The Medical Device Supply Chain – Where Now?
The Corner Office
“The supply chain stuff is really tricky.” — Elon Musk
When we think of medical device companies involved in and steering the healthcare device market, we naturally call to mind those mega-corporations that are in the press most of the time, for example, General Electric Healthcare, Siemens Healthineers, Philips Medical Systems, FujiFilm/Sonosite, and Canon. Over the last few years, we heard much about these companies when it came to the myriad of failures that they experienced with the global supply chain both during and after the Covid pandemic. But the stage for these failures was set long before Covid appeared on the scene. During the last two plus decades we have witnessed the dramatic acceleration of moving the supply chain away from the shores of the United States to places like China, Viet Nam, Korea, Taiwan, and more recently India.
Manufacturers were attracted to these countries by cheaper prices for parts, components, and sub-assemblies. In at least one case that I am aware of, components and parts for ultrasound probes for one OEM came from five different countries only to be assembled in a sixth before being shipped to a seventh where the probe was ultimately married to the ultrasound system it would run on. The diffuse nature of this type of supply chain model (in some cases sole source) meant that the lack of a part from one country would result in stopping the supply of needed finished devices into the healthcare system. There was no back-up plan for Covid.
Now, almost two years post-pandemic, where are we? A review of the business literature concerning the
reshuffling of the supply chain reveals a mixed bag. Some companies are searching for suppliers in other less risky countries, some are creating “Plan B’s” to avoid sole sourcing of critical parts, and some are attempting to reduce the number of suppliers they use. Other companies are looking at sources within the United States- even going so far as investing in some smaller companies here in order to scale their operations to meet the sales requirements of the OEM. Lastly, some are utilizing Machine Learning and Artificial Intelligence for “sourcing logistics” on a global scale – after all as Elon Musk said, “The supply chain is really tricky”. So, what is the answer to addressing the tricky supply chain going forward?
In my view (and I am biased) partnering with a smaller, Veteran-owned, high technology medical imaging company located in the middle of these United States, like Acertara, is a great choice for OEMs wishing to take a more proactive approach in verticalizing and optimizing the supply chain to match their needs and ultimately the needs of their clinical customers.
Until Next Month,