With the World Health Organization (WHO) recently declaring COVID-19, or Coronavirus, to be a “pandemic,” it has become painfully obvious that we are far from the end of this worldwide healthcare crisis. The term crisis is not simply referencing the virus itself and the impact of the illness but, for many in the healthcare industry, the crisis encompasses the shortage of commodity supplies that are so crucial to combat the risks of Coronavirus and other viruses.
For many years in healthcare, there has been a massive push to standardize, reduce vendors, and partner closely with a distribution company. This trend has helped to drive down costs, strengthens key partnerships, and often works well for the facility. In times of crisis, however, the risks inherent to this model become apparent. With worldwide shortages of supplies, rigid strictness in the allocation of goods and product hoarding, the single-sourcing risk is at the highest, leaving many with vastly increased prices or no supply at all.
Exposing the need for diversification
A need for supplier diversification at the facility level is apparent, as many hospitals are now facing shortages due to allocation. During shortages, most healthcare companies will only guarantee product allocations to the facilities that have been purchasing loyally from them. Facilities are guaranteed a specific amount of product based on their order history. This provides facilities with regular shipments during a crisis but does nothing to mitigate the need for additional products to manage spikes in usage.
Now consider, what happens when that company cannot supply any goods to the customer? The customer cannot obtain any product from another company because those companies are protecting the allocation for their own customers. We recently saw this situation play out in surgical gowns, surgical packs and now a range of PPE products in the industry. Many hospitals are seeing the need to maintain a relationship with at least two suppliers in these critical supplies to maintain a lifeline in crisis situations.
A shift in manufacturing
With so many products produced in Asia, particularly China, several large companies have already experienced the need to diversify. Politics, natural disasters and a host of other situations have demonstrated the need for multiple channels of access to supplies. We have already seen a shift in manufacturing away from China. With recent events, it is reasonable to continue to anticipate and demand greater diversification in manufacturing from the manufacturers in the healthcare industry. We simply need to be better equipped to handle disruptions to the supply process.
Over the years, we have weathered many storms. From national disasters, Flu seasons, and epidemics of all shapes and sizes, the healthcare world always finds a way to care for the patients. Our challenge during this time is to learn from the crisis and implement better methods for the future challenges that will, undoubtedly, arise.
At ASP Global, we pride ourselves on being disruptors in the market. Our business model is based entirely on identifying and meeting the unique needs of customers. We want to partner with our customers, not only to alleviate shortages during this crisis but to help ensure our customers are not impacted as severely the next time a crisis occurs.