Dated : July 6, 2020

As Bill Gates had foreseen, and rightly so, a certain Microbes are the cause for the global catastrophe we are in now ! And in the frontline of this battle is our Healthcare Sector. Now more than ever, we feel the need to empower our Healthcare system to be prepared for such catastrophes !

Let’s zoom out and take a look at what we have got …


Healthcare supply chains are made up of patients, providers, payers, and suppliers. Different products these supply chains support are

  • Personal Protective Equipment (PPE) – masks, gowns, and drapes.
  • It also consists of products used to treat acute viral illness – examples include IV Fluids, IV Pumps, IV Catheters, Ventilators and respiratory disposables.
  • Apart from this, it also includes APIs and other raw materials used in drug manufacturing.

Covid-19 has put Global Healthcare Supply Chains under pressure. To list down a few challenges…


In the US, 80% of APIs are sourced globally, with China and India playing a major role. While the most innovative biologics are made in the US and EU.
Asia as a whole also plays an important role in protective equipment supplies manufacturing. It produces up to 50% of N95 masks (plus raw materials and fabrics for N95 masks manufactured elsewhere).
There are more than 600 US FDA registered facilities in China, providing more than 1000 APIs to the US market.
A Covid-19 outbreak in India has the potential to further disrupt global healthcare supply chains as already impacted by the disease in China.


Commonly, the health care supply chain takes a fragmented & “fire-fighting” approach and the hospitals work in silos. How do we better equip ourselves for future disruptions such as this ?

In the Covid-19 outbreak, these Healthcare supply chains are on a mission. They are supporting clinicians in diagnosis, treatment, and prevention. However, as the crisis is still looming large, healthcare supply chains need to answer following question –

“How to sustain global supply of critical diagnostic kits, drugs, medical supplies, and equipment to treat patients in the wake of supply chain disruption?”


The answer to this question is further complicated by the actions taken to protect the interest of a region / nation such as restrictions on export of PPE. In future, this will force supply chains to build local suppliers to mitigate the risks. However, given the current situation, only short-term reactive measures can answer this question.

Apart from this, to improve the current situation of Healthcare supply chains, it is important to build resilience to mitigate the supply chain disruption created by the Covid 19 event, which is hard to anticipate and has high impact risk. Supply chains can be prepared with a set of Proactive and Reactive measures.

Healthy Reserves –
To be resilient, on a short-term basis – as a reactive measure, supply chains can build healthy reserves of parts with high recovery time.

Prioritization –
Wherever Healthcare supply chains are competing against other supply chains for supplies, the supply may be ensured prioritization. To give an example, the production of N95 masks is hampered by the availability of melt-blown, nonwoven fabric. It is important to note that the healthcare products community competes with the consumer goods industry for this melt-blown non-woven fabric, as it is a key input into products such as diapers and sanitary napkins. In the case of shortage of fabric, based on N95 mask demand and rationing principle of inventory allocation, suppliers can act in favor of the medical product supply chain. This is also a short-term reactive measure.

Adding Redundancies –
In the long term, the supply chain can consider adding redundancy in the process. Redundancy can be in the form of stockpiling of inventory, implementing multi-sourcing strategies, and/or maintaining a contingency workforce.

Alternate Sourcing for Modular Products –
Apart from this, in the long term, supply chain resilience can be increased by introducing modularity in product design. Though Integrated products are very efficient but creating an alternate source for Integrated products is difficult. Whereas creating an alternate source for modular products is comparatively easy. This modularity can be used to increase the resilience of supply chains in the healthcare industry.

While many healthcare supply chains have been able to meet demand from existing inventory, it is critical that companies use enabler IT applications like Supplier Segmentation and Scenario Modelling to fully understand their supply chains and identify their top products facing potential supply issues, with a perspective on next few months, taking into account potential, more aggressive scenarios. This involves,

Real-time Inventory Levels – Understanding inventory levels in full supply chain and adjusting to new reality
What-if Scenarios in minutes and not days! – Pressure testing supply chains with aggressive downside supply chain scenarios
Immediate Alternatives – Ramping up production at alternate source that are already in place
Allocations – Implementing an allocation process for affected products (for example – rationing)
Faster Initiatives – Initiating search for additional / alternate suppliers for critical APIs, raw materials or components.

Present day IT Applications enable real-time collaborations among departments, ensuring data update across the organization and keeping everyone aligned. This in turn, fast-tracks approvals, consents and decision making in Organisations. Decision making becomes easier when we have real-time data and analysis on hand.

A Supplier Segmentation and Network Optimization Apps, built using Enterprise Performance Management solutions can help Healthcare supply chains to become more resilient.

A Supplier Segmentation and Network Optimization Apps, built using Enterprise Performance Management solutions can help Healthcare supply chains to become more resilient.