Apr 13 • 5 min read

When the COVID-19 pandemic started two years ago, it exposed holes in the healthcare industry supply chain, and people experienced drastic effects. For example, lack of availability of hospital beds and personal protective equipment in the early days of the pandemic resulted in many, sadly avoidable, deaths.

What can be done to minimize future disruptions? Last month, the Fox School’s Translational Research Center (TRC) brought together research and industry experts to answer that by looking into key issues affecting the supply chain in healthcare. 

Subodha Kumar, professor of marketing and supply chain management at the Fox School, Nan Hutchinson, life sciences advisor and board director, and Anthony Flammia, DBA ’18, executive vice president of integrated supply chain at Phlow Corporation, offered their perspectives during the panel moderated by Monica Wadhwa, the TRC’s research impact director and associate professor of marketing. 

Short-term vs long-term planning with balancing costs 

Maintaining quality or focusing on cost-cutting is one of the biggest questions businesses need to address when it comes to their manufacturing process. 

During the panel, Kumar explained, “Though the industry is always trying to optimize between efficiency—especially the cost aspect—and the responsiveness, which deals with the quality of services provided, right now, the focus is on cutting costs. And as more industries follow this trend, we are compromising quality.” 

Panelists stressed that in the past there was a focus on cutting costs, which led to the supply chain issues. However, now industries are realizing that this cannot continue and that short-term strategies do not work for the long-term supply chain management.

Outline clear supply chain strategies, policies and procedures 

For Flammia, lack of transparency in the supply chain is the industry’s biggest issue.  

“Drug shortages have been a consistent and persistent challenge for 20 years. COVID-19 has shown the vulnerability to be able to secure generic, injectable drugs,” said Flammia. “Life-saving drugs are used the most during acute care and they constituted 87% of the drug shortages.” 

It doesn’t help, Flammia added, that there are only a limited number of companies making these products and the production process is complicated and costly. The industry needs clear policies and procedures to handle these drug shortages and keep prices low.

Hutchinson and Flammia addressed the perils of outsourcing a major part of the manufacturing process to only two countries: India and China. They emphasized the need for local production of drugs.  

Address key risk factors in healthcare and supply chain 

“Healthcare is a very regulated industry,” explained Hutchinson. “It’s hard to be nimble and make changes quickly.” 

Echoing Flammia’s concerns, she elaborated that since the industry imports from a limited number of places, it is vulnerable to “issues of tight-checking and monitoring, slow transportation system and geopolitical relations.” 

Because of these regulations, there is an increasing need to diversify the supply chain process.

“We need to have several service backups in different places globally,” advised Flammia. 

Focus on providing widespread access

Hutchinson reiterated that the healthcare supply chain must work seamlessly to ensure that the right people in the right place get access to the medication and help they need.

She said, “In places like rural India, market forces don’t work as efficiently. There is not really a proper infrastructure and sometimes prescribing medications without the supervision of doctors can do more harm than good.” 

Kumar explained that in many emerging economies, where the infrastructure doesn’t support a robust supply chain, there are many grassroots initiatives taken by organizations that can change this production process in a fundamental way.

“Technology plays a major part in helping provide access to areas where medical help has been difficult to reach,” said Kumar.

Hutchinson elaborated that wearable technology can be a new source of reliable data and boost supply chain efficiency. 

“There are a lot of opportunities for patients to be treated at home without needing to go to a hospital where the chance of contracting new infections is higher. Something as simple as an Apple watch for example can monitor vitals and sleeping patterns and help doctors.” 

She added, “Thanks to wearable technology, healthcare can be more available to people in rural areas as well.” 

Leverage machine learning

Technology is revolutionizing the world and the healthcare industry has been an early adopter, utilizing everything from artificial intelligence (AI) to data analysis.

Flammia said, “AI can help drive efficiency. We need accurate data collection and analysis, and we need to focus on leveraging machine learning.

Merely using historical data to forecast future events (predictive analysis) is not enough. Kumar insists that the focus of healthcare, moving forward, should be on recommending actionable steps to prevent future disruptions (prescriptive analysis).

He said, “Predictive analysis is only the part of the puzzle. We have to generate a system to reduce cost and improve efficiency using prescriptive analysis.” 

Though the panelists highlight how useful technology can be in terms of accessibility, Kumar noted that technology brings new unforeseeable challenges to the supply chain. For example, a large number of companies that are adopting data analysis and collecting big datasets have left themselves prone to ransomware and other cyber-attacks. 

With key problems, there is still much work that needs to be done to ensure that supply chain disruptions in the healthcare industry are kept to a minimum. To help policymakers and industry leaders make better progress towards these goals, here are some key research questions that need to be further addressed.

  1. How can we ensure and promote data transparency and speed up manufacturing at the patient’s bedside?
  2. How can we build resilience in the supply chain?
  3. How can we better address the new challenges that technology brings in – like protecting patient privacy?
  4. How are the changes in the supply chain in the healthcare industry going to affect the pharmaceutical industry?
DBAHealthcareMarketing and Supply Chain ManagementResearch LeadershipSubodha KumarTranslational Research Center