Company insight Investing in Europe
Not only was the Covid-19 pandemic disruptive, but it also exposed severe weaknesses in the global supply chain in the healthcare industry. Mike Benevento, CEO of Oliver Healthcare Packaging, discusses how the pandemic forced both his company and others to learn hard but valuable lessons to improve resilience and to minimise disruptions in future.
ike many businesses around the world, a variety of supply chain weaknesses were exposed in the medical technology sector during the Covid-19 pandemic. This resulted in a significant imbalance between supply and demand. The stakes in an industry like healthcare are high, literally life-or-death in extreme cases, so learning the hard lessons from the pandemic is critical for the future.
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At Oliver Healthcare Packaging, we are a part of the medical supply chain, providing sterile packaging to ensure the safe delivery of critical medical devices around the world. The hard lessons learned are driving Oliver and others to ensure that medical supplies like packaging are readily available, especially in the event of future disruption.
Supply chain challenges The entire industry is investing a variety of resources to regionalise their manufacturing capabilities, and the full supply chain is being assessed to identify intercontinental supply dependencies. The pandemic caused major disruption, especially for transoceanic carriers, where transportation times were extended by weeks, or even months in many cases. Wherever possible, regional supply sources are being considered to allow for the delivery of raw materials across more accessible pathways and short water routes. Many medical device manufacturers are also increasing the number of production sites they operate. Back to the hard lessons learned, companies like Oliver are trying to ensure that devices and therapies are manufactured closer to the hospitals and healthcare facilities that need them. Supply chain redundancy is another major trend that came out of the Covid- 19 pandemic. Device manufacturers are taking action to ensure they have more than one reliable supplier within their
Mike Benevento, CEO,
Oliver Healthcare Packaging
networks. As an industry, we have suffered a convergence of upsets to the supply chain during the past few years. These upsets weren’t just the pandemic. An example we felt at Oliver was weather-related which resulted in disruption in petrochemical-based resins used in medical packaging. Even when a device manufacturer had two or more qualified suppliers within their network, they were often sourcing common input or ingredient materials from a single supplier. These first-order suppliers were vulnerable to issues like extreme weather, labour unrest, or more. A more comprehensive interrogation of the upstream supply chain has been conducted across the industry, with a goal of fully understanding and mitigating risks wherever it is possible.
Pandemic-induced swings in demand
The pandemic also created significant swings in demand. For example, the initial shutdown of elective surgical procedures caused many companies to take a more defensive posture, dramatically decreasing their production volumes for medical devices. At the same time, demand soared for devices related to acute care. The surge in demand for ventilators is a well-known example, although there are many others. Demand for diagnostic tools also surged. Consider the overwhelming demand for Covid tests (by the billions!) that seemed to happen almost overnight. It was highly unusual for an industry that has long and relatively predictable product development timelines.
Medical Device Developments /
www.nsmedicaldevices.com
When elective procedures resumed, there was heightened demand for the backlogged procedures that had accumulated as patients were homebound. In many cases, preventative care and screening procedures were generally skipped until vaccines became more widely available. This resulted in a heightened demand for medical devices, especially for elective surgeries. As production resumed, there was a great strain on a supply chain that had been designed for more stable growth rates. Suppliers had difficulty adapting to the highly variable patterns in both product mix and volume, which was further compounded by labour shortages that were common during Covid. Companies are now proactively assessing, and in many cases investing in, automation to improve the ability to expand capacity quickly when demand surges.
Lessons learned We have learned a lot about regionalisation, supply redundancy and automation, and our own investment at Oliver is a meaningful step toward all three of these critical objectives. For example, an expanded European facility with enhanced manufacturing capabilities will improve our service levels for our growing customer base within the region. Furthermore, we’re investing in redundant capabilities within Europe, as well as across our facilities in North America and Asia, to provide an enhanced business continuity plan for customers. New equipment has been installed that incorporates the latest in process control systems to improve quality, many with integrated automation to scale-up quickly. In conclusion, the lessons we’ve learned since 2020 have better prepared many businesses, including Oliver, to adjust more quickly when facing unique challenges. ●
www.oliverhcp.com 113
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