COVID-19 supply chain risk assessments build resilience
Merry-go-Round of Supply Chain Issues
Many labs describe their experience with supply chain issues for testing kits, supplies and procurement instrumentation as a merry-go-round of issues. Just as one supply issue is mitigated, another one crops up and breaks the whole testing process again elongating test turnaround time and impacting patient care. Labs are currently experiencing severe shortages of nasal swab for COVID-19 collection kits along with the lack of instruments and reagents to support the actual testing process. Shortage of key supplies and analyzers is not only impacting the availability of COVID-19 testing but hampering the production of regular lab testing.
COVID-19-The Black Swan Event
The COVID-19 pandemic is being described as a ‘black-swan’ event. This once in a lifetime phenomenon highlights the vulnerabilities in the clinical lab decades-old supply chain infrastructure. The pandemic exposes the laboratory’s dependency on global suppliers, many in China, that control the flow of raw materials and supplies to the world for critical parts, consumables, and medical devices. The flood of new and unknown vendors into the medical device market for COVID-19 testing kits and testing platforms also introduces variability in the flow of critical supplies.
In a recent Executive War College presentation on August 20 at 1 pm EDT, Anne Tate, presented how to qualify suppliers and vendors in the midst of a pandemic for new products, supplies and vendors. Throw out the old rules, standardizing on supplies or even platforms. If you are performing high volumes of COVID-19 assays, this is the time to evaluate your potential and current vendors and flip the script when it comes to ensuring you have coverage for COVID-19 testing.
Supplier and Vendor Risk Assessments
The anticipated increases in demand for COVID-19 testing this fall as our children return to schools and colleges has pushed laboratories to consider different supply chains with minimal overlap. The goal now is to source and maintain multiple testing platforms with entirely different supply chains to ensure business continuity. System and supply redundancies will help labs move from the short-term crisis mode to one that can support testing ‘parallelism’. Using multiple and different testing platforms will help labs survive the peaks and valleys expected with the virus trajectory. The separation of the critical supply chain items will future-proof your COVID-19 testing strategy.
One method to help you evaluate which vendor platforms are appropriate for your operation is to perform a risk analysis and calculate a risk index to keep track of the performance of your suppliers. Take the time to put together an analysis of key criteria that you can periodically revisit to monitor your issues and remediation. Don’t make it complicated or time-consuming: a simple risk analysis that identifies supply chain critical issues during the pandemic will suffice.
Supply Chain Risk Analysis Process
Step through our supply chain risk analysis to determine possible issues that would disrupt your timely receipt of products.
Step 1: Identify Supply Chain Critical Items
Identify items that are critical to your testing operation from collection to final reporting: Collection kits, transport media, pipette tips, consumables, QC, reagents
Create a list of possible vendors and suppliers and then further sub-divide by their products
Grade your suppliers by tiers if possible
Identify the strength and weaknesses of your commercial relationship with each supplier
Step 2: Compare/Contrast Vendor/Product Supply Chain
Create a ‘risk’ profile for each vendor/supplier of the key critical items that are important to your lab operations.
Analyze the vendor/ and specific product supply chain sources – U.S. based or international. Determine the location of the source of their raw materials and component parts by asking your supplier or other third party sources
Identify where the product is assembled and shipping lag times within the U.S. or from overseas
Determine the longevity of the need for the vendor-product in the context of your overall testing strategy – will you be phasing out certain testing regimens, or expanding the testing to meet projected future volume?
Analyze the cost structure for each vendor-product based on your expected volumes, turnaround time and service needs
Step 3: Assign risk/calculate a risk index
For each risk issue identified – assign a likelihood of occurrence and the severity of the impact to receipt of the product in-time for use. Rank each of these risks in order of priority. You can’t tackle all the risks, so use prioritization to identify the most serious risk(s) to make any purchasing decisions that are salient to your organization and current needs.
Identify risk issues that may apply to each vendor-product. Examples include:
Raw materials for products manufactured overseas in unstable areas or where the transportation mode could be impacted during the pandemic
Raw material production issues that support the product or component parts of the product
The supply chain for the final product is complicated and has many dependencies to reach the final product
The product is assembled overseas before shipping to the U.S., adding months to receipt of the product
Consider any political issues that could disrupt the supply chain both-domestically and internationally
Determine production cycle time methods – do they use sub-contractors or other ways to speed up production such as multiple shifts, hiring more employees
If the product(s) is shipped from other countries – consider the number of assembly steps and the likelihood of delays within each step to produce a final product
Step 4: Identify risk avoidance actions
Determine ways to reduce your supply chain risk for each priority issue. Examples of risk reduction mediation may include the following:
Duel Sourcing - implementing different testing platforms with minimal supply chain overlap in collection, reagent, and consumables
Sourcing materials, parts or products from other U.S. companies or other regions of the world
Finding local vendors that could design and produce vulnerable components or materials – e.g. pipette tips, transportation media, etc.
Internally produce the product to meet your specification to solve a short-term shortage problem
Evaluate alternate outbound logistics that could bring the products or materials faster to the lab
Build-in More Resilience
A risk analysis is not a means to an end – you actually have to act upon it. The purpose of the risk analysis is to spot issues in your supply chain strategy and to fix them. Like it or not – your laboratory needs to become more supply chain savvy and do more proactive modeling and risk analysis to avoid fragility. Laboratories need to understand their supply chains more deeply than they have in the past. Dependence on a single source for lab supplies has not proven to hold up during a pandemic. Supply chain redundancy avoids single points of failure that can upset the entire process. Seek to build a more resilient supply chain that is strong enough to withstand this virus, future diseases, or other unprecedented events.