Paul Chaffin, senior vice president, president medical and pharma solutions division at Molex, discusses the importance of a robust supply chain, while highlighting the impact of COVID-19.
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Checking Her Heart Rate
COVID’s public health impact has reached into global supply chains across a broad swathe of market sectors, making it one of the defining stories of the last year for manufacturing.
In recent weeks, we’ve seen how the pandemic has played a key part in the global shortage of semiconductors. Because of the vital role that these electronic components play in every part of our lives, this so-called “chip crunch” has heavily weighed down output forecasts for everything from automotive manufacture to domestic appliances, and consumer tech.
Global supply chains are complex and often have dependencies that are only revealed in a crisis and are reliant on third parties to remove the bottlenecks. These bottlenecks can prove to be particularly acute for custom product manufacturers, as well as firms that rely on just-in-time (JIT) management strategies.
While a reliance on low inventory production within an ecosystem of third-party suppliers has previously worked well as a way of reducing risk and creating predictability within a supply chain, this model becomes vulnerable if these suppliers face their own supply issues.
The nationwide lockdowns and stay-at-home orders issued in response to the virus’s rapid spread proved to be such an obstacle. Aside from COVID, earlier this year colleagues in the United States had to contend with the aftermath of a freak winter storm that led to power cuts across Texas. This led to global shortages in refined oil products like polymer resins, which are an essential material in the manufacture of a wide range of electrical devices.
During these crises, companies that suffered the least were those with strong backup plans, and were able to be resilient, flexible, and agile in the face of shortages and logistics issues.
Supply chain shortages caused by the kinds of ‘force majeure’ events we’ve witnessed over the last 14 months should now prompt industry leaders to examine how to effectively de-risk their supply chains. In order to do this properly, you have to de-risk more than just immediate suppliers: end-to-end insights and an end-to-end strategy are essential.
When it comes medtech and connected healthcare devices, it becomes even more critical that the supply chain be as robust as possible. This means proactively working to identify potential areas of shortage as early as possible so that these can be mitigated before they cause painful bottlenecks.
How do we effectively maintain this vigilance? The first key factor in improving preparedness to reduce potential supply issues is the intelligent use of data – giving us a single view of the entire planning and execution process. This enables us to seamlessly link the changes that we see in our customer plans and alter our workflows accordingly.
We know that digital transformation has the power to redefine healthcare, especially in the fields of pharmacovigilance and drug delivery, but this innovation can also optimise the supply chains helping these novel medical interventions get into the hands of the right medical professionals on time.
The use of procurement intelligence platforms to help predict supply chain challenges and mitigate the risks are essential to being part of a robust supply chain. For example, at Molex we put measures in place to address demand surges and supply shortages during the pandemic swiftly, to prevent disruption further down the chain. This intelligent use of data is essential in enabling engineering, procurement, and business teams to make better, faster decisions.
Secondly, alongside the intelligent use of data to improve vigilance and agility within the supply chain is the value of partnerships with suppliers and customers. From our own experience we know the tangible value that these close linkages with our clients can have during times of challenge.
When supply chain disruption began to emerge in March of last year, our integrated team was heavily engaged in helping customers quickly address critical needs. Case in point, Molex helped Jabil rapidly fill demand from a top personal protective equipment (PPE) manufacturer during the ventilator shortage amid the pandemic. The need for a dramatic increase in the volume of key parts for legacy ventilators drove our team to assess risks, develop contingency plans, secure alternative sources for materials and develop new technology innovation that advanced legacy products and then ramp up manufacturing with unprecedented speed once facilities re-opened. This meant a robust influx in the supply of these critical medical devices, at a time of great need. This is just one example of the value driven by our 25-year history of collaboration in tightening alignment across technology roadmaps and critical customer focus areas.
The results were transformative: we were able to scale ventilator component production from a yearly purchase order history of around 2,000 parts to 20,000 parts in about six days. A week later, Molex delivered another 16,000 pieces to support this extremely important product build – and contributed significantly to address the acute shortages.
By understanding the needs of your partners within the supply chain, you can quickly understand how alternative sources for materials and components can slot seamlessly into their processes. These rapid-fire responses are made possible only by the strength of long-standing commercial partnerships.
Design for supply chain
Asking the question: “Are we designing for our supply chain?” is a critical step. This means doing everything possible to understand the risks associated with each dimension of a new medtech product line. In order to build optionality into the supply chain, customers must understand where the risk lies. An intimate knowledge of everything that goes into the bill of material and each line item within a capital expenditure is key. As is asking even more related questions like: How can this translate into alternative sources for components, if needed? How will the geography of the manufacturing base affect risk?
COVID and the Texas winter storm have also emphasised the vital importance of designing for supply chain risk throughout the life cycle of a product. If you began the process of designing a product in January 2019, theaudit processes may have suggested that external risk would be very low given the information available at the time. But global events since then may well have radically altered your calculus for costs, particularly in the procurement of components.
Molex is in the middle of its own supply chain, constantly challenged to ensure that we can access the parts and materials required to meet our customers’ needs in a timely way. The pandemic has already reinforced many things about our role, the most important of which is that we are part of an end-to-end global supply chain. As such we need to continue to develop a better understanding of that supply chain and use that knowledge to inform our own responses.
While we can never account for every eventuality, we can ensure that we are in the strongest possible position to adapt quickly and effectively to the changing risk profile of our supply chains if we follow the strategies outlined above.
