How Did COVID-19 Cause Supply Chain Disruptions in Life Sciences?
The COVID-19 pandemic exposed weaknesses in supply chains around the world.
Supply chains can be a complex network that spans numerous countries. If something were to happen anywhere in the supply chain, like a delay or shutdown, it can have significant effects on the business.
The pandemic highlighted this. It’s not uncommon to see product shortages and delays today. COVID-19 affected various industries, and the life sciences sector wasn’t immune.
In fact, one source credits life sciences supply chain disruptions for negatively impacting the overall health care system during the pandemic.1 And while recent studies have shown businesses made their supply chains more resilient, professionals at The Hartford believe COVID-19 will cause long-lasting global supply chain issues.
“We’re seeing the pandemic affect supply chains in so many different industries. It’s not just life sciences, but also the automobile, manufacturing and technology industries, too,” said Brad John, head of Life Sciences at The Hartford. “It’s likely that we’ll continue to have challenges with supply chain disruptions – even after the COVID-19 pandemic ends. From production to shipping and transporting, it’s a complex issue that will require a multi-pronged solution.”
Life Sciences Supply Chain Disruption Examples
There are many factors that can interrupt a life science supply chain. The most significant ones include:
Location of sources: Shutdowns or disasters in a country that’s part of a business’ supply chain can cause delays throughout the entire production process. For example, Hurricane Maria damaged more than 80 manufacturing facilities that produced pharmaceutical ingredients and medical devices.2
Regional tier supplier convergence: This is a practice where suppliers operate within the same area, like an industrial park. In China and Southeast Asia, for example, industrial parks can house more than 10,000 manufacturers. A single natural disaster or pandemic can lead to supply chain losses if there’s a shutdown or property damage.
Logistics and transportation checkpoints: Efficiency and logistics are the foundation to a strong global supply chain. But disruptions within a supply chain’s transportation route can cause delays in moving goods. It’s a scenario that’s playing out in the world today, where cargo ships are delayed at ports and truck driver shortages are affecting transportation.
China and Supply Chain Disruptions
China is a country that many types of businesses rely on for supply chains. When it comes to life sciences, China makes 13% of U.S. medical products and it provides critical manufacturing of:3
The COVID-19 pandemic continues to significantly impact the country. The pandemic caused:
- Manufacturing shutdowns in critical regions
- Disruptions to transportation and logistics that affected importing and exporting
- Smaller workforces because of quarantined or sick employees
In March 2022, a COVID-19 surge shut down several plants and manufacturing facilities in China, which affected various companies like Apple, Tesla and Volkswagen.4
Ways To Help Reduce Life Science Supply Chain Disruptions
The risks are inevitable when it comes to supply chains. And life science businesses can face losses with a supply chain disruption. That’s why it’s essential for life science businesses to make a plan to reduce impact and help weather supply chain disruptions.
We’ve put together a list of 13 best practices that life sciences businesses can use to prepare for supply chain disruptions:
- Develop a components taxonomy.
- Identify sources of components and materials.
- Determine the location of sources.
- Identify any single or sole-source suppliers.
- Find potential alternative producers.
- Look for potential logistics chokepoints.
- Detect any internal production capacity for replacement.
- Expand purchasing relationships.
- Increase buffer stocks of materials and components.
- Relax just-in-time criteria.
- Establish multiple locations for buffer stocks.
- Identify and implement alternate logistics routes.
- Develop a supply chain business continuity plan.