During the COVID-19 pandemic there is a wider recognition that cheapest purchase price has generated a vulnerability in the medical supply chain. There has been geographic disruption and reduced capacity to uplift production in the UK.
This is not unique to the medical sector and the solution is to re-examine the principles of dual-sourcing and value-based procurement.
- Of the 15 basic disposable PPE items widely used by the NHS, half are only available from outside of the UK
- This single source approach has been exposed during the pandemic and a better approach is needed.
- We need a resilient and agile medical supply chain strategy going forwards and this requires UK-based manufacturing capacity.
What is dual sourcing?
Dual sourcing is establishing two or more suppliers of the same product or service. There may be a difference in price between the two sources, but the average price is used for internal costing.
It is vital that the sources do not have any common elements in their supply chain.
This can be difficult to maintain without full visibility or transparency down to raw material.
This strategy does provide a lowering of risk but may also be reflected in an average higher price.
Using an overseas supply chain and a UK-based supply chain can be a simple way to manage security and agility in manufacturing.
What is value-based procurement?
Adoption of an approach that delivers tangible, measurable financial benefit to the health system over and above a reduction in purchase price.
The simple term for this vision is “whole life costing”.
This procurement strategy can consider Quality, Innovation, Financial, Efficiency metrics.
The equation becomes more complex and relevant when adding in the reduction of waiting time, reducing waste, improving sustainability. This is a fundamental shift from lowest purchase price to a requirement of suppliers to meet core outputs.
What is happening now
The ramifications from the COVID-19 epidemic are still playing out but a new contracting process is being adopted by NHS Supply Chain. The NHS are moving from a tightly managed input model to a looser output/outcome driven environment. Whatever name this adopts it is encouraging to see that there is a desire to move to Supplier Relationship Management. It will necessitate a closer engagement of medical specifiers with manufacturers and designers – that can only be good for all.
GTMA has engaged with the UK-based medical tier manufacturers to identify medical supply chain opportunities. We have over 80 member companies in our Cluster with a declared interest in the medical sector. Cross-sector technology transfer particularly from the aerospace and automotive sector will be a critical skill set in the move to reshoring and supplying the NHS.
In March the GTMA medical cluster delivered 85% of the manufacturing requirements for the CPAP breathing assistance device used to combat COVID-19 symptoms. We are seeking to use this learning process to provide sustained support for future medical device and component manufacture.
Globally there are over 100 trials ongoing to develop a vaccine for COVID-19. When one or more are adopted it will be a massive challenge to make and deliver the vaccine into patients requiring machines and devices. The design and manufacture challenges will be enormous and a closer relationship between manufacturing supply chain and top tier suppliers is vital. The medical supply chain is going to be tested repeatedly.
Article by Alan Arthur, CTO at GTMA.