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Challenges and opportunities

Healthcare supply chains can learn from COVID-19 response.

The global scramble to find medical supplies to deal with the COVID-19 pandemic points to both challenges and opportunities for the sometimes too narrowly defined area of healthcare supply chains, says a team of researchers from Cambridge Judge Business School.

Healthcare supply chains have suffered from an issue shared by supply chains in other sectors, in which managers have been more successful in reactive responses rather than proactive planning, the research team says in an epilogue prepared for a working paper.

The team has been working for the past year on applying supply chain thinking to healthcare to improve patient outcomes while reducing costs.

Global supply chains were found underprepared by the COVID-19 pandemic, despite earlier epidemics such as SARS and H1N1 and many warnings over the years of the crippling effect of an even bigger pandemic, says the epilogue to the paper, “Supply chain thinking in healthcare: lessons and outlooks”, currently under review in the journal Manufacturing & Service Operations Management.

Yet at the same time, as with other major disruptions, COVID-19 has created opportunities for innovation in healthcare supply chains, says the Cambridge Judge team – PhD candidate Lidia Betcheva; Feryal Erhun, Professor of Operations & Technology Management; and Dr Houyuan Jiang, Reader in Management Science.

Lidia Betcheva.
Lidia Betcheva

Feryal Erhun
Professor Feryal Erhun

Dr Houyuan Jiang.
Dr Houyuan Jiang

For example, COVID-19 has accelerated telemedicine – with more than 80 per cent of UK primary care patients being managed through digital care – which boosts efficiency by not only pooling resources but also bringing care closer to patients.

Universities and research labs are using technologies such as 3D printing and artificial intelligence (AI) to help produce supplies and assist in triage and supply allocation decisions. The research community has already started thinking about how AI can be used to measure an individual’s clinical risk of suffering severe outcomes to guide personalised care and resource allocation, if not for COVID-19 then for future pandemics.

The team draws on the history of more traditional supply chains to underline how supply chain disruptions are not new in times of sudden but not totally unforeseen events. For example, the 2011 earthquake and tsunami in Japan disrupted technology and automotive supply chains, leading to some plant closures for up to six months. Geographical concentration was a major issue in rapid resumption of semiconductor supply chains at that time.

In other well-known cases, supply chain issues were linked not only to distinct events but also to issues relating to particular companies – such as postponements in Boeing’s launch of its 787 Dreamliner a decade ago, and Apple’s delays in meeting demand for new Power Macs back in 1995 due to limited inventory that led to a $1 billion order backlog at one point.

As with the many unknowns about the origin, progression and treatment of COVID-19, even top companies face many uncertain factors when dealing with their supply chains – be it customer demand and the whims of fashion, availability of certain key materials, and cataclysmic events such as tornados and pandemics.

As healthcare executives consider the steps – and missteps – so far in the global response to COVID-19, the Cambridge Judge research team advises that they should be mindful of historical slip-ups in supply chain management and heed lessons to avoid similar mistakes in the future, as well as learn from practices around the globe.

South Korea, Singapore, Taiwan and Germany seem to have a better response in the first phase of the pandemic, which might be due to the timing of social distancing, lockdown, testing, tracing and isolating, as well as capacity and resource management. These jurisdictions can provide learning opportunities for other countries.