Establishing an End-To-End Supply Chain Technological Transformation


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Think for a moment about the number of devices you use on a day-to-day basis. From your car and your home appliances to your computers and mobile gadgets, it's unlikely that many of these devices are more than ten years old.

However, the same cannot be said for the medical device industry - which is responsible for far more critical pieces technology - where a large proportion of the equipment being used is more than a decade old.

A recent survey of more than 200 decision-makers in healthcare came back with 100 percent agreeing that the industry was lagging behind others when it came to digital transformation. Therefore, the need to digitally transform the medical device supply chain should be a top priority for those companies invested in it.

The Problem

The main reason for this lag in transformation is down to the factors which drive innovation in the medical device industry. Where most technologically-focused industries are driven by the technology itself, the medical industry is led by proven therapies, with most adopting an, "If it isn't broken, don't fix it" mentality.

When leaps forward are required, the pace of change can also be slow. Aside from the conservative approach to developing new devices, the medical industry has rigorous regulatory requirements to meet before new articles can be brought to healthcare facilities. This is compounded by cross-industry demand for the components required to build new devices, which creates a double-bladed problem where technology is slow to change, but when change is required, suppliers can struggle to keep up with demand.


Take semiconductors as an example. The demand for this component is affecting all industries, and, as the medical device industry catches up with others, this demand is going to become ever more keenly felt. Pacemakers and blood pressure monitors are just two of the devices that are reliant on semiconductors.

During the global recession, prices were driven down, which caused component suppliers to focus their efforts on newer products that had higher margins. However, this change in focus contributed to the supply of old generation components failing to meet demand, which led to the supply shortage we are now seeing. Lead times for these components are notoriously long, which only compounds the issue for medical device manufacturers trying to keep up with demand.

This need is likely to grow further as the call for personalized healthcare devices grows louder - a trend which is likely to grow even further still as time goes on. This creates a need for the medical device industry to invest even further in the supply chains which bring semiconductors and other electrical components to market.

Looking Forward

The shortage of legacy components is causing many of those older electrical devices discussed above to enter their end-of-life period.

This is creating an atmosphere where the healthcare supply chain is now facing the need to redesign products to bring them in line with modern digital technology. Internet of Things technology and big data are changing the way patients are viewed and the ways they interact with healthcare providers, increasing demand for these new connected products.

"Healthcare manufacturers must drive a cultural change to include speed and technology as major drivers to their product strategies," writes Jabil. "This process becomes more complex when brands are incredibly committed and connected to patient safety. It creates an opportunity to innovate not only in therapy and devices but in the innovation process. New products must include plans for securing the healthcare supply chain. It's time for the healthcare supply chain to move from being a technology laggard to a technology leader - or at least be somewhere in the middle."

Final Thoughts

Barriers to uptake of these new philosophies include the cost of redesigns and a lengthy (18 months) time to market. However, the times have changed, and the medical device industry is in danger of being left behind if it's not willing to begin addressing these challenges. 18 months from today will arrive a lot sooner than 18 months from an unspecified point in the future, and costs are unlikely to fall anytime soon.

As such, overhauling the technological medical device supply chain becomes a case of "sooner rather than later", and those brands willing to take the plunge now stand the best chance of addressing these gaps in the future.

The challenges of creating a new technological supply chain are set to be a hot topic at LogiMed 2019, taking place in March at the Rancho Bernardo Inn, San Diego, CA.

Download the agenda today for more information and insights.

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