Building Resilience into the Nation's Medical Product Supply Chains (2022) / Chapter Skim
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5 A Framework for Resilient Medical Product Supply Chains
5 A Framework for Resilient Medical Product Supply Chains
Pages 137-162
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From page 137... ...
This chapter presents a framework for increasing the resilience of medical product supply chains. First, the chapter describes a method for determining which medical products are supply chain critical, and therefore in need of resilience interventions.
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From page 138... ...
A clear definition of resilience is needed to identify which medical products warrant supply chain resilience interventions. This section refines and quantifies a definition of resilience in medical product supply chains using a standardized procedure that takes into account past data and future forecasts to provide reasonable estimates.
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From page 139... ...
Therefore, the assessment of whether the risks justify the costs of protection will be more nuanced and difficult than when considering essential but small market products. The conclusion here is that highlighting medical products with high Hi Si values is a good start to developing a supply chain critical list.
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From page 140... ...
Options for obtaining and using such data are described in Appendix C These include using statistical analysis of past disruptions for products, such as generic drugs, that are prone to routine disruption by process failures, and subjective scenario analysis of disruptions by major emergencies such as pandemics.
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In economics terms, investments in supply chain protection will exhibit diminishing returns to scale. This diminishing returns insight is essential to achieving a balanced supply chain resilience strategy.
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. In medical product supply chains, a disruptive trigger event will only result in harm to people if multiple layers of defense fail.
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, patients could be harmed. Invoking the Swiss cheese model description of the Redundancy Principle, the resilience of this supply chain can be improved by adding more layers of defense (more slices of cheese)
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THE COMMITTEE'S MEDICAL PRODUCT SUPPLY CHAINS RESILIENCE FRAMEWORK With the Swiss cheese representation of the Redundancy Principle in mind, the committee developed a framework for enumerating supply chain resilience interventions in a systematic manner. Because the steps that lead to a supply shortage play out over time, it is logical to consider options with respect to their position on the disruption timeline, from preknowledge of risks to postdisruption of medical product supply chains.
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145 FIGURE 5-4 Medical product supply chains resilience framework: potential trigger events and resilience measures.
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Awareness As depicted in Figure 5-4, awareness is the foundation for resilience in medical product supply chains. Here, awareness is the possession by the appropriate people of the information needed to assess, mitigate, prepare for, and respond to risks of medical product shortages.
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. As such, this represents the medical product supply chain resilience framework in a microcosm, with the pharmacy promoting awareness that underpins multiple layers of protective measures.
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Like the shields in the medical product supply chain resilience framework, the subcategories of the preparedness category can be viewed in terms of their distance from the point where products are used by providers to treat patients. Finished product inventory stockpiling is the closest because, subject to a transport step to move products to the location needed,
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From page 149... ...
Thinking carefully about the time sequence involved in medical product shortages and in shortage prevention can help in enumerating a broad range of interventions for enhancing supply chain resilience. This observation also highlights the fact that measures that are closer to being ready to use can be accessed more quickly, which, as discussed below, is important in matching different measures as part of a comprehensive resilience strategy.
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Consequently, producers and marketers of medical products maintain buffer inventory and buffer capacity at various levels of their supply chains to ensure business continuity. However, because private profit incentives differ from public health incentives, protection investments by firms may or may not produce socially beneficial outcomes.
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The average cost per year to activate the capacity buffer is KY/N. This equation shows that the cost of capacity buffering is less than the cost of buffer inventory if N > K/h.
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A resource is flexible if it can be used to satisfy more than one source of demand. Just as the layers of protection in the medical product supply chain resilience framework need to be independent to reduce risks of a shortage, flexibility is only effective for independent sources of demand.
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Note that such a plan would provide additional production capacity, albeit with a longer lead time than physical buffer capacity. A contingency plan that identifies supplemental producers for specific supply chain critical medical products and readiness steps, such as sharing supplier and bill-of-material information with these producers, would make ramping up capacity in an emergency faster and more reliable.
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Different Taxonomies and Perspectives There are other taxonomies and perspectives for building resilient medical product supply chains beyond the categories and measures presented in Figure 5-4. Each category can consider interventions that make use of regulations, economics, technology, and so forth.
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At the level of individual medical products, matching appropriate measures to products can be done using the medical product supply chain resilience framework to help select candidate options and then using detailed information about the specific medical product to evaluate the practicality of each option. For medical products identified as supply chain critical, such detailed scrutiny may be warranted.
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From page 156... ...
In both recommendations, the policies create incentives for firms to enhance medical product supply chain resilience rather than specifying actions that may be suboptimal or become so over time as manufacturing technologies and practices evolve. In the following sections the medical product supply chain resilience framework is leveraged and general insights and guidelines that may be helpful in identifying incentive-oriented policies to promote supply chain resilience are discussed.
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From page 157... ...
Consequently, as with inventory, the cost-effectiveness of capacity investments decreases with scale. Because of this, the most efficient measures -- the lowhanging fruit -- should be prioritized in all of the protective layers of the medical product supply chain resilience framework to find the most cost-effective mix of measures for promoting resilience in medical product supply chains.
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From page 158... ...
Finally, the willingness to use a more concrete measure should increase with the medically essential score of a product because the higher cost of human harm justifies more expensive investments to provide faster and more reliable protection. On the other end of the scale, for medical products that are sufficiently nonessential, it may be optimal to do nothing so that resources can be used to secure supplies of more supply chain critical medical products.
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CONCLUDING REMARKS AND OVERVIEW OF COMMITTEE RECOMMENDATIONS To achieve the goal of promoting resilient medical product supply chains that are cost-effective and protect public health in both normal and emergency conditions, all protective layers of the medical product supply chains resilience framework must be used. In the remaining chapters (Chapters 6–9)
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Response 6. International Treaty -- Negotiate an international treaty with other major medical product exporters that rules out export bans on key components of global medical product supply chains.
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From page 161... ...
. SCLRC (Supply Chain Risk Leadership Council)
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