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What Has COVID-19 Done to the Medical Supply Chain?



As we all work to cope with the global COVID-19 pandemic, many people are discussing the drastic shortages in personal protective equipment (PPE) facing healthcare organizations. But how did we get here in the first place? In the age of technological advancement and globalization, how did the supply chain for PPE break down so quickly? To understand, we must look at the numerous contributing factors.



Uncontrollable Supply and Demand


As with any modern supply chain, there are many companies that all contribute to producing medical devices and PPE. It takes even more organizations to get those devices to where they need to be when they need to be there. You have the people actually making the equipment; there’s organizations who move these devices around the globe; government agencies monitor and validate this equipment as it moves to ensure regulatory compliance - the list goes on.


Each of these stakeholders plays a different, critical role in the supply chain. When a downstream organization needs additional equipment, they place an order from their upstream suppliers, who in turn place orders from their suppliers, all the way back to the manufacturers who make the raw components. And not only does each organization order the number of devices they think they actually need, each of these nodes in the supply chain typically hold “safety stock” - that is, additional supply in case of uncertain demand. As you move up the supply chain, the amount of safety stock increases, and the amount of product being ordered also increases.


Now introduce an unforeseen event such as the COVID-19 pandemic. In a very short amount of time, as downstream organizations began running out of safety stock, they started placing larger and larger orders from their suppliers. In turn, their suppliers had to start order much more from their suppliers than they previously did. By the time you make it back to the manufacturer, there is only so much supply that can be produced in a given amount of time. And as orders continue to pour in for larger quantities, manufacturers found themselves unprepared to scale up production quick enough to meet demand.


In the supply chain world, we call this the “bullwhip effect”. While a single downstream organization placing a larger order can be absorbed by upstream safety stock, when the entire industry begins placing larger orders, the effect is drastically compounded as you move up the supply chain. And by the time you get back to the manufacturer, they are seeing such a huge spike in demand it is effectively infeasible to keep up without changing their processes.



Regulatory Complications with Medical Devices and PPE


Every supply chain experiences the bullwhip effect - it’s almost impossible in a real world scenario to completely avoid it. But consider the difference between a non-medical product and a heavily regulated device being used in healthcare. The PPE supply chain contains many additional players, such as the FDA and other regulatory bodies, that increases the amount of supply required in the system.


Take, for example, a non-regulated product such as an article of clothing. That piece of clothing is produced at a manufacturer, shipped to one or maybe two distributors, who in turn ship the product to you or the retail store you bought it from. Each of these players holds a certain amount of inventory in order to absorb variations in demand.


Now consider a medical device, which moves from manufacturers, to exporters, to customs agencies, to importers, to distributors, to healthcare purchasing organizations, to the hospitals, and finally to the end user. With many more links in the chain, the entire supply chain requires more supply and is much more susceptible to the bullwhip effect.


Furthermore complicating the matter are the regulations surrounding medical devices and PPE. Most countries and entities have differing requirements related to controlling the safety of healthcare equipment.


In the United States, for example, the FDA recently had to issue an Emergency Use Authorization (EUA) to allow the use of non-NIOSH-approved N95 respirators in American healthcare organizations. Previously, only devices from certain manufacturers meeting regulatory requirements were allowed to be imported and used in the US. However, to cope with COVID-19, many regulations are being relaxed to allow for additional supply to enter the country. In a matter of days, hundreds of additional suppliers entered the space, and the supply chain is still adjusting.


The FDA has issued guidelines for healthcare organizations to help deal with shortages in supply while the demand is still above normal. However, with the expansion of allowable devices for use in the US market, a new challenge facing healthcare providers is fraudulent products being produced in overseas markets. The FDA is working with many other countries with similar standards to NIOSH to help reduce the number of false devices, as well as requiring new manufacturers to provide evidence to demonstrate compliance with safety standards.


In April, however, to cope with the rising shortages, the FDA was forced to expand the EUA to include devices from additional Asian markets, as well as broadened the list of approved devices (for example, to include KN95 respirator previously excluded due to concerns of fraudulence). As the guidelines expand, it is becoming increasingly difficult for the FDA to enforce standards and ensure regulatory compliance.



How the HyperClear Platform Solves These Challenges


HyperClear was designed from the ground up to work with a dispersed, global supply chain with a diverse number of stakeholders. We maintain a central repository built upon our blockchain platform and utilizing smart contracts to facilitate the exchange of data and information between organizations. We integrate with numerous systems to provide verifiable details related to the life cycle of each medical device moving through our system. HyperClear validates regulatory compliance at each step in the the supply chain, and presents these details in a user friendly manner, making it easy for healthcare providers to know the devices they are purchasing are safe and effective to fight this pandemic.


With HyperClear, fraudulent devices and unsafe PPE is a thing of the past. We will get through this pandemic together, and clear a path forward to successfully manage the next global crisis.



For more information on the updated FDA guidelines, visit https://www.fda.gov/medical-devices/personal-protective-equipment-infection-control/faqs-shortages-surgical-masks-and-gowns

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