The nightmares when dealing with supply chains in the health sector | Denise Borg Manche

The healthcare supply chain is a complex global system made from an extensive network. Processes that work collectively ensure medicines and other healthcare supplies are manufactured, distributed, and provided to patients in the same condition that it left the manufacturing plan.

There are various steps involved within the healthcare supply chain that allow patients to maintain their health and obtain vital treatment.

The manufacturers, the suppliers from whom we directly procure the medicines, are the first link in the supply chain. Throughout the year many of our European manufacturers have expressed their concern of Active Pharmaceutical Ingredient (API) shortages and delays they are facing due to their dependency on Asian suppliers.

The rapid growth in production costs from raw materials, power supply and labour has also left them with no other option but to revise their production cost structure and thus increase their overall prices.

This delay in manufacturing and increase in production costs has a domino effect on the rest of the supply chain and on our expenses, as distributors.  For companies like ours who are in the marketing and distribution of healthcare products, this delay of bringing the product to market is challenging especially when we have tight delivery lead times.

This obstacle then has a ripple effect leading us to be unable to meet our contractual and moral obligations with the local government and certain patients who would require such medication at specific times. Changes in the ordering patterns due to fluctuations in supply and demand of medical commodities, equipment and essential medicines, especially due to the COVID-19 pandemic, has had an impact on the total number of orders we place with our suppliers, thus placed more frequently due to their expiry dates.

Taking the governmental orders for medicinal products as an example, these are nowadays ordered in lower quantities and with more frequent deliveries, leading to drastic price increases in our freight cost charges. This is due to the overall price rise in logistics which keep going up. These additional costs are all absorbed by the company as government prices on tender cannot be changed.

Notwithstanding the various challenges, with the right insight into what’s behind the supply chain issues, we as a health sector can identify these gaps.

All stakeholders can work together towards improving the processes and taking informed decisions to ultimately bring the medication to the patient at the right time, price and place.

On Tuesday 13 September, The Malta Chamber together with EY Malta will be organising the third event in its Industry Focus Series, this time dedicated to the Health Sector. The conference will include two panel discussions; the first panel will tackle matters of the workforce whilst, the second panel will tackle supply chain and logistical challenges. Register here: https://www.chamberorganizer.com/Calendar/moreinfo_responsive.php?eventid=428620&org_id=MLTA