Controlling the Uncontrollable

PART THREE: THE IMPACT OF POLITICAL INSTABILITY ON THE SUPPLY CHAIN

The U.S. imports a large percentage (14% in 2018) of its medical equipment from other countries around the globe. So what happens when political stability or human rights are threatened in other parts of the world? Or we endure another global pandemic? Or you depend on products that come from a region experiencing turmoil? You can’t control the bottom-line threats to the global supply chain, but you can put a plan in place to mitigate geopolitical risks for your health system. In this article, we’ll cover how to manage clinical supply chains during times of political instability.

We’ve always known about geopolitical influences on the supply chain, but COVID-19 really drove it home.

When you depend on other countries to provide you with crucial products, you’re taking a huge risk when something goes awry. Perhaps Kettering Global said it best when they stated, “Any shift in triggers like regime or government change, political upheaval, violence in society, instability and uncertainty in government policy (regulatory, tax, property, human rights law) have the potential to create major global supply chain turmoil” and “is an enormous threat to the success of companies operating in the global supply chain arenas.”

When, in the midst of the pandemic, the Federal Reserve Bank of St. Louis wrote an article entitled, “How Much Does the U.S. Rely on Other Countries for Essential Medical Equipment?” the statistics presented are sobering. Have a look for yourself.

The numbers show that in 2018, reliance on foreign countries to supply medical equipment had doubled in just six years and could be expected to continue to increase. And, in the case of a worldwide pandemic like COVID-19, countries in the EU might be loath to help the U.S. when their population is suffering as well.

Clearly, strong contingency and emergency plans are needed to mitigate the risk of geopolitical turmoil.

Much like creating a plan for weather emergencies, it’s important to stay current on what’s going on around the globe and proactively think about everything that could go wrong in the future.

• PERFORM YOUR DUE DILIGENCE

Staying abreast of current global events related to political change prior to sourcing can help protect your healthcare system from devastating impact.

• BROADEN YOUR SCOPE

Identify multiple sources for crucial products and consider how much of your critical supply is coming from the BRICS (Brazil, Russia, India, China, South Africa) where political risks have been increasing steadily since 2024.

• RETHINK COST

Lower supply chain costs typically come with greater risks, and adverse relationships can result. Attempt to create a sourcing strategy that aligns with your healthcare organization’s goals while embracing calculated risks, then adjust periodically.

• DESIGN A PLAN THAT ANTICIPATES THREATS

Develop strong supplier partnerships and relationships that you can count on when political instability strikes. Try to balance global, low-cost suppliers with near-sourced suppliers to help mitigate risk.

A great technology partner can make all the difference.

Seeing is succeeding, and finding a partner who can help improve your visibility into what’s happening around the world and in your own hospital system is the best place to begin.

Once you know what’s coming from an international perspective, VPL’s Supply Chain Visibility Platform can help you unlock hidden cost-savings opportunities and provide the enhanced end-to-end visibility crucial to thriving despite geopolitical unrest.

With VPL, hospitals and health systems can benefit from: