The medical supply sector in the United States depends on complex supply chains to make sure important items are available on time. These items include surgical gowns, medicines, personal protective equipment (PPE), medical devices, and other supplies needed for patient care. Many healthcare providers and suppliers use the “Just in Time” (JIT) delivery model. This method means keeping only a small amount of stock and ordering supplies just before they are needed to save on storage costs and improve efficiency.
However, the COVID-19 pandemic showed serious problems with JIT supply chains in healthcare. The shortages and delays revealed weaknesses in how medical supplies are obtained, stored, and delivered. This led to urgent discussions among hospital leaders, doctors, and IT staff about how to make supply chains stronger.
This article explains the growing risks linked to JIT delivery in the U.S. medical supply field, the challenges faced during recent emergencies, and new technologies that might help reduce these risks by improving supply chain management and automation.
The JIT model was first made to cut costs in many industries by lowering the need to store large amounts of inventory. Hospitals and clinics often have limited budgets. Having too many supplies like gloves, gowns, medicines, or surgical tools can cost a lot to store, risk items expiring, and tie up money that could be used elsewhere.
In healthcare, suppliers and group purchasing organizations (GPOs) make bulk orders to get lower prices. This works well with JIT delivery because orders are timed based on expected demand. In theory, JIT helps hospitals use resources well and manage cash flow, while suppliers keep a steady supply without large storage costs.
Even with these benefits, the pandemic showed that JIT systems have serious limits, especially in areas that rely on global manufacturing and complicated logistics. About 75% of companies surveyed during COVID-19 said they had supply chain problems. This showed how risky it is to keep very small stocks when demand suddenly rises.
Doug Watkins, who leads supply chain work at the Medical University of South Carolina, said the shortage of surgical gowns during the pandemic was “probably as bad as I’ve seen it.” He also noted that the healthcare supply chain works with very small safety margins, so vendors could not quickly increase production in a crisis.
These shortages happened partly because of heavy reliance on overseas factories, especially in China. In 2020, China made up 16% of the world economy, much more than during the SARS outbreak in 2002-2003. Lockdowns, port closures, and delays in China and other countries caused problems that spread far beyond initial expectations.
Hospitals could not get key supplies on their own and often asked state and federal authorities for help. Although GPOs usually save money and make buying easier by ordering in bulk, they had limited ability to respond quickly to emergency demand spikes.
One big reason healthcare supply chains are weak is the JIT method itself, which keeps only 15 to 30 days of inventory on hand. This small amount means any disruption or sudden increase in demand can cause shortages quickly.
David Simchi-Levi, a supply chain expert from MIT, said that disruptions show how risky JIT inventory systems can be. The pandemic made many companies rethink relying on factories in one country and consider spreading production out to reduce risk from local problems.
The main risks of JIT in medical supply chains include:
These risks create real problems for people who buy supplies and run clinics. When supply chains fail, missing equipment or medicines affects patient safety and daily work.
In response, healthcare organizations are starting to make supply chains more regional and source supplies from different places. A McKinsey study after the first COVID-19 wave found that 60% of healthcare groups shifted toward regional supply chains and 33% moved some production closer to main markets.
This helps reduce dependence on long transportation routes that are easy to disrupt and shortens delivery times. Keeping connections with manufacturers in North America and nearby countries like Mexico or Brazil helps medical supply chains respond faster.
Almost 90% of companies expect to keep using regional supply chains in the future since it helps make things more reliable. But this change means balancing JIT’s efficiency with having larger inventories on site or contracts that reserve production capacity.
Research supports using several methods to make medical supply chains stronger. Some key strategies for managing inventory include:
These strategies show a balance between being efficient and reducing risk. Healthcare leaders have to decide how much stock flexibility they need against money and storage limits.
Digital tools and advanced data analysis proved important after supply problems during the pandemic. They give better visibility and help plan supply needs.
Healthcare groups that had advanced analytics before the pandemic were 2.5 times more likely to manage supply chains well, according to McKinsey. Real-time data, forecasting, and demand prediction reduce uncertainties and help manage stock smartly.
Many industries invested more in digital systems for tracking supplies and planning inventory. Still, only 39% spent money on tools for monitoring risks, so there is room to improve.
Blockchain technology is becoming a way to increase transparency and trust along medical supply chains. It works as a shared record where everyone involved—factories, distributors, hospitals—can track products from production to delivery.
Projects from Deloitte using blockchain in healthcare showed benefits like less paperwork, better compliance with rules, and stronger trust between different players. For medicines or PPE, blockchain can prove items are real and quickly find problems in shipping or sourcing.
Blockchain combined with Internet of Things (IoT) devices and artificial intelligence (AI) allows live tracking of shipments and alerts about delays or risks before they become big problems. Still, issues with different blockchain systems working together and security concerns need ongoing fixing.
As medical supply chains face risks from JIT methods and global sourcing, AI and automation help improve efficiency and response times in buying and delivering supplies.
AI uses data from suppliers, stocks, and usage to predict demand spikes early. This helps managers change orders in time to avoid running out or storing too much.
Some benefits of AI and automation include:
Using AI helps healthcare move from reacting late with JIT to planning better and managing stocks more flexibly.
Even though regionalization, multi-sourcing, and digitization look useful, healthcare providers in the U.S. face real problems:
Hospital and clinic leaders must handle these issues while keeping patients safe and following rules.
Building strong supply chains needs more teamwork among hospitals, clinics, suppliers, and governments. Sharing information, buying together, and making shared plans help healthcare groups handle shocks better than working alone.
Group purchasing organizations (GPOs) are improving by adding emergency features, but they still have limited flexibility in crises. Better cooperation could improve sharing, bargaining power, and supply chain visibility when emergencies happen.
The medical supply sector in the United States is working to fix supply chain problems shown by the pandemic and global risks. Though JIT delivery is still common, its limits mean healthcare needs to combine regional sourcing, diverse suppliers, stock strategies, and new digital technologies like AI and automation. This mix can build stronger supply networks that support good patient care. Medical practice owners, managers, and IT staff should understand these issues and take steps to prepare for future supply challenges.
It indicated that the federal government would mobilize resources to manufacture vital medical supplies, revealing the fragility of the current supply chain.
Modern supply chains are built on outsourcing and thin margins, which makes them vulnerable to disruptions when demand spikes, especially during crises like COVID-19.
Hospitals and health agencies collaborate to bulk order supplies through GPOs, saving money, but their lack of nimbleness can hinder immediate access to needed items during emergencies.
Hospitals may appeal to state and federal authorities for assistance, as they often cannot quickly source needed medical supplies independently.
Nearly 75 percent of companies surveyed reported some form of supply-chain disruption due to the coronavirus.
U.S. industries have become heavily dependent on Chinese materials and manufacturing, making supply chains vulnerable to disruptions originating from China.
The ‘just in time’ delivery model, which keeps minimal inventory on hand, has significantly increased supply-chain risk, as businesses may not be prepared for sudden spikes in demand.
The pandemic may prompt companies to diversify their manufacturing locations to reduce dependency on a single country, like China.
The grocery supply chain is remarkably robust, with stores quickly replenishing supplies, unlike medical supplies which can face significant shortages.
Individuals should avoid panic buying and overstocking supplies, as this behavior can create additional strain on already stressed supply chains.
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