Restructuring Disrupted Supply Chains: Single Sourcing is No Longer a Solution
Supply chain management is a critical factor in many businesses’ long-term success, and the COVID-19 global pandemic has wreaked havoc across many industries. When a disaster strikes, everyone suffers: buyers and suppliers alike. Managing disrupted supply chains is top of mind, but it has become more important than ever for companies dealing with PPE, medical supplies, and other “essential” products. In recent surveys, 94% of the Fortune 1000 companies have reported seeing coronavirus-driven supply chain disruptions, and 56% of CFOs identified this as a key issue facing their company (PwC). Risk mitigation has become critical.
“The pandemic has been and will continue to be a major shock to global supply chains and sourcing strategies.” –The Harvard Business Review
When supply chains are disrupted, those who single source, in particular, suffer. There are numerous examples of where this has become an issue, especially for PPE and medical supplies. Many US businesses are looking at the Far East, Mexico, and Central America for additional suppliers. In other categories, Apple is moving a part of its supply chain to India. Indonesia has made dramatic changes to become more “business-friendly.” Mexico and Central America’s proximity makes them more attractive, with lower shipping costs, no duties, and imports that aren’t on the high seas for weeks at a time. PwC and AmCham call this a ‘China+1’ strategy.
Companies are identifying items at risk, developing realistic plans for moving forward, becoming more flexible and agile, gaining greater visibility to suppliers, and more accessible processes for onboarding new ones.
MULTIPLE SOURCING PARTNERSHIPS ENSURE EFFICIENT SUPPLY CHAINS
Quest Safety Products has been proactive in managing its supply lines and inventory by leveraging and expanding its sourcing partnerships.
The Power of the Network
Quest Safety leverages the power of the SafetyNetwork buying group of 55 members. This gives Quest access to manufacturers’ and suppliers’ top-level decision-makers. The buying group shares available inventory to meet customer demand and shares best-in-class, next-level suppliers outside the buying group. The size of the buying group’s orders allow them to negotiate large volume buys such as an N95 mask program with Honeywell or a Container Purchase Program for Nitrile gloves. With 55 members in the networks, customers receive excellent service nearly anywhere in the country.
Global Supply Relationships
Quest Safety works directly with overseas manufacturers to reduce costs and increase availability. We have long-standing relationships with Far East manufacturers. Quest is also in discussions with leading manufacturers in Mexico and Central America to strengthen the supply chain and ensure continuity. Samples are being manufactured for a number of products to ensure quality. These global relationships also help our company better understand events or disruptions occurring outside the US.
Quest Safety understands the importance of transparent communication, especially related to the products customers need to operate. This includes discussing any potential issues before they negatively impact the safety of their employees or pharmaceutical production.
COVID-19-related products are on a restricted-access list, and purchases must be cleared by senior management at Quest and top customers get priority.
UNIQUE SUPPLY CHAIN REQUIREMENTS OF THE PHARMACEUTICAL INDUSTRY
Quest Safety Products has developed a deep understanding of the pharmaceutical industry’s needs and requirements through technical training and decades of experience. This enabled Quest to be hyper-focused on what impacts pharmaceutical customers at this time and source high-quality PPE alternatives during recent supply chain outages.
Quest has a conference call with PPE manufacturers every two weeks to understand the supply chain status and work through challenges. The company continually monitors critical-to-business products and practices, doing this every two weeks or monthly with the customer’s end-users or usage committee group. Consistent communication allows Quest to provide demand forecasting and reports usage information by working closely with customers and manufacturers to ensure a smooth flow of information.
MITIGATE RISK THROUGH A CONSISTENT SUPPLY
Most companies are assessing their supply chains and taking action to improve resilience. As a start, they are identifying – at a granular level – the products and materials that are high risk and developing realistic plans going forward. In summary, best practices include:
- Diversifying sources for critical components and materials; this includes geographic diversification, partnering with the same supplier, or using secondary sources.
- Those highly dependent on China are considering a China+1 strategy.
Building higher levels of safety stock or strategic inventory reserves of, at the least, critical supplies and “essential” items.
- Multiple-sourcing, especially for high risk items, and building partnerships with a few suppliers. In addition to reducing disruption risks, this can have additional benefits such as access to more capabilities, more ideas for cost reductions, etc.
- Ensuring that transportation is not a bottleneck. This is one reason companies are looking to have supply options closer to home.
When a pharmaceutical company needs to consider adding a vendor to guarantee they get the products they need, Quest is experienced in managing the Supplier Change Process to ensure a smooth addition. If this is something your organization is working though, we are here to help.
Founded in 1997, Quest Safety Products is a full-line distributor and manufacturer of safety products, disposable garmenting, and equipment for any environment that requires safety equipment, risk mitigation or hazmat protection. Quest is a certified SBA HUBZone company, Board Member of AD SafetyNetwork Buying Group, and PSCI member company – Audited. Award winner from Eli Lily, AstraZeneca, NMSDC, HUBZone Council and SBA.