COVID-19 has severely disrupted supply chains on a global scale. Procurement leaders have to maintain business operations, fulfil urgent demands, and mitigate supplier challenges against a backdrop of significant disruption to their teams, their people and their local communities. To keep up with these challenges, procurement managers must act extremely fast if they want to purchase much-needed medical supplies.
It’s all been great so far
The standard procurement process for medical supplies for a facility starts with an enquiry from a department, and RFQ’s are sent to known / registered suppliers within the country. Proposals are received and evaluated on the basis of price, availability and quality – usually in that order. The PO is issued, the items are delivered and payments are made as per the agreed LPO terms. This system works well in a scenario where a facility has traditionally planned requirements based on past trends and have never had to scope for contingencies.
No rules, new challenges
At this time, there’s a severe shortage of medical consumables, equipment and furniture in most countries. The price of available stock is skyrocketing and markets have seen several fake products and undesirable practices of hoarding and price gouging. Suppliers also seize this opportunity to raise prices and negotiate commitments, sensing greater profits elsewhere.
Don’t know, get scammed
Procurement professionals are now expected to understand technical nuances of new medical products. Using the traditional index of price as the primary yardstick for procurement can result in purchase of low quality, inappropriate supplies. In Spain, the government purchased 640,000 test kits from China, only to later find out that the tests were unreliable and the seller was unlicensed by the Chinese authorities.
It’s not where it usually is
International manufacturers (who have always estimated demand based on past trends) are now incapable of committing to delivery times. Often, the projected supply could take several months, which is not acceptable in a pandemic situation. As a result, procurement professionals need to source the supplies from local or cross-country traders who have old stocks previously supplied by international manufacturers. But this is not an easy task; for a hospital in Austria to reach out to a trader with stocks in Algeria and then negotiate a deal is clearly impossible.
When will it get there?
Even if the deal is negotiated, the next big challenge is logistics. With indefinite lockdowns imposed everywhere; there can be no assurances of moving goods safely and in time between borders. New standards and qualifications imposed by countries delay the transport of supplied from manufacturer to local clearance agents. Sometimes, internal transportation between cities in the same country can run into days (when earlier it was a matter of hours). There could be further delays at the airport due to cargo and traffic congestion. Some carriers charge as much as 30% as cancellation fees (a new development!) if the cargo is not able to make it to the flight. Finally, the cargo could risk being rejected at the destination country’s customs because of national or local qualification processes.
The rise of the ‘agent’
As with every challenge, there are opportunists. A new crop of ‘middle men’ has emerged in this scenario. These agents have seen the opportunity in the surge for medical supplies and have some connections with buyers or sellers. Without market or product knowledge, they tend to stay in control of the transaction and end up raising prices or generating trust issues between parties. Procurement professionals are forced to deal with such agents, not knowing where the supplies are coming from, how to ensure quality or manage the pricing.
Unleash your secret weapon!
There are a host of other challenges that affect the efficiency and performance of procurement processes – including the use of legacy process management systems, lack of capital and limited operational staff. But one unique power that procurement managers can now bring to play is their relationships with qualified and experienced medical supplies traders.
What was once considered a profession of just buying and selling, medical traders are now so much more. They are technical and quality consultants. They are coordinators between raw material producers and end manufacturers. They co-plan with logistics companies. They are skilled negotiators between buyers and sellers. In short, they are the much-needed advisors and facilitators for the medical procurement industry in a pandemic.
A trusted medical trading specialist is the single, full-service professional who can ensure the right supplies or equipment is delivered to the right location, fully operational and ready to use at the right time. Using the services of this medical supplies trader can help institutions pick the best, most cost efficient products to meet their needs while providing consultation regarding technical issues, locating difficult to find specialty supplies and negotiating deals with the seller network.
Finding – and trusting – the right medical trading specialist in your market will be a challenge. But two things you can immediately look for is the years of experience working with a wide variety of medical facilities, and the willingness to go the long distance with you on this tough but manageable journey.