The Medical Device Industry Needs Risk Management in the New Normal
Amid the current COVID-19 pandemic, many medical device manufacturers and suppliers are moving at unprecedented speeds to develop and enact updated risk management policies and procedures. Much of what they are developing are plans to help manage manufacturing and supply-chain challenges in times of crisis. As evidenced throughout this pandemic, these policies and procedures are critical to preventing severe shortages of essential items to patients and healthcare workers. As doctors continue to investigate multiple strains of the virus, the circumstances surrounding COVID-19 seem to change as quickly as it is transmitted. One thing is certain—it's becoming increasingly clear that risk management isn't just tied to business productivity or just ticking regulatory boxes anymore.
Medical device organizations are working diligently and tirelessly to emerge from this global crisis, with many forming new partnerships previously thought to be taboo. This new normal has led to tremendous disruption in the medical device industry. It has forced many hospitals to cancel elective surgeries, which has in turn lowered demand for some products. It has also identified gaps leading to severe shortages of critical PPE (personal protective equipment) and ventilators for patients. Businesses that were underprepared at the onset have had to find the means to mitigate risk "on the fly" while others have had to ramp up production. In either case, it is essential for these businesses to be prepared for the next disruption and to assess their risk management structure and plans.
Medical device organizations continuing to operate without a risk management plan could find themselves in a more urgent situation during the next crisis. Many medical professionals have predicted that even as we move to contain the COVID-19 pandemic, the potential for a recurrence looms large. Predictably, organizations that are not adequately prepared for what potentially lies ahead will find that their competitors that have planned appropriately are in a better position to mitigate new risks. Perhaps the adage "Those who are unable to learn from the past are doomed to repeat it" should instead read, "Those who have not properly planned for the future are doomed."
Having a risk management plan is no longer an option. It should be woven into the fabric of an organization's culture. This needs to be done from the top of the organization, where all risk is considered and prioritized. Leaders sitting in the highest positions within the organization can no longer shirk the responsibility of having a risk management plan. The days of delegating risk management to someone else in the company are long gone as we continue to remain isolated in our homes unable to conduct business as usual. Instead, leadership must provide greater transparency for everyone in the company as this will best help identify gaps. The risk management plan must then be reviewed and maintained as we continue to uncover new threats to the business. Such plans should not be static but rather dynamic and adapting with the times.
Traditionally, the social consciousness for the medical device industry has settled on the shoulders of the various global governing bodies such as FDA, TGA, and EMA. As part of the reaction to the COVID-19 pandemic, many of the controls put in place by these agencies have been relaxed in order to offset shortages and accelerate the production of ventilators. As a result, executives across the business need to take a new look at risk as a matter of social responsibility. As we see from the current environment, lives and livelihoods are at risk from the fallout from the economic and health crisis when this doesn't happen. In an era of increased disruption, crisis is becoming commonplace and the need to react quickly to minimize risk is critical.
Following are four key ideas that I believe are essential for an effective risk management strategy.
In taking both short- and long-term views of supply chain risk management, the most comprehensive approach is one that prioritizes risk throughout the entire organization, across all functions. I have included a few key planning scenarios that should be top of mind for supply chain and quality leaders in the medical device industry based on my experience working as an information technology leader for global medical device organizations, especially considering our current environment:
- Global pandemics.
- Natural disasters.
- Information technology systems (e.g., cybersecurity, ERP, EDI, bar code scanners, etc.).
- Changing global regulatory and compliance requirements.
- Supplier disasters.
- Geopolitical tensions.
- Equipment failures.
- Skills gaps.
- Domestic and international logistics, trade, and transportation.
Update Information Technology Systems and Infrastructure
Digital transformation initiatives are costly, time consuming, and resource intensive. As the COVID-19 threat continued to grow and it became evident that organizations would need to explore new methods for conducting business, medical device companies began to realize severe gaps in their technologies and systems. Many outdated technologies can be found throughout the medical device supply chain. Organizations should have a digital transformation strategy to update technologies and systems, enabling employees to access data and systems critical to their day-to-day functions from any location. The cloud and smart technology has empowered our businesses to remain global from our homes. In addition to providing essential platform functions, such as data entry and reporting, adaptive cloud-based ERP can help companies respond quickly to disruptions and give executives real-time visibility to data before determining how best to conduct business and mitigate risks during crisis scenarios.
Develop Contingency Planning
Back up planning, disaster recovery, and contingency planning are critical to ensuring continuity in the event your business requires a risk management response. A comprehensive and highly detailed contingency plan defines the steps needed to minimize impact and return to normal business operations, including a process to recover lost production and data, based on the identified and prioritized risk. It is critical to ensure the entire supply chain has robust risk assessment and associated contingency planning. This is a key point in the recent Coronavirus Relief Bill, more commonly known as the Coronavirus Aid, Relief, and Economic Security Act (Cares Act). This planning includes all of your primary and secondary suppliers. It is also essential for you to verify that your suppliers have a risk management plan and corresponding contingency plan in place. The effectiveness of the entire ecosystem relies on the organization communicating key instructions across its supply chain partners to ensure they understand their role in the successful execution of recovery plans. Unfortunately, contingency plans are often too vague and high level and not adequately documented.
At a minimum, ensure that your contingency plans include:
- Key internal and external contacts.
- Recovery steps to normal operations.
- Key personnel responsible for actions.
- Lessons learned.
- Corrective actions.
Monitor Risk and Make Necessary Adjustments
As the business environment, even before the COVID-19 crisis, featured near-constant disruption, our risk management plans should remain dynamic and be updated to meet the needs of what we consider the next "new normal." In the future, your business will absolutely look different from its current state. The risk management plan will need to adapt and grow with your changing business model. At no point should your organization become complacent and believe that every scenario has been addressed. Develop a regular schedule to review your risk management plan, reprioritize, test existing processes, and make necessary updates.
While risk management has always been an important consideration, the current unprecedented disruption created by COVID-19 has brought the need for a robust risk management strategy to the forefront. Organizations are using the COVID-19 pandemic as a gauge of their preparedness and an opportunity to identify gaps in their current risk management plan. These companies should realize that the impact of disruption goes beyond the business. This impacts us all.