Dive Brief:

• After Hurricane Maria devastated Puerto Rico and hampered U.S. production of IV saline bags on the island, Baxter will send IV saline bags from Mexico to desperate hospitals in the U.S., Reuters reported earlier this week.
• This year's flu season is considered one of the worst in years, making the IV saline bag shortage especially punishing for U.S. hospitals.
• The shortage is a good case study illustrating the dangers of relying on single-source suppliers for the majority of essential supplies.

Dive Insight:

IV saline bags used in a myriad of patient treatments are made mostly in Puerto Rico by one supplier — who knew?

Well those in the medical supply chain knew, or should have known. Hurricane Maria devastated the island last fall, destroying its infrastructure. Pictures on the news focused on the human toll, as it should have. Electricity was out over most of the island. Cell towers were down, roads and highways ripped up, homes destroyed and food and drinking water in very short supply. Things are coming back to normal, but very slowly.

Industry on the island took a major hit as well, surprising many who were unaware of the number of manufacturing companies, especially those in medical technology, who maintained large operations. Many of the factories were severely damaged or destroyed, supply chains crippled and labor lost. It was the perfect storm, so to speak, of extended supply chain risk.

In the hospital supply chain, supplier performance directly impacts patient care. Suppliers typically understand the responsibility that they inherently carry and should actively address the elements of supply chain risk to maintain continuity of supply. But even with the best planning, could any supply chain withstand the damage done in Puerto Rico? Probably not.

It is not until there is a rupture in the supply chain that we come to grips with real time risk and supplier issues. Far too many supply chains go opaque after the first tier, with buyers expecting their suppliers to manage the extended tiers. This blind trust can come back to bite them. In this case, the IV supplier seemed to meet all of their obligations… until they couldn’t. Then this sole source became a real problem.

There is a lesson to be learned here. Supply managers across all industries need to address sole source situations in their own businesses to reduce supply chain risk. In the case of the IV bags, the producer was essentially a single source across a large industry, multiplying the risk across many supplier chains. The key is to not only look to risk in your company’s supply chain, but to take a deeper look at all sole source suppliers in your industry.

"Who knew?" is not a sustainable supply chain strategy.