Dive Brief:
- Medline spent $500 million by the end of Q2 to boost its inventory as part of its efforts to improve supply chain resiliency, the company announced last week.
- The additional spending raised the medical supplies manufacturer and distributor’s on-hand inventory to more than $4 billion. The company said that upping inventory will help to ensure products are available for timely delivery to healthcare providers.
- The inventory action comes after Medline spent three years executing a $1.5 billion plan to improve its infrastructure and strengthen its supply chain.
Dive Insight:
When the COVID-19 pandemic started, the U.S. saw personal protective equipment and durable medical equipment in short supply, leaving healthcare providers scrambling to secure medical products.
The move to bolster inventory is one that some medical supplies manufacturers took before the pandemic. This helped companies like Equashield and Medline better navigate the material shortages sparked by COVID-19.
In a June blog post, Medline said it has always been an important goal for Medline to own and operate its warehouses. As a result, it was able to have more inventory on-hand and improve fill rates at the height of the pandemic.
"For many years, high levels of inventory may have been perceived as a strain on capital, with many companies favoring JIT strategies, or even evidence of a lack of supply chain sophistication. For Medline, the commitment to inventory appears to have been a lifeline through this crisis," the company said in the post.
Medline’s penchant for long-term planning led it to start its Healthcare Resilience Initiative in 2018. The company said it invested $1.5 billion into opening eight new distribution centers, scaling production and adding a platform to better service e-commerce orders. The company has also targeted adding 10-million-square-feet of warehouse space, according to an update on the initiative.
“Our inventory management strategy has always been designed with one goal in mind – ensure that the right products are available at the right time to meet the demands of our customers and the patients in their care,” said Jim Pigott, Medline group president, in a statement.
