Dive Brief:
- Nitrile gloves are the latest item of personal protective equipment challenging supply chains as the coronavirus pandemic stretches into another calendar year. Nitrile gloves are used across industries from food preparation to administering vaccines.
- Nitrile gloves were the second-most sought after item reported by the Thomas Index Report in Q4. The item is third behind masks and hand sanitizer when ranked by the YoY demand increase, according to Thomas. The gloves have been in particularly short supply since major Malaysian manufacturer Top Glove shuttered 28 factories in late November after a COVID-19 outbreak among workers. A Nov. 24 statement from the company said deliveries would be delayed two to four weeks, according to Bloomberg.
- MSC Industrial has been seeking new suppliers for nitrile glove since September, according to CEO Erik Gershwind. The company resorted to prepaying for gloves in order to ensure supply, but as of the company's earnings call last week, the gloves had not been delivered.
Dive Insight:
The pandemic has challenged procurement professionals to deviate from their normal processes to prioritize PPE purchasing. Gershwind said the stress on nitrile glove supply chains is unique.
"Despite the widespread scarcity of certain products and well-documented supply chain issues, we’ve been successful in this effort across a wide range of items. Nitrile gloves have proven to be more challenging," Gershwind said on the call.
MSC was inclined to report an impairment charge for a prepaid glove order that has still not been delivered.
"We have used the prepayment tool many times over during this pandemic, and it’s become a fairly standard industry practice actually through the pandemic to secure scarce product. It’s worked out most of the time. In this case to date, it hasn’t worked out," Gershwind said.
The race for PPE has generated other potential impairments, as well. Industrial supplier Fastenal reported an excess of N95 respirators in October after building up supply in the first half of 2020. MSC execs confirmed the price drop that Fastenal executives reported.
"It’s no surprise to share that mask pricing has come down over the past couple of quarters," Chief Financial Officer Kristen Actis-Grande said Wednesday.
The CFO encouraged analysts to focus on the long term, given the volatile conditions for supply and demand created by the pandemic.
"We’re talking about a once in a generation kind of episode here that’s really hard to predict. It was really hard to predict months ago, it’s really hard to predict now," she said.
