Dive Brief:

• Manufacturing redundancies are key to keeping Baxter International, an Illinois-based healthcare company, in stock during the global COVID-19 outbreak, executives said on a Tuesday earnings call. 
• The company has engaged its production redundancies in Mexico to hedge against shortages of essential supplies and is monitoring and vetting orders to ensure quantities requested are within reason. Baxter is using a watchtower approach to avert what CEO Joe Almeida called "hoarding" by hospitals. "What we want to prevent is people buying months of inventory at a time. They don't even have a place to store [them] ...  these are bulky items," said Almeida of some of the medical devices Baxter produces. 
• Baxter's procurement team is watching suppliers and inventory levels 24-hours a day around the world. "At this time, our team has been able to mitigate those disruptions by deploying system inventory, providing additional support to our suppliers to help them return to production using alternate shipping methods to expedite delivery, and working with additional suppliers where needed," the CEO said. 

Dive Insight:

When it comes to essential medical supplies, Almeida said the company is constantly monitoring the supply and the demand side to thoroughly understand supplier capacity and actual customer need — which sometimes differs from order size. 

"We want to make sure that everybody gets what they need, and not one customer or two customers who put an order first. So we're triaging things," said Almeida. For example, if a hospital orders more CRRT machines (a device related to kidney function) than it has hospital beds, that's a red flag, Almeida explained.

It's a level of vigilance uncommon in most supply chains but essential in light of the COVID-19 outbreak. 

Previous disasters have helped Baxter learn the importance of redundancies. All Baxter's IV bags for the U.S. market were manufactured in the U.S. until the company set up a redundant factory in Cuernavaca, Mexico, after Hurricane Maria affected its Puerto Rico factory in 2017. 

Baxter is learning from its experience with the coronavirus-family illness outbreak earlier in the year in China — and adapting for the rest of the world. Almeida said buying patterns are starting to look comparable, which is helping the firm predict which products will be in high demand and when.  

The CEO said the company has not yet introduced quantity restrictions for customers and is comfortable with the safety stocks in inventory now – but any backslide in China manufacturing could change that. 

"We've been very judicious because we don't have at this moment a capacity restriction, but capacity is all relative," said Almeida.

The next hurdle for the manufacturer will be the orders from governments looking to bolster their stockpiles, he said. Those orders have started flowing in as the virus spreads. 

Correction: A previous version misnamed the CRRT machine, mischaracterized IV bag demand and misstated the location of the facility affected by Hurricane Maria.