Mission critical supply chains: When recall isn’t the best option
The onset of the COVID-19 pandemic has stretched both demand and supply for personal protective equipment (PPE). In the early stages of the crisis, panic buying and excessive stockpiling amplified the disruption in supply chains.
Many industrialised countries that relied on imports of such products found that strict lockdowns and other quarantine measures imposed in supplier countries exacerbated the situation.
The shortages driven by these disruptions have prompted many domestic companies to rapidly reconfigure their supply chains. This has happened in three different ways — some firms are scaling up their existing supply chain by increasing production and distribution capacities while others are repurposing existing production capacities for new products.
Finally, some firms are extending their supply chains by creating alternative channels of supply. They do this by either creating a more local supply chain or by restructuring international purchasing operations, as happened with many critical goods such as PPE.
All these rapid changes have improved the ability of firms to deliver their products and services, but there are risks that cannot be ignored. Working with new suppliers and sourcing new product categories exposes firms to product quality risks and fraud.
When time is of the essence, due diligence is less thorough than normal. This situation would normally lead to product recalls. Yet, when every piece of PPE is potentially lifesaving, recall is not an option. How are supply chains responding to this new phenomenon?
There have been three main reasons for product alerts on PPE during this period (see table below). First, product malfunctions, where insufficient protection is provided. Second, counterfeits, for example fake CE marks. Finally, there are those with misleading descriptions.
The tidal wave of counterfeit certificates indicates that the supply chain is currently subject to fraudulent behaviour by many manufacturers. And even legitimate manufacturers are experiencing problems with production as they attempt to rapidly scale-up to meet demand.
PPE supply chains have low agility and minimal surge production capacity in the short run. For example, both the materials and equipment for producing the melt-blown fabric that is essential to face mask production have become scarce. Short supply makes scaling-up a significant industrial challenge.
Even though governments have stepped in with measures to support scaling-up of production at existing mask manufactures, there remains a high risk of counterfeit products reaching the market. This isn’t new. Globally dispersed and complex supply chains have always meant an increased risk of substitution of counterfeiting, for example, the use of alternative ingredients in pharmaceutical products.
Risk-controlling regulatory bodies have shown themselves to be ineffective in low-visibility, globally dispersed supply chains. In order to keep the production costs low, counterfeiters may use incorrect amounts of active raw materials — or none at all.
A recent case of product recalls for KN95 masks issued by The Netherlands is an example of how this is affecting the COVID-19 response. The counterfeiter succeeded in getting the masks past three government bodies in China, Spain and The Netherlands before the problem was detected.
Test, track and trace
Extending the supply base puts a strain on testing procedures. Under usual conditions, importers and distributors are responsible for sample testing and ensuring conformity, as well as withdrawing or recalling products when there is reason to believe that they do not comply with the regulations.
Yet, with PPE in urgent need around the world, medical providers do not want to forgo potentially useful products just because they have doubts about certifications.
Rob Glew, manager of the rapid response PPE warehouse at Cambridge University Hospitals (CUH), describes the impact on them. “The UK is one of the world’s worst hit nations and there’s been an enormous surge in PPE demand,” he says. “We put a call out for donations of PPE to help support CUH’s existing supply chain, which has [been] severely disrupted.”
However, as these products started to arrive, problems began to appear. “Working with clinical staff, we realised that over 70% of the donated masks had a mismatch between functional specifications, suggesting they were counterfeit,” says Rob. “Under normal circumstance we would withdraw and recall these products, but they’re urgently needed. We had to try to take some corrective action.”
“We get hundreds of emails offering us PPE,” says Sarah Greasley, head of clinical engineering at CUH. “We can tell immediately that most of it is fake.”
Even those that are useable are subject to uncertainty. One case that sticks in Sarah’s mind is a donation of over a million surgical masks from an international corporation. This was more than enough to provide the hospital with masks for 100 days. The manufacturer’s certificates turned out to be out of date, there was no evidence to back up the claimed CE mark and the packaging was covered in confusing claims.
Sarah explains that the masks claimed to be ‘type IIR’ (the highest UK standard) and ‘95% bacterial filtration’ — yet the type IIR standard requires 98% filtration.
In a normal situation, this would lead to a recall and withdrawal of these masks from the supply chain. Yet, with them in urgent need and without funds to facilitate reverse logistics, a recall was not an option.
Instead, Sarah and her colleagues developed an investigation testing procedure, working with the UK’s National Physical Laboratory to attempt to trace back and check certifications for the products. With this in place, the team was able to confirm that the masks could be used.
Cases like these tell us a lot about how firms can respond to quality and recall risks under disruptions, usually by mitigating the product quality risks upstream in the supply chain, or managing the risks further downstream.
First, to mitigate the risks, make sure that your processes are agile and compliant. Importers have the obligation to ensure product compliance.
We recommend setting up an inspection system as early upstream in the supply chain as possible, avoiding expensive backward processing and reverse logistics. Here, testing for certificates and product characteristics precedes the delivery. If it turns out that the product does not meet the given specifications, an export will not take place.
Second, to manage the risks, implement formal incoming inspection processes downstream in the supply chain. Here, agile process management is key; broad supply chains with many suppliers from different manufacturers can quickly lead to a bottleneck in the chain. The inspection process should include sample testing for compliance as well as a review of the CE certification.
When supply chains are put under immense pressure, problems are inevitable. But these two simple lessons can help corporations and public bodies respond to these risks and, ultimately, save lives.
Originally published at https://www.themanufacturer.com.