Supply chain strategy for medical devices: A Q&A with industry expert Sanjay Gupta

Supply chain leaders and managers in the medical device industry are often puzzled by the multitude of strategies, corporate directives, and transformation programs that claim to improve the performance of their supply chain operations. Frequently, decision-makers are unclear about what will and will not work for their supply chain.

Sanjay Gupta is the vice president of integrated supply chain at Imbed Biosciences Inc. Gupta has more than two decades of leadership experience in strategic sourcing and supply chain operations, with specialized expertise in the medical device and marine logistics industries. Recognized for his success in managing a $140 million supply chain operation during the COVID-19 pandemic, Gupta successfully navigates the continuous battle with regulatory, compliance, supply chain disruptions, design failures, customer complaints, materials shortages, inflation, suppliers’ bankruptcy, and labor shortages. These capabilities and successes make him uniquely qualified to identify challenges and develop easy-to-implement processes to bring supply chain performance under control. Recognizing the most significant obstacles facing today’s supply chain managers, Gupta offers his recommendations for successful navigation.

Q: How have you seen the global supply chain evolve in recent years, and what trends, technologies, and innovations contribute to this evolution?

GUPTA: As I see it, customer expectations are the single biggest change. Today’s customers have more information, a wider variety of interests and knowledge, and demand the same from all types of businesses. The number of customers who prefer online shopping jumps yearly—from 44% in 2022 to 58% in 2023.

External challenges include disruptions like COVID-19 and geopolitical tensions from Russia and Ukraine, China, and now in the Middle East. This is especially prominent in the medical device supply chain, with many global interconnections. On the technology side, the most significant trend is the emergence of artificial intelligence (AI) and machine learning. Tons of transaction data exist in the supply chain, and AI can certainly help there. That said, there are a lot of layers within each supply chain, and each requires effective risk management and cybersecurity.

Q: What steps would you advise medical device supply chain leaders take to identify and prioritize effective strategies for their unique environment?

GUPTA: Medical device supply chain leaders can follow a structured approach to identify and prioritize effective strategies for their unique environment. Alignment with business objectives is best accomplished through meetings with business leadership and functional executives like R&D, sales, marketing, regulatory, quality, and manufacturing to ensure that supply chain strategy supports initiatives such as market expansion, regulatory compliance, quality improvement, or cost reduction. This step sets the stage for cross-functional collaboration, with clear ownership and involvement from the appropriate departments in every project.

External challenges include disruptions like COVID-19 and geopolitical tensions from Russia and Ukraine, China, and now in the Middle East. This is especially prominent in the medical device supply chain, with many global interconnections. On the technology side, the most significant trend is the emergence of artificial intelligence (AI) and machine learning. Tons of transaction data exist in the supply chain, and AI can certainly help there. That said, there are a lot of layers within each supply chain, and each requires effective risk management and cybersecurity.

Sanjay Gupta

I emphasize reviewing the chosen strategy with stakeholders to confirm alignment. This ensures that R&D, quality, and regulatory teams are comfortable with how the strategy addresses regulatory compliance, risk management, and product development timelines. Finally, create a series of projects that align with the selected strategy to implement over time. This may include process improvements, technology adoption, digitization of the supply chain, risk mitigation efforts, or operational changes.

Q: As a supply chain executive, how would you convince top leadership that you have designed a winning strategy?

GUPTA: It’s vital to clearly show how my chosen approach aligns with overall business goals and delivers measurable value. A structured approach for gaining leadership buy-in includes the demonstration of strategic alignment by presenting a supply chain strategy that directly supports the company’s broader business objectives, such as market growth, profitability, customer satisfaction, or innovation. It’s important to highlight how supply chain improvements will contribute to achieving these goals.

Next, it’s essential to quantify my approach’s value proposition by utilizing data to illustrate the financial benefits of the strategy. I provide projections on cost reductions, customer on-time order fulfillments, and link those to revenue growth and margin improvements. Then, I emphasize expected improvements in areas like lead time reduction, supply chain agility, on-time delivery, or reduced regulatory risk, measuring the impact on customer satisfaction and competitiveness.

Additionally, risk evaluation and mitigation are necessary for leadership buy-in. I explain how the strategic plan accounts for supply chain disruptions, compliance issues, or quality problems that could negatively affect the business. By presenting the strategy as a well-structured plan with crucial milestones, timelines, and phases, I can ensure that leadership understands that the strategy will roll out via manageable projects, reducing risk while ensuring continuous progress.

Finally, I think it’s helpful to identify and emphasize early wins or quick, measurable outcomes that can demonstrate the strategy’s effectiveness in the short term. This builds confidence and momentum.

Q: What are the key metrics and key performance indicators (KPIs) to measure the success of supply chain operations?

GUPTA:There’s no shortage of measurable metrics in the medical device industry, but a few are particularly important to supply chain leadership. I select KPIs depending on the company’s maturity stage. Smaller companies will have a few pivotal metrics, while larger organizations will have a long list of metrics to provide a more comprehensive and encompassing overview. That said, a few KPIs will always stand out.

For example, perfect order rate tracks the percentage of orders delivered on time, in full, and without defects. A high perfect order rate indicates overall supply chain efficiency and customer satisfaction. Aim for a rate above 95% to ensure reliable delivery performance.

Conversely, defects per unit (DPU) measures the number of errors found in a product per unit produced. Quality is essential in medical devices due to strict regulatory requirements. A high defect rate could lead to recalls, regulatory non-compliance, and endanger patient safety. Strive for a DPU close to zero to maintain product quality and regulatory compliance.

Cost of goods sold (COGS) represents the direct costs of producing medical devices, including materials, labor, and manufacturing overhead. Lowering COGS while maintaining product quality increases profitability and competitiveness. Continuously monitor COGS to ensure it stays within acceptable limits relative to the company's pricing strategy and profitability targets.

Lastly, perfect supplier delivery measures performance in terms of cost, quality, and time. Medical device companies rely heavily on suppliers for critical components. Imperfect deliveries can delay production, affect product quality and launch timelines, or disrupt the availability of products in the market. Ensure a high level of supplier collaboration and target above 95% success in perfect supplier delivery.

Q: Can you offer a real-world example of a company’s successful supply chain management strategy?

GUPTA: In 2012, Philips embarked on a large-scale procurement transformation program to generate approximately €1 billion in cumulative savings over three years. It was part of a broader companywide effort to optimize the supply base and improve cost efficiency.

Key components of the strategy included the adoption of design for excellence (DfX) principles to enhance product design and manufacturing processes. By embedding these principles into the procurement strategy, the company ensured that products were designed for cost efficiency, quality, and manufacturability, reducing waste, defects, and inefficiencies. Cross-functional collaborations and optimization of the supplier base were also essential in strategic implementation and attainment of the ultimate outcome, which was Philips exceeding the target of €1 billion in savings, contributing to overall business growth and operational efficiency. This experience highlighted the importance of collaboration, innovation, and strategic procurement management in achieving large-scale cost-saving goals.

As part of this transformation at Philips, I saw firsthand how the synergy between procurement, supply chain, marketing, and R&D teams can drive meaningful results in a global organization. The lessons from this initiative have deeply influenced my approach to supply chain management in subsequent roles.

Looking ahead

The global supply chain is undergoing a transformative shift, driven by evolving customer expectations, technological advancements, and ongoing disruptions. The future of supply chain management will be defined by new and emerging technologies that will enhance visibility and efficiency at every point in the supply chain. It’s essential for supply chain leaders in the medical device industry—and every sector—to embrace these technologies to help them stay agile and proactive. By integrating data-driven tools and fostering cross-functional collaboration, companies can align their strategies with broader business goals and future-proof their operations in a dynamic and competitive marketplace.

About the Author:

 

Rob Senior is a freelance writer and editor. He has written for numerous websites, blogs, and publications, specifically in the areas of healthcare, technology, sports coaching and management, and finance. Contact him at [email protected].

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