Supplier Risk Management Strategies for Healthcare Organizations

4 minute read

July 2021

The COVID-19 pandemic served as a wake-up call for supplier risk management programs globally. Formerly reliable supply chains were suddenly interrupted, directly impacting the public and private sectors. The shortage of necessary supplies – toilet paper, medicine and masks, to name a few – created consumer panic that only led to more disruption in the global economy. 

Simultaneously, supply chains and transport routes have been continuously disrupted around the world because of other incidents; most recently, the Suez Canal blockage. There has been a shortage in shipping containers expected to last until 2022, leading to high prices and low inventories. These new challenges present a complex risk environment for supply chains – particularly in the area of healthcare. 

What the healthcare industry experienced during the pandemic presents valuable lessons for managing supply chain risk. As you likely already know, demand for medical products skyrocketed as a direct result of the COVID-19 outbreak. This reality, paired with the criticality of disinfecting products, surgical masks and respirators, has led to the development of a surplus over time.  

However, many MedTech and pharmaceutical companies initially encountered severe supply chains problems, and even though have developed a surplus in many key areas, supply chain concerns nevertheless persist – specifically within pharmaceuticals. 

Critical medical supply chains are fraught with risk. For one, the sourcing of key materials necessary for production is often from different parts of the world – the FDA estimates 80% of manufacturers that produce key ingredients for drugs are outside of the U.S. The export of these materials are liable to a country’s social, political and economic disruptions. Recent legislation being proposed in Washington aims to address these concerns by minimizing the reliance on foreign suppliers.   

Nonetheless, pharmaceutical sourcing is more vulnerable to supply chain risk than ever before. The key to mitigating risk in pharmaceutical sourcing is to develop complete visibility throughout the supply chain. Capable technology and automation can help organizations focus in on their suppliers and the risks they present, as well as the supply chain as a whole. 

Supply Chain Optimization to Prepare for Future Disruptions

Following the Suez Canal blockage and the COVID-19 pandemic, it has become apparent that many organizations lack the agility to address risk and adapt to disruption. To recall the earlier example, medical and pharmaceutical supply chains without a geographically diverse set of suppliers face serious risk in the event of an incident where the suppliers are concentrated. Pharmaceutical manufacturers with suppliers in countries seriously impacted by the pandemic experienced severe disruption – especially if most of their supply base was affected. Organizations should develop insight into their supply chain concentration risk to understand where their most critical vendors are located, and how they can diversify to mitigate risk.

Another strategy medical and pharmaceutical supply chains should consider is maintaining excess inventory to safeguard supply in the event of a disruption.  The pandemic demonstrated just how quickly a surge in demand can drain supplies, causing the organization to scramble to keep up.

It’s understandable that organizations may be reluctant to keep more supply than necessary due to higher costs. Many organizations seek supply chain optimizations while minimizing costs and maintaining a low inventory. However, this creates vulnerability – all the while making it harder for the organization to bounce back in the long term.

Ultimately, supply chain optimization for healthcare organizations comes down to visibility. Preparing for a supply chain disruption requires that organizations understand the risk in both their suppliers and the structure of their supply chain. 

Holistic visibility is difficult to gain with manual processes – that’s why organizations opt to implement a technology architecture to develop an agile, prepared supply chain. With automated supplier risk management tools, organizations can address future disruptions and maintain smooth business operations.

A technology architecture will help an organization:

  • Evaluate Risks: Develop complete visibility into risk scattered throughout the supply chain to identify critical suppliers and risk areas.
  • Focus on Critical Risks: Prioritize risks by several factors: the likelihood of their occurrence and their potential effect on business continuity. This information can be leveraged to drive resources towards mitigation efforts for the most critical risks.
  • Monitor Risk Velocity: Understand how fast a risk can materialize and consider how long it will take to recover from a disruption.
  • Know Your Suppliers: Conduct pre-contract due diligence and ongoing monitoring on each supplier to address risk from every angle. Maintain awareness of the risks your suppliers may be exposed to that could invertedly affect your organization.
  • Manage Issues: Continuously monitor risks to address issues as they arise. Coordinate issue response to minimize the long-term impacts of a disruption on business continuity.
  • Eliminate Silos:  Adopt integrated processes within a centralized platform to streamline workflows. This drives organizational efficiency and maximizes the value of a program.
  • Ensure Compliance: Adapt organizational practices in real time to remain compliant with the ever-evolving regulatory landscape. Gain a complete understanding of the standards and regulations that apply throughout the supply chain.

With supply chain disruptions on the rise, healthcare organizations need the assistance of an automated solution to stay ahead of risk. A capable supplier risk management tool will prepare the organization to weather even the fiercest disruptions before they occur.

ProcessUnity Vendor Risk Management provides organizations with a centralized solution that automates the vendor lifecycle – from initial onboarding to ongoing due diligence. To learn how Vendor Risk Management can help your organization identify, manage and mitigate risk in your supply chain, visit

Related Articles

About Us

ProcessUnity is a leading provider of cloud-based applications for risk and compliance management. The company’s software as a service (SaaS) platform gives organizations the control to assess, measure, and mitigate risk and to ensure the optimal performance of key business processes. ProcessUnity’s flagship solution, ProcessUnity Vendor Risk Management, protects companies and their brands by reducing risks from third-party vendors and suppliers. ProcessUnity helps customers effectively and efficiently assess and monitor both new and existing vendors – from initial due diligence and onboarding through termination. Headquartered outside of Boston, Massachusetts, ProcessUnity is used by the world’s leading financial service firms and commercial enterprises. For more information, visit