I recently interviewed Bruce Spurgeon who discussed supply chain risk management from the perspective of the medical industry. Bruce went to studied agricultural business management in college and from there went on to work in the food industry, high tech and various other sectors. He is currently a Supply Chain Manager at OSspray Ltd which is a company that has developed a biomedical product that rebuilds the enamel on teeth.
Supply chain risk management in the medical industry
In the medical industry you want close to zero risk for the patient. This has been the directive from OSspray’s board of directors. They are building a no to low risk supply chain. It is an interesting situation because they have a new technology and it is very expensive to get into the technology. The company needed to work hard at building a combination of suppliers and quality systems which go beyond even what the FDA and other regulatory agencies would require.
One of the things they do to mitigate supply chain risk is to build inventory ahead in order to be able to do necessary testing with time to spare. This would result in a near zero risk situation when the product hits the marketplace. Being a startup they have faced some challenges. One of the risks of being a start up is that you are not a big buyer to anyone in the supply chain. As a result, the company needs to work very hard. Part of what is needed is to sell the vision of the company to their suppliers.
The company works far ahead in terms of their forecasting. They are doing a good job at this partly because they are good at keeping the engineering, technical, quality and supply chain together. Every week they discuss not only the supply chain, but also product development and potential changes for improvements. This helps to mitigate the supply chain risk.
Recommendations for other start-up companies
The key is getting the runway and working ahead. Part of the supply chain job is to be a salesman to your own board of directors on what it really takes to get there and explain to them the risk management side of the business.
You also need to be a salesman to your suppliers to let them know and get them to have a vision of your business. At times Bruce will even bring in their President and VP of Marketing to help them meet with suppliers in order to get that high level buy in on both sides. This helps them get the best suppliers, leading to mitigated risk.
Supply chain risk management is becoming increasingly important. Bruce encourages companies to drill down to the supplier’s supplier. In the medical industry it is very important to know the purity of everything that goes into the product. They drill down several levels, not just with their suppliers, but also raw material suppliers.
We have seen with the earthquake and tsunami in Japan how critical it is to manage supply chain risk.
The critical thing for OSspray has been a board of directors which understands supply chain, many of which have spent parts of their careers in this field. As a result, Bruce can go back to them and discuss drilling down to raw materials. The board of directors will allow them to time to do this because they understand the supply chain.
About Bruce Spurgeon
Supply Chain Builder and Manager