Preparing for the Next Big Orthopedic Supply Chain Interruption

More than one year into COVID-19, businesses continue to exercise flexibility in handling supply chain interruptions. A recent EY study found that serious disruptions during the past year affected 57% of businesses surveyed, with 72% reporting a negative effect and 17% reporting a significant negative effect. Orthopedics, of course, has faced significant uncertainty with the stop and start of procedures amongst various other supply chain interruptions.

In April, we hosted a discussion among executives at OEMs and contract manufacturers. The group talked about the massive challenges that COVID-19 caused in supply chains and how businesses can prepare for major disruptions by fostering resilient business plans, leadership and team members.

The panel was moderated by Howard Levy, Vice President of Global Sourcing at Zimmer Biomet, and featured the following panelists:

• Brandi Maranian, Senior Vice President of Global Supply Chain & Procurement, Smith+Nephew
• Jodie Gilmore, Director of Orthopedics and Strategic Business Development, Elos Medtech
• Victor Swint, Chief Executive Officer, Tecomet

We felt the honesty and insight shared by these leaders was worth recapping here as you and your team, supply chain or otherwise, consider responding to the COVID recovery. There comments were edited for clarity and brevity. You can also watch the full OMTEC conversation.

Responding to Challenges

Mr. Levy: When you think about the supply issues that you’re faced with and the things that are happening in the industry in general, what keeps you up at night?

Mr. Swint: The big thing that keeps me up at night is making sure that we continue to improve our performance, our lead times, our on-time delivery, and continue to remain a reliable supplier through what might be a pretty aggressive ramp up this year. It could be as much as 20% per quarter, so we’re really doing a lot of planning and SIOP (Sales Inventory and Operations Planning) processes, and getting close to our customers. That’s my top focus in 2021: making sure that we can respond and manage this ramp up.

Ms. Gilmore: What keeps me up at night is just the general high level of uncertainty and the great unknown, the things that we cannot predict. Over the last 12 months, we have learned that many of the things that we used to be able to count on completely are shifting and changing in ways that we never could have possibly imagined. Realistically, who could have predicted the pandemic, the extreme winter weather affecting the plastics and the petrochemical resources in Texas, resource shortages, a container ship stuck sideways in the Suez Canal, massive logistic woes, etc.? What this means is that our historical behavior patterns and our tried-and-true methods are ultimately less effective. We have to be entrepreneurial, we have to be flexible, we have to adapt.

Ms. Maranian: My biggest concern is the morale of people, particularly after a year of COVID where there were personal issues and stress. They’re working pretty hard, 24/7, staying up through the night to try to get product through despite the uncertainty that comes up every day when a new issue surfaces. It’s not stopping. We thought that we would be able to take a pause and somehow magically 2021 would have been a restart and go back to normal and it’s just not. So, I’m really concerned about employee morale, employee retention, pulling on the same resources for the same concerns that we were struggling through last year, and now we’ve got new ones.

Mr. Levy: How are you working through challenges and keeping connections fresh with your customers and suppliers?

Mr. Swint: We’ve tried to be as proactive as possible with our customers. We’ve done deep mapping of our key suppliers and making sure we understand where the biggest risk remains. We’ve intensified the executive level discussions. We’ve also developed SIOP processes to make sure that everybody’s ready and everybody has capacity in place, and we have priority inside of their companies. We give them our weekly updates on forecasts and we want to see that they have their forecast in place too. We’ve upgraded our supply chain in 2020 and the timing was good. They’re bringing some really excellent processes to the table to help us and they stay lock stepped with our supply base.

Ms. Maranian: We put a much more robust process in place that we’ve been wanting to do; now we had the time and the need to put in more of a supply risk mitigation plan. What are our backup plans? What are our risk mitigations for our key suppliers? We also identified a heat map, globally, and as COVID moved from Asia into Europe and into the U.S., we tracked our supply base and the mitigation plans based on where COVID was hitting last year. So, I think we’re in a bit of a better place and now have the opportunity to put a risk mitigation supplier plan in place in real time.

Ms. Gilmore: At the end of the day, when you cannot be together in person, you really need to use all of your available resources to stay in touch and to connect. Pick up the phone, start a Teams chat, open a Zoom meeting, send a text message, literally reach out in every way possible. Share your information, share your concerns, be very real, be very transparent, and don’t be afraid to ask the very direct questions of not only your suppliers, but of your key customers: What are your biggest worries? Where do we need to make sure that we are shoring up any potential holes or gaps? We all have a shared interest in making sure that this industry can continue to grow, and roll, and serve because it’s essential and it’s really meaningful.

Lessons Learned

Mr. Levy: In the words of Rahm Emanuel, you never let a crisis go to waste. It’s an opportunity to do things you could not do before. With respect to the COVID crisis, was there something your team moved quicker on?

Mr. Swint: I think we all learned that there’s a great deal that is possible in non-traditional working relationships and locations. We had 700 people in our company working from home and now we’re trying to figure out how to get back to normal. I ultimately believe that we’re going to be a better company and we’re going to create an environment where people can do their best work, because we’re going to try to tailor the situation to how we can continue to keep people safe, minimize risk in facilities, and at the same time give people options to be effective either at home or at work.

Ms. Maranian: In regard to how work gets done, we don’t necessarily need to get on an airplane and fly around the world and get everybody together in meetings, which was taking up a considerable amount of time. Now, because we’re so used to this technology and making things happen, that was a big lesson learned that we really don’t need to meet face to face as much as we thought we did.

Ms. Gilmore: It just helps to really, truly reinforce the fact that our people in all of our organizations are truly our greatest asset and really working together as a team is just incredibly rewarding and is ultimately the most successful in the end.

Mr. Levy: What is a COVID lesson learned that you will continue to follow after the pandemic is behind us?

Mr. Swint: It’s important to keep the pedal to the metal, managing the crisis, but at the same time continuing to invest and aiming for continuous improvement. In the last year we deployed over $35 million in capital for productivity and to improve our performance. At the same time, we did over 200 kaizens across the company. One of the things I think that was most pivotal in keeping us focused through all of this was taking communications to another level, delivering weekly letters to our organization and continuing to do our monthly communication meetings.

Ms. Maranian: The biggest lesson learned for me during the COVID crisis, and now I’ll call it the COVID hangover in supply chain that we’re experiencing, is how incredibly important it is to maintain good leadership and make sure that folks know that you’re supporting them. The leadership principles that we talk about really have to come into play when things get tense. That requires you as a leader to take a few moments to maybe take a walk, really have some balance because it will resonate to the rest of the multi-hundred or thousand-person organization. When they hear that you’re comfortable and you feel like we’re going to solve this, they’ll feel that way.

Ms. Gilmore: Having a solid foundation — whether it’s financial, or risk mitigation plans, or business continuity plans — is incredibly important. From a pure leadership perspective, we always expect we will have the answer and as executive leaders we are supposed to have a plan for every situation, and that’s not realistic. We need to make sure to communicate, even when we don’t necessarily have a specific solution or know exactly what’s going to happen next. At the end of the day, there’s not a roadmap, and you’re going to have to build one and people need to know that. We’re going to do it together and it’s going to be just fine.

Maintaining Momentum

Mr. Levy: How have you worked with your team members to allow them to continue to grow in their roles when there’s so much stress and other things going on?

Ms. Maranian: We have continued investing in development plans and executive leadership training. We’ve worked with third-party consultants that are working through very targeted team building sections. We didn’t stop doing that while we’re still trying to solve all these supply chain issues, and come up with new solutions when there is a COVID case. We’ve kept those things going knowing that it’s important.

Ms. Gilmore: As part of our business continuity and disaster recovery plan, we already had line items and risk analysis based on critical employees, both in leadership as well as technical, but one of the things that we really activated throughout the course of this year was doing a realistic succession planning across all of our operating sites, identifying the first, second, third option for doing different key tasks. Another thing that we’re doing extensively now across our global organization is a full gap analysis of both process and technical competence.

Mr. Swint: We’ve got to figure out how to manage the Zoom environment, and do a better job continuing to motivate people, because it is stressful. People work for hours after work, around the clock. You work at home anyway, the computer’s there; I find myself doing it. We’ve got to figure out what to do about this.

Mr. Levy: In this nonstop world where we’re not slowing down, what would you say is the most important thing for your team to keep in mind to help them get through it all on a sustainable level?

Ms. Gilmore: Let people know they are important, their work is valuable, and what they do makes a meaningful difference every day in the lives of millions of people. We’re very lucky to be in the industry we’re in because it automatically gives you a sense of being needed; lives depend on our good work. Of course, we have to have a balance, and it’s important because otherwise we will be burnt out and we will not do our best work.