Virtually every industry has had to adapt to the supply chain and staffing issues caused by the COVID-19 pandemic, but the healthcare sector was impacted more by this kind of disruption. With its long lead times, specialized labor force, need for complex certification, rigorous change management, and reliance on essential components, key healthcare companies struggle to both meet demand and to continue to provide reliable services to their patients.

That’s where outsourcing to a Contract Development and Manufacturing Organization (CDMO) can be a game-changer. By aligning with a CDMO to help with forecasting, competitive supply provisioning, precision design and manufacturing expertise, and critical staffing, healthcare companies can significantly ease the challenges associated with bringing a product to market at a global scale. This relationship is one that’s built on foundational trust, ensuring all requirements of supply chain, design and manufacturing quality and reliability, as well as support for fluctuating market demand through labor and raw material readiness, are met with a mutual commitment to excellence.

Labor crisis

Indeed, finding and retaining labor is one of the biggest challenges facing healthcare manufacturing today. This year, 3,000,000 baby boomers decided to retire in the US alone, leaving a sudden gap in the highly skilled work sector. This was further compounded by two million women planning to stay home following the pandemic. Companies are scrambling to change their shift schedules and hiring practices to attract and retain staff.

The incremental phenomenon has seen a number of technology specialists considering career shifts – moving to passion projects and new vocations that may have been deferred before the pandemic inspired meaningful change. Many are not returning to their previous jobs and are instead striking out in new directions. This perfect storm of labor shortages is making it hard for healthcare companies to find the skilled staff they need in many key areas – from engineering and design to direct labor on the plant floor. What’s more, the cost model has changed, with demand driving labor costs up, while budgets are reduced due to pandemic losses.  

The cost of this kind of staff turnover is significant. Apart from the resource challenge, it can cost up to 150% of an individual’s salary to recruit and train a replacement. Retention strategies are becoming more and more critical to mitigate turnover and reduce its associated costs.

Phillips-Medisize addresses these growing concerns by constantly exploring ways to improve the work environment. They explore and institute a multitude of focused actions including aligning shifts to flexibly accommodate staff, and building an employee-focused MBM culture to ensure all employees recognize their value and contribution and are provided with opportunities for growth and advancement.

Training hiatus

Compounding the issues related to the labor shortage is the emergence of what is now being recognized as a hiatus in the training of the next generation of workers which has exponentially reduced the pool of skilled workers. COVID-19 caused schools and colleges to close. Additionally, many companies halted training programs altogether, leading to a domino effect in specialized labor shortages not just in the short term but likely also in the years to come.

Phillips-Medisize responded to the labor challenges of the pandemic differently. When many closed their graduate training programs, the company ramped up these important efforts – increasing the number of engineering training positions available and filling them with premier talent throughout the world. This is yet one more validation of the commitment to development for the here and now and active investment in helping people build the skills that will be needed in the future.  Phillips-Medisize also placed similar emphasis on its Mold Technician Development Program by driving best practices into all facilities and providing a career path for injection molding technical specialists.

Life cycle forecasting

As vital as labor is to driving success in the healthcare category, supply chain is an equally important variable. Indeed, a trusted CDMO relationship requires not just securing supply against the customer demand forecast, it’s also about establishing processes to ensure that cost reduction can be achieved as demand grows. As major players in the industry, the right CDMOs can flex their purchasing power to secure competitive pricing for their customers, leveraging the collective buying influence of the full customer base to drive the lowest possible cost from valued suppliers. This supply chain expertise also provides benefits in the form of operations. Because they regularly work with a multitude of customers and suppliers worldwide, CDMOs draw on precision expertise and key supplier relationships to drive continuous improvement and processes that deliver cost savings and critical efficiencies.  

The same holds true when global scope and scale is achieved and new regions are added. CDMOs are uniquely skilled in duplicating process, operations, quality and supply chain practices quickly and proficiently, while bringing knowledge around local labor protocols and regulations that can save tremendous time and resources. Once a manufacturing process is created and perfected, CDMOs bring simplicity to the complex “lift and shift” process required to enable healthcare manufacturers to quickly start up, move to, or grow into new territories while protecting the customer’s current supply chain.

CDMOs must be in constant communication with their customers to understand their changing needs. And the COVID-19 pandemic has exacerbated the challenge, with product demand and labor shortages giving both OEMs and CDMOs a run for their money as it relates to planning and optimization. Phillips-Medisize meets regularly with its customers to ensure that fluctuations in customer demand precipitated by hospital closures and non-essential procedure deferrals on the customer side and raw material availability and staff shortages due to outbreaks and the on-going labor crunch on the manufacturing side can be addressed in real time. The discussions bring forward innovation in the way of process refinement, additional automation, secondary supplier sourcing, cost reductions and capacity tuning over the whole lifecycle of a customer’s business. And the specialization that comes with a close and trusted partnership makes the real difference. After all, at the end of the day, contract development and manufacturing enables healthcare manufacturers to do what they do best – provide reliable, high-quality healthcare solutions and services to improve and save lives.