During the initial COVID-19 outbreak in Wuhan, China, the PPE supply chain worked solely through social media applications. "They used WeChat a lot," says Dr. Opher Baron, a Professor of Operations Management at the University of Toronto. This highlights the importance to the PPE supply chain of technology companies that ease the flow of information.
Apps like WeChat and WhatsApp were replaced with more sophisticated technology platforms. Nonetheless, one year into the pandemic and supply chains are still struggling to meet demand. Many manufacturers still lack crucial e-commerce and logistics management technologies. At the same time, many buyers are working from home to limit the spread of the virus, further disrupting typical purchasing processes.
According to data from the nonprofit, Get Us PPE, requests for PPE rose 260% between November and December 2020. 63% of facilities had no supply remaining of at least one type of PPE in December. They also report that the demand for PPE is far more expansive than just hospitals. Less than 1% of December requests came from hospitals, but instead from facilities such as nursing homes and clinics.
The United States International Trade Commission (USITC) recently reported that "for certain COVID-19 goods, supply constraints are not expected to wane until 2022." These facts reflect a major ongoing challenge to the PPE supply chain.
There is a global need to replace more traditional supply chain infrastructure with a more streamlined approach that meets current needs and promises protection against the next crisis.
As the virus spread around the globe in 2020, healthcare buyers in every country found that they were unable to fulfill their PPE needs through their traditional procurement sources and methods. This hastened newer suppliers who pivoted from other markets to focus on PPE. For example, alcohol brands pivoted to making hand sanitizer, Tesla to manufacturing ventilators, 3-D printing companies to printing face shields, and some clothing brands to crafting face masks.
In those first months, supplies came in with very high prices because they were the only supplies available, and suppliers didn't have enough to cover the demand. There were shortages of different items at different times. For instance, the first shortage was with face masks; the second shortage was gloves; then it was gowns.
In times of crisis, supply shortages compounded by lack of visibility can create the right conditions for companies to maximize profitability through price gouging. Many countries responded to the pandemic by relaxing existing national procurement laws, allowing public buyers to purchase PPE quickly, in large quantities, and with few restrictions. As a result, incidents in Brazil, the U.S., and Germany show price gouging behavior that distorted the market. In some cases, governments purchased masks at 25 times the original price. At the same time, many countries restricted exports of PPE, which also drove up prices.