The Five Major Benefits of Domestic Sourcing

By Jeffrey F. Solarek, CMRP, FAHRMM

Vizient Consulting Director, Supply Chain Services

Discussions around domestic manufacturing of medical supplies have picked up steam in recent years as the COVID-19 pandemic highlighted the risks and challenges of the global supply chain. While goods manufactured overseas might cost less due to lower labor costs, there are far more benefits to choosing domestic sourcing — particularly when it comes to helping to ensure you have the supplies necessary to deliver the best possible patient care.

Benefits of Domestic Sourcing

When considering ways to diversify your supply chain, remember sourcing supplies closer to home can have advantages beyond keeping your inventory at desired levels. Some of the major benefits include:

• A more robust U.S. economy and job market: An analysis by the McKinsey Global Institute suggests that restoring growth and competitiveness in key manufacturing industries could boost U.S. gross domestic product by more than 15% through 2030. Additionally, investing in suppliers and manufacturers in your community supports the local economy and provides better-paying jobs to people who live there.
• Stronger national security and stability amid global turmoil: The U.S. shouldn’t depend on faraway countries for critical healthcare supplies like personal protective equipment or essential medications. By producing these goods at home, we can better ensure healthcare providers have what we need no matter what pandemics, wars or other geopolitical events happen in the future.
• Decreased product shipping time and expedited lead times: A product shipping from Michigan arrives much quicker than one shipping from Malaysia, and with a shorter distance to travel, there’s less opportunity for issues to pop up. Especially in healthcare, it’s critical to receive supplies quickly so providers can administer care in the right place and at the right time.
• Increased environmental sustainability: Products made abroad have a greater distance to travel, and therefore have a much higher carbon footprint than local goods and materials. Domestic goods also do not need to be stored in shipping containers or warehouses for as long as products coming from overseas, which further reduces emissions and energy usage.
• Greater control and more flexibility over products: Suppliers are typically more responsive to local clients than those further away. You can even have face-to-face meetings to ensure everyone is on the same page and the product meets expectations. Cultivating strong relationships leads to easier and faster communication, which is critical when a problem arises.

Considerations for overseas sourcing

While manufacturing overseas may often be cheaper due to lower labor costs, the cost of shipping and import duties can offset these savings.

Of course, there are times when your health system chooses to source certain supplies directly from overseas manufacturers. To ensure you make a safe, reliable sourcing choice, here are some factors to keep in mind:

• Verify overseas suppliers adhere to quality control standards and have appropriate oversight of manufacturing facilities. There have been instances where some medical supplies manufactured overseas were found to be of poor quality or even unsafe for use, which can put patients at risk.
• Have a plan in place to mitigate supply chain disruptions. Foreign supply chains can be especially vulnerable to disruptions such as natural disasters, political instability, lockdowns or trade disputes. This can lead to production and delivery delays, which can have serious consequences in a healthcare setting. A diversified supply chain strategy with multiple suppliers from different locations for each product category can ensure you have a backup in place if something goes wrong. Avoid relying on a ‘just in time’ purchasing strategy by increasing on-hand inventory levels of critical supplies.

It is important to carefully consider your options when making a supplier decision. When sourcing essential medical supplies, it’s crucial to ensure a reliable and secure supply chain, as well as to adhere to high quality and ethical standards.

Learn more about Vizient’s supply chain assurance solutions and read a story about Vizient’s domestic sourcing efforts..