Events happening around the globe can adversely impact medical device supply chains, creating delays, increasing costs, and causing other challenges for companies.

“Although companies have become more resilient when faced with evolving economic conditions in recent years, resilience alone is not enough to overcome the geopolitical challenges that suppliers face,” said Lisa Anderson, president of LMA Consulting Group, a Claremont, Calif.-based supply chain consulting firm.

“In addition to improved supply chain resilience, reduced lead times, and quicker product design cycles, reshoring and nearshoring allow for greater process control and quality standards, as well as reduced costs,” said Anderson.

Geopolitical risks such as political instability, trade wars, and tariffs, and regulatory differences across regions often disrupt global supply chains and drive up manufacturing costs, upsetting global trade. The orthopedic device industry is increasingly affected by these and other geopolitical pressures, especially the fluctuating tariffs proposed/enacted by the Trump administration.

For example, higher tariffs on imported metals such as steel and aluminum increase production costs for orthopedic device manufacturers. Material shortages can also impact supply chains, forecasting and purchasing, production, and logistics. Such large-scale disruption often leads to increased costs and delayed delivery times, affecting both manufacturers and healthcare providers. In addition, shortages can create huge fluctuations in supply and demand because they stimulate overstocking by orthopedic OEMs and their contract manufacturers (CMs), making delays longer.

“Although companies have become more resilient when faced with evolving economic conditions in recent years, resilience alone is not enough to overcome the geopolitical challenges that suppliers face,” said Lisa Anderson, president of LMA Consulting Group, a Claremont, Calif.-based supply chain consulting firm.1

Major geopolitical issues impacting the medical device industry today include:

• The Israel-Hamas war “is sabotaging trade routes in the Red Sea and wreaking havoc on container ship traffic in the Suez Canal,” Anderson said. To avoid capture, container ships are being diverted around the southern tip of Africa, which adds about 10 days to an outgoing trip from Asia to Europe.
• Extreme drought in Panama has reduced shipping in the Panama Canal, creating congestion and delays.
• China’s military stance against Taiwan, which threatens lawful commerce in the South China Sea, including deliveries of computer chips to the United States and other countries.
• Russia-Ukraine War—This three-year conflict has caused supply-and-demand uncertainties regarding critical raw materials utilized in medical device production. Economic sanctions against Russia have also forced Europe to find new energy suppliers.
• The U.S. has restricted the incoming supply of Russia-produced metals such as platinum, titanium, and nickel, disrupting automobile, electronics, and medical device production.

Read more: Worldwide Worries: How Geopolitical Issues Impact the Medtech Industry

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