Supply Chain Matters continues with succinct updates to our readers on business and industry headline developments impacting various supply chains.

A series of catastrophic storms and earthquakes that impacted in some form or another, multiple Caribbean Island nations and portions of the United States and Mexico, are beginning to take a quantified toll for businesses and their respective supply chains.

Reuters reports that with roughly half of S&P 500 companies now reporting third-quarter financial performance, firms are now beginning to quantify the sizing of such impacts. According to the report:

Senior executives of at least 48 S&P 500 companies have told investors on quarterly conference calls that their businesses had been negatively affected by storms.”

At least 12 companies, including U.S. Bancorp and Abbott Laboratories also said their businesses had been negatively affected by the storms.

As an example, the CFO of motorcycle designer and manufacturer Harley-Davidson indicated that roughly 1.5 to 2 percentage points of retail sales decline came from the effects of such storms.

Belgium-based Anheuser-Busch InBev indicated profits slipped in its U.S. market segments because of the severe hurricanes impacting portions of Florida and Texas which hampered both product demand and shipping. The company’s U.S. market share also slipped.

Global parcel logistics and delivery provider UPS quantified a $50 million cumulative impact because of these storms.

Of course, some industries and firms are garnering added benefits from the effects of such storms, most notably building materials and home improvement producers and retailers.

Supply Chain Matters has especially zeroed reader attention on the pharmaceutical, drug and medical device industry supply chain impacts emanating from the vast destruction that occurred in Puerto Rico.

Last week, Gastroenterology & Endoscopy News reminded us that 12 of the top 2o pharmaceutical companies and 13 of the top 20 medical device companies have production or supply chain facilities across Puerto Rico. Manufacturers such as Baxter, Boston Scientific, Johnson & Johnson, Medtronic, Pfizer, and Zimmer Biomet are all mentioned by the report. Further noted:

Of the 23-medical technology in Puerto Rico that are represented by Advamed (Advanced Medical Technology Association), nearly all were relying on generators for power.”

The longer the island’s electrical infrastructure remains out-of-service, the more that the supply disruption widens. Thus far, manufacturers are relying on built-up inventories and/or safety stocks to satisfy existing product demand. The open question is how long partial power and an impacted worker population remains.

The President of Advamed has written a letter to the U.S. Department of Health and Human Services asking that the needs of medical technology manufacturers be prioritized after the immediate humanitarian needs are addressed.

As in many prior cases of supply chain disruption, the real effects of such incidents are not evident until hours, days, or weeks after the initial event, when existing supply networks are scrutinized and analyzed for component and production supply impacts. Most likely, by the latter part of November, the industry will begin to truly understand the full impacts.

As pointed out in our prior blog updates, healthcare providers drug and medical device distributors and procurement teams need to maintain constant communication with drug manufacturers as to ongoing expected shortages.

 

Bob Ferrari

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