Heroes of Procurement


Combining our sourcing powers to make ventilators for UK hospitals

CIPS 13 May 2020

Thales in the UK was tasked with producing 8,000 ventilators to support NHS hospitals fighting Covid-19. We find out how they mobilised a sourcing programme to deliver this life-saving equipment. 

There are more than four million confirmed cases of the coronavirus around the globe, and the World Health Organization estimates that one in six people affected will require medical assistance. Covid-19 attacks the respiratory system, making ventilators a critical requirement to support normal breathing while the patient fights the virus. But as cases are rising, so demand is soaring worldwide.

 Contents

  1. Procurement a "pivotal role"
  2. Easing Pain Points
  3. Logistics and Onshoring
  4. Utilising Category expertise
an image of a ventilator

Image: ©2020 Smiths Medical

UK Health Secretary Matt Hancock estimated the nation would need around 18,000 ventilators to manage hospital admissions at peak virus point, posing the question - how do we rapidly accelerate the production rate of ventilators to meet the need? To solve the problem, the government setup a consortium of industrial and technology firms, named VentilatorChallengeUK, to collectively deliver a super supply mission.

 Under the challenge, Thales in the UK expedited the delivery of 8,000 units in one of the two approved designs - the Smiths Medical paraPAC plus ventilators - by coordinating the capabilities of six different manufacturers to reach a steady rate of production. 

 “The ventilator challenge has been one of solving complex supply chain issues in challenging timescales and under unusual business conditions and it has been very much a team effort,” says Kate Cox, Thales head of procurement.

 Procurement a "pivotal role"
Thales led a workstream to manage production of the printed circuit board assemblies (PCBAs) of the ventilator units. For this, the procurement team had to work with the original manufacturer to help source materials for the firms making the PCBAs and associated hardware, develop testing methodologies for each manufacturer, and create operating guides for users.

This huge effort required the company to secure 1.8m electronic components to be used in 36,000 separate parts for the ventilators. With demand outstripping supply, the company hit a series of hurdles in terms of dwindling resources and increasing costs.

 “The mantra throughout the supply chain became ‘We will beat this – we support the NHS’,” says Cox. “At the same time as many companies were stopping work, we were engaging with our suppliers to ensure they were ramping up production while setting up Covid-19-resilient practices, such as social distancing and implementing personal protective equipment in their factories.

“Our procurement team was and continues to be instrumental in working with the supply chain to support production commitments and problem-solve ways to set up additional capacity in the supply chain. This included implementing a multiple sourcing approach and working with the incumbent supplier, Nemco, to replicate their production and test processes in other capable UK suppliers, in order to ramp up quickly to the required manufacturing volumes.”

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 Easing Pain Points
A major change for the Thales procurement team was the decision to abandon just-in-time and single sourcing methods, which Cox says simply “could not cope” with the rapid rise in production from 200 to 10,000 products per week, to be achieved in less than a month.

 As a starting point, the team rescheduled current orders for components and placed new ones to bring all delivery dates forward and build up inventory. According to Cox, this seemingly small change highlighted “extremely challenging” complications, as every ventilator manufacturer worldwide was competing for the same electronic components, which were quickly becoming scarce. 

“We had multiple teams tracking down and buying these components in Rolls-Royce, Thales and Nemco, and faced many challenges with confirmed orders being redirected to support non-UK national ventilator programmes or by being ‘gazumped’ by other companies,” says Cox. 

“We managed by qualifying alternative components in parallel and placing orders for those components extremely quickly in order to secure enough to maintain manufacturing capacity on a day-by-day basis. We have had to qualify over 40 alternatives,” she adds.

To simplify the process, all component sourcing was carried out via Nemco, the incumbent supplier, and once equipment tests were developed, these were rolled out to all suppliers to ensure “a single point of truth” for consistent quality of components. 

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Image: © VentilatorChallengeUK

key worker stickers

 Logistics and Onshoring
It seemed that each solution pointed to another, as the need for multiple sourcing and new suppliers raised the question of onshoring procurement activities for the long term.

Reduced passenger flights were severely impacting air freight routes, including from Asia and the US, causing long delays on parts deliveries, prompting Thales to restructure its global approach to procurement and establish a UK-centric supply chain.

“We set up an onshore high-capacity UK source for some PCBAs that were being made abroad in order to ensure that we had a UK supply to mitigate risks associated with offshore manufacturing or freight transport of those items due to the impact of Covid-19. Setting up this second source in the UK meant we had to design and manufacture new test sets – which the Thales engineers achieved within a week,” Cox says. 

Business continuity was finally looking achievable, as Thales’ suppliers were now operating 24 hours a day, seven days a week, and the firm had arranged priority shipment agreements with a courier to manage stock flow. Meanwhile, the company implemented separate shift patterns for production lines to limit any risk of cross-contamination, and rolled out protection and distancing measures for staff.  

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 Utilising Category Expertise
VentilatorChallengeUK required competing businesses to collaborate with trust and confidence, particularly when sharing intellectual property, such as technology designs. To protect parties, Cox says use of non-compete clauses in contracts was “critical” to help meet their objectives.

“Due to the nature of the challenge, there is also a significant amount of goodwill and collaborative working behaviours in the consortium and supply chain which has helped potential issues to be resolved quickly on all sides.”

In April, VCUK announced that Smiths paraPAC plus ventilators successfully reached a steady production rate of 1,500 units per week after a three-week period, and 5,000 units have already been delivered to the UK government to help fight the coronavirus pandemic.

Cox is clear on the crucial role procurement had to play in achieving success. She concludes: “Procurement’s role in the delivery of these work streams is widely recognised at a senior level and, while there have been multiple procurement professional involved from Thales, the efforts of Mark Goodman (project procurement manager) and Brian Stewart (category manager) are a fantastic demonstration of what can be achieved in a relatively short space of time when bringing together both industry and category expertise.”

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Image: © VentilatorChallengeUK

A man testing a ventilator

 


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