Philips Healthcare: Global Sourcing In a Post-COVID-19 World
As a global leader in healthcare technology, Philips had an important role to play in the COVID-19 pandemic. The surge in demand for life-saving medical equipment by hospitals around the world presented high-stakes opportunities for the company. At the same time however, national governments in most countries were compelled to implement safety measures that greatly affected commercial activity. The production and flow of physical goods were heavily impacted, leading to widespread disruption of global supply chains, which pulled a great deal of media focus on the topic of supply chains generally. The lockdown in China alone caused a global supply shock that many companies were ill-prepared for. Philips' Healthcare business units, particularly in diagnostics and respiratory equipment, faced critical supply challenges during the Corona crisis which garnered media attention both at home and abroad. In order to capitalize on the high demand for medical equipment, CEO Frans van Houten knew that Philips needed to overcome several hurdles to produce and deliver enough inventory to meet that demand. Furthermore, subsequent pandemic waves and other forms of crises could well cause future supply chain disruptions of the same scale and severity within the healthcare sector and beyond. Aware of the many challenges ahead, van Houten had to decide whether to revise the company's global sourcing strategy to future-proof it in a post-COVID-19 world - and, if so, how.