Ref: IMD-7-2223

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Reference: IMD-7-2223

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Philips healthcare: global sourcing in a post-covid-19 world

Niccolò Pisani

By Professor Niccolò PisaniNiccolò Pisani and Inès Augier

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.

Learning Objective

  1. Analyze the extent to which the COVID-19 pandemic disrupted the healthcare sector, and how global healthcare supply chains may have shifted as a result.
  2. Explore the opportunities and threats that may arise from global crises, and the role that supply chains play in a company’s ability to leverage opportunities and mitigate threats.
  3. Explore global sourcing strategies in a sector that is vital to society and may be subject to political sensitivity.
  4. Analyze the advantages and disadvantages of global vs. regional supply chains.
  5. Analyze the advantages and disadvantages of multiple sourcing vs. single sourcing.
KeywordsBusiness Model, Globalization, Growth Financing, Operation, Project Management, Value Chain, Vertical Integration
SettingsGlobal, Netherlands
Philips, Health Care, Health and Medical Services, Medical Equipment
2015-2020
TypePublished Sources
Copyright©IMD 2020
Related materialTeaching note
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Reference: IMD-7-2223

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Reference: IMD-7-2223

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