GLOBAL HEALTH SUPPLY CHAINS SCTL: San Jose, Costa Rica July 21 st, 2009 1
TYPICALLY MOH SCM INVOLVES ACTIVITIES AT 3 DIFFERENT LEVELS SC Activities at each level • Product Registration • Forecasting / Quantification • Procurement • Storage • Inventory Management • Transportation • Storage • Transportation • Inventory Management Ministry Of Health Focus at each level Central/National • Central Co-ordination • Guidance / Direction • Target Setting • Procure / Store & Distribute Central Medical Store (CMS) Provincial/ Regional WH • • Storage Transportation Inventory Management Dispensing Hospital/ Hospital Lab Provincial/District • M&E consolidation • Provincial Budget Mgmt • Liaison between Sites & Central • Storage & Distribution Site • Storage • Inventory Management • Dispensing Health Centre /ICTC Data Flow Health Centre/ ICTC Product Flow • Patient Test, Care & Treatment • Report Completion • Request & receive Commodities • Storage
GLOBAL SUPPLY CHAINS Where I have come from …. Holistic Approach to SCM Outsourcing of non-core competencies Dynamic & Regular forecasting Strategic relationships with Suppliers Pooled Procurement/ Draw down qtys VMI/ DSI Supplier Hubs Direct Shipments/Cross Docking/ Merge Route optimization SW Integration Metrics used to identify weakness/set priorities. CI efforts Data turned into Information High Level of Awareness of SCM - w/in organization - in country eg: education - SCM strategies To where I am now …. Silo’d view of SCM In-source everything CMS, Procurement etc Annual forecast/incorrect assumptions No supplier relationships or perf mgmt Annual Tendering w/single deliveries/no consolidation of procurement across system High buffer stocks at all levels held at various stocking location Manual processes/tools, typically using excel/access database with no integration Some metrics identified but not always appropriate or tracked, no CI Limited data availability and integrity Funding provided by multiple sources/with different priorities Low level awareness of SCM Vertical Supply Chains Decentralizing of SCM
THE GAP CONTINUES TO WIDENED BETWEEN DELVEOPED WORLD AND DEVELOPING WORLD SUPPLY CHAINS Private Sector/High Income Health Systems Developing World Focus on supply chain as competitive advantage / increase profits • Lack of HR/specialized SCM knowledge Outsourcing allows focus on core competencies and specialization • Absence of metrics for performance/progress • Massive cost savings • Poor communications/data integrity • Lack of strategic approach/ business framework • Funding provided by multiple stakeholders whose priorities are not always aligned • Reduction in inventory at all points in chain (cashflow benefits) Exacerbated by Concurrent with • Push to decentralize • Investment in vertical supply chains • Enhanced customer service - Shorter lead times - Increased customization - Improved quality Result Patients • Go without • Or have to purchase meds privately MOH/Donors • Wasted investments/inefficiencies throughout system • Lost opportunity to make more effective use of funds
CHARACTERISTICS OF GLOBAL HEALTH SUPPLY CHAIN New Product § NPI = Forecasting & Procurement, limited focus on lifecycle planning Introduction: § Timing = 12 -18 months for actual implementation § Uptake not very successful ending up with a lot of expired stocks Quantification: § Annual Forecast process using a 12 -18 month planning window § Limited consumption data available, unconstrained demand not included § Assumptions not always appropriate (eg: Malaria AMC, Ess Meds distribution history) § Forecast Accuracy is not tracked Procurement: § Tender 1/Year w/single deliveries & supplier selection driven by cost § Procurement processes are long cumbersome process driven by perceived transaction efforts § Payments are made up front, even for donor commodities § Funding from National Budget can be unpredictable and insufficient § Supplier Performance Management does not exist § Govt Procurement Guidelines can be restrictive and favour local organizations § Many hospitas/labs do their own procurement but do not utilize Pooled procurement to leverage economies of scale 5
CHARACTERISTICS OF GLOBAL HEALTH SUPPLY CHAIN Storage: § Utlize CMS concept - central distribution to provincial warehouses & sites § Require sufficient space to store upto 12 months of inventory § Poor storage facilities and in many cases insufficient storage § Storage & Distribution costs are based on % of commodity prices not activity based costs § CMS are typically parastatal and can be very bureaucratic with no revenue recovery models Inbound/Outbound § Customs Clearance can be cumbersome /Product waivers required for some Logistics commodities Distribution: § Different trucks used for different commodities, no optimization of transportation /routes § Cold Chain challenges in rural areas § Reverse Logistics doesn’t occur very effectively Inventory Mgmt: § High buffer stock levels - typically 2 -3 months at site, 2 -3 months at provincial level and 6 months= at central § Inventory Balancing /Redistribution doesn’t happen very well and is usually through an informal process § Little or no proactive management or tracking of Excess, Expired & Stockouts § Ongoing Shortages of commodities such as gloves, due to inaccurate ess meds lists § Stock outs monitored at National Level not so much as site level § ARVs tend to have excess/expired as opposed to shortages § Many times stock turns up in Private Sector Clinics 6
CHARACTERISTICS OF GLOBAL HEALTH SUPPLY CHAIN Technology § Fragmented systems and usually utilizing NGO developed tools § Technology solutions focus on point solutions for Forecasting, Inventory Management, Data collection and are usually excel/access data base § Focus on central level not site level Resources: § Little awareness of SCM as a profession § Typically Pharmacists are in charge of SCM activities w/little or no training § Very little synergies between partners/disease specific programs & primary health care systems § Task shifting needs to occur especially in resource constrained settings § Many personnel have multiple jobs § Salary inequities amongst Mo. H programs due to donors § Poor communications across the supply chain § People who gain from not fixing the issues Data: § Data collection is in place for disease specific programs, but little information is available § Accuracy & completeness of data is questionable § Little or no data analysis is done except for reporting to the donors § Reports used for order fulfillment, however order qtys are typically determined based on patient data Policy: § Treatment Guidelines/ Essential Meds list not updated on a regular basis § Payment processes § Procurement tendering - favor local suppliers 7
VERTICAL SUPPLY CHAINS LIKE THIS EXIST IN MOST DELVELOPING WORLD COUNTRIES
RESULT OF POOR INFRACSTRUCUTRE, TRAINING AND LACK OF RESOURCES
BIGGEST IMPACT OF ALL: APPROX 2/3 OF SELECTED MEDS ARE UNAVAILABLE IN PUBLIC HEALTH FACILITIES ON AVERAGE AT ANY TIME* *across developing world excluding LAC/Caribbean Average availability = 34. 9% in the public sector and 63. 2% in the private sector Source: WHO, Health Action International, United Nations MDG 8 Report
CHAI’s Supply Chain Strategy is to empower governments to build cost-efficient, effective and sustainable national health care supply chains 1. Ensure sustainability through increased awareness and continuous source of SCM skills/knowledge in country. E. g. SCM Curriculum/Accredition, SCM Mentoring 2. Leverage resources from developed world, private sector. E. g. Partnerships, Applying lessons learned 3. Turn data into information E. g. Develop technology roadmaps 4. Secure funding for SCM specific programs, to help demonstrate effective solutions
EXAMPLES OF SCM ISSUES IN COUNTRY India redistributes on a monthly basis as oppose to having the supplier ammend their delivery qtys each quarter India - Cold Chain for HIV Kits compromised because fridge isnt working Many countries, testing doesn’t occur because they run out of reagents or machines are broken Swaziland distributes ARVs monthly, but ess meds only every 2 -3 months if the trucks are in working order Botswana/Cambodia forecast Malaria using average monthly consumption GF encourages procurement of high volume, single deliveries to achieve lowest cost GF encourages up front payment to suppliers PEPFAR training objectives are based on # of personnel trained not the effectiveness of the training Per diem culture exists in training/workshops Unconstrained demand is not captured especially for essential meds in Mozambique if you are sick, it is best to have HIV, because you know you will get treated Liberia is constantly running out of gloves Communications between site & central are broken down and a lack of trust exists 10 -30% of drug costs are allocated to storage and distribution of drugs for GF Decisions are driven by budet & project not by commodity requirements Public Health SC has been weakened by disease specific programs 12
PARTNERS AND DONORS INVOLVED IN SUPPLY CHAIN MANAGEMENT ACTIVITIES Major institutional donors providing funding for health systems • GFATM R 8 procurement/SCM = $172 m or 8. 7% of total phase one • PEPFAR $185 m in 2007 to PFSCM (runs SCMS) • USAID Funds DELIVER, with JSI in 38 countries (focus on contraceptives) $100 m 6 years • AUSAID • DFID • World Bank No distinct SCM budget but incorporated into many activities Key implementing agencies engaged in health system strengthening • SCMS: Typically focused on Forecasting & Procurement at the national level • JSI/JSI DELIVER: Logistics focused, conducts assessments and develops tools (eg: Qantamed, Pipeline) • MSH: MIS focused, usually on Inventory management tools, also an implementer of GMS Technical Assistance • WHO: Technical Assistant for PSM Plans • UNICEF: Acts as Procurement Agent
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