Strategic Decentralization: Centralizing Logistics

1. Strategic Decentralization: Centralizing Logistics Paula Nersesian, RN, MPH

2. No product? No program.

3. Commodity Security • Know commodity requirements • Plan the necessary financial resources to meet those requirements • Procure the commodities needed - or have them procured • Reliably deliver the commodities to customers

4. The Logistics Cycle

5. The Supply Chain

6. Supply Chain Objectives • The right goods • In the right quantities • In the right condition • Delivered to the right place • At the right time • For the right cost

7. Health Sector Reform • Decentralization • Integration • Cost Recovery • Privatization

8. Logistics in HSR Settings • Integration in Mali and Nepal • Both improvements and harm to LMIS • Privatization in the Philippines • Stockouts and problems with private carrier contracts

9. Logistics in HSR Settings • Cost recovery in Mali • Donated condoms expired • Decentralization in the Philippines and Mexico • Some regions didn’t order contraceptives or didn’t order enough to meet demand

10. Advantages and Disadvantages to Decentralizing Logistics Functions

11. Serving Customers • Service delivery based on local needs • Reduced control over prescribing practices

12. Product Selection • Selection based on local needs • Selection based on non-medical criteria • Reduced influence on: • Treatment guidelines • Products for priority essential services • Priority of preventative products

13. Forecasting and Procurement • Quantification based on local requirements • Greatly increased prices • Increased: • Forecasting labor • Forecasting error • Procurement complexity

14. Inventory Management • Local control over reordering decisions • Local control of shipping schedules • Impossible to rationally allocate scarce products • Local resources (e.g., staff and transport) may be unavailable

15. Information, Money, People, Quality • LMIS may be lost or folded into the HMIS • Local financial resources may be inadequate • Local staff may be absent, or lacking necessary skills • Commodity quality control difficult if procurement decentralized

16. Lessons Learned from Commercial Sector • Eliminate intermediate levels in the supply chain • Include a strong LMIS • Increase supply chain “agility” • Centralize and automate supply chain management

17. Planning for Decentralization

18. Planning for Decentralization Centralize: • Logistics System Functions • Drug Registration • Standard Treatment Guidelines • Health Professional Licensing

19. Kenya: STI kits

20. Avoid decentralization of these logistics functions • Specification and Enforcement of EDL • Product Selection and Essential Service Package specification • Bulk and international purchasing • Rationing for scarce essential products • Quality assurance for all products • Logistics Management Information Systems

21. Conclusions • Decentralize decision making only if you can provide district managers with the resources to execute those decisions • Begin with a detailed, indicator-based logistics system assessment • Examine critical planning assumptions critically (e.g., funding, personnel availability, organizational constraints, time frames)

22. Conclusions • Develop a detailed logistics decentralization plan for all aspects of the logistics cycle • Be prepared to change it • Strengthen/protect the LMIS at all costs • Ensure that logistics training to support decentralization is competency-based and is accompanied by periodic follow-up • Supervision is critical, and should include logistics oversight