GLOBAL HEALTH SUPPLY CHAINS

1. GLOBAL HEALTH SUPPLY CHAINS SCTL: San Jose, Costa Rica July 21st, 2009 1

2. TYPICALLY MOH SCM INVOLVES ACTIVITIES AT 3 DIFFERENT LEVELS SC Activities at each level Focus at each level Ministry Of Health • Product Registration • Forecasting / Quantification • Procurement Central/National • Central Co-ordination • Guidance / Direction • Target Setting • Procure / Store & Distribute • Forecasting / Quantification • Procurement • Storage • Inventory Management • Transportation Central Medical Store (CMS) • Storage • Transportation • Inventory Management Provincial/District Provincial/ Regional WH • M&E consolidation • Provincial Budget Mgmt • Liaison between Sites & Central • Storage & Distribution • Storage • Transportation • Inventory Management • Dispensing Hospital/ Hospital Lab Site • Patient Test, Care & Treatment • Report Completion • Request & receive Commodities • Storage Health Centre /ICTC • Storage • Inventory Management • Dispensing Health Centre/ ICTC Data Flow Product Flow

3. GLOBAL SUPPLY CHAINS To where I am now …. Where I have come from …. 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 • 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

4. THE GAP CONTINUES TO WIDENED BETWEEN DELVEOPED WORLD AND DEVELOPING WORLD SUPPLY CHAINS • Private Sector/High Income • Focus on supply chain as competitive advantage / increase profits • Outsourcing allows focus on core competencies and specialization • Massive cost savings • Reduction in inventory at all points in chain (cashflow benefits) • Concurrent with • Enhanced customer service • Shorter lead times • Increased customization • Improved quality • Health Systems Developing World • Lack of HR/specialized SCM knowledge • Poor communications/data integrity • Absence of metrics for performance/progress • Lack of strategic approach/ business framework • Funding provided by multiple stakeholders whose priorities are not always aligned • Exacerbated by • Investment in vertical supply chains • Push to decentralize • 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

5. CHARACTERISTICS OF GLOBAL HEALTH SUPPLY CHAIN 5

6. CHARACTERISTICS OF GLOBAL HEALTH SUPPLY CHAIN 6

7. CHARACTERISTICS OF GLOBAL HEALTH SUPPLY CHAIN 7

8. VERTICAL SUPPLY CHAINS LIKE THIS EXIST IN MOST DELVELOPING WORLD COUNTRIES

9. RESULT OF POOR INFRACSTRUCUTRE, TRAINING AND LACK OF RESOURCES

10. 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 MDG8 Report

11. CHAI’s Supply Chain Strategy is to empower governments to build cost-efficient, effective and sustainable national health care supply chains Ensure sustainability through increased awareness and continuous source of SCM skills/knowledge in country. E.g. SCM Curriculum/Accredition, SCM Mentoring Leverage resources from developed world, private sector. E.g. Partnerships, Applying lessons learned Turn data into information E.g. Develop technology roadmaps Secure funding for SCM specific programs, to help demonstrate effective solutions

12. EXAMPLES OF SCM ISSUES IN COUNTRY 12

13. PARTNERS AND DONORS INVOLVED IN SUPPLY CHAIN MANAGEMENT ACTIVITIES Major institutional donors providing funding for health systems Key implementing agencies engaged in health system strengthening R8 procurement/SCM = $172m or 8.7% of total phase one $185m in 2007 to PFSCM (runs SCMS) Funds DELIVER, with JSI in 38 countries (focus on contraceptives) $100m 6 years • GFATM • PEPFAR • USAID • AUSAID • DFID • World Bank • 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 No distinct SCM budget but incorporated into many activities