PRESENTATION: Health Commodity Supply Chain Management 0516

8/17/2019 PRESENTATION: Health Commodity Supply Chain Management 0516

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HEALTH COMMODITYSUPPLY CHAIN MANAGEMENT

16 May 2016

ABOUT

5 THINGS Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or

policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not

guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.

Terminologies used may not necessarily be consistent with ADB official terms.


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#1Effectivecommodity supply

chains are crucialfor health security


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More lives saved and improved quality of life


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Effective health supply chains improveefficiencies and service quality

Increasesprogramimpact

• Builds trust inthe health system

• Increasedhealth service use

Enhancesquality ofcare

Improvescostefficiencyandeffectiveness

•Improved servicedelivery

• Motivates staff

•Reduces overstock,waste, expiry,

damage, pilferage,and inefficiency

•Protects programinvestments;

• Accelerates cost recovery


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Health commodity managementcapacity needs to keep up with Asia’s

expanding pharmaceutical market

UHC: Expansion of access to

health careIndonesia: 155M covered

60%

Expanding pharmaceutical market

13% annual growth rate

$214B

(2010)

$386B

(2017)


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Increased profitability of privatehealthcare companies31% annual growth rate

Average revenues

USD5.4M(2005)

USD27.6M(2011)

Expanding prevalence of non-

communicable diseases (NCDs)

51M(China)

43MDiabetes

(India)

Vulnerability to pandemics andnatural disasters• SARS, avian flu, earthquakes, etc.


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Supply Chain Strengthening SupportsSustainable Development Goals

SDG 3.8: Achieve universal health coverage,

including financial risk protection, access toquality essential health-care services andaccess to safe, effective, quality and affordableessential medicines and vaccines for all


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#2Health supply chainsshould be

customer-centered


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ProductSelection

Quantification

Procurement

ServingCustomers

Warehousing,

Storage andDistribution

Logistics Cycle

Source: USAID | DELIVER


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• Logistics systems begin and endwith the customer / patient

6 Logistics “Rights”

Product

Quantity

Place

Time

Quality

Cost


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#3Information is the heart of a

health commoditysupply chain


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InformationManagement


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Inventory levels & distribution

Commodity budgets

Patient Information

Management & SupervisionInformation ManagementFinancial Management

Human Resources

Management & SystemResource AllocationDecision-Making

Batch and expiry information

Product lead times

Price and market information


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#4Health supplychains are

fragmented


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Manufacturer

Regional Distributer

Wholesaler or Pharmacy

End user

Privatesupply chain

Publicsupply chain

End user

Provincial or District

Central Level

MoH Donors

MOHProcurement

Agent

DonorProcurement

Agents


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End user

Provincial or District

Central Level

MoH

Essentialmedicine

TB ReproductiveHealth

HIV Vaccines

Fundingsource

Procurementagent

Donor YDonor X

NGOs MOHProcurement

Agent


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#5Coordination andplanning is requiredto achieve efficiencyand effectiveness


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I n f o r m a

t i o n

F i n a n c

e s

M e

d i c i n e s & H e a l t h C o m m o d i t i e

s

= Rational Drug Use

= Inventory managementand reporting

= Procurement andfunding cycles

= System performance

= National drug strategiesand regulatory frameworks

= Manufacturing leadtimes

= contract monitoring &payment

= Quality Control andMonitoring

= Decentralization or

other health reform

= Procurement policies


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Indonesia after Tsunami in 2004

• 60% of products not on essential medicines list

• 70% labeled in a foreign language

• 25% had an inadequate expiry date

661 tons of medicines had to be destroyed at thecost of EUR2.4M

4,000 pounds of pharmaceutical donations


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ADB opportunities


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ADB Investments in Supply ChainLargely commodity procurements – not dedicated system strengthening

ADB Project Procurement Related Funding

CDC2Total Budget: $54M

Procurement of laboratory equipmentCambodia: $2.5MLao PDR: $1.85MVietnam $10.88M

CDC2

Additional FinancingTotal Budget: $9.5M

Procurement of malaria program equipment and

consumables (rapid diagnostic tests, artemisinin-basedcombination therapies, long-lasting insecticide-treatedmosquito nets)

Lao PolicyHealth SectorPolicy LoanTotal Budget: $20M

USD 548,000 for equipment and vehicles

R-CDTATotal Budget: $4.5M

● Purchase the minor laboratory equipment, rapid tests(January 2016 – March 2017).● $75,000 for microscopes● $186,000 for other laboratory equipment

GMS Health Security

Total Budget: $114M

● Assessment of laboratory equipment

● $9,000 budget for the purchase of laboratory equipment


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ADB Supply Chain InvestmentOpportunities

Largely commodity procurements – not dedicated system strengthening

•CMS Infrastructure at the central or regional levels

•Expanded storage facilities (hospitals, etc.)

•Fleet refurbishment

InfrastructureDevelopment

•Integrated LMIS systems

•Automated national drug quality registries

InformationManagement

•WHO MQAs accreditation

•Warehouse accreditation (ISO Organization)

•Public procurement reformManagementStrengthening

Integrate into ADB health security programming


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References

1. “Asia Rising: Health Care.” A report from the EconomistIntelligence Unit, 2014

2. “Logistics Management Units: What, Why and How ofthe Central Coordination of Supply ChainManagement.” USAID | DELIVER, April 2010

3. “Managing Access to Medicines an HealthTechnologies.” Management Sciences for Health. 2012.

4. “Rapid Analytical Review and Assessment of HealthSystems Opportunities and Gaps in Indonesia,” Health

Finance and Governance Project, USAID 2015 DRAFT

5. “The Logistics Handbook: A Practical Guide for theSupply Chain Management of Health Commodities.”

USAID|DELIVER, 2011


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ANNEX 1. Logistics Cycle


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Logistics Cycle

Serving

Customers

ProductSelection

Quantification& Procurement

Warehousing,Storage andDistribution

PolicyEnvironment

Policy

Environment

Source: USAID | DELIVER


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Logistics Cycle – Serving Customers

① ServingCustomers

ProductSelection



Management &

SupervisionInformation ManagementFinancial Management

Human Resources

PolicyEnvironment

Policy

Environment

• Logistics system begins and end with thecustomer

• 6 Logistics “Rights”: Product, Quantity, Place,Time, Quality and Cost


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Logistics Cycle – Commodity Selection

Serving

Customers

② CommoditySelection



Management &Supervision

Information ManagementFinancial Management

Human Resources

Policy

Environment

Policy

Environment

= List of common health problems

= Choices of standardmedicines and non-drugtreatments

= Drug TherapeuticCommittee

= National Drug Policy

= National TreatmentGuidelines

= Essential Medicines List (EML)


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Logistics Cycle - Quantification

Serving

Customers

ProductSelection

③





Human Resources

PolicyEnvironment

Policy

Environment

= Calculate product demand

= Morbidity based method

= Consumption-based

= Data accuracy?

= PartnerCoordination


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Logistics Cycle - Procurement

Serving

Customers

ProductSelection

③Quantification& Procurement




Human Resources

Policy

Environment

Policy

Environment

= Accuratespecifications

= Transparent vendorselection

= supplier performancemonitoring

= ProcurementPlanning

= Alignment ofprocurement andfunding cycles

= contract monitoring& payment

L i ti C l W h i St


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Logistics Cycle – Warehousing, Storage& Distribution

Serving

Customers

Product Selection

Quantification &Procurement

④


Management &


Human Resources

PolicyEnvironment

Policy

Environment

= Inventory control

= Product put-away, pickingand packing

= Distribution planning

= Product security & workersafety

= Distribution

= Customs clearing


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Logistics Cycle – Policy Environment

Serving

Customers

ProductSelection



Management &


Human Resources

⑤ PolicyEnvironment

Policy

Environment

= Public procurementpolicies

= National strategies

= Quality testing

= Health worker tasks

= Decentralization orother health reform

= Treatment protocols


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ANNEX 2. Supply ChainStrengthening Examples

A t O d t A hi C t


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Aggregate Orders to Achieve CostSavings – Pooled procurement

• PEPFAR’s SCMS project • USD2.5 billion in medicine and health

commodity procurements from 2005 – 2015(65 countries)

• Indefinite quantity contracts (IQCs) andblanket purchase agreements (BPAs)

• Generic procurements of ARVs increasedfrom 9.17% (2005) to 76% (2008) with an

estimated total savings of USD323M *

*Annual ARV expenditures USD116M (2005) to USD202M (2008)

St th C t l M di l St (CMS)


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Strengthen Central Medical Stores (CMS)to strengthen public system

• Pharmaceutical or medical supplywarehouse for the public sector

• Often the national procurement agent• Government main client

• Distribute to regional or provincial stores• Implement various outsourcing models –

3PL providers• Drug quality quarantine point

• Increasing trend towards independencefrom MOH


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Nepal: Introduction of “Pull” (Requisition)Logistics System reduces stock-outs

• 1994: 40% commodity stock-out rate underpush” system

• 2004 – 2010: Transitioned to a “pull” or orderingsystems at all 75 districts

• 2012:o Reduced stock outs of family planning

products to 2%o Improved inventory reporting by facilities from

88% to 96%


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Bangladesh: Coordinate supply chainthrough Logistics and Supply

Management Units• Based at the

Directorate of FamilyPlanning and centraland Regionalwarehouses

• Over 280 staff• Oversee the national

quantification,forecasting andprocurement

planning process• Manage LMIS• Identify needs and

gaps• Distribution planning• Manage international

procurements for FP

and RH commodities

PRESENTATION: Health Commodity Supply Chain Management 0516

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