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Operating a Global Health Supply Chain in Low-Resource Settings

Wednesday December 5, 2018


Companies work tirelessly to optimize supply chain management and enhance end-to-end performance. From agribusiness to information technology, we all strive for better data, stronger foresight and breakthrough innovations. And, of course, we want that all-important metric — on-time delivery. But the global health sector confronts a unique set of challenges. For instance, last-mile delivery means very different things to an e-commerce company than a global health supply chain using camels to deliver mosquito nets to a village in rural Ethiopia.

In addressing the challenges of operating a global health supply chain in low-resource settings, there’s plenty to learn from established commercial supply chains. The USAID Global Health Supply Chain Program — Procurement and Supply Management (GHSC-PSM) project sheds light on unique complexities that challenge the very idea of industry-wide best practices. Through sharing information with our fellow supply chain professionals about the challenges we have faced and our progress made, we can all learn from each other as we seek to strengthen global health supply chains and make them more efficient and effective for our beneficiaries and customers.

To that end, here are three behind-the-scenes glimpses of what makes global health supply chains so different and how to navigate the challenges:

1. The stakes are high. Implemented by Chemonics International and a consortium of partners, including IBM, GHSC-PSM’s mission is to deliver an uninterrupted supply of lifesaving health commodities to improve lives worldwide. Like all supply chain managers, we aim to deliver to the right place at the right time. But for us, the cost of inventory inaccuracies and stockouts are much worse than lost profit.

In most cases, GHSC-PSM delivers commodities to central warehouses. From there, an in-country supply chain managed by local governments or other entities takes over the process of delivering to regional warehouses and service delivery points, such as hospitals and clinics. Finally, the product gets to patients. So far, our program has distributed more than $1.35 billion worth of commodities to 59 developing countries around the world.

2. There are quantification challenges. Each year, many countries go through a forecasting and supply planning process for major global health commodities, addressing the questions of how much will be procured and when it needs to be delivered. With GHSC-PSM’s support, many countries produce supply plans for the next 12-24 months. The aggregation of supply plans from various countries is a key input to the demand planning effort of donor programs, such as this one. While this seems like a relatively straightforward demand planning process, the reality is far from it. The stock status in countries may abruptly change because of unexpected outbreaks of disease, a change in treatment regimen, unexpected inventory losses or other emergencies. And in some contexts, limited data availability and quality interrupts supply planning.

To tackle these data visibility challenges, GHSC-PSM uses appropriate technology to facilitate data collection and create a more streamlined and simplified visualization of stock levels. This helps countries detect problems early, so they can be systematically resolved. For example, in Malawi we introduced the country’s first ever web-based logistics management information system to expedite the process for health facilities and service providers to report on health commodities in stock and in need of resupply. Information from such systems facilitates more accurate quantification and forecasting. We use this more reliable information to plan orders and deliveries.

3. There are on-time delivery complexities. One key indicator of GHSC-PSM’s success is our on-time delivery performance. Countries order products from GHSC-PSM and request delivery dates that will allow them to maintain an adequate inventory. If the goods arrive too early, the country may lack space in the warehouse. If the goods arrive too late, the country runs the risk of understock. For this reason, GHSC-PSM uses a restrictive three-week window for determination of on-time delivery.

Fulfilling an order can take a year or longer, due to several factors. As donor-funded commodities, the orders must be approved by GHSC-PSM, the customer country and USAID. For some large volume orders, the commodity is made-to-order and the supplier can take weeks, if not months, to manufacture it. Even if the quantity is small, issues such as stringent shelf-life requirements may demand fresh production batches. For most countries, shipments require pre-inspection or an importation waiver, which can be lengthy and unpredictable. Waivers can take anywhere from two weeks to six months, depending on the country, timing of the request and type of commodities. When an order is shipped by sea, the transit time, customs process and in-country transit introduce additional uncertainties. These factors make it very challenging to meet a narrow, three-week delivery window. To help, GHSC-PSM manages buffers in the various fulfillment steps and carefully tracks the progress of each order through detailed daily review of a pipeline dashboard.

The challenges that arise in operating global health supply chains demand innovation, collaboration, cutting-edge information systems and continual improvement. GHSC-PSM achieved 82 percent on-time delivery in June 2018, with even higher provisional rates in July and August. We also expect to exceed our quarterly target of 80 percent, thanks to discovering techniques to navigate these challenges, improve our processes and optimize the supply chain.