THE SUPPLY

CHAIN MANAGER’S

HANDBOOK

A PRACTICAL GUIDE TO THE MANAGEMENT

OF HEALTH COMMODITIES

2017 JS

THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES

 THE SUPPLY CHAIN ABOUT JSI

John Snow, Inc. (JSI) is a U.S.-based health care consulting firm committed to improving the

MANAGER’S HANDBOOK health of individuals and communities worldwide. Our multidisciplinary staff works in partnership

with host-country experts, organizations, and governments to make quality, accessible health

care a reality for children, women, and men around the world. JSI’s headquarters are in Boston,

A PRACTICAL GUIDE TO THE MANAGEMENT Massachusetts, with U.S. offices in Washington, D.C.; Atlanta, Georgia; Burlington, Vermont;

OF HEALTH COMMODITIES Concord, New Hampshire; Denver, Colorado; Providence, Rhode Island; and San Francisco,

California. JSI also maintains offices in more than 40 countries throughout the developing world.

RECOMMENDED CITATION

John Snow, Inc. 2017. The Supply Chain Manager’s Handbook, A Practical Guide to the

Management of Health Commodities. Arlington, Va.: John Snow, Inc.

ABSTRACT

The Supply Chain Manager’s Handbook: A Practical Guide to the Management of Health

Commodities is the starting point for anyone interested in learning about and understanding

the key principles and concepts of supply chain management for health commodities. Concepts

described in this handbook will help those responsible for improving, revising, designing,

and operating all or part of a supply chain. John Snow, Inc. (JSI) has written The Supply Chain

Manager’s Handbook based on more than 30 years of experience improving public health supply

chains in more than 60 countries.

Cover graphic: Photo courtesy of USAID | DELIVER Project

JOHN SNOW, INC.

1616 Fort Myer Drive, 16th Floor

Arlington, VA 22209 USA

Phone: 703-528-7474

Fax: 703-528-7480

The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for Email: jsiinfo@jsi.com

International Development or the United States Government. Internet: www.jsi.com

ii THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES iii

 TABLE OF CONTENTS

4.2 National Essential Medicines List....................................................................................................46

ACRONYMS........................................................................................................................................................... 4.3 Registration of Pharmaceutical Products...................................................................................... 47

4.4 Standard Treatment Guidelines....................................................................................................... 48

PREFACE................................................................................................................................................................. 4.5 Funder Requirements.........................................................................................................................49

4.6 Laboratory Supplies and Equipment Standardization...............................................................50

1. INTRODUCTION TO LOGISTICS

What a Supply Chain Manager Needs to Know.................................................................................... 1 5. QUANTIFICATION OF HEALTH COMMODITIES

1.1 What Is Supply Chain Management?................................................................................................... 1 What a Supply Chain Manager Needs to Know................................................................................. 53

1.2 Why Supply Chains Matter....................................................................................................................3 5.1 Introduction to Quantification............................................................................................................54

1.3 The Supply Chain and the Six Rights................................................................................................ 5 5.2 Key Steps in Quantification...............................................................................................................55

1.4 The Role of the Supply Chain Manager............................................................................................ 6 5.3 Using the Quantification Results..................................................................................................... 72

1.5 Logistics Cycle: Organized Logistics Activities............................................................................... 8 5.4 Reviewing and Updating the Quantification................................................................................. 73

1.6 Supply Chain Integration.....................................................................................................................12

1.7 Supply Chain Evolution-The Path to Integration............................................................................15 6. HEALTH COMMODITY PROCUREMENT

1.8 Segmentation in the Public Health Supply Chain Context.........................................................16 What a Supply Chain Manager Needs to Know................................................................................. 75

6.1 The Complexity and Challenges of Procurement........................................................................ 76

2. SUPPLY CHAIN STRATEGY AND DESIGN 6.2 Developing the Procurement Strategy.......................................................................................... 78

What a Supply Chain Manager Needs to Know..................................................................................18 6.3 Steps in Procurement (Focus on Competitive Tendering)........................................................ 87

2.1 National Supply Chain Strategy (or master plan)...........................................................................18

2.2 System design......................................................................................................................................20 7. INVENTORY STRATEGY

What a Supply Chain Manager Needs to Know.................................................................................93

3. INFORMATION SYSTEMS FOR DATA VISIBILITY AND USE 7.1 Purposes of Holding Inventory..........................................................................................................94

What a Supply Chain Manager Needs to Know.................................................................................25 7.2 Considerations for Defining an Inventory Strategy.....................................................................95

3.1 What is a Logistic Management Information System?.................................................................26 7.3 Defining and Implementing the Inventory Strategy....................................................................98

3.2 Data Selection......................................................................................................................................30 7.4 Inventory Control System and Policies ......................................................................................... 101

3.3 Data collection...................................................................................................................................... 33 7.5 Monitoring and Measuring Inventory Performance.................................................................. 104

3.4 Data visibility......................................................................................................................................... 34

3.5 Digital LMIS...........................................................................................................................................36 8. WAREHOUSING AND DISTRIBUTION

3.6 Data Use................................................................................................................................................39 What a Supply Chain Manager Needs to Know............................................................................... 109

3.7 Data Quality............................................................................................................................................ 41 8.1 Warehousing......................................................................................................................................... 110

8.2 Distribution........................................................................................................................................... 119

4. PRODUCT SELECTION 8.3 Outsourcing......................................................................................................................................... 122

What a Supply Chain Manager Needs to Know................................................................................. 43 8.4 Performance Measurement.............................................................................................................123

4.1 Purpose of Product Selection............................................................................................................ 44 8.5 Health and Safety...............................................................................................................................124

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 9. PERFORMANCE MANAGEMENT FIGURES

What a Supply Chain Manager Needs to Know.................................................................................131 Figure 1-1: Correlation Between Contraceptive Prevalence Rate and Product Availability...............4

9.1 What is Performance Management?...............................................................................................132

Figure 1-2: Correlation Between Malaria Mortality Rates and Product Availability..............................4

9.2 Creating Performance Management Systems............................................................................133

9.3 Key Performance Indicators.............................................................................................................135 Figure 1-3: Logistics Cycle.................................................................................................................................. 8

Figure 1-4: The Integrated Public Health Supply Chain............................................................................ 13

10. ORGANIZATIONAL CAPACITY AND WORKFORCE

Figure 1-5: Supply Chain Evolution.................................................................................................................15

What a Supply Chain Manager Needs to Know................................................................................139

10.1 Introduction......................................................................................................................................... 140 Figure 2-1: Logistics Cycle................................................................................................................................ 17

10.2 Staffing the Supply Chain................................................................................................................141 Figure 2-2: Timeline of Master Planning Activities in a West African Country ...................................19

10.3 Building the Capacity of the Supply Chain Workforce........................................................... 146

Figure 2-3: Supply Chain System Design Process.....................................................................................21

10.4 Supporting Your Greatest Asset, the Workers on the Job.................................................... 149

10.5 Providing Stewardship and Leading the Supply Chain Team...............................................153 Figure 3-1: Logistics Cycle................................................................................................................................25

10.6 Monitoring Workforce Performance............................................................................................ 156 Figure 3-2: The Role of data in Supply Change Evolution......................................................................26

Figure 3-3: Sample LMIS Information and Supply Flow Diagram.......................................................... 27

11. FINANCING

What a Supply Chain Manager Needs to Know................................................................................163 Figure 3-4: Sample Logistics Reporting System for National Vaccine Program................................ 35

11.1 Tracking Commodity Financial Flows............................................................................................ 164 Figure 3-5: Data Entry Screen for Requisitions for HCMIS Ethiopia.....................................................36

11.2 Supply Chain Costing...................................................................................................................... 169

Figure 3-6: Vaccine Dashboard for vLMIS Pakistan.................................................................................. 37

11.3 Economic Evaluation.........................................................................................................................173

Figure 3-7: Dashboard of Stock Status by Location and Product for eLMIS Tanzania.................... 38

12. SUPPLY CHAIN RISK MANAGEMENT Figure 3-8: Managing the Process of Developing a Digital LMIS..........................................................30

What a Supply Chain Manager Needs to Know................................................................................178

Figure 4-1 Logistics Cycle................................................................................................................................. 43

12.1 Risk Management Basics.................................................................................................................179

12.2 Benefits of Risk Management....................................................................................................... 180 Figure 4-2: Applying Value Analysis in Product Selection......................................................................45

12.3 Risk Management as a Formal Process for Figure 5-1: Logistics Cycle............................................................................................................................... 53

Public Health Supply Chain Managers........................................................................................ 181

Figure 5-2: Steps in Quantification................................................................................................................55

Figure 5-3: Sample Forecasting Tree for Zinc Tablets for Treatment

of Diarrhea in Children Under 5 ..............................................................................................64

Figure 6-1: Logistics Cycle............................................................................................................................... 75

Figure 6-2: Supply Positioning Matrix........................................................................................................... 83

Figure 6-3: Procurement Steps...................................................................................................................... 87

Figure 7-1: Logistics Cycle................................................................................................................................93

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 Figure 7-2: Network Diagram..........................................................................................................................96 TABLES

Figure 7-3: Safety Stock and Service Level Relationship........................................................................ 97 Table 2-1: Type of Data Collected (Illustrative)............................................................................................22

Figure 7-4: Segmenting Inventory............................................................................................................... 100

Table 3-1: HMIS and LMIS Differences..........................................................................................................30

Figure 8-1: Logistics Cycle............................................................................................................................. 109

Table 3-2: Essential Logistics Data Items..................................................................................................... 32

Figure 8-2: Warehouse De-Junking............................................................................................................. 118

Table 5-1: Preparation Process.......................................................................................................................56

Figure 8-3: Basic Distribution Center Model............................................................................................. 120

Table 5-2: Forecasting Process......................................................................................................................58

Figure 8-4: Basic Distribution Network Model.......................................................................................... 121

Table 5-3: Types and Sources of Data for Forecasting Product Consumption.................................60

Figure 9-1: Logistics Cycle...............................................................................................................................131

Figure 9-2: Performance Management Cycle Graphic...........................................................................133 Table 5-4: Example Country Data Quality Analysis for ARV Drug Quantification.............................62

Figure 10-1: Logistics Cycle.............................................................................................................................139 Table 5-5: Conversion of Data into Product Quantities...........................................................................66

Figure 10-2: Impact of Human Resources on Supply Chain Performance........................................ 140 Table 5-6: Supply Planning Process..............................................................................................................68

Figure 10-3: Recruit the Right People......................................................................................................... 146

Table 5-7: Supply Planning Data Requirements.........................................................................................69

Figure 10-4: Building the Capacity of your Supply Chain Workforce..................................................147

Table 11-1: Zambia: Cost Effectiveness of Alternative

Figure 10-5: Professionalization of Supply Chain.................................................................................... 152 Essential Medicines Supply Chains..........................................................................................175

Figure 10-6: Regions Using QIT Approach Show Improvement in

Table 11-2: Supply Chain Risk Management Process.....................................................................................

Key Supply Chain Indicators.................................................................................................. 155

Table 12-1: Common Conceptions vs. Best Practice in

Figure 10-7: PBF Intervention Decision Tree..............................................................................................157

Supply Chain Risk Management ..............................................................................................179

Figure 11-1: Logistics Cycle..............................................................................................................................163

Table 12-2: Example of Scale Interpretations for Impact of Risk Events.............................................183

Figure 11-2: Steps for Counting and Tracking Commodity Funding.................................................... 165

Table 12-3: Example of Scale Interpretations for Likelihood of Risk Events......................................183

Figure 11-3: Country Example of Commodity Financing......................................................................... 166

Figure 11-4: Comparison of Requirements, Commitments, and Spending.........................................167 Table 12-4: Example Solutions for Risks to Commodity

Availability at the Service Delivery Point.............................................................................. 185

Figure 11-5: Typical Financing Process Steps........................................................................................... 168

Figure 11-6: Supporting Health Services with Effective Supply Chain................................................ 169 ANNEX

Figure 11-7: Supply Chain Costing Framework...........................................................................................171 Annex 3-1: Sample Business Process Map for Order Processing Function........................................ 42

Figure 11-8: Supply Chain Costs....................................................................................................................172 Annex 8-1: Storage Guidelines......................................................................................................................126

Figure 11-9: Components of Economic Evaluation of Supply Chains..................................................173 Annex 8-2: Common Product Quality Problems...................................................................................... 129

Figure 12-1: Logistics Cycle............................................................................................................................. 177 Annex 8-4: Common Product Quality Problems.......................................................................................130

Figure 12-2: Supply Chain Risk Management Process............................................................................ 181 Annex 10-1: Supervision Checklist for Health Facility Visits.........................................................................

viii THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES ix

 ACRONYMS EOQ

ERP

Economic order quantity

Enterprise resource planning

3PL Third party logistics provider

FBO Faith-Based Organizations

3TC Lamivudine (antiretroviral drug)

FIFO First-in, first-out

ABC Abstinence, be faithful, use condoms

GFATM Global Fund to Fight AIDS, Tuberculosis and Malaria

ACT Artemisinin-based combination therapy

GIS Geographic information system

AIDS Acquired immune deficiency syndrome

GIS Geographic information system

AMRH African Medicines Regulatory Harmonization

GMP Good manufacturing practice

API Active pharmaceutical ingredient

GPS Global Positioning System

APICS American Production and Inventory Control Society

HIS Health information system

APS Advance planning systems

HIV Human immunodeficiency virus

ART Antiretroviral therapy

HMIS Health management information systems

ARV Antiretroviral

HR Human Resources

CBA Cost-benefit analysis

HSS Health Sector Strategy

CEA Cost-effectiveness analysis

IAPHL Association of Public Health Logisticians

cGMP Current Good Manufacturing Practice

ICC Inventory control cards

CHW Community health worker

ICT Information and communications technology

CMS Central Medical Stores

Information Mobilized for Performance Analysis

COGS Cost of goods sold IMPACT

and Continuous Transformation Network

COO Certificate of origin INN International non-proprietary name

CPR Contraceptive prevalence rate IT Information Technology

CSCMP Council of Supply Chain Management Professionals IUD Intrauterine device

CYP Couple-years of protection JSI John Snow, Inc.

D Desirable drugs (inventory strategy) KPI Key performance indicators

DALY Disability-adjusted life years LAM Lactational amenorrhea

DHS Demographics and Health Survey LIAT Logistics Indicators Assessment Tool

DPT Diphtheria-tetanus-pertussis vaccine LMIS Logistics management information systems

E Essential drugs (inventory strategy) LMU Logistics Management Unit

EFV Efavirenz (antiretroviral drug) LSAT Logistics System Assessment Tool

ELISA Enzyme-linked immunosorbent assay M&E Monitoring and evaluation

eLMIS Electronic LMIS MAPE Mean absolute percent error

EML Essential medicines list MIS Management information system

EMR Electronic medical record MOH Ministry of Health

x THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES xi

 MOHSW Ministry of Health and Social Welfare SRC (Chapter 10)

MRP Materials requirements planning ST&C Specific Terms and Conditions

MS Medical stores STG Standard treatment guidelines

MSH Medicines and Health Technologies STI Sexually transmitted infection

N Necessary drugs (inventory strategy) TB Tuberculosis

NDRA National drug regulatory authority TCO Total cost of ownership

NEML National essential medicines list TDF Tenofovir disoproxil fumarate (antiretroviral drug)

NGO Nongovernmental organization TFR Total fertility rate

NVP Nevirapine (antiretroviral drug) TMS Transport management system

OJT On-the-job training TOT Training-of-trainers

PATH Program for Appropriate Technology in Health TRAC The Risk Assessment and Control

PBI Performance based incentive UN United Nations

PEPFAR President’s Emergency Plan for AIDS Relief UNDP United Nations Development Programme

PO Purchase order United Nations Development Programme -

UNDP-CIPS

POD Proof of delivery Chartered Institute of Procurement and Supply

UNFPA United Nations Population Fund

POS Point-of-service

UNICEF U.S. Agency for International Development

PtD People that Deliver

USAID United States Agency for International Development

RFEOI Request for Expression of Interest

V Vital drugs (inventory strategy)

RFI Request for Information

VAN Visibility and Analytics Networks

RFP Request for proposals

VED Vital, essential, and desirable

RFQ Request for quotes

VEN Vital, essential, and nonessential

RIRV Requisition, issue, and receipt voucher

VMI Vendor-managed inventory

ROI Return on investment

VPP Voluntary Pooled Procurement

SC4CCM Supply Chains for Community Case Management

VVM Vaccine vial monitor

SCMS Supply Chain Management System

WHO World Health Organization

SCOR Supply Chain Operations Reference

WHO PQ World Health Organization Prequalified

SDP Service delivery point

WI Work instruction

SKU Stock keeping unit

WMS Warehouse management system

SMART Specific, measurable, attainable, realistic, and timely

SOH Stock on hand

SOP Standard operating procedure

SPARHCS Strategic Pathway to Reproductive Health Commodity Security

SRA Stringent regulatory authority

xii THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES xiii

 PREFACE HOW TO USE THIS HANDBOOK

Supply chain managers and others will learn about a wide range of supply chain principles and

practices. The Introduction chapter provides a general overview and framework for the rest of

Strong supply chains save lives. Strong supply chains are critical to get health products to the chapters and should be read first. The Logistics Cycle, presented in the Introduction chapter,

clients, wherever and whenever they need them. The Supply Chain Manager’s Handbook is the provides a graphical representation of how the chapters fit together.

starting point for anyone interested in learning about and understanding the key principles and

concepts of supply chain management for health commodities. The handbook will be valuable Each chapter begins with a summary of “What a Supply Chain Manager needs to know” about

for anyone involved in managing, operating, or overseeing health commodity supply chains, from the particular chapter topic, which will guide you in selecting chapters of particular interest. The

policymakers and program managers, to service providers, storekeepers, technical assistance handbook highlights each activity of the logistics cycle, in detail, as well as the management

providers, and public- and private-sector partners. Concepts described in this handbook will functions that support these activities.

help those responsible for improving, revising, designing, and operating all or part of a supply

chain. The technical topics apply to managing a variety of health commodities, including essential To increase your understanding of the material, note the selected text boxes that provide

medicines, antiretroviral medicines, vaccines, contraceptives, antimalarial medicines, diagnostics, more in-depth explanation or examples. You will find the following types of text boxes throughout

introduction icons

tuberculosis medicines, and laboratory commodities. the handbook: introduction icons

introduction icons

John Snow, Inc. assembled some of our most experienced supply chain experts to write The introduction icons

Supply Chain Manager’s Handbook based on more than 30 years of experience improving public

health supply chains in more than 60 countries. We have worked together with governments and

introduction icons

private and public sector partners to manage health supply chains in a cost-effective way to make

Real-life in-country examples of supply

sure health products are available to the people who need them. Throughout this work, we have Real-life

chain management

Real-life in-country

in-country in action of

examples examples

supply of supply chain management in action

learned valuable lessons which we have distilled into The Supply Chain Manager’s Handbook. chain management in action

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Portions of this handbook were adapted from The Logistics Handbook, originally developed by chain management in action

Real-life in-country examples of supply

the USAID | DELIVER PROJECT funded by USAID. Fact

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Photo courtesy of A. Makulec, Ethiopia

xiv THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES xv

1 1

CHAPTER 1

INTRODUCTION availability of health commodities to the people who need them. In this chapter, we will first

consider logistics activities, and then discuss supply chain integration, which provides a context

in which the logistics activities take place.

Organizations in the supply chain often include departments of ministries of health (procurement,

WHAT A SUPPLY CHAIN MANAGER planning, drug regulatory board, human resources, and health programs); central medical

NEEDS TO KNOW: stores; donors; nongovernmental organizations (NGOs); regions and districts; health facilities;

community health workers; and private sector partners, such as third-party logistics providers,

A supply chain manager needs to know the following, which are covered in this chapter: drug manufacturers, distributors, and private service providers.

• The critically important role played by supply chains in attaining health objectives, and the This network of actors is nested within a country’s health system and the operational and

six rights of supply chain management socio-economic environments. Supply chains must satisfy demand for essential health

commodities across sectors (public, private, and nongovernmental) and operate at each level

• The full range of activities that combine to constitute the supply chain

of the system — from manufacturers to central warehouses down to communities, and into the

• The role of the supply chain manager as a steward of the supply chain hands of customers.

• How the concepts of supply chain integration, evolution, and segmentation apply to their This handbook focuses on specific logistics activities that are undertaken within the context of

own supply chains an integrated supply chain model. This model promotes collaboration and seamless linkages

between the activities, levels, and people responsible for managing the supply chain.

1.1 W

 HAT IS SUPPLY CHAIN

MANAGEMENT?

A strong health system cannot function without a well-designed, well-operated, and well-

maintained supply chain management system—one that can ensure an adequate supply of

essential health commodities to the clients who need them.

According to the Council of Supply Chain Management Professionals (CSCMP) —

“Supply chain management encompasses the planning and management of all activities

involved in sourcing and procurement…and all logistics management activities. Importantly,

it also includes coordination and collaboration with channel partners, which can be

suppliers, intermediaries, third party service providers, and customers. In essence, supply

chain management integrates supply and demand management within and across

companies.”

Logistics activities are the operational component of supply chain management, including

functions such as quantification, procurement, inventory management, warehousing,

transportation and fleet management, and data collection and reporting.

Supply chain management includes the logistics activities plus the coordination and collaboration

of staff, levels, and functions, with the ultimate goal of aligning supply and demand. A public

health supply chain is a network of interconnected organizations or actors that ensures the

Photos courtesy of IAPHL

1 THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES 2

1 1

1.2 W

 HY SUPPLY CHAINS FIGURE 1-1.

CORRELATION BETWEEN CONTRACEPTIVE PREVALENCE RATE

MATTER Health programs cannot

AND PRODUCT AVAILABILITY

succeed unless the supply

The goal of a public health supply chain is much larger than chain delivers a reliable,

simply making sure a product gets where it needs to go. continuous supply of health

Ultimately, the goal of every public health supply chain is commodities to its customers.

to improve health outcomes. A properly functioning supply

chain is a critical part of ensuring commodity security—when

every person is able to obtain and use quality essential health

NO PRODUCT?

supplies whenever he or she needs them. NO PROGRAM!

Supply chains also help determine the success or failure of any

public health program. Both in business and in the public sector,

decision-makers increasingly direct their attention to improving supply

chains, because these improvements bring important, quantifiable benefits. Well-functioning Figure 1-2 shows that improved product availability of malaria treatment reduces malaria case

supply chains benefit public health programs in important ways by— fatality rates. When a person with malaria is able to receive prompt and effective treatment with

artemisinin-based combination therapies (ACTs), case outcomes improve.

• Increasing program impact

• Enhancing quality of care FIGURE 1-2.

CORRELATION BETWEEN MALARIA MORTALITY RATES AND

• Improving cost effectiveness and efficiency PRODUCT AVAILABILITY

SUPPLY CHAINS INCREASE PROGRAM IMPACT

If a supply chain provides a reliable supply of commodities, more

people are likely to use health services. Customers feel more confident about the health program

when there is a constant supply of commodities—it motivates them to seek and use services.

Figures 1.1 and 1.2 show the program impact of improved product availability. In figure 1.1, as the

availability of a mix of contraceptive methods improves, the contraceptive prevalence rate (CPR)

for the public sector increases. Studies have demonstrated that when a choice of contraceptive

methods is available in health facilities, more women use contraception. When more women

use contraception, it affects a number of key public health indicators—maternal mortality, infant

mortality, and total fertility rates all decrease.

Photos courtesy of USAID | DELIVER Project

3 THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES 4

1 1

SUPPLY CHAINS MATTER. • Service delivery points — where customers receive the products that they need. Service

SUPPLY CHAINS ENHANCE QUALITY OF CARE delivery points are health facilities, including hospitals, clinics, and health centers.

Medicines and medical supplies are essential components of health services. Well-supplied Customers may also receive the products they need in the community, from a community

health programs can provide superior service, while poorly supplied programs cannot. Likewise, health worker — at the last mile of the supply chain.

well-supplied health workers can use their training and expertise fully, directly improving the These components help make up the in-country supply chain (sometimes called the pipeline). It

quality of care for clients. Customers are not the only ones who benefit from the consistent is the entire chain of physical storage facilities and transportation links through which supplies

availability of commodities. An effective supply chain helps provide adequate, appropriate move from the manufacturer to the user, including port facilities, central warehouse, regional

supplies to health providers, increasing their professional satisfaction, motivation, and morale. warehouses, district warehouses, all service delivery points, and transport vehicles.

Motivated staff are more likely to deliver a higher quality of service.

The goal of the public health supply chain—improving health outcomes—is achieved by ensuring

SUPPLY CHAINS MATTER. the six rights - that the right goods, in the right quantities, in the right condition, are delivered to

EFFECTIVE SUPPLY CHAINS IMPROVE COST EFFICIENCY AND EFFECTIVENESS the right place, at the right time, for the right cost.

An effective supply chain contributes to improved cost effectiveness in all parts of a program,

Whether a supply chain supplies soft drinks, vehicles, or pens; or manages contraceptives,

and it can stretch limited resources. Strengthening and maintaining the supply chain is an

essential drugs, or other commodities, these six rights always apply.

investment that pays off in three ways: (1) It reduces losses due to overstock, waste, expiry,

damage, and pilferage; (2) it reduces costs due to inefficiency; and (3) it protects other major

program investments. WHAT IS THE RIGHT COST OF A DONATED GOOD?

In many health programs, health Yes. Even if the product is donated, the

SUPPLY CHAINS MATTER.

commodities are donated by multilateral program may still be responsible for

SUPPLY CHAINS SHOULD MATTER TO YOU! or bilateral agencies, private foundations paying the other supply chain costs — the

It is not enough that supply chain managers know that public health supply chains provide or charitable organizations, or paid for by cost of clearing, storing, and transporting

commodity security and improve program impact, quality of care, and cost efficiency, we must grants from multilateral agencies. If an the products, as well as collecting data

convince policymakers and decision makers that investing in supply chains will increase overall item is donated, does the sixth right, at and reporting on how the products are

program effectiveness and improve health outcomes. We must show them that the right cost, still apply? used.

for any public health program to deliver high-quality, comprehensive

services (and ultimately improve health outcomes), a robust supply

chain for managing health commodities must be in place. We The Six Rights

must demonstrate to them that supply chains matter. of Logistics 1.4 T

 HE ROLE OF THE SUPPLY

The RIGHT goods CHAIN MANAGER

1.3 T

 HE SUPPLY CHAIN in the RIGHT quantities

AND THE SIX RIGHTS in the RIGHT condition

Supply chain managers have overall responsibility to ensure the continuous supply of health

commodities wherever and whenever they are needed. The concepts described in this handbook

Consider a public health supply chain in a developing delivered… will help supply chain managers that are responsible for improving, revising, designing, operating,

country. It could include the and monitoring all or part of a supply chain.

to the RIGHT place

following components:

at the RIGHT time Supply chain managers are often responsible for the following:

• Warehouses — from central, intermediary (such as regions,

for the RIGHT cost. • Provide the stewardship function for the public health supply chain—providing vision and

provinces, or districts), down to the storeroom at the health

facility—act as storage facilities, where health commodities are guidance for its design, operation, and oversight

held until they are given to another facility or a customer • Develop and implement a supply chain strategy and system design(s)

• Transportation assets — a variety of transportation means – from large trucks to smaller • Identify the financing required for the commodities and supply chain operations, develop

trucks to bicycles and canoes — move the products from the warehousing facilities to the a strategy for ensuring adequate financing, and monitor the efficient and effective use of

health facilities or community health workers these resources

5 THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES 6

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• Identify supply chain performance drivers and bottlenecks, and formulate actionable

solutions to address challenges to ensuring product availability

1.5 L

 OGISTICS CYCLE: ORGANIZING

• Leverage private sector capabilities of providing supply chain services

LOGISTICS ACTIVITIES

• Utilize state-of-the-art approaches/standards for supply chain design—whether the entire

As mentioned in the introduction, supply chain management is a system that integrates activities,

network from sourcing to last mile, or discrete system segments/components—with a

people and partners to closely align supply and demand. Zooming in, we can consider logistics

focus on supply chain efficiency and performance, utilizing the levers of change, while

activities as the operational component of supply chain management. Figure 1-3 shows the

understanding the political factors of design

logistics cycle, a model to illustrate the activities in a logistics system.

• Provide overall direction and management to the public health supply chain and supply

chain organizational structures (such as a logistics management unit)

• Establish and strengthen coordination among the Ministry of Health departments, programs,

and agencies, the Central Medical Stores, private sector partners, funding agencies, and

other supply chain actors, ensuring coordination on supply chain strengthening activities FIGURE 1-3.

THE LOGISTICS CYCLE

• Develop annual workplans and budgets for the public health supply chain, and mobilize any

necessary resources Serving Customers

• Measure and monitor the overall performance of the supply chain, using established key

performance indicators

THE LOGISTICS CYCLE

• Cultivate a capable supply chain workforce, implementing any capacity building strategies

• Advocate for the necessary resources to successfully operate the supply chain and highlight

the supply chain’s contribution to national public health objectives

Supply chain managers do not need to be expert in every aspect of supply chains; the topics

Warehousing & Product

covered in this handbook provide foundational knowledge for the supply chain manager, who can Distribution Selection

identify specialized technical resources when necessary. Management

Support Functions

System Design & Strategy

STEWARDSHIP AND THE PUBLIC HEALTH SUPPLY CHAIN Logistics Management

Information Systems (LMIS)

In many countries, governments have reducing redundancy across supply Performance Management

acted as operators of supply chains. chains, while minimizing supply disruption. Organizational Capacity

and Workforce

However, governments should see Undoubtedly, strong public health systems

Financing

themselves as stewards of the public and supply chains require mature and

Risk Management

health supply chain—providing vision, continuous stewardship, or oversight, from Inventory

Quantification

guidance, and oversight to ensure that the public sector. The stewardship role of Strategy

supply chains achieve results—serving the state is designed to ensure that actors

the needs of customers to improve and from all sectors—public, subsidized, and

maintain people’s health. private/commercial—offer their products

As stewards, governments have the and services competently, equitably, and

responsibility to take a holistic approach cost-effectively. The supply chain manager

to the multiple players and various must take a lead role in the government’s

supply chain systems in country—to provision of this stewardship function and

weave these into an integrated system, is responsible for its effectiveness. Procurement

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You will first notice that the cycle is circular, which indicates the cyclical or repetitive nature of the procurement activities, which should be carefully researched, planned, and monitored, all while

various elements in the cycle. Each activity—serving customers, product selection, quantification, abiding by the applicable rules and regulations. This will enable the procurement to be carried

procurement, inventory strategy, warehousing, and distribution—depends on and is affected by out in a timely manner, according to an open, fair, and competitive process and to ultimately

the other activities. supply quality-assured products for the best value of the program.

The activities in the center of the logistics cycle represent the management support functions Inventory strategy. Inventory plays a key role in meeting the objectives of the supply chain, and

that inform and impact the other elements around the logistics cycle. it is the responsibility of the supply chain manager to ensure that inventory policies are in place

to support the organization’s mission, goals, and objectives related to health. The decision to

Below is a summary of the elements shown in the logistics cycle, including the: hold inventory provides organizations with a means to balance supply and demand. A cohesive

• Major activities in the cycle inventory strategy will define policies that determine which products to hold in inventory, how

much inventory to hold, and where to hold them, and ensures that inventory management

• Heart of the logistics cycle

decisions are documented and applied consistently across the system.

1.5.1 MAJOR ACTIVITIES IN THE LOGISTICS CYCLE Warehousing and distribution. After an item has been procured, its physical management,

through various levels of an in-country supply chain, must be carried out in a structured way

Major activities in the logistics cycle include: to ensure that it will be protected from harmful environmental conditions or handling and is

available, accessible, and in good condition while posing no risk of injury to workers. To meet this

Serving customers. Everyone who works in supply chain must remember that they select, requirement a combination of interventions requiring both physical infrastructure and structured

procure, store, distribute, or dispense products to meet customer needs, and that each customer procedures must be maintained.

receives the right product based on established protocols. In addition to serving the needs of

the end customer—the customer seeking health services—each person in the process is also

serving the needs of more immediate customers. Storekeepers provide customer service when 1.5.2 HEART OF THE LOGISTICS CYCLE

they issue medicines to the health facility, and the central medical stores provide customer

service when they issue commodities to the district. The supply chain ensures customer service The center of the logistics cycle consists of management functions that support the operational

by fulfilling the six rights. Each activity in the logistics cycle, therefore, contributes to excellent components.

customer service and to ensuring better health outcomes. • Logistics Management Information Systems (LMIS). In the beginning of the cycle, supply

chain workers and managers gather information about each activity in the system and

Product selection. In any public health supply chain, health programs must select products. In

analyze that information to make decisions and coordinate future actions. For example,

most countries, a national formulary and therapeutics committee, with membership drawn from

information about product consumption and inventory levels must be gathered to ensure

medicines regulatory agencies as well as pharmacy, medicine, and nursing professional practice

that a manager knows how much of a product to procure. An LMIS collects data about

regulatory bodies, and other government-appointed persons may be responsible for product

the supply of and demand for commodities and these are most often used for routine

selection. Most countries have developed essential medicine lists patterned on the World

operations, such as ordering and replenishing supplies for health facilities. Logistics data are

Health Organization (WHO) Model List. Products selected for use will impact the supply chain,

used for making informed decisions about activities within the logistics cycle.

so the supply chain requirements must be considered during the product selection. The output

of product selection is a national essential medicines list that is guided by standard treatment • Supply chain workforce. The workforce employed to manage and operate the supply

guidelines and recommended protocols for service delivery. chain is its most important resource. To run effectively, a public health supply chain requires

dynamic staff at all levels who are motivated and possess the competencies required to

Quantification. After products have been selected, the required quantity and cost of each fulfill essential supply chain functions, whose performance is supported and improved

product must be determined. Quantification is the process of estimating the quantity and cost through supervision, continuous learning, and opportunities for further development. Staff

of the products required for a specific health program (or service), and determining when the must also be empowered to make decisions and take action, positively impacting health

products should be procured and delivered to ensure uninterrupted supply of products. supply availability and supply chain operations.

• Financing. Health commodities and the supply chains that deliver them need to be

Procurement. After a supply plan has been developed as part of the quantification process,

adequately resourced. Allocation and management of finances directly affect all parts of

products must be procured. Health systems and programs should be strategic about their

the logistics cycle, including the quantities of products that can be procured, the amount of

9 THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES THE SUPPLY CHAIN MANAGER’S HANDBOOK A PRACTICAL GUIDE TO THE MANAGEMENT OF HEALTH COMMODITIES 10

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storage space that may be available, the number of vehicles that can be maintained, and the

number of staff working in logistics. Mobilizing resources and securing a budget line item ENSURING PRODUCT QUALITY THROUGHOUT THE SUPPLY CHAIN

for health commodities and logistics activities is extremely important to ensure that products Products that are quantified should be on and packaging condition and shelf life, and

are available and that the logistics system operates effectively. Supply chain managers need the national essential medicines list (EML), that any special handling requirements,

to have a strategy and plan for ensuring the financing required for the commodities and be approved and registered for use in the e.g., cold chain, are strictly adhered to.

supply chain operations, and for monitoring costs and funding to ensure viability of country, and be included in appropriate Furthermore, the quality of the storage

ongoing operations. standard treatment guidelines (STGs). facilities and transportation mechanisms

• Performance management. Routine monitoring of the supply chain’s performance, including Also, service providers must be trained to should be articulated in policy documents

rigorously reviewing, analyzing, and fine-tuning key performance indicators, is necessary to correctly use the products before they are and monitored using standard operating

determine the current status, effectiveness, and efficiency of supply chain operations. In the procured and distributed to facilities. procedures. The inventory control system

spirit of continuous improvement, performance data can indicate to supply chain managers must be designed so that, if followed,

To ensure product quality, procurement customers will receive the products they

whether adjustments in policies or procedures are warranted.

documents must include detailed product need, at the time they need them, in the

• Risk management. Risk management is a formal approach to identifying and mitigating and packaging specifications, and the quality they need.

sources of disruption and dysfunction within a public health supply chain, helping managers expectations for quality at the time of

devote planning efforts and management attention where they’re needed most. receipt. After procurement, program Health workers must adhere to standard

managers must check that the procured treatment guidelines when serving clients,

commodities meet the requisite monitor product and packaging condition

quality criteria before they enter the and shelf life, and observe all handling

distribution system. special requirements for the products

they dispense. Quality monitoring of both

As products are received, stored, and the product and the service is critical to

distributed (and when customers receive the success of efforts to promote the

them), it is important to monitor product appropriate use of products.

1.6 SUPPLY CHAIN INTEGRATION

Zooming out to supply chain management more broadly, an integrated supply chain has

seamless links among the various actors, levels, and functions within a given supply chain to

maximize customer service, to ensure that clients have access to quality health care services and

supplies wherever and whenever they are needed. Information on supply and demand is visible

up and down the chain; there are no redundant steps in its processes; and there is alignment of

objectives, trust, communication, and coordination among all the levels and actors in the chain.

Integration provides the framework for the activities in the logistics cycle to operate effectively.

This kind of integration is different from the integration or combining of one or more functions of

existing parallel supply chains to achieve efficiencies. See the segmentation section below for

more on this.

An integrated supply chain management system has the capacity to learn from errors, self-assess,

and adapt through continuous improvement processes. It leverages resources from all parts

of the supply chain and enables rational implementation of innovations and new technologies.

Photo courtesy of USAID | DELIVER Project

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People managing integrated supply chains use data about products, costs, and customers to interconnected process. Program managers must use consumption data during the

make decisions and to optimize performance across functions, levels, and partners. Figure 1-4 quantification process to procure the right quantities of products. Likewise, product

shows the integrated public health supply chain. selection can have an impact on warehousing and distribution, as the attributes of products

can influence warehouse and transportation requirements.

FIGURE 1-4. • People at different levels of the system (central, region, district, health facilities,

THE

THEINTEGRATED PUBLIC

INTEGRATED PUBLIC HEALTH

HEALTH SUPPLY CHAINSUPPLY CHAIN communities) carry out various supply chain management activities and must understand

how they link to others in the supply chain. When central warehouse managers are aware of

reporting and ordering processes carried out by personnel at the facility level, it helps them

Program managers and policy

anticipate how and when they will receive orders and how order quantities reflect quantities

makers select, quantify, and delivered to customers.

procure health supplies.

• Partners across programs, organizations, and sectors must work together in a coordinated

way. When international donors harmonize the data they require from national supply chain

mangers, it allows busy health system staff to streamline their information systems and focus

on other important task.

An integrated approach to supply chain management takes a whole system perspective, rather

than looking at separate activity, such as a LMIS or warehousing; or separate programs, such as

HIV and AIDS or malaria; or separate levels, such as central or regional. Integration results in a

Central and

intermediate

more cost-effective, agile, and reliable supply chain, yielding lower stockout rates, reduced costs,

warehouses, store and better order fulfillment rates.

and distribute

health supplies.

Integrated supply chains demonstrate six key attributes:

Health facilities store and

dispense health supplies • Clarity of roles and responsibilities: Roles, responsibilities, and processes are established

to customers.

and publicized throughout the supply chain

• Agility: The supply chain is able to respond and adapt quickly to changing demand or supply

requirements and maintain an adequate flow of commodities to customers

• Streamlined process: Logistics functions are performed quickly, accurately, and effectively

so products, information, and decisions can move swiftly throughout the supply chain to

respond promptly to customer needs

• Visibility of information: Data are visible throughout the supply chain, so stakeholders at

different levels can see where products are and what demand is, and use this information to

better meet customers’ needs

• Trust and collaboration: A collaborative environment exists that can help break down

functional and organizational barriers to improve supply chain performance

Community health workers

store and dispense health

• Alignment of objectives: organizations and levels have a compatible vision, goals, and

supplies to customers. objectives to ensure consistency in direction within the supply chain

With the right approach, integrated supply chains can be as transformative in the public health

• Activities (as described in the logistics cycle) in an integrated supply chain (for example, sector as they have been in the commercial sector, delivering greater coverage, better use of

product selection, procurement, warehousing, and distribution) are all steps in an resources, and higher quality of care.

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1.7 S

 UPPLY CHAIN EVOLUTION — implemented, roles and procedures for basic logistics functions are clarified, and

sufficient financial and human resources are mobilized to operate the system

THE PATH TO INTEGRATION • Integrated phase: People, functions, levels, and entities of the supply chain are linked

Countries typically move through an evolution process to achieve an integrated public health and managed under an interconnected supply chain organization. Supply chain

supply chain. While every country and supply chain is different, the path to integration generally managers are empowered and understand how to collect and use information to map

goes through three sequential phases as illustrated in figure 1-5. the system and streamline processes, use resources more effectively and efficiently,

monitor and improve performance, and align various supply chain partners to achieve

common goals.

The supply chain manager should understand where their supply chain exists on the evolution

continuum, and identify how to move the supply chain along this continuum, towards integration.

FIGURE 1-5. Analysis can be conducted—whether singularly focused or multidimensional—to identify supply

SUPPLY CHAIN EVOLUTION

SUPPLY CHAIN EVOLUTION chain performance drivers and bottlenecks, and formulate actionable solutions.

1.8 S

 EGMENTATION IN THE PUBLIC

HEALTH SUPPLY CHAIN CONTEXT

Public health programs handle thousands of products with many characteristics, going to a

Characteristics Ad Hoc Organized Integrated diverse group of clients through many different kinds of facilities. Many countries have several

parallel logistics systems for selecting, procuring, and distributing different types of supplies

Clarity of roles and Roles are not clearly defined Roles and responsibilities are High performing teams are

responsibilities clarified and documented formed and supply chain to clients. Often health programs—family planning, maternal and child health, malaria control,

managers are empowered

TB control, or HIV and AIDS—each manage and distribute supplies for their programs. These

Agility and The supply chain is inflexible, The supply chain sometimes The supply chain responds programs are called disease-specific programs (sometimes called vertical programs) and,

Responsiveness unable to respond to changes responds to changes in the rapidly to changes in the

environment environment, the marketplace, historically, have often had separate standard operating procedures and distribution channels

and customer needs

and may be managed by separate management units at the central level.

Streamlined Processes are undefined and Processes are defined and Processes are optimized and

processes undocumented well run continually improved Procuring, storing, or delivering all of these products in the exact same way does not make sense

and will not achieve 100% availability. At the same time, it is important to attain efficiencies in the

Visibility of Logistics information is not Essential logistics data are Supply and demand information

information available or shared collected and reported are visible throughout the supply supply chain whenever possible, so that efforts are not duplicated and available resources can

change and used to make

decisions

be used to their fullest.

Trust and Supply chain actors do not Supply chain actors value Supply chain partners Segmentation can help. It is the process of analyzing data on customers’ needs and product

collaboration collaborate systematically collaboration but it is not always

achieved

collaborate with and trust

eachother

characteristics to determine which segments—or groupings—of products make most sense to

procure, store, or deliver together. Once defined, logistics processes are tailored to meet the

Alignment of There is no consensus on a A supply chain strategy is A comprehensive supply needs of each segment. When you determine which logistics functions to combine, you need to

objectives supply chain strategy under development chain strategy is defined

and implemented consider and make trade-offs between the handling requirements of particular products (i.e., cold

chain, short shelf life), the cost of the functions, and customer service (i.e., ensuring that merging

the distribution of different products will not disrupt service).

Improved Supply Chain Performance

The concepts presented in this chapter provide the framework for the rest of the handbook.

• Ad hoc phase: Stakeholders have little common understanding of what the supply chain Each chapter will discuss details of specific logistics activities, as depicted and described in the

looks like and have no formal procedures for its operation, leading to fragmented supply logistics cycle. When reading these chapters, the supply chain manager should consider these

chain efforts across various entities in the system topics in the context of the integrated public health supply chain, and as the steward of the public

• Organized phase: Standard supply chain systems, including MIS, are designed and health supply chain.

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CHAPTER 2

WHAT A SUPPLY CHAIN MANAGER

SYSTEM DESIGN & NEEDS TO KNOW:

STRATEGY The supply chain manager needs to know the following, which are covered in this chapter:

· The value and components of a supply chain strategy, and approach to developing a

supply chain strategy

· Key elements of logistics system design, and the process of system design

· The role of data in supporting design decisions and in meeting the strategic objectives

FIGURE 2-1. of the supply chain.

THE LOGISTICS CYCLE

· Considerations for implementing a logistics system

Serving Customers

2.1 N

 ATIONAL SUPPLY CHAIN

THE LOGISTICS CYCLE STRATEGY (OR MASTER PLAN)

2.1.1 WHAT IS A SUPPLY CHAIN STRATEGY?

A supply chain strategy, often referred to as a master plan, is a strategic roadmap aimed at

strengthening the national supply chain to deliver public health commodities. It is comprised of

Warehousing & Product two parts: a strategic approach that outlines the vision and principles of the unified supply chain,

Distribution Selection

Management and an operational plan that details the timeframe, responsibilities, and costs of each activity

Support Functions required to bring the supply chain vision to fruition.

System Design & Strategy

Logistics Management

Information Systems (LMIS) 2.1.2 WHY IS A SUPPLY CHAIN STRATEGY IMPORTANT?

Performance Management The strategy is critically important to public health supply chain management because it provides

Organizational Capacity the guiding policies and interventions, along with corresponding implementation activities, to

and Workforce

Financing

address the systemic challenges and goals that have been identified. While a strategy is helpful

Risk Management at any point in time, it is particularly useful when countries are addressing system challenges or

Inventory are ready to introduce new approaches or resources to address supply chain issues.

Quantification

Strategy

Supply chain strategies are developed for defined periods of time, often five or 10 years,

but should have specific points when they are assessed and refreshed to address new

circumstances, challenges, and technologies. This allows stakeholders to define a set of

objectives and activities they would like to accomplish over a defined time period, track progress,

and continue to visualize the future state.

A supply chain strategy is critical to achieving supply chain integration in a number of ways.

Procurement

It helps to define a set of activities required to optimize the supply chain over time, and can

uncover challenges or threats as well as approaches to overcome them. The process of

developing a strategy also aligns stakeholder objectives around a vision for the supply chain.

This helps ensure coordination of activities implemented by multiple partners, avoids duplication

of efforts, and best leverages limited funds. Plus, the strategy helps define and clarify the various

stakeholders’ roles in the supply chain and the implementation of the strategy. These activities

are critical to connecting actors and organizations along the integrated end-to-end supply chain.

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2.1.3 H

 OW DO YOU DEVELOP A SUPPLY 2.2 SYSTEM DESIGN

CHAIN STRATEGY?

In virtually all health programs, products move from one place to another. The way that

Although countries have adapted the strategy development process for their particular situations, products move may not be rational, the quantities of products that move may not be based on

there is a general approach, which is described below. actual data, and the methods used to move the products may not be standardized or optimized

(although they should be). The purpose of designing the logistics system is to optimize the

Defining the need for a strategy is the first step in the process. A rapid assessment provides flow of commodities and information, and to standardize the related business processes.

the evidence base to understand current capacity and performance. Rapid assessment tools

include the Supply Chain Compass (see chapter 9), an on-line, high-level diagnostic tool that The need to design any of these elements may arise arises during strategy development.

helps determine how mature the public health supply chain is across key managerial and Design can help achieve strategic, tactical, and operational improvements. Without a

functional areas. This analysis can then be used to drive a discussion of how the supply chain deliberate, well-considered design vetted by stakeholders, the supply chain system is

can support overall health goals in the short and long term. This should include consideration of unlikely to be successful.

the performance management system (see chapter 9), and use of agreed-upon KPIs to measure

At the same time, design rarely represents an entire system overhaul, but rather incremental

progress against the strategy. Once stakeholders reach consensus, a detailed implementation

improvements to interrelated components over time. The scope of the design may involve one