Logistics Matters: Why Policymakers Care about the Supply Chain Carolyn Hart Mini-University Implementing Best Practices in Reproductive Health Cairo, February 2002

The Supply Chain “No customer should ever leave a clinic disappointed because the product he or she needs is out of stock.” Programs That Deliver, p. 28

The Purpose of the Supply Chain To serve the customer by delivering The right goods In the right quantities In the right condition Delivered to the right place At the right time For the right cost.

Contraceptive Security When a program –Accurately estimates requirements –Has the financial resources –Has the technical skill to procure the products –Ensures reliable and timely delivery to the customer For the medium- to long-term

The Supply Chain

The Logistics Cycle

Redefining Logistics A revolution in the commercial sector –From “logistics” to “supply chain management” Mission-critical function in any business or service delivery organization –A determinant of organizational viability –A guarantor of customer service

How the Supply Chain Contributes Improving customer service Saving money Increasing program impact  Increasing customer loyalty  Boosting profitability  Increasing market share

Customer Service Product quality Method choice Product availability Customer confidence Customer loyalty Customer retention

Money Logistics protects the investment in commodities Logistics protects the much larger investment in other program costs Good logistics increases revenue potential –You cannot sell what you do not have

Money Good logistics brings savings –Increased efficiency –Reduced waste –Improved accountability To help meet program priorities –Contraceptive security for all –Free, subsidized, and fully-paid “markets”

Money Good logistics... –Protects commodity and other investments –Increases revenues –Saves money –Is required for complex, segmented markets... enhances contraceptive security

Impact Kenya STI Kits

Impact Logistics contributes to program impact.

The Supply Chain No product? … No program.

Industry Leaders vs. Industry Averages Meet delivery dates 17% more frequently Carry 60% less inventory Spend  44% less on supply chain costs Meet customer-request dates 95% of the time … through  Unwavering executive support  Customer-focused, integrated supply chains  Not rules, regulations, or trade policy

Best Practices to Improve Supply Chain Performance Step 1: Focus on customers Step 2: Focus on consumption data Step 3: Focus on “supply chain integration”

Step 1: Focus on Customers Not on goods Not on budget cycle Not on bureaucratic rules and regulations And who is the customer ??  Ultimate: clients at the SDPs  Intermediate: next level down the supply chain

Step 2: Focus on Consumption Data “Quantities dispensed to clients” Logistics MIS isn’t easy: –Forms, manuals, job aids –Timely reporting by brand from every facility –Procedures for processing and use of data –Training and supervision at every facility in the distribution system –Automation, in large systems with many products Logistics MIS isn’t Health MIS

Step 3: Focus on “Supply Chain Integration”

Customer Service — One Customer at a Time Resupply procedures Transport procedures (and transport) Good storekeeping practices (and stores) Quality assurance procedures Disposal procedures At every facility in the system

So, what does it take? Commitment to product availability one customer at a time Agreement to the supply chain view of contraceptive security Commitment to integrated supply chain management –Customer focus –Strategic collaboration and information sharing –Much longer planning horizons and commitments

If you do all this... The customer gets: The right goods In the right quantities In the right condition Delivered to the right place At the right time For the right cost

No product? No program. Remember...