CLICK TO ADD TITLE The 5th Global Health Supply Chain Summit November 14 -16, 2012 Kigali, Rwanda   CLICK TO ADD TITLE Setting the stage for supply chain performance management in Kenya’s public sector Jonathan Pearson Manager Deloitte Consulting LLP [SPEAKERS NAMES] [DATE]

Executive Summary Challenges Approach Public sector medical supply agency undergoing reform Strategic vision and metrics misalignment Limited culture of performance management Approach Strategic alignment of metrics to supply chain performance strategy Sustainable practices to align vision with measurement and performance management action

Aligning Supply Chain Metrics to Strategy

Three step process to strategically align supply chain metrics Strategic Alignment Approach 1 Prioritize supply chain performance requirements 3 Identify strategic focus areas for supply chain performance Review final metrics Executive Leadership 2 Prioritize supply chain process areas Identify supply chain metrics Align metrics with strategic focus areas Identify gaps and revise metrics Operations

Strategic Alignment Approach First, prioritize performance requirements to align business strategy with operations Strategic Alignment Approach 1 Prioritize supply chain performance requirements 3 Identify strategic focus areas for supply chain performance Review final metrics Executive Leadership 2 Prioritize supply chain process areas Identify supply chain metrics Align metrics with strategic focus areas Identify gaps and revise metrics Operations

Strategic Alignment Approach Next, prioritize process areas to effectively address challenges in operations Strategic Alignment Approach 1 Prioritize supply chain performance requirements 3 Identify strategic focus areas for supply chain performance Review final metrics Executive Leadership 2 Prioritize supply chain process areas Identify supply chain metrics Align metrics with strategic focus areas Identify gaps and revise metrics Operations

Strategic Alignment Approach Then identify focus areas for metrics based on requirements and processes Strategic Alignment Approach 1 Prioritize supply chain performance requirements 3 Identify strategic focus areas for supply chain performance Review final metrics Executive Leadership 2 Prioritize supply chain process areas Identify supply chain metrics Align metrics with strategic focus areas Identify gaps and revise metrics Operations

Performance metrics for supply chain planning and delivery Responsiveness Order fulfillment lead time Truck availability Customer complaint cycle time Carrier on-time arrival Pick to ship cycle time Dock to stock time Order turnaround time Transit time Reliability Order fill rate Forecast accuracy Facility consumption report timeliness Distribution Plan adherence % short-dated inventory Stock outs per period Supplier on-time delivery Compliant order accuracy rate (%) Order shipping accuracy On-time delivery On-time shipment On-time Proof of Delivery (POD) returns Cost / Efficiency COGS as a percent of revenue Return on assets Cumulative supply chain lead time Warehouse Capacity utilization Months stock cover Inventory Turns Space Utilization Inventory waste and/or damages Months’ stock cover Freight payment cycle time Fixed Asset Turnover Ratio Agility Plan cycle time Distribution planning lead time Inventory turns Procurement lead time Order line fill rate Order lines picked / per FTE / Labor hour [units / hour] MUDA: Transport; The movement of product and components between locations, this costs you money but adds no value to the product. Inventory; Inventory is a buffer used to hide all of the problems in your system, it insulates you from supplier failure, poor scheduling, breakdowns, poor quality and many other problems. In addition inventory requires space, transporting and ties up your cash. Motion; Any movement within the workspace that cannot be done more ergonomically or efficiently, such as picking heavy objects up from floor level to a bench or other working area. Waiting; Exactly that, waiting for machines, people, information, product and so on. Overproduction; Creating more that the customer needs or sooner that the customer needs it thus leading to inventory. Over processing; Doing more to the product than is required by the customer such as over specifying tolerances causing slower more expensive processes to be utilized. Defects or Rejects;

Linking Performance to Strategic Mission MISSION: To provide reliable, effective and sustainable medical logistics service for health care delivery Deliver the right quantity, at the right quality, at the right time, at the right location and at the right cost Order Fill rate Plan Adherence Cost Balance Supply Chain Planning Procurement Delivery costs: Efficient routes Pick to route Stock the right quantities for required customer service Months Stock cover Customer Service Warehouse Distribution Seek improvements in planning processes to support Order Fill Rate Review supporting metrics for each department to enhance plan adherence

Sustaining Performance Management Practices

First, define Performance Management operationalization Planning Performance Management Strategic and operational planning Design dimensions to measure progress towards organizational objectives Set KPI targets based on past performance and expected change Planning Monitoring Evaluating Reporting Learning Monitoring Collect, compile, and manage routine data Evaluating Analyze data to assess the effectiveness of the organization in the achievement of goals Provide regular feedback to departments Reporting Provide useful information to stakeholders in a systematic and timely manner Learning Systematically introduce changes in processes based on results evaluations Utilize M&E results in Planning process

Second, link Performance Management concepts to implementation pillars Planning Monitoring & Evaluating Reporting Learning Human Resources & Accountability Set performance objectives JDs to reflect PM expectations Make PM requirements clear to staff & data producers Provide regular feedback on results Review and refine objectives Capacity & Institutional Knowledge Develop PM Plan with capacity resource needs and Action Plan Define data management procedures & strengthen M&E capacity Define routine reporting reqts Document decision-making actions Implementation Plan Pillars Management Information Systems Prepare MIS to meet data capture requirements Improve MIS capacity to track data Standardize reporting through MIS Review and refine MIS to meet new PM requirements Advocacy and Change Publish targets and expectations transparently Improve MIS capacity to track data Utilize M&E reports for organizational advocacy Implement and monitor change based on evidence

Then, develop and implement the work plan and measure expected outcomes Work Plan Categories Work Plan Activities Desired Outcomes Human Resources & Accountability Define roles and alter job descriptions to reflect PM responsibilities Create M&E Unit and hire staff Clear roles and expectations for staff with PM activities institutionalized Operationalized M&E Unit Capacity & Institutional Knowledge Develop PM Plan and implementation action plan Create “Metrics Dictionary” Document what works Increased institutional knowledge and performance management capacity Uniform understanding of PM and common course of action Management Information Systems Identify ERP PM functionality gaps Align MIS (e.g. ERP/WMS) with PM needs Reduced burden on staff & more focus on operations Compliant levels of data quality & timeliness Advocacy and Learning Define internal & external information products, distribute, and learn Deliver Actionable Information Use workshop to leadership and operationalize information use Increased transparency and results- driven advocacy Stronger culture of information use and action for change.

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