Integrated Supply Chain Management in Public Health The All-Party Parliamentary Group on Malaria and Neglected Tropical Diseases 16 October, 2012; Portcullis House, Westminster. David Jamieson, Deputy Director, Global Partnerships, Partnership for Supply Chain Management

Contents 1.Getting Products to People - The JSI Framework for Integrated Supply Chain Management in Public Health 2.Case Study - examples from SCMS in applying integrated supply chain management 3.Concluding thoughts 2

1. Getting Products to People: The JSI Framework for Integrated Supply Chain Management in Public Health Applying commercial sector solutions to transform public health supply chains

Applying the Commercial Sector Approach By integrating their supply chains, high-tech companies have: Improved customer satisfaction, Increased sales performance by 25%, and Reduced costs by $6 billion* The public health sector is using integration to change and save lives. *Global Logistics and Supply Chain Strategies “IBM’s Integrated Supply Chain Creates Strategic Value Throughout the Enterprise”

The Environment for Public Health Supply Chains is Changing Populations are growing; health programs are expanding Range, value and volume of health products are increasing Funders are placing greater emphasis on sustainability and accountability At the same time…. Technology provides new opportunities

What is a Public Health Supply Chain? A network of interconnected organizations (Ministry of Health, central medical stores, donors, etc.) that ensures availability of health products for the people who need them

Supply Chain Integration for Public Health The integrated public health supply chain links all users, managers, suppliers and funders from top to bottom Source: John Snow, Inc.

Evolving Supply Chains in Increasingly Complex Environments: Bangladesh Example Integration provides a goal and process for strengthening systems A break in the chain, could cause regression

2. Case Study - examples from SCMS in applying integrated supply chain management 9

PEPFAR established the Supply Chain Management System (SCMS) President’s mandate: Health impact: Value proposition: Establish and operate a safe, secure, reliable, and sustainable Supply Chain Management System (SCMS) and develop self sustaining supply chain skills and capability within countries. 6 million on treatment have the drugs they need. 1.Ensure patients access to commodities 2.Reduce product and supply chain costs 3.Ensure product quality 4.Elevate value of supply chain to health

The Partnership for Supply Chain Management won the contract for SCMS

USAID revolving capital fund FDA approval of generic drugs A data-driven solution Consolidated forecasting to support pooled procurement Applying commercial sector innovations 12 Regional stocks held close to point of use Frequent local distribution able to be flexible to changing needs Emergency supply Collect point-of-use data

Strategy 1: Maintain relentless focus on market analysis to drive pooled procurement Innovations: Extract and leverage information to determine credible forecast demand to balance supply and increase data transparency Leverage large volumes to negotiate reference price advantages for donor funded products Align objectives to balance pharma shareholder value with developing market requirements Mandate FDA-level standards in public health Forecast Procurement Freight Warehouse Distribute

Different products require different procurement and supply strategies SCMS product range varies from a small number of different ARVs, ACTs or bednets to 1200 products in our e-catalog, and over 4,500 different products delivered

Leverage large volumes to negotiate reference price advantages for donor funded products Pooled procurement helps decrease prices 68% reduction in average generic ARV prices 30% reduction in male circumcision kit prices SCMS prices at or below all others 15 USFDA approved generics account for >94 percent of purchases – savings: $1.1B over Accelerated Access Initiative prices 68% Reduction

Innovations: Pre-positioned aggregated product inventory stored in regional distribution centers Continuous improvement program to enhance public health warehousing infrastructure Effective last mile distribution ensuring end to end chain of custody Increased supply chain responsiveness by utilizing safety stock to avoid or overcome health facility stock outs >80% of orders planned $8-25M potential wastage avoided Strategy 2: Build an integrated African logistics footprint based on commercial best practice Forecast Procurement Freight Warehouse Distribute

Pre-positioned aggregated product inventory stored in regional distribution centers Accra, Ghana Abuja, Nigeria Nairobi, Kenya Johannesburg, South Africa

Mode optimization to enable efficient freight forwarding From 0% to 80% by ocean Saved more than $91 million in freight by switching from air to sea and land $50,000 (0.01%) lost or stolen of >10,000 deliveries - 3 incidents in 6+ years

Continuous improvement program to enhance public health warehousing infrastructure(cont.) BeforeAfter

Conclusions from SCMS experience The supply chain begins by understanding the in country demand and available funding and ends by satisfying that demand – patients are served Funding models that allow stock-holding close to point of use significantly improve product availability Supply chain managers must understand where key constraints impact product availability Segment products by type and apply different strategies to ensure availability and best value e.g. supply of ARVs is very different to bednets Commercial models can be applied - selectively 20

Characteristics of an Integrated Public Health Supply Chain Integrated supply chains demonstrate six key attributes: Clarity of roles and responsibilities Streamlined processes Visibility of logistics information Agility Trust and collaboration Alignment of objectives

Thank You! 22 David Jamieson, Deputy Director, Global Partnerships Partnership for supply Chain Management Phone: Innovative approaches and flexible funding build secure, reliable and cost-effective health supply chains that advance the health goals of developing countries.