1. Maximum-Minimum ICS: Adjusting Distribution Systems Supply Chain Management

2. 4 months Max SOH 20 months pipeline 2

3. Reducing the Length of Pipeline How do we reduce a pipeline? Eliminate one or more levels from the distribution system Reduce the Max at one or more levels 3

4. 16 months pipeline 4 months Max SOH 4

5. 16 months pipeline 3 3 2 5

6. Reduce the Maximum Stock Level Elements of the formulas which can be changed in order to reduce the Max stock level: – Shorten the Review Period at one or more levels – Reduce the Lead Time at one or more levels – Improve the distribution system's reliability at one or more levels so that Safety Stock can be reduced 6

7. Design StepWhat’s the formula?Set Levels… Make a Change… 1. Identify Lead Time Stock Identified through supply chain analysis 2. Set Review Period Stock Set as a policy decision 3. Set Safety Stock Safety ½ Review Period 4. Set Min StockForced/Continuous: Min = Lead + Safety Standard: Min = Lead + Safety + Review 5. Set Max StockMax Min + Review Months of Stock in your supply chain If you have 5 levels… How does this work in practice? 2 months 1 month 7

8. Design StepWhat’s the formula?Set Levels… Make a Change… 1. Identify Lead Time Stock Identified through supply chain analysis 2. Set Review Period Stock Set as a policy decision 3. Set Safety Stock Safety ½ Review Period 4. Set Min StockForced/Continuous: Min = Lead + Safety Standard: Min = Lead + Safety + Review 5. Set Max StockMax Min + Review Months of Stock in your supply chain If you have 5 levels… How does this work in practice? (Answers) 2 months 1 + 1 = 2 2 + 2 = 4 4 Max * 5 levels = 20 months of stock on hand 1 month 2 months 2 + 1 = 3 3 + 2 = 5 5 Max * 5 levels = 25 months of stock on hand 2 months 1 month 0.5 month 1 +0.5 = 1.5 1.5 + 1 = 2.5 2.5 Max * 5 levels = 12.5 months of stock on hand 1 month 8

9. Other Factors That Impact Max-Min Stock Levels (1) Cost of products Reliability of transportation Storage capacity Cost of storage Storage conditions at different levels Shelf ‑ life of health commodities 9

10. Other Factors That Impact Max- Min Stock Levels (2) Lead times Reliability of source of supplies Effect of a zero balance of stock Management skills of staff Age of program Accuracy of forecasts. 10

11. Advantages to Using Max-Min Systems Avoid overstocking Avoid under stocking Minimize wastage Avoid costs of emergency orders Simplify inventory control decision ‑ making Consistency of stock levels Reliable data source from SDP for forecasting and quantification 11

12. Challenges to Using Each Version and Variation Systems with numerous levels Systems that manage a large number of commodities Systems that manage products for new programs 12

13. Applying Max-Min to Different Programs (1) If you are a community health worker who distributes condoms and orals which Max/Min version might work best? Continuous Review – Two-bin Why? 13

14. Applying Max-Min to Different Programs (2) Which version would you recommend for drugs, HIV test kits, and labs as the most appropriate? Standard version! Why would we not want to use continuous review? 14

15. Assessing Stock Status Supply Chain Management

16. Definition of Physical Count A physical Count is the process of counting by hand the total number of usable units of each commodity in your store or health facility at any given time 16

17. Purpose of Physical Count The purpose of a physical inventory is used to compare actual usable stock on hand for each commodity with the amount recorded on the stock card.” 17

18. Purpose of Assessing Stock Status The purpose of assessing stock status is to determine how long supplies will last 18

19. Formula: How long will your stock last? NOTE:This formula applies to all levels. Avg amount we used in most recent typical 3 months with data … Avg amount we used in most recent typical 3 months with data … Amount We Have… Amount We Have… 25 tablets used per month 25 tablets used per month 100 tablets = 4 months supply of tablets How Long Will It Last… = Definition Example Average Monthly Consumption Average Monthly Consumption Stock on Hand Months of Stock = Formula 19

20. Calculating MOS on Hand, Example Let’s say you have 3000 cycles of Lo-Femenal in your storeroom. Your consumption for the last 6 months are: Feb = 1,203 March = 1,190 April = 0 May = 1,250 June = 1,261 July = 1,252 How many months of stock do you have on hand? Average Monthly Consumption Average Monthly Consumption Stock on Hand Months of Stock = Formula 20

21. Calculating MOS on Hand, Example Answer 3,000 Lo-Fen = Answer Avg amount we used in most recent typical 3 months with data … Avg amount we used in most recent typical 3 months with data … Amount We Have… Amount We Have… = How Long Will It Last… Definition Average Monthly Consumption Average Monthly Consumption Stock on Hand Months of Stock = Formula 21

22. Calculating MOS on Hand, Example – BONUS Let’s say you have 3000 cycles of Lo-Femenal in your storeroom. Your consumption for the last 6 months are: Feb = 1,203 March = 1,190 April = 1,030 May = 0 June = 1,261 July = 1,252 How many months of stock do you have on hand? Sum of consumption in typical (n) periods (1,030 + 1,261 + 1,252 / Number of (n) periods (3) = Estimated consumption for period in which stock out occurs (1,181) 22

23. Calculating MOS on Hand, Example – BONUS, Answer 3,000 Lo-Fen = Answer Avg amount we used in most recent typical 3 months with data … Avg amount we used in most recent typical 3 months with data … Amount We Have… Amount We Have… = How Long Will It Last… Definition Average Monthly Consumption Average Monthly Consumption Stock on Hand Months of Stock = Formula 23

24. When to Assess Stock Status Regularly, according to how often the products are being ordered (but at least once a year) More frequently for new programs to ensure that rapid increases in consumption are not missed During quantification exercise 24

25. Importance of Assessing Stock Status Looking at the stock we have at hand and determine: Months of stock (MOS) available How long our stocks will last, if consumption remains the same If we are overstocked or under-stocked 25

26. Any questions? Thank you!! 26