1. Definition, Importance & Impact Noel Watson PhD Principal, OPS MEND USAID | DELIVER PROJECT Critical Issues Series The Future of Pharmaceutical Supply Chain Management: Intelligent, Integrated and Informed Design July 30, 2012

2. Definition: Increased sophistication in how supply chain (SC) features are chosen and, when appropriate, as a result, increased sophistication in the SC features themselves. Examples of increased sophistication in design process Use of decision support tools, e.g., optimization models, to help recommend potential supply chain features A more constructive collaboration between relevant stakeholders during the design process. Examples of increased sophistication in SC features Use of outsourcing Use of vendor managed inventory models 2

3. More proactive design rather than reactive, e.g., R&D, well defined SC design planning stages, planning to react (to grow, provide additional services, or accommodate additional commodities). Design process driven by Clear health strategy that the SC design is expected to support Health reform direction, e.g., privatization, decentralization, etc. Type of performance expected from SC, e.g., efficiency, equity, types of sustainability. Capabilities to be developed Clear understanding of the causes of dysfunction in the current SC. Design process features Good information collection and sharing to design process participants Sound analysis, e.g., multiple perspectives/validation, SC modelling Coordination across relevant stakeholders and decision-makers Sound principles for situations where SC design requires compromises. 3

4. SC management is non-trivial; even in a fully-integrated, narrow product focused, private sector based organization. Developing countries introduce additional challenges Low infrastructure, resources and capabilities High demand Country/cultural diversity Product diversity (critical, non-critical, special SC needs) But, many options exist for SC design Therefore how we choose is crucial. Intelligent design principles and practices are needed to match right solution to particular context and needs. Some elements of sophistication in SC design are missing from current planning processes, e.g., proactiveness, sound analysis, principles for compromise. 4

5. Private Sector Examples Walmart (e.g. of intelligent SC design: cross-docking, MIS, trucking fleet) Opened first store in 1962; currently $444B in sales Ranked #7 on AMR Research Supply Chain Top 25 Ranked #11 among Fortunes Global most admired companies P&G (e.g. of intelligent SC design: Vendor Managed Inventory) Ranked #3 on AMR Research Supply Chain Top 25 Ranked #5 among Fortunes Global most admired companies Public Sector Examples Logistics Design (Local SC Design) Zimbabwe Delivery Truck Topping Up (DTTU) Systems Resulted in 98% coverage and <5% stockouts Procurement Coordination (Global SC Design) SCMS, CHAI in ARV market (2005-2011) Increase in generic ARV use (now 90% by volume of use); dramatic reduction in ARV prices ($1500 down to $88-$200) 5