1. Supply Chains Management for Pharmacy
Dr James Mwenda Riungu (B.Pharm; MBA; M.SCM)
Senior Technical Advisor- Commodity Security at Jhpiego Corporation –an affiliate of John Hopkins University

2. The problem
6.9 million children under five years of age died in 2011 – nearly 19,000 children each day and almost 800 every hour - due to lack of access to simple and affordable interventions (WHO 2013)
58% of deaths in children under age five are caused by infectious diseases (WHO 2013)
Many could be saved by access to already developed drugs and vaccines
Availability of essential medicines at public health facilities is often poor (WHO 2013)
Health clinics and service delivery points still remain frequently stocked out on drugs and health commodities due to the lack of efficient and effective health supply chains

3. Challenges at Pharmacy level
Stock outs
Overstocks
Obsolescence
Poor quality and/or counterfeit products
High cost of products
High cost of holding stocks

4. Some diseases are better funded than others
Well funded
Underfunded
Neglected
HIV/AIDS, malaria, TB
Repr health care, ess meds
River blindness

5. Medicines flows – variability in quality & price increases down the supply chain
Drug Manufacturers
Procurement Agents
Manufacturers National Representative
Distributors
Regional Medical Stores/ Regional Hospitals
Private Prescribers
Sub-wholesalers
Importers/ Wholesalers
Central Medical Store
Second Tier Pharmacies/ Chemists
District Medical Stores/ District Hospitals
Patients
Community Health Worker
Health Centers
Pharmacies
PRIVATE SECTOR
PUBLIC SECTOR
International
National
Regional
District
City/ Large Town
Small Town/ Rural Community

6. What is supply chain?
Consists of all parties involved in fulfilling a customer request
Includes: manufacturers, suppliers, transporters, warehouses, retailers and customers
A supply chain is dynamic and involves the constant flow of information, products and funds between different stages

7. The 3 basic elements of a supply chain
Suppliers (Medical stores, pharma distributors)
Customers
or Service Delivery Points (Health facility, Pharmacy)
Product flow
Information flow
Financing flow
The role of supply chain manager is to manage and optimize these 3 flows

8. What is the overall objective of health supply chains?
“Improving access to quality, safe, cost effective and efficacious health products and technologies”

9. Definitions
If Selection answers the question "Which products are needed to be selected?"
Forecasting answers the question "How much do we need to meet demand and serve our customers?” then
Supply Planning will answer the questions “How much to procure, when will we receive products, and what is the cost ? and
Procurement Planning will answer the question “How will we procure the products, which procurement method will we use and when will we initiate and monitor the purchasing activities?”
First ask participants what they think the term “quantification” means”? What do you think of when you hear about “drug quantification” or “quantifying drug requirements” ?
Facilitator process responses, clarify as needed. Uncover each bullet one by one and clarify as follows:
If Selection answers the question "which drugs are needed?" then
Estimation answers the question "how much do we need?" to meet the health needs of the population, to serve our customers.
Quantification will answer the question “How much can we procure? ” by comparing the estimation of drug quantities needed against the available financial resources and adjusting the final drug quantities to be procured.
While the word "estimation" suggests an approximate calculation which is based on probabilities, "quantification" is generally used in the context of calculating drug requirements with more precision and accuracy including calculating the financial requirements for procurement.
For the purposes of our discussion today, we understand “estimation” to mean the same as the term “forecasting” which you have been using for contraceptives in the course.

10. Quantification is key to improving health commodity security
The process of estimating quantities and costs of products required for a specific health program during a specific period and determining when the products should be delivered to ensure uninterrupted supply for the program

11. Components of Quantification
Has 2 parts:
Forecasting - estimating quantity required of each product to meet demand for the forecast period
Supply planning - adjusting quantities forecasted to determine quantities to procure and time of delivery of the products

12. Forecasting What does the dictionary say ?
forecast : to calculate or predict (some future event or condition) usually as a result of study and analysis of available pertinent data

13. Supply Planning Supply Planning answers the question:
“How much to procure, when will we receive products, and what is the cost ?
The purpose of supply planning is to ensure that there are adequate supplies in the program while at the same time not over stocking or running the risk of stock outs.

14. Steps in Quantification

15. Poor Quantification affects service delivery

16. This is what you see when there is no effective forecasting & Supply planning

17. Suggestions to improve Pharmacy supply chains
Development of annual forecasts and supply plans
Regular monitoring and review of supply plans
Bulk/pooled procurement (economies of scale)
Prequalification of suppliers to reduce supply lead time
Framework contracts to minimize supply interruptions
Shortening of supply pipeline to minimize quality and price variability

18. Max – Min Inventory Control

19. Stockout 7 Max 6.5 Desired July Oct Jan Apr 3 Min Overstock Understock
Stockout 7
Max
Overstock
6.5
Desired
July
Oct
Jan
Apr 3
Min
Understock
Buffer
Distrib. Interval
Distribution to Facilities
Initial Supply
CMS Resupply Interval
Quarterly Resupply
Vendor Shipment
Supply Plan Update
Initial Forecast & Supply Plan