1. CLICK TO ADD TITLE [DATE][SPEAKERS NAMES] The 5th Global Health Supply Chain Summit November 14 -16, 2012 Kigali, Rwanda Risks in Health Supply Chains: Simple Solutions Prof. Yehuda Bassok University of Southern California And Center for Health Education and Research (CHEaR)

2. What is CHEaR? A group of people in academia that is dedicated to provide training in Health Care Supply Chains.

3. What is risk? Risk –The negative effects of uncertainty on objectives. In this definition, uncertainties include events (which may or not happen). Some times we know the probability of these events Uncertainties caused by ambiguity or a lack of information. There are two ingredients that are needed for risk to exist: –Uncertainty about the potential outcomes. –The outcomes have to matter in terms of providing utility. Example: Demand Risk –Demand for a new drug Events: 1. The demand will be 1M tablets per year 2. The demand will be 0.5M tablets per year 3. The demand will be 0.25M tab per ear

4. What is risk (cont.) How many units should be ordered? –Notice that whatever we do one of two things may happen: Shortages Excess inventory Demand risk affects not only the countries It also affects the pharmaceutical, who might be reluctant to develop and produce drugs for LMIC

5. Example of Demand Risk

6. Types of Risk Example: Supply Risk –An order for 1m units is placed but only 0.5m units are delivered. –Goods are not of the quality desired How many units should be ordered –Perhaps 2 million units Example: Funding Risk –Donors promise to provide the funding to purchase a certain quantity of a drug and they renege on their promise.

7. What are the effects of risks? Who suffers from risks? –The patients –The donors –The countries –The pharmaceuticals

8. What can be done? Risk is part of life. There are methods to reduce risk. There are methods to reduce the outcome of risk. Reduce risk –Better data to better forecast the demand What is a good forecast? Partial shipments reduce wastage of drugs –Example: Country makes a commitment to an annual purchase of a drug. –Drug is delivered every three month for a total of the annual order. –What are the advantages of such an approach? »Expiration date is delayed and wastage is eliminated

9. What can be done? –Make long term commitments with some flexibility –Example:

10. –Safety stock How to calculate safety stock? –Safety time Order early enough

11. Thank You