Inventory Management: Distribution, ICS, LMIS Moscow, March 12 – 16, 2006 Dr. Dragana Veskov HIV/AIDS Logistics Advisor

DELIVER’s Logistics Cycle Tell participants that they have probably seen similar diagrams of supply chain management cyckles, but we did want to show this particular cycle, which shows DELIVER's approach to supply chain management. Point to the parts of the cycle that we will be covering today (highlighted in orange), and explain how the three topics of today: storage, LMIS, and inventory control systems, are all part of the wider framework of inventory management. Supply chain management would include everything we will discuss today - inventory management - as well as all of the other elements listed on the logistics cycle. Tell participants that we will start by giving brief overviews of the three key areas in the session today.

Objectives of Storage and Distribution Storage: Assures product and packaging quality and constant availability Transport: Assures that products arrive in good condition, in the right place and at the right time The less frequent your re-supply, the greater your storage requirements.

Distribution Considerations (Storage & Transport) Which transportation system used? Pick-up system (facilities collect drugs) or delivery system (warehouses deliver) Is transportation outsourced? Do procedures exist to: Verify the products shipped and received: type and quantity, Conduct visual inspection for quality assurance, including expiration dates, Complete and sign transaction records/vouchers, Store the products, and Update stockkeeping records

Objective of Inventory Control Systems The objective of an inventory control system is to ensure the constant availability of products, by defining: When products should be ordered. What quantities of products should be ordered How to maintain adequate quantities to meet demand, while avoiding overstocks and stockouts

Inventory Control Systems Maximum/minimum Inventory Control System are defined by months of stock Systems are designed so stock quantities routinely fall between the minimum and maximum stock levels The minimum stock level includes safety /buffer stock Any inventory control system (max/min or other) must take into account safety/buffer stock

Inventory Control Considerations Who decides what quantities to distribute? The lower level (pull) or the upper level (push)? Decision should be based on training and human resource implications Which type of max/min system to use? How long should the pipeline be? Longer pipeline reduces likelihood of stockouts (more security stock) but increases likelihood of wastage (short shelf lives, increased expiries)

Logistics Management Information System (LMIS) The LMIS: Is a key component of any logistics system, Impacts ordering, forecasting, procurement Provides data to facilitate logistics decision-making

Objective of Logistics Management Information System (LMIS) The objective of an LMIS is to provide the data and information needed for decision-making at all levels: Health Center Level: e.g, quantities to order, monitor stock availability National Level: e.g, quantities to procure, re-supply schedule

LMIS Considerations What data to collect? Only collect data in LMIS that is useful for decision-making in the area of commodity management

LMIS Considerations Regardless of product, always collect the three essential logistics data items: Consumption Stock on hand Losses and adjustments For other products: ARV Drugs: number of patients by treatment regimen HIV Tests: number of tests by purpose of use

Common Challenges Insufficient storage space Inappropriate storage conditions Different reporting systems in place at same facility (by donor, by program) No established logistics data collection and reporting systems from SDP to central level Poor data utilization at the central level Drug supply is driving prescribing and dispensing Need for drug storage at home (pediatric formulations)

No Product, No Program! Thank participants for their attention.

www.deliver.jsi.com Thank participants for their attention.