Strategic Decentralization: Centralizing Logistics Paula Nersesian, RN, MPH

No product? No program.

Commodity Security Know commodity requirements Plan the necessary financial resources to meet those requirements Procure the commodities needed - or have them procured Reliably deliver the commodities to customers

The Logistics Cycle

The Supply Chain

Supply Chain Objectives The right goods In the right quantities In the right condition Delivered to the right place At the right time For the right cost

Health Sector Reform Decentralization Integration Cost Recovery Privatization

Logistics in HSR Settings Integration in Mali and Nepal –Both improvements and harm to LMIS Privatization in the Philippines –Stockouts and problems with private carrier contracts

Logistics in HSR Settings Cost recovery in Mali –Donated condoms expired Decentralization in the Philippines and Mexico –Some regions didn’t order contraceptives or didn’t order enough to meet demand

Advantages and Disadvantages to Decentralizing Logistics Functions

Serving Customers +Service delivery based on local needs -Reduced control over prescribing practices

Product Selection +Selection based on local needs -Selection based on non-medical criteria -Reduced influence on: –Treatment guidelines –Products for priority essential services –Priority of preventative products

Forecasting and Procurement +Quantification based on local requirements -Greatly increased prices - Increased: –Forecasting labor –Forecasting error –Procurement complexity

Inventory Management +Local control over reordering decisions +Local control of shipping schedules -Impossible to rationally allocate scarce products -Local resources (e.g., staff and transport) may be unavailable

Information, Money, People, Quality -LMIS may be lost or folded into the HMIS -Local financial resources may be inadequate -Local staff may be absent, or lacking necessary skills -Commodity quality control difficult if procurement decentralized

Lessons Learned from Commercial Sector Eliminate intermediate levels in the supply chain Include a strong LMIS Increase supply chain “agility” Centralize and automate supply chain management

Planning for Decentralization

Centralize: Logistics System Functions Drug Registration Standard Treatment Guidelines Health Professional Licensing

Kenya: STI kits

Avoid decentralization of these logistics functions Specification and Enforcement of EDL Product Selection and Essential Service Package specification Bulk and international purchasing Rationing for scarce essential products Quality assurance for all products Logistics Management Information Systems

Conclusions Decentralize decision making only if you can provide district managers with the resources to execute those decisions Begin with a detailed, indicator-based logistics system assessment Examine critical planning assumptions critically (e.g., funding, personnel availability, organizational constraints, time frames)

Conclusions Develop a detailed logistics decentralization plan for all aspects of the logistics cycle Be prepared to change it Strengthen/protect the LMIS at all costs Ensure that logistics training to support decentralization is competency-based and is accompanied by periodic follow-up Supervision is critical, and should include logistics oversight