CLICK TO ADD TITLE [DATE][SPEAKERS NAMES] The 5th Global Health Supply Chain Summit November , 2012 Kigali, Rwanda “Continuous productivity improvement opportunities: Private goods supply chains to country level healthcare supply chains” Ananth Iyer Gemma Berenguer Krannert School of Management Purdue University

Agenda Private goods supply chains Public and nonprofit supply chains Our study on the Global Healthcare space

Private goods supply chains Summarize a project with Consumer Packaged Goods companies supply chain benchmarking Explain how DEA (Data Envelopment Analysis) techniques were used Explain the results and associated learning

Problem Features A supply chain benchmarking study typically involves many variables with a comparatively small number of participants. The methodology has to consider all facets of the supply chain and should give insights about best practices, best performers and focus areas for inefficient companies. The methodology should be able to identify relationships among various variables and should help us understand the tradeoffs involved.

Benchmarking: Identify best practice for each step and improve performance Some examples: - Internet based DEA for warehousing at Georgia Tech - Tourism organizations benchmarking at University of Illinois at Urbana Champaign - DEA study of banks - Healthcare organizations in the UK - Supply chain benchmarking (Martin Christopher)

IndustryMethodology Grocery and RetailCustomer surveys, summary statistics Higher educationParticipant surveys, DEA, SFA Electronics industryProcess comparisons, summary statistics WarehousingDEA TourismSummary statistics, SFA, DEA BankingDEA, SFA Health careDEA, SFA, summary statistics Airline IndustryDEA Benchmarking studies

Inputs and Outputs The Data collected was divided into outputs and inputs. Efficiency = Weighted Output/Weighted Input The inputs were further divided into internal inputs and external inputs. Internal inputs were the variables which were under direct control of the companies. External inputs required interactions with partners and were an indication of collaboration. The split in inputs gave insights about how flexible the company is internally, and how well it collaborates externally.

Data description

Data reduction techniques The dimensionality of the dataset was too high to conduct a statistically significant analysis. Composite variables were created using Factor Analysis. The variable set was reduced to: 4 output factors, 6 internal input factors and 7 external input factors, each representing at least 80% of the original variance. The variable groupings were made on the basis of the correlations among variables and eventually led to intuitive factors.

Data reduction techniques (cont.)

The Idea: For a given input and read off the associated output If not on the frontier, examine how To reach it DEA Analysis

What do you learn from DEA ? Every organization is usually good at some things, can improve on other dimensions For each organization, find distance to the frontier and associated efficiency Identify specific ways to improve the inputs and outputs to increase efficiency Examine other organizations who exemplify best practice and share your best practice Cultivate the idea of “shared learning” to improve efficiency and thus productivity Quantify this process to provide guidance and milestones

Continuous productivity improvement for governmental and nonprofit organizations Our questions: Is this concept implemented by governmental and nonprofit organizations? If so, what measures of performance are employed? Based on the specific context and performance results, what are the best operational practices to implement?

Differences between the 3 sectors Click to add text Sources of revenueValue delivered For-profit organizationMoney from sales-Financial returns delivered to shareholders -Value delivered to customers Governmental organization Taxes-Achievement of social mission -Fulfillment of citizen aspirations Nonprofit organization (NPO) Charitable contributions of money, time, materials -Achievement of social mission -Satisfaction of donors’ desires to contribute Source: Managing for Value: Organizational Strategy in For-Profit, Nonprofit, and Governmental Organizations, Mark H. Moore, Nonprofit and Voluntary Sector Quarterly, 2000, 29:183.

Public and nonprofit supply chains Suppliers Governmental organization or NPO Beneficiaries Donor agencies

Who are we? University of Michigan CGD Purdue University

Focus of our study Donor agencies: PEPFAR and the Global Fund Organizations in Sub-Saharan African countries Medicines and health products for: HIV, TB and malaria Country level governmental and nonprofit organizations Funders are interested in our study: OGAC, USAID, PEPFAR, …

Our Project Questionnaire 1 Compile all information Questionnaire 2 Analysis Recommendations -General information -Supply Chain structure -Measures most proud of and most challenging -From questionnaire 1 -From other previous reports -From donors -Further questions about the company and its operations -Numerical values of list of metrics -Data Envelope Analysis (DEA) -Each organization is anonymous -Adjusting for different externalities -Results on where does your organization stand related to others that are similar -Recommended performance measures to use -Recommended operational practices to implement to achieve continuous improvement

Your participation is fundamental! Questionnaire 1 Compile all information -General information -Supply Chain structure -Measures most proud of and most challenging -Further questions about the company and its operations -Numerical values of list of metrics -Results on where does your organization stand related to others that are similar -Recommended performance measures to use -Recommended operational practices to implement to achieve continuous improvement Compile all information Questionnaire 2 Recommendations

Your participation is fundamental! Incentives for participating: –You will be able to influence with your proposed metrics –We will be reaching out to all organizations, so you shouldn’t miss it! –We will get back to you with private information on your performance relative to other organizations and we’ll give you recommendations on how to move forward

Today: Questionnaire 1

Today: Questionnaire 1 Thank you for your participation!