Inventory Management: Distribution, ICS, LMIS Technical Briefing Seminar in Procurement and Supply Management for HIV, TB and Malaria Copenhagen, 1 February 2006 Dr. Jabulani Nyenwa (for JSI)

Select Elements of the Logistics System Distribution –Storage –Transport Inventory Control Systems Logistics Management Information System

Objectives of Distribution (Storage & Transport) 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) Availability of transportation (vehicles) Security during transport Security during storage Sufficient storage space/capacity (based on procurement plan and frequency of deliveries at all levels of the system) Short shelf life of products Appropriate storage conditions (cool chain)

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) How to include safety stock levels in a non- max/min system

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 The LMIS: –Is a key component of any logistics system, –Impacts ordering, forecasting, procurement –Provides data to facilitate logistics decision-making

LMIS Considerations What data to collect –Only collect data in LMIS that is useful for decision-making in the area of commodity management Data collection tools –Daily records to capture data –Monthly/quarterly reports –Consistent reports (format, content) –Computerized system or not

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

Other considerations Vertical or integrated system Full-supply or non-full-supply products Other ideas…?

Resources, Tools Guidelines for Managing the HIV/AIDS Supply Chain (comprehensive) Guidelines for Warehousing Health Commodities Guidelines for the Storage of Essential Medicines and Other Health Commodities (joint publication with WHO/UNICEF/JSI)