1. CLICK TO ADD TITLE [DATE][SPEAKERS NAMES] The 5th Global Health Supply Chain Summit November 18-20, 2013 Addis Ababa, Ethiopia Malawi Parallel Supply Chain Operations Bob Steele (IHS), Flemings Kapunda (CML)

2. Background In 2011, the Government of Malawi (GoM) approached the donor community for assistance to address widespread shortages of essential medicines in all health facilities in the country The essential medicine kits were procured by UNICEF and distributed to all health facilities by USAID through the USAID | DELIVER PROJECT, using a private-sector outsourced storage and distribution solution called the Parallel Supply Chain (PSC), for 18 months from January 2012

3. PSC The USAID|DELIVER PROJECT contracted –Imperial Health Sciences (IHS), in October 2011, to provide a pharma-grade warehouse in time for the receipt of the goods in January 2012 In the nine weeks allowed to IHS, they were able to find, customize, staff and were ready to receive the Essential Medicines to plan –Cargo Management Logistics Ltd (CML), a local company to perform distribution of EM kits to over 600 healthcare facilities throughout Malawi The volume of the EM kits significantly exceeded the existing capacity of the CML delivery fleet IHS stepped in to provide CML with more, high volume capacity vehicles With the technical assistance offered through USAID|DELIVER PROJECT, CML was able to make significant strides as a professionally run transportation service provider

4. Themes of the PSC Story The effort in setting up the PSC involves several cutting - edge aspects of commercial supply chain management, applied in the public health arena. It is a story of supply chain integration: it emphasizes: –Alignment –Visibility –Agility –Outsourcing –Measurement These principles and practices are crucial in modern supply chain management

5. Decisions taken WAREHOUSING: Move the whole warehousing function to IHS, who have a complete and international standard warehousing operation that has a tried and tested high-level WMS for inventory management (Outsourcing) TRANSPORT: Establish a high level, resourced transportation operation that is efficient and effective. Collaboration enhanced by placing the transportation department on the same site with IHS operation. Training transport staff on best practice (All 5 themes)

6. Warehousing Summary - Professional, pharma-grade warehouse SAP warehouse management system (WMS) 1200 pallet space capacity Staff trained in SOPs and SAP

7. Transportation Summary Before Sep 2011 Small 15 vehicles with a capacity of about 175cbm About 80cbm delivered per month No transport department & 0.5 staff No transportation SOPs & KPIs Incorrect vehicle size mix No Routing & Scheduling software, all planning manual No deliberate vehicle maintenance plan By Sep 2012 30 vehicles, up to 10T, capacity 610cbm 600 – 1000cbm delivered every month Transport dept. established with a complement of 4 staff Routing & Scheduling system bought & implemented Comprehensive SOPs and KPIs (suite of 5) developed and implemented Deliberate vehicle maintenance plan in place White boards to act as dashboards of activities in the field in place

8. Transportation Summary (2) Decisions Vehicle Maintenance, Security & Fuel Transport Planning KPIs Put together comprehensive maintenance, fuel and security management procedures, train all staff and implement constantly and consistently (Visibility & Measurement) Procure & implement a routing and scheduling system to not only aid with the planning (time management), but also extract major savings through efficiency gains from utilising the vehicles more effectively. Savings enjoyed by CML and its clients (Alignment, Visibility, Agility & Measurement) Develop a suite of relevant and measurable KPIs to measure the performance of the whole operation every month. These are important to allow CML to manage their fleet better, while providing better customer service at minimal cost (Visibility & Measurement)

9. KPIs DescriptionNov 2011Sept 2012 Vehicle utilisation (use of fleet and vehicle space) Not measured, estimate to have been about 50% 80-90% On-time delivery Not measured47% on planned day; 99% within 2 days of plan (Dec 2012 targets: 80% on planned day; 100% within 2 days of plan) Fuel consumption Not measuredAround 5.0 kms/L (target: 6) Vehicle days lost Not measured, but significant due to fuel, rain and breakdowns i.e. 20 per month Currently zero Transportation by non-CML vehicles Not measuredCurrently reduced to 30% (Target: < 20%)

10. Transportation Summary (3) Decisions SOPs Communications Develop comprehensive SOPs detailing all procedures and protocols to be observed and review these as necessary. These are important to allow CML to manage their operation effectively (Alignment & Visibility) Hold well structured, agenda driven meetings as often as is necessary in order to make sure that all deliverables are being met by all parties and that the meetings are highly productive (Visibility) Have IHS warehouse and CML transportation dept. share the same office to encourage collaboration. Develop a communication protocol, and clarify roles & responsibilities, for CML/IHS/JSI to aid resolving of problems when they arise. Meet as frequently as possible (Visibility)

11. Conclusions This was achieved by a great deal of effort over a period of 6-10 months: –Sustained and regular technical/professional support and guidance through USAID|DELIVER PROJECT –The responsiveness of CML to that advice and their willingness to make the necessary investments and organisational changes CML has invested –Approx.$1,500 per month on new staff –Approx. $59,000 per month on leased vehicles –$50,000 in a vehicle routing & scheduling system, as well as ongoing annual costs of $7000 The PSC has consistently delivered on performance, visibility and accountability through oversight and contract management by USAID | DELIVER PROJECT and service provision by the private sector partners who provided storage and distribution services –notwithstanding the undoubted success of this project, there are always challenges in any transport operations….and we have managed to overcome these due to deliberate planning, well-structured systems, strong collaboration between partners, etc Proving supply chain integration, out-sourcing, and other commercial practices can work in public health supply chains

12. Lessons Learned & Next Steps Even in low resource settings such as Malawi, the private sector finds a way to thrive –CML are a great example. If the right private sector partner is engaged, it can enable a speedy, successful implementation of Supply Chain infrastructure Finally, it is equally feasible that the national systems can establish such a system as the PSC where key supply chain functions like Procurement, Storage and Distribution can be outsourced –Such solutions are universally known as the Public Private Partnership (PPP). Currently there are preliminary but positive discussions underway with the Ministry of Health in Malawi about the possibility of engaging with the private sector organizations directly – a true public private partnership

13. Questions?