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The 5th Global Health Supply Chain
Summit November 14 -16, 2012Kigali,
Rwanda 
What can we learn from Consumer Goods on supply
chain? How can we smartly apply that to
Health? Hassan Belkhayat Doan Hackley McKinsey
Company
DATE
SPEAKERS NAMES
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In Africa, CPG has much lower stock-out rates
than EHP
CPG1 stock-out rate prepaid mobile phone credit
cards
EHP1 stock-out rate
of time, annual average
of time, annual average
Kenya
Kenya
Amoxicillin
25
Uganda
Nigeria
Pills
50
Tanzania
Senegal
Nigeria
Depo
46
DRC
Nigeria POS 55,000
Nigeria POS 710,000
1 EHP Essential Health Products CPG Consumer
Packaged Goods
Source DHS 2006, BMGF Contraceptive supply chain
diagnostic in Senegal and Nigeria 2011
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Learning from CPG, despite differences, given
similar challenges seem in EHP
Similar challenges

• Breadth of distribution
• Ensuring high quality of delivered product
• Managing compliance
• Increasing efficiency

Financing
Structure
Performance management
Forecasting
Operators
Differences

• Product economics
• Management model
• Complexity of delivery
• Regulatory considerations
• Product demand dynamics

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SCM is the end to end integration of key business
processes
Information flow
Physical flow

• Distribution network configuration,
  transportation management, operations of
  distribution centers, 3PL, and retailers
• Objective deliver high-quality products, on
  time, in the demanded volumes

Source McKinsey
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A distinctive approach to supply chain improvement

• Holistic perspective on performance
• From customer to supplier
• Quantitative (metrics) and qualitative (maturity
  of processes)
• Correlation between structural set up and
  performance

End to end

• Fast and effective approach with relevant key
  insights
• Focus on understanding key performance drivers
• No extensive data mining
• Top-down quantification and prioritization

Fast and focused

• Prioritized action plan is key outcome
• Rapid estimation of impact potential
• Prioritize measures by impact and implementation
  effort
• Best-practice repository and deep-dive analysis
  tools

Linked to action
Source McKinsey SCM Practice
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McKinsey 360º SC diagnostic
Source McKinsey SCM Practice
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then assess impact potential and prioritize
actions
Move to action prioritize measures

• Description of measures across all performance
  dimensions
• Best-practice SC repository including case
  studies and detailed approaches

Source McKinsey SCM Practice
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6 lessons on what drives performance
Source McKinsey SCM Practice
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Methodology applied to Senegal contraceptive
supply chain
Quantitative
Qualitative
Room for action

• Central level stock-outs
• Inappropriate forecasting
• Lack of performance management procurement and
  stock levels
• Non standardized order management

• Revive RHSC to review central stock levels
  monthly
• Change forecasting tool and methodology (target
  driven)
• Implement informed push system for distribution
  (private logistician)

Average days of stock out per year at SDP level
gt300
gt150
Injectables
Implants
Source of stock outs

• Distribution issues
• Complex network design
• Malfunctioning order management
• Low staff capabilities medical staff as
  logisticians

Target lt 2 stock-out at facility level Supply
chain key component of the FP strategy to move
from 12 CPR to 27
60
40
Distribution issues
Central level
Source BMGF Contraceptive supply chain
diagnostic in Senegal and Nigeria 2011
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Potential concrete solutions best practice CPG
ideas
Financing how to pay for inventory
Inventory management right stock level?
Streamlining the design how many steps?
Performance management how to get /use data to
improve performance?
Outsourcing who and how to optimize?
Source Team analysis
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Solutions for public health inspired by CPG
best practices
Financing how to pay for inventory?
Inventory management right stock level?

• Revive a RHSC with all donors to follow on a
  monthly basis stock
• Trigger procurement when stock levels hit a
  minimum level

• Initial endowment from MoH of base stock to
  facilities as a working capital
• Facilities only reimburse for products sold

Streamlining the design how many steps?
Performance management how to get /use data to
improve performance?

• Products flow straight from regional warehouse to
  facilities
• Products are delivered using a standard and
  optimized route

• Central unit following impact on stock-outs and
  consumption (merged potentially with RHSC)
• Data of stock-outs and consumption collected
  monthly by operator

Outsourcing who should operate?

• Outsource logistic duties (order management,
  transportation, stock monitoring) to a private
  operator
• Contract includes penalties if stock-outs are gt2
  and data flow not on time
• Medical workers focus only on medical tasks

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Senegal case-study results massive supply
chain improvements
PIKINE DISTRICT- 2012 fugures
Stock-outs Share of SDPs experiencing at least
one stock-outs during a month ()
DIU
Implants
Injectable
Pills
Oct
Sept
August
July
June
May
April
March
Feb
Baseline
Source ISSU, operator baseline average last
quarter 2011
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Senegal case-study results supply chain and
performance management increases health impact
PIKINE DISTRICT
Consumption Number of units per month dispensed
DIU
52
Implants
940
61
Injectable
73
Pills
Baseline
Oct
Sept
August
July
June
May
April
March
Feb
Source ISSU, operator. Baseline average
consumption per month during last quartner
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Ongoing performance management is critical to
satisfy customers
... without firefighting!
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