The pulse of Africa’s healthcare supply

chains benefit from South African expertise

Agenda

• Introduction Of Company

• Definition Of Specific Problem / Challenge

• The Analysis

• The Solution

• The Implementation

• Results Achieved To Date

• Learning's And The Way Forward

IMPERIAL’s Healthy Client Base

…

PPP – Public Private Partnerships

PEPFAR(Hubs in Africa)

THE

GLOBAL

FUND(RSM)

NDoH

SOUTH

AFRICA(Control Tower)

Pharmaceutical CompaniesMedicines, Vaccines, Consumer Healthcare Products

IHS Coverage & Services

• Provides end-to-end supply chain solutions including:� FCL consolidation ex Europe� Inbound Freight Management� Warehousing� Order Management� Secondary Repackaging� Kitting � Outbound Distribution� Customer Services� 3PL, Stock Purchasing Model or Distributor� Debtor management� Reverse logistics� Cold chain management� Infrastructure deployment� Health system strengthening

� Consulting & training

The pulse of Africa’s healthcare supply chains benefit from South

African expertise

Review of healthcare supply chain in Malawi..

Defining the Challenge

Imperial’s Strategy– Deploying capacity and reach– Pharma-grade service and security– Asset light, quickly deployed– Client responsiveness– Commercially sustainable

Background

– Approached by JSI - major public sector client

– Requested Imperial’s logistics expertise– MoH Malawi had reached a critical point -

most of ~700 public health facilities were chronically stocked out of key medicines

– Objective - ensure the safe, secure supply of essential meds to the people of Malawi

The Solution

• Needed urgent short-term assistance AND long-term strategic support

• Short term objectives:

– Reduce stock outs

– Be able to receive and deliver medicines within 6 weeks from receiving the SOS

– Create a parallel supply chain to manage the warehousing and distribution of a multi donor essential medicines, family planning and malarial commodities

• Long term objectives:

– Build sustainable 3PL capacity that can survive the project

The Details …

• Analysing the available resources and partners– No strategy in place to absorb the 9 fold increase in commodity volumes expected

– The first shipments of commodities were expected within 6 weeks of project initiation

– The existing 3PL partner was motivated, but lacked:

• Key operational capacity

• Quality management systems and processes

• IT systems, planning capacity, tracking ability, POD control

• Transport management capacity - all ops were managed by the owner

• Customers satisfaction levels were poor, driving the need for a better solution:• The 3PLs costing method was combination of volume and mileage which overstated costs

and was not sustainable for the client

• Client perceived a lack of transparency from billing to daily operations

The Analysis

• Development aid donors account for over 70% of Malawi’s pharmaceutical budget

• These external partners halted funding pending investigations into budget management

• This caused severe shortfall and stock outs at facility level

• As an emergency measure, a consortium of donors channelled funding for procurement of commodities directly to Unicef

• Unicef packed essential medicine kits composed of key commodities

• To ensure rapid deployment and total control of the supply chain, the donors awarded oversight contract to John Snow Inc who had been using CML as their service provider

• JSI - understanding that CML did not have the capital, systems, quality systems and processes or human capacity to take on this work in the required urgent timeframe -approached IHS for assistance

• IHS is an existing USAID contractor that has been a frequent collaborator in supply chain improvement projects across Africa

The Solution

• Imperial to identify, refurbish and deliver a quality-compliant warehouse, while deploying technical experts and capital resources to support CML, on scaling-up the distribution

• Warehousing:

– Requires new IT installation (SAP)

– Requires refurbishments and upgrades to achieve quality systems standards

• Distribution:

– CML would require additional investments - vehicles and GPS devices & tracking

– Also required: extensive training on route planning, POD tracking etc

– Client satisfaction: implement clear and transparent activity-based costing and regular performance reporting

• Minimum investment required:

– Approx US $1m in warehouse capacity

– 8 vehicles

– Approx US $50k in IT licences and configuration

– Approx US $300k in training technical support

The Implementation

• All activities implemented in accordance with a detailed project plan based on the analysis of routes/customers/volumes.

• Warehouse identified and refurbished within 6 weeks--– Refurbishment and upgrades of the facility to achieve GDP compliance

– Quality and Information systems: SAP and QMS deployment.

– Imperial’s technical experts (IT, Quality etc) deployed to train and support staff

• Imperial also collaborated closely to support CML:– Fleet deployed to CML from Imperial

– Technical advisor deployed to work “hands on” full-time with CML counterpart

– Comprehensive end-to-end distribution planning and order flow mapping

– Logix routing software configured for deployment and use in active routing

– Reporting requirements and communication meetings established

– Metrics outlined and data sources identified with requisite training

The Results

• Capacity to serve– Costing system aligned to allow scalable growth– 9 regular reports shared across the business with client (previously none)– 8 additional vehicles supplied by Imperial– GPS tracking on fleet deployed– LogiX planning software deployed (previously none)– Fleet increased from 15 to 30– 15,000 kits delivered, 12M ACT’s, 10M RDT– 60 new jobs created.

• Management and Quality Systems – KPIs for all functions– Dedicated transport department created– All commodities batch tracked.– SOPs for all functions– Clean PODs 2013 99.83%

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Amoxycillin Stock Outs 2011 & 2012/13

Amox Jan - Dec '11

Amox Jan '12 - Mar

'13

Warehousing

Before• Seven warehouses being managed

– Six at the airport and one outside

• Basic sheds with no racking

• All commodities block stacked

• No WMS

• Management capacity inadequate for the volumes managed

After• Warehousing capacity coped well with

increased volumes

• ACTs receipts increased three/fourfold

• RDTs receipts increased

• Warehouse management capacity was compromised at times

• More errors in receipts reports

• IHS assistance sought

Transportation

Before• 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

After

• 30 vehicles, up to 10T, capacity 610cbm, additional fleet from IHS

• 600 – 1,000cbm delivered every month

• Transport dept. established with 4 staff

• Routing & scheduling system implemented

• Comprehensive SOPs and KPIs (suite of 5) developed and implemented

• Deliberate vehicle maintenance plan

• White boards to act as dashboards of activities in the field

Costing / Pricing

Before• Costing was a combination of volume

and mileage

• These overstated costs were not sustainable when volumes increased

After• The costing was revisited in Q1 2012

• A price per kit delivered for essential medicines kits was developed

• A per drop rate was developed for malaria and family planning products

• New agreed rates reduced costs to the clients without compromising CML’s viability

KPIs

Before• No KPIs existed

• CML did not know

– If their drivers / vehicles were efficient in use of fuel

– If fleet was being utilized optimally

– The level of Customer Service

• Mistakes and costs could not be avoided or managed better

After• A suite of 5 KPIs was developed to

manage the whole operation

• Vehicle Utilisation

• On Time Delivery

• Fuel Consumption

• Vehicle Days Lost

• Transportation by non-CML vehicles

KPI Specifics

Description Nov 2011 Sept 2012

Vehicle utilisation (use of fleet and vehicle space)

Not measured, estimate to have been about 50%

80-90%

On-time delivery Not measured Dec 2012:80% on planned day100% within 2 days of plan

Fuel consumption Not measured Around 5.0 kms / litre(target: > 6 kms / litre)

Vehicle days lost Poorly measured but estimate of 20 per month due to fuel, rain and breakdowns

Zero

Transportation by non-CML vehicles

Not measured Currently reduced to 30% (Target: < 20%)

SOPs

Before• No SOPs meant:

• CML staff did not have reference points

• Mistakes and certain costs could not be avoided

After• SOPs were developed to manage

all processes in the transport department, from chain of custody, to loading, handover (takeover) etc.

• Driver & Distribution Checklist, incl. “Chain of Custody” Procedures

• Driver de-brief• Handling of PODs• Security of vehicles• Obtaining fuel• Management of KPIs• All drivers & transport

management staff were trained in relevant SOPs

Communications

Before

• Only ad hoc meetings with clients

• No meetings with consignees / facilities

• No KPIs for reporting in meetings; hence meetings less productive / focused

• No fixed agenda and no action points from meetings, meaning again less productive meetings

After• CML transport staff are housed on

the same premises as IHS• Collaborative meetings are held

regularly• Operations meetings held every

week with a pre-set agenda• CML, JSI and IHS have tri-weekly

operations meeting to get updates on loading, offloading, distribution, and general operations matters -thereby enhancing the partner relationships

Summary - CML

• 2011 - ~ 15 trucks • ~ 100cbm vehicle volume• ~ 80cbm delivered per month• Scale-Up of PSC started with ACTs• Then added USG FP and GFATM malaria

commodities• _________________________• 2012 - ~ 30 trucks• ~ 60 sustainable jobs created• ~ 610cbm vehicle volume • ~ 600 – 1,000cbm delivered per month • ~ Phase I Kit was 0.18cbm• ~ Phase II Kit is 0.8cbm• All USG commodities, GFATM malaria commodities

and PHC essential medicines•

PSC Scale-Up with the PHC kits

The Learning's And Way Forward

• Governance and Infrastructure are required to consider such a partnership

• Infrastructure, operations & quality processes, technology, human capital and oversight are required for distribution to be effected

• Integration, a communication framework and oversight with transparency are required to build a more sustainable and mature relationship with the 3PL service provider

• As the short term emergency need has been met

• JSI and Imperial are now supporting MoH to develop and implement a medium-to-long strategic plan

• Imperial and CML have won a contract to strengthen the CMST supply chain over the next 21 months

• Imperial business in Malawi continues to be sustainable with further 12 heads for new contracts.

• Imperial and CML have also bid an RFP to enter into a public-private-partnership over 2-5 years to provide a solution with Malawi’s National AIDS Commission

• With CML, there is a continuous process underway to drive the next step change of efficiencies for operating fleet, and more formal development of staff

Thank you