Strategic Decentralization:

Centralizing Logistics

Strategic Decentralization:

Centralizing Logistics

Paula Nersesian, RN, MPH

No product? No program.No product? No program.

Commodity SecurityCommodity Security

• Know commodity requirements

• Plan the necessary financial resources to meet those requirements

• Procure the commodities needed - or have them procured

• Reliably deliver the commodities to customers

The Logistics CycleThe Logistics Cycle

The Supply ChainThe Supply Chain

Supply Chain ObjectivesSupply Chain Objectives

• The right goods

• In the right quantities

• In the right condition

• Delivered to the right place

• At the right time

• For the right cost

Health Sector ReformHealth Sector Reform

• Decentralization

• Integration

• Cost Recovery

• Privatization

Logistics in HSR SettingsLogistics in HSR Settings

• Integration in Mali and Nepal

– Both improvements and harm to LMIS

• Privatization in the Philippines

– Stockouts and problems with private carrier contracts

Logistics in HSR SettingsLogistics in HSR Settings

• Cost recovery in Mali

– Donated condoms expired

• Decentralization in the Philippines and Mexico

– Some regions didn’t order contraceptives or didn’t order enough to meet demand

Advantages and Disadvantages to

Decentralizing Logistics Functions

Advantages and Disadvantages to

Decentralizing Logistics Functions

Serving CustomersServing Customers

+ Service delivery based on local needs

- Reduced control over prescribing practices

Product SelectionProduct Selection

+ Selection based on local needs

- Selection based on non-medical criteria

- Reduced influence on:– Treatment guidelines– Products for priority essential services– Priority of preventative products

Forecasting and ProcurementForecasting and Procurement

+ Quantification based on local requirements

- Greatly increased prices

- Increased:– Forecasting labor– Forecasting error– Procurement complexity

Inventory ManagementInventory Management

+ Local control over reordering decisions

+ Local control of shipping schedules

- Impossible to rationally allocate scarce products

- Local resources (e.g., staff and transport) may be unavailable

Information, Money, People, QualityInformation, Money, People, Quality

- LMIS may be lost or folded into the HMIS

- Local financial resources may be inadequate

- Local staff may be absent, or lacking necessary skills

- Commodity quality control difficult if procurement decentralized

Lessons Learned from Commercial SectorLessons Learned from Commercial Sector

• Eliminate intermediate levels in the supply

chain

• Include a strong LMIS

• Increase supply chain “agility”

• Centralize and automate supply chain

management

Planning for Decentralization

Planning for Decentralization

Planning for DecentralizationPlanning for Decentralization

Centralize:

• Logistics System Functions

• Drug Registration

• Standard Treatment Guidelines

• Health Professional Licensing

Kenya: STI kitsKenya: STI kits

Avoid decentralization of these logistics functionsAvoid decentralization of these logistics functions

• Specification and Enforcement of EDL

• Product Selection and Essential Service Package specification

• Bulk and international purchasing

• Rationing for scarce essential products

• Quality assurance for all products

• Logistics Management Information Systems

ConclusionsConclusions

• Decentralize decision making only if you can provide district managers with the resources to execute those decisions

• Begin with a detailed, indicator-based logistics system assessment

• Examine critical planning assumptions critically (e.g., funding, personnel availability, organizational constraints, time frames)

ConclusionsConclusions

• Develop a detailed logistics decentralization plan for all aspects of the logistics cycle

• Be prepared to change it

• Strengthen/protect the LMIS at all costs

• Ensure that logistics training to support decentralization is competency-based and is accompanied by periodic follow-up

• Supervision is critical, and should include logistics oversight