Nearly half of all recipients of healthcare in Africa lack access to essential medicines, due in part to supply chain inefficiencies and outdated practices. Tackling these inefficiencies, and doing so sustainably, is critical to ARC’s mission to enable public health supply chain transformation.
Why supply chain sustainability matters
The COVID-19 pandemic brought the subject of global supply chain sustainability to the forefront. Millions of people worldwide experienced periods of lockdown or self-isolation and became increasingly reliant on “last mile” distribution models, sometimes for extended periods.
Researchers and public health experts believe that a public health supply chain based on traditional supply chain practices is unsustainable because it costs too much to run and insufficiently caters to recipients of care. Many African governments have not adequately invested in their healthcare supply chain as a critical enabler of development or adopted innovations that will make systems more agile and impactful.
Private sectors role in sustainable public health supply chains
Governments recognise the critical role played by the private sector in national development and articulate this role in most national development programmes. Private sector partnerships are already an essential component of many supply chains, but in seeking to reduce costs and become more flexible, governments can extend existing roles. This is because the private sector has a proven ability to continue supplying goods and services, even when there is volatility.
Therefore, the private sector can provide governments with tools and best practices to improve agility and allow for scaling capacity up or down when there are shifting demands and needs. Further, governments can leverage the private sector to deliver agile services without carrying the fixed cost burdens and other risks of establishing such systems in-house.
An important caveat is that private sector engagement must be, and be perceived as being, based on fair competition and delivering value for money. For this to work, ARC posits that technical innovations must be explored and contracted within an environment where supply chain leadership is empowered with ownership of end-to-end decision-making and corresponding accountability.
In this position paper, ARC proposes five technical initiatives that can contribute to sustainable supply chains in public health delivery. It also makes recommendations for country ownership and governance to create an enabling environment for governments to adopt them, potentially with private sector assistance.
FUNDAMENTAL ASPECTS OF SUPPLY CHAIN SUSTAINABILITY
A sustainable supply chain is critical to reaching broadly held national health objectives such as universal health coverage. ARC recommends a multi-faceted approach to enabling and empowering ministries of health to build capability in supply chain governance elements, technical solutions, and innovations to realise supply chain sustainability.
ARC understands that the correlation between supply chain practices and sustainability performance is critical. It thus follows that we aim to collaborate with governments towards the design of current solutions that enable them to actively drive, from a top-down approach, the reorganisation of their supply chains from solely focusing on traditional priorities such as cost and service levels, to promoting minimal environmental impact and ethical working conditions anchored against a backdrop of structured guidelines and enabling policies. Thereby catalysing broad-scale environmental, social and governance (ESG) reforms.
Investment in technical capabilities and innovations is vital for building cost-effective, high-performing supply chains. Still, they cannot be successfully and sustainably implemented without committed governance.
Any lack of governance of the end-to-end supply chain creates incomplete accountability on the part of stakeholders and a resulting lack of impetus to invest in and develop strategic and tactical management capacity. When donor support reduces over time, there is a significant risk that without these capabilities, systems will fail to deliver either because of fragmentation or due to inheriting costly structures that may prove unaffordable to a country’s own revenue base.
Figure 1: Fundamental aspects for ensuring effective supply chain sustainability
COUNTRY OWNERSHIP AND GOVERNANCE
To ensure that ARC improves the capability of African ministries of health to achieve their supply chain strategies sustainably, we focus on six elements of a supply chain sustainability model:
- Supply chain strategy: Government and donors recognise the criticality of supply chain for achieving health outcomes and promoting building the capability of supply. It is a planning, monitoring and alignment tool for stakeholders on sub-sector priorities. In addition to the reference framework, it ensures consistency with policy documents and helps support priority health programmes.
- Supply chain improvement roadmap: Investments and projects are aligned to the supply chain strategy and driving value for the government, gaps are closed or filled, overlaps or duplications are removed, and key performance indicators are clear to all.
- Governance: Understanding and oversight of partner performance by the ministry of health, with a robust supply chain system that is coordinated and well governed, based on enabling policies and strategies that bring on board service providers from various sectors.
- Policies and research: Governments will have public health sector policies in place which engage with other sectors that have good practices in supply chain and those that provide supply chain services.
- Supply chain-specific solutions proposals: Funding received for implementation of solutions and evidence of new concepts and solutions showing progress against agreed metrics and milestones (for example, in visibility and last mile delivery).
- Supply chain budgets and investment cases: Leveraging and reorientating supply chain resources (human and financial), supporting through advocacy for new or additional funds invested (if needed), and tracking bought-in financing activities annually to see achievement against specific areas in the supply chain strategy.
SUPPLY CHAIN TECHNICAL CAPABILITIES AND INNOVATIONS
ARC has supported technical innovation through several solutions, including replicating decentralised service delivery and outsourcing models. For example, in Uganda, ARC engaged the Ministry of Health to build an alternative supply chain model that addressed the last mile delivery of antiretroviral therapy medication to chronic but stable patients by leveraging pharmacies in the private sector.
On a global scale, ARC led and coordinated the development of an Outsourcing Toolkit, a resource developed for health ministries and public health organisations exploring outsourcing to enhance supply chain performance.
Table 1 (below) outlines more of these solutions, which are underpinned by well-proven methods that have been leveraged from the private sector. This list of solutions is not exhaustive but comprises areas in which ARC has experience and expertise that significantly impact the availability of medicines and healthcare services.
Table 1: ARC supply chain sustainability solutions
BUILDING SUPPLY CHAIN RESILIENCE
The COVID-19 pandemic highlighted the fragility of extended supply chains in the public and private sectors. In Africa, lower- and middle-income countries (LMICs) ‘lost out’ disproportionately to richer countries that were able to secure supplies of scarce products and vaccines.
Shift to more localised production and shorter supply chains
One response is shifting to more localised production. Studies have highlighted the benefits of shorter food supply chains, but this same principle and argument can be made for medicines and health products supply chains. This strategy is gaining traction in developed markets because even though per-unit costs may increase, a shorter supply chain is generally recognised as leaner and more agile than the alternative of building extensive inventories.
According to Kiss et al. (2019), short supply chains’ “(supposed) positive sustainability attributes are based mostly on extensive production methods and short transport distances”. With increased regional manufacturing and a greater proportion of locally sourced products, shorter supply chains can also be more accountable and cost-efficient, depending on the circumstances.
On the other hand, shorter supply chains anchored in local manufacturing also present several challenges, including longer production cycles, quality non-conformance and delayed delivery times.
While there are risks to creating wasteful overcapacity, ARC will support efforts to analyse the opportunity to shorten supply chains to LMICs in Africa and integrate local supply into public health markets. This could prove to be an essential strategic change, and it may have a multiplier effect on both the governance and technical innovation aspects above.
Increase spending on pre-COVID-19 sustainability measures
In addition to the ‘shortening’ notion, ARC’s recommendation for strengthening public health supply chains is for nations to increase spending on measures already in place before the spread of COVID-19. For example, there will undoubtedly be a temptation to build yet more bespoke ‘parallel’ supply chain capacity in some cases, ultra-cold chain being one such example, strategic reserves another.
However, the long-term return on investment from these types of projects may be less than if countries focused on driving maximum efficiency from infrastructure that already exists, judiciously building more in a network that is optimised (as supported by data-rich analysis) and investing in ‘softer’ aspects such as processes, governance routines and skills. We would count exploration of outsourcing arrangements that provide ‘surge capacity’ and minimise public sector liability for assets as one of these investment areas.
Most African LMICs lag in current technology investment, so this remains a fruitful area for further work. The shock of the COVID-19 pandemic has shown the power of collaboration and integration of systems rather than proliferation. It has been an environment that demonstrated the power of centralised planning for access to public health products.
These gains in terms of ‘new’ operating model acceptance should not be lost, and donors can positively contribute to supply chain resilience by giving their partners the flexibility to respond to demands from countries to embed practices piloted during the pandemic.
Donor support to LMICs in Africa has delivered enormous benefits. Still, in some crucial respects, it has created fragmentation along programmatic lines and has disempowered or shielded leaders from the need to adopt leading practices in supply chain management. Most LMIC public health supply chains that ARC has observed would score at the lowest end of supply chain maturity by standards applied to the private sector.
Technical innovations are available to address some of these maturity gaps, but the more fundamental aspects of ownership, governance, skills building, and ‘operating models’ must also be addressed to make investments in innovation stick. These aspects will require health systems’ leaders and investors to be objective in prioritising investments and long-sighted in maintaining direction and momentum on a strengthening journey that may take 5 to 10 years.
Ed Llewellyn, Bonnie Fundafunda, Phenyo Shabangu, Trip Allport, Jemina Harry, Ibnou K Diaw.
ARC Africa Resource Centre
LMICs lower- and middle-income countries
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