ARC partnered with the AMD to develop an operating model that would improve its ability to predict, avoid and respond to stock shortages timeously. This led to the development of a future-state VAN operating model.
Date:
September 22, 2021
Author(s):
Africa Resource Centre
BACKGROUND
Public health supply chains are often unreliable due to the inability to track and analyse supply chain data to identify potential supply chain disruptions in advance. In addition, there is limited availability of planning skills and scattered IT systems across ministries of health – centrally and in districts. As a result, improving the planning process has been prioritised as a strategic goal by many ministries of health, including South Africa’s National Department of Health (NDoH).
In South Africa, the supply of medicines is centrally contracted by the NDoH, through the Affordable Medicines Directorate (AMD), with input from the provinces during the tender process. This means that contracts with pharmaceutical suppliers happen at a national level, and the provincial governments purchase medicines against these national contracts. Misalignment on demand forecasts could result in stock-outs of medicines and healthcare supplies, negatively impacting patients’ access to medicines, or lead to overstocking. By improving visibility throughout the supply chain from national to provincial levels, the efficacy of the entire system can be advanced with better forecasting.
ARC’S ROLE
The NDoH recognised the need to build a more robust supply system, and ARC was part of the team that developed the NDoH’s Strategy for Improved Medicine Access (SIMA). After the continuous national stock-outs in 2014, ARC partnered with the AMD to develop an operating model that would improve its ability to predict, avoid and respond to stock shortages timeously. This led to the development of a future-state VAN operating model.
COVID-19 RESPONSE SUPPORT IN SUPPLY PLANNING
Since the SIMA in 2016, there has been good progress in supply chain planning. However, there is room for further integration. Due to COVID-19 driven demand and supply volatility, the supply chain planning process in South Africa is run on a national level. By developing a centralised supply chain planning process and solution, the NDoH can coordinate the flow and delivery of products and materials through the supply network while balancing demand, supply and financial objectives.
ARC collaborated with Deloitte, Anaplan and Johnson & Johnson to develop the Centralised Supply Chain Planning Concept Demonstrator. Johnson & Johnson made funding available in 2020 to support ARC with developing a concept demonstrator for supply chain planning – based on its own experience. The aims of creating a concept demonstrator in Anaplan were scenario planning, and business intelligence capabilities. These tools and capabilities enabled ARC to demonstrate the principles and benefits of centralised supply chain planning for public health supply chains. Further, this would help to drive strategy and roadmap workshops with country decision-makers to develop and implement supply chain planning capabilities.
The supply chain planning concept demonstrator was a small exercise to demonstrate potential new ways of working with suppliers and provinces, and advocate for adoption of some proven supply chain planning practices developed since 2016. The concept showed the functionality and analytic reporting possible if ministries of health integrated different supply chain planning efforts across implementers. This tool is completed and is ready to be used for centralised planning capability workshops and workshops in the countries where ARC works.
ARC’s support to the NDoH to strengthen supply planning in South Africa during COVID-19 had the following outcomes and impact:
Improving the ability to predict, avoid and respond to stock shortages
ARC initially set up an Excel tool in April 2020 to track 70 priority medicines to treat COVID-19 symptoms at a national level. By September 2020, the NDoH used the tool to track over 500 essential products across more than 4 000 facilities with forecasting analysis for up to 12 months ahead. When ARC started working with the NDoH, several products were at risk of potential shortages but, as of March 2021, fewer than 10 products were at risk. Thus, the NDoH was able to respond to COVID-19 and ensure that essential medicines were available when and where they were needed in the correct quantities, thereby minimising any stock-outs.
Developing a consolidated supply planning tool
ARC also supported the development of an online tool to improve supply planning for any health department. It was based on the Excel tool developed by ARC but was cloud-based to offer additional functionality and automation and allow multiple parties to access the information. This tool is completed and is ready to be used for centralised planning capability workshops and workshops in the countries where ARC work. More automated, data-driven supply planning decisions resulted in better communication with suppliers, increased medicine availability and improved working capital across the supply chain.
Coordinating stakeholders and suppliers
Building on the credibility from previous work on the VAN, ARC was in a position as a trusted independent advisor to successfully coordinate various stakeholders to ensure the tool’s adoption for all medicine supply planning.
OUTCOMES AND IMPACT
ARC’s support to ministries of health focuses on strengthening six supply chain elements. The VAN initiative at the NDoH strengthened five of these six areas: strategy, improvement roadmap, governance, policies and research, and solutions proposals.
INCREASING MEDICINE AVAILABILITY LEVELS
Key element: strategy and improvement roadmap
The VAN project created a realistic and comprehensive transformation roadmap for approximately 20 different supply chain projects run by various consultancies and non-governmental organisations funded by multiple donors.
IMPACT: As a result of major investments in supply chain visibility and analytics, the availability of medicines improved and remained at high levels.
IMPROVING SUPPLY FORECASTING AND PLANNING
Key element: governance and policies and research
ARC contributed to setting up governance processes to oversee and align the efforts of multiple supply chain projects and helped the NDoH advocate with donors for its priorities and sustainable investments.
IMPACT: By supporting the NDoH with insights and expertise from the private sector, ARC improved the capacity of the directorate to critically assess technical assistance from its donor partners.
LEVERAGING EXPERTISE
Key element: solutions proposals
ARC supported supply chain improvement by connecting the NDoH and AMD with specific skills and expertise to plug gaps and contributed to developing a VAN model that would support supply chain efficiency and effectiveness.
IMPACT: ARC developed a high-level operating model that used visibility data to improve demand forecasting, budgeting, inventory management and procurement planning.
