The pulse of Africa's healthcare supply chains benefit from South African expertise by Gavin Pearson. Presented during the 37th annual SAPICS conference and exhibition held at Sun City, South Africa from May 31 to 2 June.

1. The pulse of Africa’s healthcare supply
chains benefit from South African expertise

2. 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

3. IMPERIAL’s Healthy Client Base
…
PPP – Public Private Partnerships
PEPFAR
(Hubs in Africa)
THE
GLOBAL
FUND
(RSM)
NDoH
SOUTH
AFRICA
(Control Tower)
Pharmaceutical Companies
Medicines, Vaccines, Consumer Healthcare Products

4. 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

5. The pulse of Africa’s healthcare
supply chains benefit from South
African expertise
Review of healthcare supply chain in Malawi..

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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%
0%
20%
40%
60%
80%
100%
120%
Jan
Mar
May
July
Sep
Nov
Jan
Mar
Amoxycillin Stock Outs 2011 & 2012/13
Amox Jan - Dec '11
Amox Jan '12 - Mar
'13

12. 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

13. 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

14. 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

15. 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

16. 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 day
100% 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%)

17. 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

18. 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

19. 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

20. 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

21. Thank you