Course 3: Supply Chains in Global Health

Innovation in health requires a novel technological solution in conjunction with an effective implementation program.(1) This latter component is essential for the introduction, distribution, maintenance, and longevity of technological solutions, and can provide an extended network of economic improvement within developing countries. The delivery of technological innovation from conception to the hands of its users is known as the “supply chain.”

The procurement process is defined by the World Health Organization as, “all actions from planning and forecasting…until the delivery of goods, the end of a contract or the useful life of an asset.”(2) Essentially, this process comprises a bulk of the supply chain methodology. Poor practice in supply can lead to the provision of sub-standard technology that negatively affects the health outcomes of an area.

Goals of a successful supply chain:(3)

• Cost-effective

• Appropriate quality

• On-time delivery

• Expected quantity

• Satisfactory installation and training

• Effective warranty

• Satisfactory maintenance and upkeep

• Transparent and trustworthy service

Yet, when developing an effective supply chain, it is important to consider barriers to delivery in developing countries. Such barriers include lack of reliable infrastructure, political instability and corruption, and the lack of trained technical staff. Other limitations involve regulatory, cultural, and language constraints that narrow the criteria for successful implementation.(4) When such barriers are enough to hinder supply, stock-outs may occur, leading to idle machines, wasted consumables, and unfulfilled needs.

Organizations use various supply chain models; however, many policy-makers recommend a general framework for the supply process:(5)

• Needs Assessment. An evaluation of the gap between the desired health situation and current situation. Priorities may need to be identified to ensure the most critical specifications are met.

• Product Forecasting. To achieve optimum stock levels throughout the community, decisions need to ensure supply meets demand. More basic supplies will often be given priority over other equipment, as will replacement consumables over new technology.

• Funding and Budget Analysis

• Definition of Purchasing Method. Necessary contracts are drawn between stakeholders.

• Monetary Exchange. Trained financial officers or accountants complete monetary transactions once workable goods have been successfully delivered. The original contract should include strict guidelines on expected behavior in order to avoid potential conflict.(6)

• Evaluation of Technical and Financial Methods

• Installation. Technology and necessary equipment is integrated within the intended location. Construction and instruction delivery may be required for successful storage.

• Commissioning. Before initiation, tests must be carried out to ensure no breakages have occurred during transport, and that any product or procedural specifications have been adhered to by the supplier. It is at this stage that staff training should occur.

Even after the final product is deemed functional, staffed, and ready-for-use, ongoing evaluation is necessary to ensure the continued success of technology and its complementary supply chain model. In the course of continual evaluation, the Organization for Economic Cooperation and Development (OECD) cites four main “pillars” of a successful procurement model: the legislative and regulatory framework, the institutional framework and management capacity, the procurement operation and market practices, and the principles of integrity and transparency.(7) Using these guidelines, it is possible to methodically identify areas of weakness in a supply chain.

Techniques of Effective Supply Chains

Flexibility

The challenges of time and distance in rural areas indicate that supply chains often rely on little established infrastructure. For instance, unreliable electricity can create problems when transporting medication or consumables, and uneven roads can damage equipment. Methods of distribution must be able to adapt to physical, economical, or social constraints unique to different cultures and community organizations. As such, the best supply chain models utilize creative venues to disseminate technologies, products, and programs to target users.

Sustainability

Sustainable supply chains are advantageous to benefactors and suppliers of technology. Often, global health innovations receive financial support from aid organizations or anonymous donors. Fixed or temporary terms of donation would not be as restrictive if supply chains utilize built-in components of sustainability. Areas of consideration include the use of local management, terms of cultural sensitivity, and environmental awareness.  Often, an indicator of sustainability is the advancement of sectors that parallel or are relevant to the global health issue at hand. For instance, improvements in health outcomes due to a given technology or program could have positive effects on social issues such as human rights, female empowerment, and local governance. Traditionally, success of distribution has been considered in terms of monetary transactions. To reflect sustainability, another measure would be to assess the development of such socially-based complements as an outcome of the supply chain model.(8)

Decentralized Delivery

Within developing countries, the areas of greatest need are overwhelmingly rural. Of the one billion people leaving in extreme poverty, 75% do not live in cities.(9) Decentralization of healthcare away from traditional health care hubs can improve delivery and improve access by eliminating barriers of time and transportation often required to seek care.(10) By acting as gate-keepers, rural health providers can more effectively direct scarce resources to areas of need.

As such, supply chains should not rely on the presence of large urban hospitals to distribute medical care, and technologies should be institutionalized in such a way as to reach rural communities. Examples of effective delivery systems have been implemented gradually, making use of upgrades in infrastructure and communication to ensure that medical care does not diminish in quality as it spreads.(11)

One particular example has been the development of telemedicine. Telemedicine allows knowledge and information to be shared beyond traditional geographical constraints – “healing at a distance.” It can circumvent barriers traditionally posed by a rural setting and is increasingly used throughout both the developed and developing world. Incorporating a variety of methods, telemedicine has seen variable success. The linguistic and cultural barriers can be great, especially when the remote provider has little or no connection to the community. However, it can allow new technology to be implemented in areas which do not currently have trained personnel, enhancing education through mobile-based instruction at a distance.(12) This has proven to be effective in developing settings, as demonstrated by a tele-education program for primary care providers in Brazil and a maternal health program in Mongolia.(13)(14) Limitations to telemedicine include the need for existing and available infrastructure and the potential dependence on other technology to work. Such requirements may unintentionally increase rather than decrease the “digital divide.”(15)

Local Production

Typically, given local capacity, production using local workers and facilities is a cost-effective investment in the success of an innovation. Not only does local production save time and resources on product delivery, it improves the sustainability of the program by contributing to the area’s economic and social development. Local sourcing of technology reduces problems of product availability and also allows for continued upkeep and development. In many cases, associated consumables and spare parts are more readily available, and the local economy benefits from additional industries, increasing manufacturing capacity in the nation.

Local production in the industry of health technology, however, is controversial. Production is highly specialized, with a need for skilled workers and a regulated production process. Limited production due to high specifications and an extensive patenting process is just one factor that deters the start-up of local health technology manufacturers. (16) Overall, if the cost of local production is greater than that of importing, local production would not be optimal.(17) A recent report by the World Bank regarding pharmaceutical industries of developing nations revealed that the economies of scale for small developing nations often inhibit any significant gains in prioritizing local production.(18)

Nevertheless, aspects of other medical technologies and consumables have very different requirements in their supply chains. For technologies, the requirement for ongoing maintenance and modification may necessitate localized production. The transfer to local production also ensures development of prioritized needs specific to the target population.(19)

Avoiding Corruption

The risks of corruption are multidimensional, and the consequences are catastrophic for all parties of the supply chain. To avoid corruption, it is helpful to recognize certain risk factors:(20)

• Complex or multi-stage procurement of drugs and equipment

• Large number of involved individuals (contractors or subcontractors)

• Lack of transparency in market information

• Limited ground supervision of product quality

• Indeterminate need

• Risk-prone industries or sectors

In order to combat these risks, strict regulation processes and feedback mechanisms can allow for successful delivery. Accountability in the public sector can help establish appropriate codes of conduct and avoid the dangers of corruption.

Safeguarding Consumables and Spare Parts

When designing the procurement system for a new technology, it is imperative not to forget the associated consumables and spare parts. Often, the misperception is that the central device or equipment poses the greatest financial barrier. In fact, most failed technologies suffer from inadequate or unsustainable consumables and the lack of spare parts that cause functionality to break down.(21) When these components are not addressed, perfectly viable devices may be wasted.

Whether consumables are provided as an arm of the supply chain for the central device, or are procured from other existing systems, plans should be made for long-term provision and sustainability. Similarly, arrangements must address repairs and maintenance. This final requirement can take advantage of other effective techniques to supply chain-design, such as local production and decentralized delivery to best meet implementation needs.

Case Studies

Village Reach

Village Reach was founded in 2000 as a logistics and supply chain platform to improve access to healthcare in remote areas of Mozambique. It has now expanded to cover over 250 health clinics in other countries. By combining three main areas of focus – Health Systems, Information Systems, and Social Business, Village Reach has tackled many of the underlying difficulties in health technology implementation in the developing world. In particular, Health Systems is a distribution and logistics platform that assesses the needs of local communities and develops systems to deliver the most efficient management of health care services.(22) Information Systems supports the development of ICT capabilities as a means by which data and support can be easily shared.(23) The last platform, Social Business, is used to develop the systems of health care infrastructure, by creating private businesses who may eventually scale-up in size or services.(24)

ACTwatch

ACTwatch is an organization with a goal to provide accurate recommendations and evidence-based feedback on methods of increasing availability and decreasing price of Artemisin-based combination therapy against malaria.(25) ACTwatch provides partners with information on levels and trends of products as they progress through delivery points, wholesaler and retailer volumes, and consumer behavior. Recommendations are disseminated to policy makers to ensure findings are translated into action.

Accredited Drug Dispensing Outlet (ADDO) in Tanzania

Government-sponsored ADDOs were developed as an alternative to the traditional reliance on private, unregistered drug supply stores in rural areas. By targeting the supply chain, quality and availability of drugs have greatly improved, along with affordability due to strict market regulation. Evaluation after eight years of the program indicates that ADDOs in Tanzania have been successful, both from a healthcare perspective and a social entrepreneurship model.(26) Initial funding came from the Strategies for Enhancing Access to Medicines (SEAM) program, funded by the Bill and Melinda Gates Foundation, and the model is now being expanded through the Ministry of Health throughout Tanzania.(27)

ColaLife

ColaLife is a non-profit organization with the aims to reduce child mortality from preventable disease and to improve maternal health and knowledge. Yet, the unique vision of ColaLife is to achieve their goals by engaging existing commercial distribution chains, particularly that of The Coca-Cola Company, to “carry ‘social products’ such as oral rehydration salts and zinc supplements to save children’s lives.”(28) Running a pilot program in Zambia, the organization has sought partnerships with the Zambian Ministry of Health, UNICEF, and other contractors for the distribution of AidPods through Coca-Cola’s secondary distribution chain. The AidPod package “fits between the necks of crated bottles, in un-used space, adding no extra volume and very little weight to a crate,” carrying simple medication and social products to the ‘last mile’ of developing countries.(29)

The pilot model features delivery through the private sector, with AidPods introduced at the wholesaler and subsidies incorporated at the previous step – at the distributor depending on the ability or willingness to pay. From the wholesaler to the community, social marketing and sensitization methods will be necessary to introduce and implement AidPods to target users. Because transportation costs often comprise up to 40% of the cost of medical supplies in developing rural communities, the distributed product is more accessible and affordable. Evaluation of this trial, from the assessment of such cross-sector alliances to the proof of concept through scale-up or adaptation, will be valuable as the model is shared and disseminated to other countries.(30) Still in early stages of implementation, there is limited evidence of success. One factor for concern is the decision to create a ‘demand’ rather than ‘need’ for the product – while competing with the consumer’s ‘want’ – as it shifts from a donor-based product of aid to a market-based commodity.(31) It is hoped that results from the Zambia trial will prove useful for development of an ideal distribution model of health care products.

Footnotes

(1) Gardner, C., T. Acharya, and D. Yach. “Technological and Social Innovation: A Unifying New Paradigm for Global Health.” Health Affairs. 26.4(2007): 1052-1061.

(2) Ibid.

(3) “Procurement Process Resource Guide.” World Health Organization. Geneva: WHO Press, 2011.

(4) “Trends in Medical Technology and Expected Impact on Public Health.” World Health Organization. Geneva: WHO Press, 2010.

(5) “Procurement Process Resource Guide.” World Health Organization. Geneva: WHO Press, 2011.

(6) Kaur, M., et al. “How to procure and commission your healthcare technology.” How to Manage-series of health care technology guides, no. 3. St Albans: Ziken International (Health Partners International), 2005.

(7)“Compendium of Country Examples and Lessons Learned from Applying the Methodology for Assessment of National Procurement Systems: Volume 1 – Sharing Experiences.” Organization for Economic Cooperation and Development. 2008.

(8) United Nations. (2006). “UN Procurement Practitioner’s Handbook.” https://www.ungm.org/Areas/Public/pph/channels/PPH.pdf.

(9) Kinkade, S. and K. Verclas. “Wireless Technology for Social Change: Trends in Mobile Use by NGOs.” Access to Communication Publication Series, vol. 2. Washington, DC and Berkshire, UK: UN Foundation–Vodafone Group Foundation Partnership, 2008.

(10) “Trends in Medical Technology and Expected Impact on Public Health.” World Health Organization. Geneva: WHO Press, 2010.

(11) Marinucci, F., et al. “Decentralization of CD4 Testing in Resource-Limited Settings: 7 Years of Experience in Six African Countries.” Cytometry A. 79.5(2011): 368-374.

(12) “Telemedicine – Opportunities and Developments in Member States.” World Health Organization, Geneva: WHO Press, 2010.

(13) Joshi A., et al. “Evaluation of a Tele-education Programme in Brazil.” Journal of Telemedicine and Telecare. 17.7(2011): 341-345.

(14) “Telemedicine – Opportunities and Developments in Member States.” World Health Organization, Geneva: WHO Press, 2010.

(15) Chandrasekhar, C. and J. Ghosh. “Information and communication technologies and health in low income countries: the potential and the constraints.” Bulletin of the World Health Organization. 79.9(2001): 850–855.

(16) Yadav, P., O. Stapleton, L. Van Wassenhove. “Always Cola, Rarely Essential Medicines: Comparing Medicine and Consumer Product Supply Chains in the Developing World.” INSEAD Working Paper, Aug. 2010.

(17) Gardner, C., T. Acharya, and D. Yach. “Technological and Social Innovation: A Unifying New Paradigm for Global Health.” Health Affairs 26.4(2007): 1052-1061.

(18) Kaplan, W. and R. Laing. “Local Production of Pharmaceuticals: Industrial Policy and Access to Medicines.” World Bank HNP Discussion Paper, 2005.

(19) Salicrup, L. and L. Fedorkova. “Challenges and opportunities for enhancing biotechnology and technology transfer in developing countries.” Biotechnology Advances 24(2006): 69-79.

(20) Heggstad, K. and M. Froystad. “The Basics of Integrity in Procurement.” U4 Anti-Corruption Resource Centre. U4 Issue. Oct. 2011(10).

(21) Malkin, R. “Design of Health Care Technologies for the Developing World.” Annual Review of Biomedical Engineering. 9(2007): 567-87.

(22) Village Reach: Health Systems. https://www.villagereach.org/.

(23) Village Reach: Information Systems. https://www.villagereach.org/.

(24) Village Reach: Social Business. https://www.villagereach.org/.

(25) ACTwatch: The Program. http://www.actwatch.info/.

(26)“ADDO Program at Glance.” Tanzania Food and Drugs Authority, 2011.

(27) “Increasing Access to Essential Medicines through the Private Sector: The ADDO Program.” Rational Pharmaceutical Management Plus.

(28) ColaLife. https://www.colalife.org/.

(29) ColaLife Operational Trial Zambia. https://www.colalife.org/.

(30) ColaLife: Frequently Asked Questions. https://www.colalife.org/.

(31) Esper, H. “Creating Demand with Social Marketing: ColaLife’s Approach.” NextBillion. https://nextbillion.net/creating-demand-with-social-marketing-colalifes-approach/.