Definition, Importance & Impact

Noel Watson PhDPrincipal, OPS MEND

USAID | DELIVER PROJECT Critical Issues SeriesThe Future of Pharmaceutical Supply Chain Management:

Intelligent, Integrated and Informed Design

July 30, 2012

Intelligent Supply Chain Design

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Definition: Increased sophistication in how supply chain (SC)

features are chosen and, when appropriate, as a result, increased sophistication

in the SC features themselves.Examples of increased sophistication in design process

Use of decision support tools, e.g., optimization models, to help recommend potential supply chain features

A more constructive collaboration between relevant stakeholders during the design process.

Examples of increased sophistication in SC featuresUse of outsourcingUse of vendor managed inventory models

Intelligent Supply Chain Design

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More proactive design rather than reactive, e.g., R&D, well defined SC design planning stages, planning to react (to grow, provide additional services, or accommodate additional commodities).

Design process driven by Clear health strategy that the SC design is expected to support

Health reform direction, e.g., privatization, decentralization, etc. Type of performance expected from SC, e.g., efficiency, equity,

types of sustainability. Capabilities to be developed

Clear understanding of the causes of dysfunction in the current SC.

Design process features Good information collection and sharing to design process

participants Sound analysis, e.g., multiple perspectives/validation, SC

modelling Coordination across relevant stakeholders and decision-makers

Sound principles for situations where SC design requires compromises.

Sophistication in Design Process

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SC management is non-trivial; even in a fully-integrated, narrow product focused, private sector based organization.

Developing countries introduce additional challengesLow infrastructure, resources and capabilitiesHigh demandCountry/cultural diversityProduct diversity (critical, non-critical, special SC needs)

But, many options exist for SC designTherefore how we choose is crucial.

Intelligent design principles and practices are needed to match right solution to particular context and needs.

Some elements of sophistication in SC design are missing from current planning processes, e.g., proactiveness, sound analysis, principles for compromise.

Why important?

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Private Sector Examples Walmart (e.g. of intelligent SC design: cross-docking, MIS, trucking

fleet) Opened first store in 1962; currently $444B in sales Ranked #7 on AMR Research Supply Chain Top 25 Ranked #11 among Fortunes Global most admired companies

P&G (e.g. of intelligent SC design: Vendor Managed Inventory) Ranked #3 on AMR Research Supply Chain Top 25 Ranked #5 among Fortunes Global most admired companies

Public Sector Examples Logistics Design (Local SC Design)

Zimbabwe Delivery Truck Topping Up (DTTU) Systems Resulted in 98% coverage and <5% stockouts

Procurement Coordination (Global SC Design) SCMS, CHAI in ARV market (2005-2011)

Increase in generic ARV use (now 90% by volume of use); dramatic reduction in ARV prices ($1500 down to $88-$200)

Examples of Impact