strategic decentralization: centralizing logistics
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Strategic Decentralization:
Centralizing Logistics
Strategic Decentralization:
Centralizing Logistics
Paula Nersesian, RN, MPH
Commodity SecurityCommodity Security
• Know commodity requirements
• Plan the necessary financial resources to meet those requirements
• Procure the commodities needed - or have them procured
• Reliably deliver the commodities to customers
Supply Chain ObjectivesSupply Chain Objectives
• The right goods
• In the right quantities
• In the right condition
• Delivered to the right place
• At the right time
• For the right cost
Health Sector ReformHealth Sector Reform
• Decentralization
• Integration
• Cost Recovery
• Privatization
Logistics in HSR SettingsLogistics in HSR Settings
• Integration in Mali and Nepal
– Both improvements and harm to LMIS
• Privatization in the Philippines
– Stockouts and problems with private carrier contracts
Logistics in HSR SettingsLogistics in HSR Settings
• Cost recovery in Mali
– Donated condoms expired
• Decentralization in the Philippines and Mexico
– Some regions didn’t order contraceptives or didn’t order enough to meet demand
Advantages and Disadvantages to
Decentralizing Logistics Functions
Advantages and Disadvantages to
Decentralizing Logistics Functions
Serving CustomersServing Customers
+ Service delivery based on local needs
- Reduced control over prescribing practices
Product SelectionProduct Selection
+ Selection based on local needs
- Selection based on non-medical criteria
- Reduced influence on:– Treatment guidelines– Products for priority essential services– Priority of preventative products
Forecasting and ProcurementForecasting and Procurement
+ Quantification based on local requirements
- Greatly increased prices
- Increased:– Forecasting labor– Forecasting error– Procurement complexity
Inventory ManagementInventory Management
+ Local control over reordering decisions
+ Local control of shipping schedules
- Impossible to rationally allocate scarce products
- Local resources (e.g., staff and transport) may be unavailable
Information, Money, People, QualityInformation, Money, People, Quality
- LMIS may be lost or folded into the HMIS
- Local financial resources may be inadequate
- Local staff may be absent, or lacking necessary skills
- Commodity quality control difficult if procurement decentralized
Lessons Learned from Commercial SectorLessons Learned from Commercial Sector
• Eliminate intermediate levels in the supply
chain
• Include a strong LMIS
• Increase supply chain “agility”
• Centralize and automate supply chain
management
Planning for DecentralizationPlanning for Decentralization
Centralize:
• Logistics System Functions
• Drug Registration
• Standard Treatment Guidelines
• Health Professional Licensing
Avoid decentralization of these logistics functionsAvoid decentralization of these logistics functions
• Specification and Enforcement of EDL
• Product Selection and Essential Service Package specification
• Bulk and international purchasing
• Rationing for scarce essential products
• Quality assurance for all products
• Logistics Management Information Systems
ConclusionsConclusions
• Decentralize decision making only if you can provide district managers with the resources to execute those decisions
• Begin with a detailed, indicator-based logistics system assessment
• Examine critical planning assumptions critically (e.g., funding, personnel availability, organizational constraints, time frames)
ConclusionsConclusions
• Develop a detailed logistics decentralization plan for all aspects of the logistics cycle
• Be prepared to change it
• Strengthen/protect the LMIS at all costs
• Ensure that logistics training to support decentralization is competency-based and is accompanied by periodic follow-up
• Supervision is critical, and should include logistics oversight
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