1• Introduction toLogistics
What Is Logistics
Overtime,theprofessionofsupplychainmanagementhasevolvedtomeetthechangingneedsofthe
globalsupplychain.AccordingtotheCouncilofSupplyChainManagementProfessionals(CSCMP)—
“Supply chain management encompasses the planning and management of all activities
involvedinsourcingandprocurement…andalllogisticsmanagementactivities.Importantly,
italsoincludescoordinationandcollaborationwithchannelpartners,whichcanbesuppliers,
intermediaries, third party service providers, and customers. In essence, supply chain
managementintegratessupplyanddemandmanagementwithinandacrosscompanies.”
The CSCMP also defines logistics management as—
Thepartofsupplychainmanagementthatplans,implements,andcontrolstheefficient,effective
forwardandreversesflowandstorageofgoods,servicesandrelatedinformationbetweenthe
pointoforiginandthepointofconsumptioninordertomeetcustomers’requirement…
Logisticsmanagementisanintegratingfunction,whichcoordinatesandoptimizesall logistics
activities, as well as integrates logistics activities with other functions including
marketing,salesmanufacturing,finance,andinformationtechnology.”
In other words, you can consider logistics activities as the operational component of supply chain
management, including quantification, procurement, inventory management, transportation and
fleetmanagement,anddatacollectionandreporting.Supplychainmanagementincludesthelogistics
activitiesplusthecoordinationandcollaborationofstaff,levels,andfunctions.ftesupplychain
includesglobalmanufacturersandsupplyanddemanddynamics,butlogisticstendstofocusmoreonspecif
ictaskswithinaparticularprogramhealthsystem.
.
Why LogisticsMatters
Inthepast,logisticswasconsideredacustodialactivity.Storekeeperswerethecustodiansofsuppliesstored
insmallstoreroomsandlargewarehouses.. Fortunately, as time passed, more and
moreprogrammanagershavecometounderstandhowimportantlogisticsistoaprogram’ssuccess.
Thegoalofahealthlogisticssystemismuchlargerthansimplymakingsureaproductgetswhereitneeds
togo.Ultimately,thegoalofeverypublichealthlogisticssystemistohelpensurethateverycustomer
hascommoditysecurity.Commoditysecurityexistswheneverypersonisabletoobtainandusequality essential health
supplies whenever he or she needs them. A properly functioning supply chain is a
criticalpartofensuringcommoditysecurity—financing,policies,andcommitmentarealsonecessary.
Effectivesupplychainsnotonlyhelpensurecommoditysecurity,theyalsohelpdeterminethesuccessor
failureofanypublichealthprogram.Bothinbusinessandinthepublicsector,decisionmakersincreasingly direct their attention to
improving supply chains, because logistics improvements bring important, quantifiablebenefits.Well-
functioningsupplychainsbenefitpublichealthprogramsinimportantwaysby—
• increasing program impact
• enhancing quality ofcare
• improving cost effectiveness andefficiency.
Logistics System
During your lifetime, you will encounter hundreds of logistics systems—in restaurants, stores,
warehouses, and many other places. this handbook describes logistics systems for health programs;
1• INTRODUCTION TO LOGISTICS 5
however,ifyouunderstandasimpleexampleofalogisticssystem,youwillbeabletounderstandalmost any
health logisticssystem.
A restaurant is one example of a simple logistics system.
• Thekitchenisastoragefacility;thefoodisheldthereuntilitisdeliveredtothecustomer.
• Waitersprovidethetransportation;theycarrythefoodfromthekitchentothecustomer.
• Thetablesaretheservicedeliverypoints,wherecustomerssittoorderandeatthefood.
Forcustomers,arestaurantisnotalogisticssystem;itisaplacetoeat.Youprobablyneverthoughtofa
restaurantasalogisticssystem.Yourexpectationsforarestaurant,however,aredirectlyrelatedtologistics.
What expectations do you have when you go out to a restaurant for a meal?
You may expect that the—
• restaurant will be attractive andpleasing
• serverwillprovideexcellentcustomerservice
The Six Rights • food you order will beavailable
of Logistics • food will be servedpromptly
• correctorderwillbedeliveredtoyourtable
The RIGHT goods • food will be of acceptablequality
in the RIGHT • food will be of acceptablequantity
• costofthemealwillcorrespondtothevalue.
quantities in the
RIGHT condition thesecustomerexpectationsdefinethepurposeofa
logisticssystem—itensuresthattherightgoods,inthe
delivered… rightquantities,intherightcondition,aredeliveredto
to the RIGHT place therightplace,attherighttime,fortherightcost.In
logistics,theserightsarecalledthesixrights.
at the RIGHT time
Whetherthesystemsuppliessoftdrinks,vehicles,or
for the RIGHT cost. pens;ormanagescontraceptives,essentialdrugs,or
othercommodities,thesesixrightsalwaysapply.
Logistics Cycle: Organizing LogisticsSystem
Activities
Logisticsmanagementincludesanumberofactivitiesthatsupportthesixrights.Overtheyears,logisticians
havedevelopedamodeltoillustratetherelationshipbetweentheactivitiesinalogisticssystem;theycall it the
logistics cycle
Figure 1-2:The Logistics Cycle
Youwillfirstnoticethatthecycleiscircular,whichindicatesthecyclicalorrepetitivenatureofthe
variouselementsinthecycle.Eachactivity—servingcustomers,productselection,quantificationand
procurement,andinventorymanagement—dependsonandisaffectedbytheotheractivities.
For example, product selection is based on serving customers. What would happen if, for a medical
reason,weselectaproductthatisnotauthorizedorregisteredforuseinacountryprogram?Wewould
needtorethinkourdecisionandorderaproductthatisauthorizedandregisteredforuse.thisdecision
would,inturn,affectourprocurementandstorage,twootheractivitiesinthelogisticscycle.
Theactivitiesinthecenterofthelogisticscyclerepresentthemanagementsupportfunctionsthatinform and
impact the other elements around the logisticscycle.
In the next few sections, you will look briefly at all the elements shown in the logistics cycle, including the—
• major activities in thecycle
• heart of the logisticscycle
• quality monitoring of theactivities
• logistics environment—policies and adaptability of thesystem.
4 • MAxIMUM-MINIMUM INVENTORy CONTROL SySTEMS 7
Quality monitoring
Itisimportanttounderstandtheroleofqualitymonitoringinensuringanefficientandeffectivelogistics
system.Inthelogisticscycle,noticehowqualitymonitoringappearsbetweeneachactivityofthelogistics
cycle.Qualitymonitoringrefersnotonlytothequalityoftheproduct,butalsotothequalityofthework.
Quality monitoring appears four times in the logistics cycle:
Between Product Selection and Quantification & Procurement. Quality monitoring plays an
importantroleinquantifyingandprocuringtherightproducts,basedontheappropriateproduct
selectionanduse.Productsthatarequantifiedshouldbeonthenationalessentialmedicineslist
(EML),beapprovedandregisteredforuseinthecountry,andbeincludedinappropriatestandard
treatmentguidelines(STGs).Also,serviceprovidersmustbetrainedtocorrectlyusetheproducts
before they are procured and distributed tofacilities.
BetweenQuantification&ProcurementandInventoryManagement.Procurementdecisionsshouldbe
basedonthesupplyplanthatisdevelopedduringquantification.Toensureproductquality,procurement
documentsmustincludedetailedproductandpackagingspecifications,andtheexpectationsforqualityat
thetimeofreceipt.Afterprocurement,programmanagersmustcheckthequalityofhealthcommodities before
they enter the distribution system. Products that are procured should be quickly cleared through
customs,orotherinspections,beforebeingdistributedtofacilities.
BetweenInventoryManagementandServingCustomers.Whileproductsarereceived,stored,anddistributed
(andwhencustomersreceivethem),itisimportanttomonitortheirquality.Furthermore,thequalityofthestorage
conditionsandtransportationmechanismsshouldbemonitored.fteinventorycontrolsystemmustbedesignedso
that,iffollowed,customerswillreceivetheproductstheyneed,atthetimetheyneedthem.
Between Serving Customers and Product Selection. Even after customers receive the products, the
programmustcontinuetomonitorthequality.Programsmustdetermineifcustomersaresatisfiedwith
thequalityoftheproductsandwhetherthecustomersaresatisfiedwiththeservicetheyreceived.Health workers must adhere
to standard treatment guidelines when serving clients; they must also conduct
pharmacovigilance.Qualitymonitoringofboththeproductandtheserviceiscriticaltothesuccessof efforts to promote the
appropriate use of products. Customers should correctly use the products they
receiveandbesatisfiedwiththemandwiththeservicetheyreceived.fteresultsofmonitoringcustomer satisfaction can be
used to inform decisionmakers about changes in product selection and use for the
nextprocurementcycle.Remember,servingcustomersisatthetopofthelogisticscycleandthatmeans getting the right
goods to thosecustomers.
Qualitymonitoringisdiscussedinmoredetailthroughoutthishandbook.Tosatisfythesixrightsand
ensureyoureceivetherightgoods—intherightcondition—tocustomers,youneedtoinstitutequality assurance
mechanisms throughout the supplychain.
adaptability
In addition to the elements in the logistics cycle, two additional factors— adaptability— directly relate to the
logistics system.
adaptability. Adaptability is a characteristic of all successful logistics systems. Logistics systems must be
designedtobeflexibleandadapttoconstantlychangingcircumstances,suchaschangesindemandfor a product, or
changes in funding policies for logistics activities. You cannot redesign the logistics system
everytimeanewproductisintroduced,orwhenconsumptionincreases.Inonesense,adaptability
speakstothelogisticssystem’sabilitytosuccessfullyobtaintheresourcesthatarenecessarytoaddress
changesindemand.Forexample,asdemandincreases,thelogisticssystemneedstobeflexibleenough
torespondtotheincreaseinthequantitiesofproductsthatwillmovethroughthesystem.ftismay
meanbuildingmorewarehousesandpurchasingmorevehicles,orincreasingthefrequencyofresupply
toavoidtheneedforlargerstoragefacilities.ftesystem’sabilitytomeettheseneeds—itsadaptability—
willimpactcommodityavailability.Asgovernmentscontinuetoproposewaystoreformtheentire health sector—such as
8 THELOGISTICSHANDbOOK•APRACTICALGUIDEfORTHESUPPLyCHAINMANAGEMENTOfHEALTHCOMMODITIES
4Maximum-MinimumInventoryControlSystems
Purpose of an Inventory ControlSystem
Yourhomeprobablyhasanumberofinventorycontrolsystems;forexample,themilkinyourkitchen. ftink
about the followingquestions:
• How much fresh milk do you keep in yourhouse?
• How often do you buymilk?
• Whatisthelowestquantityofmilkyouwanttohavebeforeyoubuymore?
• How much milk do you want to have at any onetime?
• Do you consume milk regularly, or does your usefluctuate?
• How many people in your house consume milk? Does this everchange?
• Doyouhaveanyfinancialorotherconstraintswhenyoupurchasemilk,suchaslimitedsupplyor transport?
Althoughyoucanuseanyotherhouseholditeminthisexample,milkisagoodonetocomparewith
healthproducts.Likemilk,healthproductsarestaplegoods—youdonotwanttorunoutofthem,and
eachmayhavemanyuses.Forexample,youcanusemilkatbreakfastwithcoffeeandthroughoutthe
daywhenyoucookandbake.Likewise,antibioticsareusedinavarietyoftreatments.Usingmilkas
anexamplealsodemonstratesthatsimplyhavingalargequantityofanitemdoesnotensurethatyou
willalwayshavesupplies;bothmilkandantibioticsmayspoil(orexpire)overtime.Althoughyoumay
notneedtohaveaformalinventorycontrolsystemformilk,whenyoudrive,youneedamoreformal
systemforensuringthecarhasfuel—inthiscase,afuelgauge.theworst—andmost preventable—
thing is for your car torunoutoffuel.Similarly,theworstthingthat
canhappeninahealthfacilityistohave astockout(i.e.,yourunoutofstock).the
bestwaytoensurethatyoudonotstock outinahealthfacilityistoestablishan inventory controlsystem.
A vehicle’s fuel gauge helps you maintain your stock level.
Figure 4-1: Fuel Gauge
4 • MAxIMUM-MINIMUM INVENTORy CONTROL SySTEMS 9
While driving, you monitor your fuel consumption from time to time and decide when to purchase
moregas.Byassessingthesupplystatusofthetank,youcancalculatewhentorefuelandhowmuch,
dependingonyourdestination(andperhapsyourbudget).Driversoftenusetheredwarningareaasan
indicatorofwhentobuymorefuel.Inothercases,driversreplenishthetankonaspecificdayofthe
week,regardlessofthelevel,addingenoughfueltoreachfull.Indecidingonanapproach,driversare choosing a form of
inventory control.
Where…
• maxstockquantity=averagemonthlyconsumption×maxstocklevel
• averagemonthlyconsumption=averageofthequantitiesofproductdispensedtousersorpatientsin the most recent
three months, asappropriate.
Inaforced-orderingmax-minsystem,storekeepersdonotusethemin,becausetheyalwaystakeaction
attheendofthereviewperiod.thereviewperiod,then,isthetriggerforordering.
Storekeepersmustbecarefulnottorunoutofstock.therefore,inadditiontoapplyingthedecision
ruleforordering,theyaregivenanEOP.StorekeeperswillknowthattheyhavereachedtheEOPifthey
frequentlyassessstock.thisiswhy,insystemsthatplaceordersquarterly,stockstatusshouldbeassessedmoref
requently.theresultsofastockstatusassessmentalertthestorekeepertotheneedtoplacean emergency
order for any item that has reached theEOP.
Inacontinuousreviewsystem,thestorekeeperistoldwhentoorderandhowmuchtoorderbasedon the
following decisionrule—
Review all stock levels at the end of each review period. for products that
12 THELOGISTICSHANDbOOK•APRACTICALGUIDEfORTHESUPPLyCHAINMANAGEMENTOfHEALTHCOMMODITIES
are at or have fallen below the min, order/issue stock quantities up to their
max levels.
In a standard system—
• Whentomakeanorderorissuenewstockisbasedontheminstocklevelandthereviewperiod.this
meansthatthestorekeepermustknowthemin,max,andreviewperiod.
• thestorekeeperwillneedanemergencyorderpointtoensurethatastockoutdoesnotoccurbetween reviewperiods.
• thestorekeepermustassessthestockstatusattheendofeachreviewperiodandatanytimelevels appear to be
low enough to warrant an emergencyorder.
or issuesupplies.
Reportingperiodsmaybemorefrequentthanreviewperiods.Forexample,aclinicmaysendreports
inmonthly,butonlyplaceordersquarterly.thisisthecasewhenitisdifficulttoresupplyclinicsmore often—
forexample,whentransportationandroadconditiondifficultiesoccur.
Indesigningamax-minsystem,itisrecommendedthatyouusereportingperiodsasthereviewperiods.
Bylinkingreportingandordering,logisticsmanagersaremorelikelytoreceivetheinformationneeded
forcentral-leveldecisionmaking.SDPsaremorelikelytosendintheirreportswhentheygetsomething
inreturn(i.e.,resupplycommodities).ftevalueforreportingisseenwhencommoditiesaresupplied.
Remember,inacontinuousreviewsystem,thetriggerfororderingiswhenproductsreachtheirminstock
level(nottheendofthereviewperiod).So,eventhoughfromthestorekeeper’spointofview,thereisno
fixedreviewperiod;asasystemdesigner,youwanttosetareviewperiodaboutasoftenasyouwouldlike
tohaveordersprocessed.Forexample,ordersshouldnotbeplacedasoftenasweekly,norasinfrequently
asonceayear.Asthedesigner,youshouldchooseadesiredreviewperiodtofactorintothemin.the
desiredreviewperiodisalsousedtohelpsetthesafetystock,ifnobetterinformationisavailable.
14 THELOGISTICSHANDbOOK•APRACTICALGUIDEfORTHESUPPLyCHAINMANAGEMENTOfHEALTHCOMMODITIES
Safety stock is the buffer, cushion, or reserve stock kept on hand to protect against
stockouts that are caused by delay in deliveries, increased consumption, or product
losses.
As a general guideline, the safety stock level should equal at least half of the review period.
Safety stock ≥ ½ review period
Howhighshouldthesafetystockbe?Onlythedesignerandpersonnelinthesystemassessingconfidence
inthesystemcandeterminethis.Personnelmustbelievethatthesafetystockissufficienttoprevent
astockout,ortheymaybegintoordermorestockthantheyactuallyneed.Whendemandisstable,
andthelogisticssystemfunctionswell,thesafetystockcanbelowerbecausethereislessuncertainty.
Whendemandisunstable,orthelogisticssystemdoesnotfunctionwell,thesafetystocklevelshould
besethigher.Inanewsystem,thedesignershouldsetthesafetystockhigher,monitorthesystem’sperformance,andlowerth
esafetystock,ifpossible,asdataonactualfluctuationsindemandandsupply
becomeavailable.Remember,however,thatsettingahighersafetystockincreasesthequantitieskeptinstock,which,insm
allwarehouses,mayresultinexpiredordamagedproducts.Havinghighersafety
stockalsomeansthatmorefinancialresourcesarebeingheldininventory.
theformulaforsettingtheminstocklevelforforced-orderingandcontinuousreviewisthesame.there
isaspecialconsiderationforstandardsystems,whichisdiscussedbelow.
Forforced-orderingandcontinuousreviewmax-minsystems,theformulaforsettingtheminstocklevel is asfollows:
Forastandardsystem,theformulaforsettingtheminisalittledifferent.Inthestandardsystem,orders
areplacedattheendofthereviewperiod,butonlyforproductsthathavereachedthemin.Ifastoreis
justabovemin,youwouldnotplaceanorderattheendofthereviewperiod,andyouwouldnothave
anotherchancetoorderuntiltheendofthefollowingreviewperiod.Consequently,theminmustbeset
higher.Forthestandardsystem,theformulaforsettingtheminstocklevelisasfollows:
8 • STOrageanDDiSTribuTiOn 15
Dostorekeepersneedtoknowthemin?Toanswerthis,thinkaboutthetriggersforordering/issuingin each of
thesystems.
• Inaforced-orderingsystem,storekeepersdonotneedtoknowthemin,noraretheyconcernedabout
whatitistheonlyneedtobringthestockleveluptothemaxattheendofthereviewperiod.Why, then,establishamininaforced-
orderingsystem?First,you,asthedesigner,determinethemaxbasedon
themin,asdescribedbelow.Also,theministhestocklevelyouwouldlikethefacilitytohaveonhandat
theendofanormalreviewperiod—thatis,areviewperiodwhennothingunexpectedhasoccurred.
Itmustbehighenoughtopreventstockoutswhenunexpectedconsumptionorothereventsoccur.
• Inacontinuousreviewsystem,thetriggerfororderingiswhenproductshittheminstocklevel,so the storekeeper
definitely needs to know themin.
• Similarly,inastandardsystem,thetriggerfororderingorissuingisattheendofthereviewperiod,
butonlyfortheproductsthathavereachedmin.therefore,thestorekeepermustknowthemin.
Yousetyourminpreviously,andyourreviewperiodisfixed(probablymonthly,bimonthly,orquarterly).
Simplyaddthetwotofindthemax.thegreaterthanorequaltosymbol(>)indicatesthatyoumaywant
tosetthemaxlevelhigherthanthesumoftheminandreviewperiodstocklevel,whenitislogicallyand
economicallysensibletostorealargerquantityataspecificlevelinthesystem.
Step 6. Set the emergency order point
Asasystemdesigner,youshouldsetmaxandminlevelshighenoughtoavoidstockoutsyetlowenoughthat
youdonotincreasetheriskofexpirationordamage(ifthewarehouseistoofull,theriskofdamageincreases).
Onrareoccasions,however,afacilitymayfinditselfverylowonstockbeforeitistimetoplacearoutineorder.
Whenstocksreachtheemergencyorderpoint,thestorekeepershouldplaceanemergencyorder.
theEOPshouldnotbesettoequalthemin,becausetheminincludesthebufferstock.theEOPcouldbeashigh
astheleadtimestocklevelifurgentorderstakeaslongtoprocessasaroutineorder.Inmostcases,however,itshould
bepossibletoissuestockfasterthannormalinurgentoremergencysituations.thisiscalledtheemergencyleadtime.
the EOP is defined as—
8 • Storage
Storage
Productsarestoredateveryfacilityinthepipeline;almosteveryoneworkinginthesupplychainisresponsible
forproductstorage.Storageensuresthephysicalintegrityandsafetyofproductsandtheirpackaging,
throughoutthevariousstoragefacilities,untiltheyaredispensedtoclients.Animportantgoalinstorage
ofhealthproductsisthecorrectstagingofhealthproductstoensurethatorderscanbefilledanddistributed.
Regardlessofstoragefacilitysize—fromasmallhealthcentertoacentralwarehouse—themainoperational
activitiesforstorageareverysimilar.Howcomplextheseactivitiesbecomewillvarybasedonthevolume
ofproductstobemanagedandstoragefacilitysize;aswellasparticularrequirements,suchascoldstorage.
8 • STOrageanDDiSTribuTiOn 17
Shelf life
Tomaximizetheproducts’shelflifeandmakethemreadilyavailablefor
distribution,youmusthaveproceduresforsafestorageforallproducts.
Storage Spacerequirements
Properstorageincludestheeffectiveuseofstoragespace.Iftoomuchspaceisunused,astoreroom
isunderusedandmoneyiswasted.But,ifproductsarecrammedintotoosmallaspace,theymaybe
damagedbecausegoodstorageproceduresarehardertofollow. thus,warehousemanagersmustlearn
howtocalculatethespaceneededtostoreincomingshipmentsandhowtocalculateoverallstorage
requirementsforthewarehouse,aswellasanideallayout.
Todevelopaworkablelayoutandtocalculatestoragerequirementsatalargewarehouse,whichmay
servemultiplepurposes;itisimportanttoidentifythevariouswarehouseactivitiesthatwouldinfluence
layoutplanning,determinethespacerequirementsandideallayoutforeachactivity,andthenreconcile space requirements
with any constraints. To optimize storage space, larger warehouses may require
pallets,racking,shelving,and/ormaterial-handlingequipment,suchasforklifts.
To determine space requirements, you need to consider—
• totalstoredpalletequivalents,bycommodity,basedonapeakmonth
• stored palletorientation
• required space for receiving, inspection, andquarantine
• required space for picking, packing, andshipping
• typeofstoragemedia,percommodity(i.e.,palletrack,gravityflowrack,shelving)
• required operation aisle distances
• type of material handling equipmentrequired.
Yourcalculationsbeginwiththetotalnumberofunitsfortheproductyouneedtostore.Ifyouare
calculatingspaceforasingleshipment,usethenumberofunitsinthatshipment.Ifyouarecalculating
spacerequirementsfortheentirequantityofaproductthatyouneedtobeabletokeepinyourstore,
usethemaximumquantity,ascalculatedinchapter4(maxstocklevel×AMC).Ifyouaremakinga long-
termplanforyourstorageneeds,youmustusethelargestquantityyoumightneedtostoreduring theperiodofyourplan—
i.e.,themaxleveltimesthelargestAMCprogramplannershaveforecast.
In addition to knowing the total number of units to be stored, you or the storeroom manager needs to know—
• number of units in a carton (exteriorpackaging)
• size of thecarton.
If you do not have this information, you should request it from the supplier.
Tocalculatetheamountoffloorspaceneededtostoreanyproduct,followthestepsbelow
Bycalculatingspacerequirementsforfutureshipments,youorthewarehousemanagerscandetermine
whethertheyhaveadequatespacetoreceivetheshipment.Ifsufficientspaceisnotavailable,youshould
asktoreceivetheorderinseveralsmallshipments,insteadofonelargeone.However,largeshipments
areusuallylessexpensive,andsomedonorsmayprefertoprovidetheentireforecastedneedinasingle
shipment.Youcanconsideralternatives,suchasrentingadditionalspace,whenspaceisnotavailable.
Whenprocurementcontractsareset,itwouldbeadvisabletosetthesizeofallowableshipmentsand
includeashippingscheduleinthecontract.Knowinghowtocalculatestoragespacebeforeshipmentsarrive can save a
program time andmoney.
Tousetheformulatocalculatethespaceneededinanentirewarehouse,beginwiththemaximum
quantityofproductexpectedtobestored,insteadofthenumberofunitsexpected.Youwillusually
wanttoaddextraroomforloadingandunloadingdocks;qualityinspectionandquarantine;packing,
preparingshipments;andofficesforadministrativestaff.
10 • Logistics Systemdesign
During a typical system design workshop, you will make decisions about all the major technical
componentsofthesystem,specificallytheLMIS,ICS,andstorageanddistribution.Basicelementscovered in the
design activity include thefollowing:
Reviewbasiclogisticsprinciples.Startwithareviewofbasiclogisticsprinciples;thiswillensurethat
allmembersofthedesignteamhaveacommonunderstandingofthelogisticsprinciplestheywill
applyduringthedesignactivity,andtheywillhaveacommonvocabulary.Afterlogisticsbasics,give
participantstimetoapplytheirnewknowledgeindescribingtheirownsystem.
Agreeonsystemparametersandboundaries.thisincludesreachinganunderstandingonanyalready
existingelementsthatcouldbeopportunitiesfortheneworredesignedsystem,parametersthatcanor
cannotbechanged,andanyotherparametersthatneedtobeconsideredduringthedesignprocess.
Designthepipeline.Ensurethatthepipelineshowsthelevelsinthesystemandtheflowofinformation and
commodities.
DesigntheLMIS.EnsurethattheLMISincludesdraftsofallrecordsandreports,includingfeedback
reportsalreadyinthesystem.thedesignoftheLMISisintegrallylinkedtothedesignoftheICS.Afterdecidingonthe
ICS,itisimportantforyoutogobacktotheLMISthatwasdesignedandensurethat
thetwoaspectsofthesystemstillworkwelltogether.
DesigntheICS.theICSshouldincludemax-minstocklevels,emergencyorderpoints,andreviewperiods
foreachlevelinthesystem.Youshoulddecideonwhichlevelsinthepipelinewillrequisition(pull)and
whichwillallocate(push)products.Toassistinthisdesign,youshoulddosomeanalysisoftypicallead
timeinadvanceusingkeyinformantinterviewsandareviewofstockcardsandtransactionrecords.
Identifystorageanddistributionrequirements.Ensurethatthestorageanddistributionrecommendations conform to the
suggested LMIS andICS.
Identifyrolesandresponsibilities.Ensurethateveryoneinvolvedinthehealthsystemhasclearlydefined roles and
responsibilities.
Developanimplementationplan.thisworkshopdesignteamshouldprovideinputabouttheappropriate
timingforimplementation,aswellastherequiredpreparations.thisimplementationplanshould consider the
points noted in step 3below.
Undoubtedly,outstandingissueswillnotberesolvedduringtheworkshop.Documenttheseandfollowup,as
appropriate.Ifanyissuesmightpreventthesystemfromworking,youmusthighlightandaddressthem.
Aspartofthedesignstep,youshoulddevelopanSOPmanualthatdocumentsallthestepsinthesystem. It should be drafted
immediately after the system has been designed. After the SOPs are developed,
theyarereviewedbystakeholders,changesaremade,andfinalapprovalissought.ftisapprovalprocess involves
convening stakeholder meetings to ensure the approval of all stakeholders; the ministry of health should own
and endorse thisdocument.
2. implement the system.
Implementingalogisticssystemisadynamicprocessthatrequiresongoingtraining,monitoring,
andevaluation.ftesuccessofasystemdesignisdefinedbyhoweffectiveandefficientthesystem
isinpractice.Nomatterhowwellitisdesigned,thesystemwillfailwithoutawell-planned,
properly resourced implementation plan. To maintain the momentum created in the
workshop,
theimplementationphaseshouldbeginimmediatelyafterthesystemdesigniscomplete.An
implementationplanincludeskeyactivities,timelines,androlesandresponsibilities.Itshouldalso
include answers for the followingquestions:
• What model of training will beused.
• Howmanysitesneedtobetrained.Howmanyindividualsneedtobetrained.
• How many trainings, in total, areneeded.
• Howwillthetrainingsbescheduled(i.e.,whatregion/district/state/provinceshouldyoustartwith).
• Who will conduct thetrainings.
• Willthesystembeimplementedallatonceorthroughapilot/phase-inperiod.
• Whatresourcesareneededtoimplementthesystem(newLMISforms,computers,trainingofstaff,etc.).
Basedontheexpectedleadtimes,reviewperiods,andsafetystocklevels,isthetotallengthofthein-country
pipelinetoolongfortheproductwiththeshortestshelflife.Canitbeshortened.
Whoshoulddeterminetheresupplyquantitiesateachlevelofthepipeline.
10•LOgiSTiCSSySTEMdESign 23
AfteryoudesigntheinitialICS,maptheflowofcommoditiesthroughoutyourpipeline,includingthe max-
minstocklevels.Ensurethattheoveralllengthofthetotalpipelinedoesnotexceedtheshelflifeof
theproductsmanagedbythesystem.Youshouldalsoverifythattheleadtime,safetystock,andreview
periodstocklevelsarecorrectlycalculatedforthemax-minstocklevels.
Storagespacerequirementsmustbedeterminedforeachfacility,ateachlevel,ofthesystem;facilities
musthavethestoragecapacitytostoreuptothemaximumstocklevelsetforthatlevel.Transportation
resourcesmustbeavailableatwhicheverlevelisresponsibleforphysicallymovingtheproducts:thus, higher-
levelfacilitieswillneedvehiclesiftheyaretodelivercommoditiestothelowerlevels;lower-level
facilitieswillneedvehiclesiftheyaretopickupcommoditiesfromtheresupplyfacilityatthehigherlevel.
Roles and Responsibilities
Afteraninitialsystemdesignisdrafted,makealistofeachpositionthatwillbeinvolvedinthelogisticssystem;
identifythevariousrolesandresponsibilitiesforeachperson,bylevel,ifpossible(i.e.,startwithallstaffatthe
facilitylevelthathavelogisticsresponsibilities,thenmoveupthesystem,levelbylevel,tothecentrallevel).
Youwillneedtoclarifytheskillsetneededtofulfillthoseresponsibilitiesandtoensurethatallrolesand
responsibilitiesneededtooperatethelogisticssystemareassignedtoaspecificjobtitleorjobfunction.
For the LMIS, specifically, roles and responsibilities will include those related to—
• collecting logisticsdata
• reporting logisticsdata
• aggregating logistics data, if applicable
• analyzing logistics data, including qualitycheck
• managing computerized data management system, ifapplicable
• generating and disseminating feedbackreports.
For ICS, specifically, roles and responsibilities will include those related to—
• determining resupply quantities
• approving resupply quantities
• conducting physical inventories
• monitoring stocklevels.
For storage and distribution, specifically, roles and responsibilities will include those related to—
• receiving orders from the lower level
• physically receiving the products at the storagefacility
• processing commodity orders (picking,packing)
• maintaining adequate storage conditions
• maintaining cold chain equipment, ifapplicable
• processing emergency orders, ifapplicable
• scheduling commodity deliveries, ifapplicable
• monitoring storagecapacity
• maintaining vehicles in working order.
In addition to the specific areas mentioned above, roles and responsibilities should also be defined in other areas:
• monitoringlogisticssystemperformance(forexample,stockoutratesandreportingrates)
• supervision and on-the-jobtraining
• production and distribution of logistics tools (forms, records,reports)
• roleofprogramstaffinmonitoringcommodity availability and supporting the logisticssystem.
Afteryouassigntherolesandresponsibilities,double-checkyourliststoensurethattherolesand
responsibilitiesareassignedlogically,allfunctionswithinthelogisticssystemhavebeenassigned
appropriately, and there is noredundancy.
Other designConsiderations
Thereareafewgeneralconsiderationsthatyou
shouldthinkaboutwhenpreparingforandundertakingasystemdesignactivity.Discussingtheseconcerns
withkeystakeholderscanhelpyouselectthemostappropriatedesignoptions,basedonthecountry’s
characteristics,theproductsbeingmanaged,andthetypeofhealthprogramsservedbythesystem.
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Council of Supply Chain Management Professionals (CSMP). 2011. CSCMP Supply Chain Management
Definitions.
To access the definitions, go to—http://cscmp.org/aboutcscmp/definitions.asp (accessed 02-07-2011)
DELIVER.2007.DELIVER:FinalProjectReport.Arlington,Va.:DELIVER,fortheU.S.Agencyfor
InternationalDevelopment.
Rao, Raja, Peter Mellon, David Sarley. 2006. Procurement Strategies for Health Commodities: An Examination
ofOptionsandMechanismswithintheCommoditySecurityContext.Arlington,Va.:DELIVER,forthe
U.S. Agency for International Development.
Transparency International. 2002. Corruption Fighter’s Toolkit: Civil Society Experiences and Emerging
Strategies. Berlin: Transparency International.