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Creating resilient health supply chains through localisation strategies

22nd June 2021

Localisation as a means of supply chain compression has been an industry trend for some years, and the COVID-19 pandemic has revealed the importance of shortening supply chains to improve resilience while reducing risks, costs and waste.

In health supply chain management, localisation strategies such as prequalification, pooled procurement and private sector engagement through models and approaches like vendor managed inventory (VMI) and community engagement not only help ensure the reliable supply of affordable health products, but also endow stakeholders with the resources and skills needed to be self-reliant.

John Snow, Inc. (JSI) a US-based public health research and consulting firm, brought together a select group of health supply chain experts to share their experiences in driving localisation in the context of public health supply chains in low- and middle-income countries (LMICs) through a Facebook LIVE event.

The LIVE included Crown Agents own experts, Muchaneta Mwonzora and Giovanna Riggall. Giovanna’s presentation focused on VMI, which is a streamlined approach to inventory management that involves close collaboration with a supplier or third party to manage the order fulfilment process. VMI changes the traditional inventory management process by shifting the order management responsibilities from the customer to the vendor.

When designing a VMI solution, the customer and vendor align their plans to streamline the operational flow, ideally building on effective technology. This creates direct value through increased information flow and efficiency that reduces storage and transport costs. The resulting process governance also helps personnel to increase their focus on inventory control, thereby minimising the risk of stock outs and uncertainty – ultimately, strengthening local supply chains.

“Through the design and implementation of highly customized VMI models, we support countries on creating order management solutions that promote continuous process improvement, capacity building and innovation for increased sustainable impact.”

Munchaneta gave a perspective from Crown Agents’ work in Zimbabwe. “We have learned that many LMICs have become dependent on one main system such as the government medical stores, and that such polarisation often leads to shortages and overpricing in the both the private and public sectors. This is especially notable when these systems fail and the private sector pivots to support the government during pandemics and outbreaks.”

Our recommendation was for the public and private sector to partner to diversify and strengthen local supply chains.

“There are many ways to engage the private sector including contracting and collaborating. If well managed, these initiatives lead to increased efficiency, improved access to quality health products, and an overall robust local supply chain.”

Crown Agents has over time partnered with the local private sector in several initiatives, including with local manufacturers in Zimbabwe to provide medicines to the public sector. By engaging the public and private sector and understanding their challenges, Crown Agents provided much needed foreign currency directly to the local manufacturing entities to procure Active Pharmaceutical Ingredients and pre-finance the manufacturing process to meet stringent global requirements.

This partnership helped the manufacturers to remain viable and provide medicines not only to both the public and private sector, increasing national availability and affordability of medicines. Lead times and carbon footprint were also reduced, employment was created, economic activity enhanced and an the supply chain system for these products made stronger.

Read the full blog here or watch the Facebook Live recording for the whole conversation.

Clockwise right to left: inSupply Health Regional Technical Advisor Harrison Mariki, PFSCM CFO/COO Erin Seidner, Crown Agents Principal Consultant Health and Supply Chain Giovanna Riggall, Crown Agents Zimbabwe Country Director Muchaneta Mwonzora, EPN Technical Advisor Susanne Duff-MacKay.