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Strategic Decentralization: Centralizing Logistics Paula Nersesian, RN, MPH No product? No program. Commodity 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 The Logistics Cycle The Supply Chain Supply 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 Reform • Decentralization • Integration • Cost Recovery • Privatization Logistics 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 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 Serving Customers + Service delivery based on local needs - Reduced control over prescribing practices Product 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 Procurement + Quantification based on local requirements - Greatly increased prices - Increased: – Forecasting labor – Forecasting error – Procurement complexity Inventory 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, 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 Sector • Eliminate intermediate levels in the supply chain • Include a strong LMIS • Increase supply chain “agility” • Centralize and automate supply chain management Planning for Decentralization Planning for Decentralization Centralize: • Logistics System Functions • Drug Registration • Standard Treatment Guidelines • Health Professional Licensing Kenya: STI kits Avoid 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 Conclusions • 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) Conclusions • 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