Inventory Management: Distribution, ICS, LMIS

Nairobi, 21 February, 2006

Yasmin ChandaniHIV/AIDS Technical Coordinator

Select Elements of the Logistics System

• Distribution– Storage– Transport

• Inventory Control Systems

• Logistics Management Information System

Basic In-Country Supply Pipeline

Objectives of Distribution (Storage & Transport)

• Storage: Assures product and packaging quality and constant availability

• Transport: Assures that products arrive in good condition, in the right place and at the right time

The less frequent your re-supply, the greater your storage requirements.

Distribution Considerations(Storage & Transport)

• Availability of transportation (vehicles)

• Security during transport

• Security during storage

• Sufficient storage space/capacity (based on procurement plan and frequency of deliveries at all levels of the system)

• Short shelf life of products

• Appropriate storage conditions (cool chain)

Distribution Considerations(Storage & Transport)

• Which transportation system used?– Pick-up system (facilities collect drugs) or delivery

system (warehouses deliver)

• Is transportation outsourced?• Do procedures exist to:

– Verify the products shipped and received: type and quantity,

– Conduct visual inspection for quality assurance, including expiration dates,

– Complete and sign transaction records/vouchers,– Store the products, and– Update stockkeeping records

Objective of Inventory Control Systems

• The objective of an inventory control system is to ensure the constant availability of products, by defining:

– When products should be ordered.

– What quantities of products should be ordered

– How to maintain adequate quantities to meet demand, while avoiding overstocks and stockouts

Inventory Control Systems

• Maximum/minimum Inventory Control System are defined by months of stock

• Systems are designed so stock quantities routinely fall between the minimum and maximum stock levels

• The minimum stock level includes safety/buffer stock

Any inventory control system (max/min or other) must take into account safety/buffer

stock

Inventory Control Considerations

• Who decides what quantities to distribute? – The lower level (pull) or the upper level (push)? – Decision should be based on training and human

resource implications

• Which type of max/min system to use?

• How long should the pipeline be?– Longer pipeline reduces likelihood of stockouts

(more security stock) but increases likelihood of wastage (short shelf lives, increased expiries)

• How to include safety stock levels in a non-max/min system

Objective of Logistics Management Information System (LMIS)

• The objective of an LMIS is to provide the data and information needed for decision-making at all levels:

– Health Center Level: e.g, quantities to order, monitor stock availability

– National Level: e.g, quantities to procure, re-supply schedule

• The LMIS:– Is a key component of any logistics system,– Impacts ordering, forecasting, procurement– Provides data to facilitate logistics decision-making

LMIS Considerations

• What data to collect– Only collect data in LMIS that is useful for

decision-making in the area of commodity management

• Data collection tools– Daily records to capture data– Monthly/quarterly reports– Consistent reports (format, content)– Computerized system or not

LMIS Considerations

• Regardless of product, always collect the three essential logistics data items:– Consumption– Stock on hand– Losses and adjustments

• For other products:– ARV Drugs: number of patients by treatment

regimen– HIV Tests: number of tests by purpose of use

Common Challenges

• Insufficient storage space

• Inappropriate storage conditions

• Insufficient transportation resources

• Different reporting systems in place at same facility (by donor, by program)

• No established logistics data collection and reporting systems from SDP to central level

• Drug supply is driving prescribing and dispensing

• Need for drug storage at home (pediatric formulations)

Dynamic Environment

• Rapid expansion of programs

• Growing experience program strategies and policies continuously evolving

• Highly politicized

• New technologies for drugs and tests

• Decentralized systems

• Integrated vs vertical service delivery

• Multiple donors/sources of funding