Modeling the Future of Health in Tanzania

Modeling the Future of Health in Tanzania
Sako Mayrick
For Director General
Medical Stores Department
1. Introduction
2. MSD Network and Distribution Systems
3. MSD Supply Chain & Impetus to Change
4. Private Sector Engagement
5. SCM Transformation
6. Challenges
7. Way Forward
1.0 Introduction
• Medical Stores Department (MSD) is an autonomous institution under the
Ministry of Health & Social Welfare. It was established by an Act of
Parliament No. 13 of 1993, and started operations in 1994.
• Vision
The MSD vision is, "To provide quality medical services (medicines and
medical supplies) closer to people."
• Mission statement
To make available at all times essential drugs and medical supplies of
acceptable quality at cost-effective prices to the population through
government and approved non-government and private health
• Objectives
– Procurement
– Storage
– Distribution.
2.0 Distribution Network
• Central warehouse
in Dar es Salaam &
9 zonal stores
• MSD uses 75% of
its own trucks
• Under private
sector participation:
– 100%
from port to MSD
– 25% distribution
to zonal stores.
3.0 Impetus to Change
• Challenges call for review of supply chain design
complaints from customer
increased operational costs
staff and management readiness to adopt changes
Uncoordinated implementation of recommendations.
• Stakeholders’ commitment
– government focusing on value-for-money and grassroots
development (health is primary asset for livelihood)
– development partners’ engagement (warehouse design, vehicles,
and revised MTSP; and M&E)
• Gradual roll-over for change; completed 40%.
3.1 MSD Supply Chain Management
New direction: Direct delivery to primary
health facility
Distribution systems: ILS (dispensaries and health clinics)
and walk-in customers (referral hospitals, regional
hospitals, and faith-based organization).
3.1 Drivers for Change
• Focus on customer satisfaction (vision mandate)
– stock availability
– direct link with customers
– restructuring of operations and CSS.
• Human capital requirement (competency)
• Capable computer system (ERP) for real time
• Supply Chain Modeling for Optimization (2020 project)
– network
– quantification
– third party logistics providers.
4.0 Private Sector Engagement—Procurement & Storage
 Procurement
80–90% of requirements come from overseas
private sector engagement locally and overseas
total value of procurement about $U.S.130 million, per annum
local capacity limited both in number of industries (5) and
production capacity (items)
 investment opportunity for local industries.
 Storage
 total capacity 42,000 sq m of required 60,000 sq m
 50% rented from private sector.
4.1 Private Sector Engagement—Distribution
• MSD has one of the most complete logistical networks in Africa.
• From main warehouse in Dar es Salaam: medicines and medical
supplies distributed to 500 points in-country. June 2013: 7,000
distribution points with direct delivery.
• Concerns:
– Coca-Cola delivered to most remote villages in-country—why not medicines
and medical supplies? Who should pay delivery costs and maintain quantity
and quality of supplies?
– Can private sector use the Coca-Cola model to help distribute medicines and
medical supplies to remote areas? What about profit motive? Standards?
– Why model the private sector (third party logistics)?
5.0 Supply Chain Management Transformations
Present and Future to 2020
MSD supplies reached customer
through district medical office
All supplies go directly to the
Quantification based on historical
data of facility orders
National quantification determines
national needs
Multiple accountability on the
supply chain
MSD becomes fully accountable
for entire supply chain
MSD uses its trucks to distribute
and uses private sector as needed
Full integration with private sector
(use third party) using the CocaCola model
Late delivery of medicines and
medical supplies
On-time delivery of medicine and
medical supplies
Customer has complaints.
Customer is satisfied.
5.1 Private Sector Engagement—Current & Future
• March 2011: MSD commissioned to deliver directly to health facilities
– pilot in Tanga
– exercise is efficient way to distribute but expensive and shifts scope of MSD
activities; private sector engagement becomes necessary
– nine regions under direct delivery, starting July 2012, moving to 18 regions.
• Private sector engagement
– consultancy on using Coca-Cola model for last mile logistics to reduce
stockout and operating costs, and invest in infrastructure
– now includes nine more regions
– today baseline cost averages $U.S.80 per trip to health facility
– use of third party being considered
• risk and cost based on Supply Chain Model 2020 cost parameters.
6.0 Challenges
• Making model a reality (need finance, and human and
material resources)
• Finding a credible, reliable third party provider
– specialized vehicles for cold chain, experience with medicines
• Possible collusion and diversion of drugs before building
lasting business relationship
• Infrastructure challenges (roads, facilities, and warehouses)
• Strict non-commercial procurement laws
• Logistics optimization challenges
• Coordination challenges (health sector, quantification, and
network (see Supply Chain Model 2020).
6.0 Challenges
MSD mini-truck going to Tamota
dispensary in Korogwe
Delivery truck going from Lushoto
to Makanya dispensary
7.0 Way Forward
• Define and implement metrics for engaging private sector for
direct delivery through Phase III of the Coca-Cola/Global Fund
last mile interventions
– eliminate stockout
– improve forecasting
– decrease operating costs
– engage the private sector.
• However, DD project depends on stakeholders investing in
warehouse and vehicles (Global Fund and USAID start possible
for MSD).
• Modeling of Supply Chain 2020, with focus on network
optimization and heath sector metrics.
7.1 Way Forward
• Implement Supply Chain Model 2020
– MSD working on clear roadmap
• National quantification project started with SC 2020 exercise to
support accurate forecast of demand.
• Phase III of last mile logistics under support development partners
aims to optimize facility-to-warehouse assignment (from SCM 2020
model), saving significant distribution costs.
• Phase III of last mile logistics project aims to prepare and implement
framework for third party, by phases.
• New strategic plan (2013) similar to 2020 framework; will support
focused road map for effective, efficient supply chain systems.
• Stakeholder commitment to investing in the supply chain network
ensures sustainability.
Thank you for your attention
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