Why getting the
First Mile right,
drives the........
Last Mile
Challenge
18 September 2013
Christopher Game
Chief Procurement Officer
Geneva 9 Sept
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What is The Global Fund ?
• 4.2 Million
• 4.2 Million People currently receiving ARV therapy
• 9.7 Million
• 9.7 Million New smear-positive TB cases detected and treated
• 310 Million
• 310 Million Insecticide-treated nets distributed
Since its inception in 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria has
become the main multilateral funder in global health . It channels 82 percent of the international
financing for TB, 50 percent for malaria, and 21 percent of the international financing against
AIDS. It also funds health systems strengthening, as inadequate health systems are one of the
main obstacles to scaling up interventions to secure better health outcomes for HIV, TB and
malaria.
What started as a Procurement Transformation……..
Are directly aligned to the Global Fund’ s strategy
The Global Fund will become the benchmark organisation in the
sector for Sourcing and Procurement
Using simple, clear leading
edge processes and tools
designed by and for
the organisation
Minimising waste and
eliminating non value adding
activities
With measurable
performance
in value and lives saved
Ensuring effective governance
and watertight compliance
Building collaborative relationships with partner agencies
suppliers and donors
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Industry must love us as a sector ?
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We are silo’d
We are fragmented
We are impeded by process / bureaucracy
We have poor funds flow
Inadequate planning & forecasting
Much of what we do is outsourced
Or perhaps they don’t ?
How can we
become a
customer of
choice ?
• All of these carry a $ premium
• Risk increases with fragmentation
• Long lead times reduce system stress at manufacturers
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What started as a Procurement Transformation……..
Turned into a process for industrializing thought leadership
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I soon realised that we are not a customer of choice
Many inputs, few outputs
Data often out of date and not easily refreshable
Slow and operating in silos'
That too many are thinking and too few are doing
Substantial amount of people feeding at the table
Numerous barriers to improvement (agent structures and cash flow)
Drugs often mid-late lifecycle
Partial aversion or fear of the private sector……in the same sector
Our behaviors may erode the incentive to innovate
• That upstream leverage irons out some downstream supply issues
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Working Upstream to improve the Downstream
I am going to illustrate how upstream transformation can drive downstream performance
What we soon realised :-
How we responded :-
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Lack of Accountability
High Agency Costs
Multiple Agencies Incentive model
Agency ‘local versus Global’ expertise
Poor visibility of lost innovation
Lack of ownership / supplier relationships
Poor funds flow driving wrong behavior
Fragmentation = difficult to plan
Little competition in pricing
Role of many funders largely executional
No volume leverage/Many spot purchases
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Subscription, (spend under control) driven by
transparency and ease of application
Leverage with other large funders / donors to
become a customer of choice
Agency accountability (track & trace)
Vendors incentivized to innovate
Creation of product market & supply chain
experts
Ownership of relationships, up and downstream
Greatly improved funds flow ? Cash flow
Simple user designed processes
Comprehensive market intelligence
Frequent price competition
Scalable and can be leveraged
COGS versus Market based costing
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Fixing the Plumbing first ? Creating the Ecosystem
Upstream partnering facilitating downstream partnering creating the Ecosystem
Phase 1 : Creating Partnerships
Manufacturers / Logistics
Funders
Countries
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Fixing the Plumbing first ? Creating the Ecosystem
Upstream partnering facilitating downstream partnering creating the Ecosystem
Phase 2 : Creating Capacity and Capability
Common Accountability for OTIF
Manufacturers / Logistics
A Single Ecosystem
Underscored by common
systems and transparency
Funders
Countries
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The Principles of Our Approach
Fundamentally changing the way we work across the supply chain to
increase access to products
Earlier
involvement
and closer
collaboration
with
manufacturers
Improving our
purchasing
capability and
changing our
contracting
models
Optimising the
international
supply chain to
reduce cost
Better planning
and
scheduling to
support
continuity of
supply
Delivering more
products at the
right time and
place to more
people
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How we are measuring this ?
1. Develop and implement comprehensive
reengineering of the Procurement
Operating Model and Organisation.
2. Develop Procurement as a strong
partner to create and facilitate Best in
Class solutions and delivery for the
global fund.
3. Create additional Value of 8% per
annum
4. Increase spend penetration by 20% per
annum
5. On Time and In Full (OTIF) service to
recipient countries to exceed 90 %
The Commercial Relationship
To ensure we maintain a competitive price in a longer term
contractual framework we will need to change our commercial
model.
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i-Fund for The Global Fund
Partners
Suppliers
Knowledge & Collaboration
Equipment ,
Goods and
Services
team
Health
Products
Team
Track
&
Trace
The Support
Group
GF PSM’s
Suppliers
Country Ownership & Supply
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To Reflect – How does fixing the first mile influence the
last mile ?
How upstream transformation can drive downstream performance
Phase 1 (Upstream) :-
• Make the Public Sector a
customer of choice for the
private sector
• Leverage funders / buyers
• Harmonize specifications
• Improve forecasting
• View longer term
replenishment cycles
• Improve planning
• Standardize track & trace
• Open leverage to smaller
buyers +cost of doing business
• Pay on time
• Create transparency
Phase 2 (Downstream) :-
• Use savings generated to
build country level capacity
• Take an academic approach
to buffering supply chains
• Harmonize regulatory
landscape
• Create regional centers of
excellence building on
upstream partner leverage
• Make logistics partners
accountable and KPI to that
accountability
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Thank You
Questions / Discussion
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