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The top ten global health supply chain issues:


Perspectives from the field
ARTICLE in OPERATIONS RESEARCH FOR HEALTH CARE DECEMBER 2014
DOI: 10.1016/j.orhc.2014.09.002

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Natalie A. Privett
New York University
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Retrieved on: 02 October 2015

Operations Research for Health Care 3 (2014) 226230

Contents lists available at ScienceDirect

Operations Research for Health Care


journal homepage: www.elsevier.com/locate/orhc

Short communication

The top ten global health supply chain issues: Perspectives from the
field
Natalie Privett , David Gonsalvez 1
Zaragoza Logistics Center, C/ Bari 55, Edificio Nyade 5 (PLAZA), 50197, Zaragoza, Spain

article

info

Article history:
Received 4 March 2014
Accepted 25 September 2014
Available online 18 October 2014
Keywords:
Global health
Health systems
Humanitarian
Disaster response
Visibility
Emerging markets
Developing countries

abstract
In the battle for global health, supply chains are often found wanting. Yet most of what is known about
in-country pharmaceutical supply chains resides in the experiences of individual stakeholders, with limited amounts of this knowledge captured in technical reports and papers. This short communication taps
into the collective experience and wisdom of global health supply chain professionals through interviews
and surveys to identify and prioritize the top 10 global health pharmaceutical supply chain challenges:
(1) lack of coordination, (2) inventory management, (3) absent demand information, (4) human resource
dependency, (5) order management, (6) shortage avoidance, (7) expiration, (8) warehouse management,
(9) temperature control, and (10) shipment visibility. As such, this work contributes to the foundational
knowledge of global health pharmaceutical supply chains. These challenges must be addressed by researchers, policy makers, and practitioners alike if global pharmaceutical supply chains are to be developed and improved in emerging regions of the world.
2014 Elsevier Ltd. All rights reserved.

1. Introduction
Heroes may win battles but it is capable supply chains that
win wars. In the war against disease, supply chains are often
found wanting. But exactly how are these supply chains wanting? And what should be done about it? This short communication brings together expert opinion to answer just such questions.
To enable a better understanding of what the specific needs are
to strengthen global health pharmaceutical delivery (GHPD) supply chains, we undertook interviews and surveys of professionals working in GHPD supply chains. Our premise is that from a
reasonable sample of knowledgeable experts in the global health
arena we can obtain a reasonable consensus of opinion on the key
challenges in GHPD supply chains. From the interview and survey
data, this communication identifies and prioritizes key GHPD supply chain challenges, and subsequently we develop a dependency
model to determine the key underlying influences or drivers. This
work informs research, policy, and practitioner agendas. As Yadav

Correspondence to: Robert F. Wagner Graduate School of Public Service, New


York University, 295 Lafayette St, 2nd Floor, New York, NY, 10012, USA. Tel.: +1 212
992 6506.
E-mail addresses: natalie.privett@nyu.edu (N. Privett), dgonsalvez@zlc.edu.es
(D. Gonsalvez).
1 Tel.: +34 976 077 600.
http://dx.doi.org/10.1016/j.orhc.2014.09.002
2211-6923/ 2014 Elsevier Ltd. All rights reserved.

[1] emphasizes, understanding the challenges and needs in developing country public health systems is crucial for the OR/MS practitioner and researcher.
2. Methodology
A two-part methodology consisting of interviews and surveys
was employed. In the first phase, a set of semi-structured interviews were conducted via telephone with 22 individuals. Interviewees were selected from various roles in global health and
pharmaceutical supply chains from manufacturer to individual facility (details available from authors), each with substantial experience in their specific supply chain area.
Based on the results and input from the interviewees as well as
a pre-survey pilot [2], a survey was developed and deployed using
judgment sampling [3]. The survey asked respondents to rate 17
supply chain issues based on importance for successful drug delivery to patients and saving lives. The rating scale was a five point
Likert scale whose intermediate points were labeled Not Important, Important, and Critical. (Survey instrument is available
from authors.) The target population was individuals working in
GHPD supply chains that deal with pharmaceutical delivery and
distribution; as such, surveys were distributed to global and incountry health supply chain professionals from the International
Association of Public Health Logisticians (IAPHL). We restricted the
survey to the delivery of pharmaceutical products in developing

N. Privett, D. Gonsalvez / Operations Research for Health Care 3 (2014) 226230

227

Fig. 1. Top 10 global health pharmaceutical supply chain issues ratings.

regions rather than on the broader overall delivery of health services and products throughout the globe.
From the interview and survey data, key GHPD supply chain
challenges were identified and prioritized. The rank order of the
top ten issues is based on the average of the survey respondents
ratings. From these identified challenges, key underlying influences or drivers are pinpointed via dependency. These drivers
serve two purposesfirst, they provide a background for framing
future research questions in this arena; second, they provide decision makers a framework to set more effective policies in this
arena. In fact, we conclude that working on other issues without
addressing these key drivers will result in minimal improvement
in practice.
3. Top 10 supply chain management issues
Interview and survey data were used to identify and prioritize
the top ten issues in GHPD supply chains. These issues are as
follows:
1. LACK OF COORDINATION, fragmentation, and silos of current
system.
2. INVENTORY MANAGEMENT, including quantification, inventory levels, availability management, and stock counts.
3. DEMAND INFORMATION is often unknown and/or aggregated.
4. HUMAN RESOURCE DEPENDENCY on expertise, training, and
personnel capacity.
5. ORDER MANAGEMENT, including planning, ordering, and
follow-up.
6. SHORTAGE AVOIDANCE. Shortages lead to (expensive) emergency orders, frequent replenishment, frequent ordering, and
high inventory.
7. EXPIRATION.
8. WAREHOUSE MANAGEMENT, including procedures and organization.
9. TEMPERATURE CONTROL, including monitoring and failure, in
both transport and storage.
10. SHIPMENT VISIBILITY, including in-transit, delay, and arrival
visibility.

Survey rating results can be found in Fig. 1, which shows the


distribution of ratings. In the following subsections, the survey and
interview findings are discussed in-depth as they relate to each
of the issues. All statements are paraphrased from interviews or
survey comments except where explicitly referenced.
3.1. Lack of coordination
The current system of health delivery is siloed, fragmented, and
ultimately uncoordinated; this lack of coordination was cited as
critical by more than half of survey respondents (Fig. 1). In fact,
100% of respondents rated it between important and critical.
After the 2005 Paris Declaration on Aid Effectiveness and the
Global Task Team on Improving AIDS Coordination reported on the
need for better coordination within global health, many initiatives
were established for such goals [4]. However, such fragmentation
is still clearly evidenced even in the separate but parallel structure
of in-country supply chains. There is further division by product
types, projects, and funding entities; even where and when to
send an order may depend on the funder, product, project, etc.
Such complexity in the system makes for difficult management
and distribution of pharmaceuticals. Coordination can ensure
comprehensive implementation, avoid duplication of effort, more
optimal use of scarce resources, and improved supply chain
performance.
But this coordination has clearly proved difficult to achieve
among players, each with different and potentially conflicting priorities [1]; in fact, some survey respondents noted competition
among functions and supply chains. Yet, for now, the issue of coordination remains unsettled. As Sridhar and Batniji [8] state, the
pluralism of global health institutions and the informal alliances
on which power in global health rests make a unified and fully coordinated health system unlikely.
3.2. Inventory management
Managing inventory in GHPD supply chains is a complex challenge, especially considering the lack of information and unique

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contextual challenges. It involves managing inventory levels, capacity, quantification, and replenishment decisions. Optimally,
these decisions would be made together with accurate information, but even then uncertainty can have dire effects. However, the
current state of these supply chains is far from this optimal. Inventory management was considered a critical issue by 45% of survey
respondents and nearly all respondents cited it no less than important (98%, Fig. 1). Congruently, nearly all interviewees cited inventory management and planning as ineffective. Such issues involve
inventory inaccuracies, quantification, uninformed push systems,
inventory allocation, product availability management, and appropriate IT systems.
3.3. Demand information
Demand information is often absent and/or aggregated, creating serious consequences in procurement and management decisions. Demand information was cited between important and
critical in 95% of survey responses and critical in 46% (Fig. 1). Several interviewees remarked that not knowing true beneficiary demand was a key weakness in their supply chain.
There is most often no information or data generated on
consumption at any level of the supply chain, as was the case in
Nigerias assessment [9]. That is, there is a lack of information
gathering to inform procurement and supply decisions. While
health facilities see real demand daily, it is most often logged in a
paper-based system and not shared with other levels of the supply
chain. In fact, most stages of the in-country supply chain only know
demand in terms of orders from the following stages. For instance,
a regional level may see bi-monthly orders from the district levels
where each order consists of demand aggregated over 60 days and
across districts and facilities. Due to the procurement process, a
supplier may only see one order over an entire year, and, with
intermediaries ordering for multiple countries, orders may even be
aggregated over multiple countries. Such aggregation can lead to
large inaccuracies and poor decision making. Often only individual
health facilities are aware of actual demand.
3.4. Human resource dependency
Human resource (HR) limitations are increasingly recognized as
a key bottleneck for aid delivery in developing countries (e.g., [5
7]). The lack of qualified personnel leads to high workloads and low
performance while leaving key duties unattended. In fact, there is
often insufficient trained supply chain staff at the warehouses and
health facilities to perform even basic duties, a finding supported
by Dowling [6]. Logistics-specific positions are rare; instead medical personnel are often responsible for making supply chain calculations and decisions. The few qualified staff must bear heavy
workloads due to the lack of qualified personnel and unqualified
staff; they often make poor decisions with the best intent. There
is also a serious lack of training in logistics and supply chain functions, such as stock management and ordering procedures, across
most in-country health care providers (NGOs, public health systems, some international wholesalers, and procurement agents).
As Dowling [6] aptly concludes, high workloads, lack of training,
deficient facilities, poor working conditions, and inadequate pay
not only affect employees ability to perform their jobs but also
affect morale and turnover. Increased visibility within in-country
supply chains may reduce pressure on HR capacity, meaning that
less expertise and training are needed; however, combinations of
responsible, trained people and effective, easy-to-use IT systems
are essential.
3.5. Order management
The issues regarding order management (planning, ordering,
and follow-up) are heavily linked to a lack of reliable demand

information and shipment visibility. As a consequence, it is generally unknown if there is enough product in the system or at the central medical stores. Due to this lack of reliable data, ordering and
planning are currently based on assumptions and experience. All
of these concerns are only exacerbated by long, difficult to manage
leadtimes, which were mentioned in several interviews and surveys as a ubiquitous issue negatively affecting product availability and complicating order management. Typical leadtimes were
cited between three and six months with the potential to double; geography or circumstances may further lengthen leadtimes
(e.g., landlocked Uganda). Often, after this lengthy process, orders
arrive incomplete, inaccurate, or delayed, which compounds the
inventory management problem. As delays and order quantities
are unknown before physical receipt of the shipment, advances in
shipment visibility can reduce variability and increase reliability.
Such improvements can pave the way for proper order management in these GHPD supply chains with systematic processes and
procedures.
3.6. Shortage avoidance
There are a few principal strategies employed to avoid and react
to shortages, namely frequent ordering, frequent replenishment,
large buffer stocks, and emergency ordering. Such shortage
avoidance was cited as critical by 34% of responses and at least
important by 88% (Fig. 1).
Frequent ordering and frequent replenishment go hand-inhand. Such order and replenishment cycles are often far from optimal, resulting in inventory and planning inefficiencies. As for large
buffer stocks, warehouses do not have sufficient capacity to store
the resulting large inventories they are required to carry. Such
large inventories also increase both cost and risk of product expiry. As one interviewee mentioned, even in the private sector, it is
frequent that participants in the supply chain put in a lot of individual effort to get the product there to make up for human error, technical failure, shipment delays, and unexpected events. A
primary example is emergency ordering, a standard reaction upon
impending shortage. However, emergency ordering is expensive
because these orders are often at a premium and shipment is expedited. Emergency ordering from local markets also poses high risks
of purchasing low quality products in haste, and, in cases where
orders are filled from a common warehouse, such emergency orders create disruptions and interrupt the flow of other orders in the
system.
3.7. Expiration
Expiration is a major source of product wastage with significant consequences, including financial losses, safe disposal efforts,
and lack of stock elsewhere [10]. Currently, expiration is at unacceptable levels at every stage of in-country supply chains [9]. In
the Uganda National Medical Stores, at least US $550,000 worth
of antiretrovirals and 10 million antimalarial doses recently expired [11]. This is merely one example of a widespread problem.
Even third party logistics providers are lacking effective warehouse
management capabilities. One interviewee cited an example of a
third party provider who claimed to have proper warehousing, but
the partner later found that $76,000 of strategic pediatric HIV combination drugs had expired.
The causes of expiration include medicine selection, forecasting, demand quantification, procurement, warehouse management, inventory management, employee training, and use.
Oversupply and product expiration are directly affected by quantification, forecasting error, procurement, availability management, and order management. Poor management in these areas

N. Privett, D. Gonsalvez / Operations Research for Health Care 3 (2014) 226230

229

results in more product than can be consumed before its expiration, especially when excessive shipment delays compromise the
shelf life of arriving product. Expiration is also caused by poor
warehouse management and lack of employee training, which results in the lack of adherence to First-ExpiredFirst-Out (FEFO)
inventory pull policies. In fact, a 2010 Nigeria study finds noncompliance with FEFO inventory policies to be a main cause of
expiry [9].
3.8. Warehouse management
Warehouse management issues center around poor storage,
organization, capacity, and shared space management; overall,
such issues were cited between important, very important, or
critical by 91% of survey responses (Fig. 1). Interviews also revealed
warehouse management and storage conditions as a major
issue.
While conditions in national warehouses are often the best,
other warehouses suffer from poor management. Such poor storage and organization stem from poor facilities, often lacking proper
warehouse equipment and electricity, as well as limited training.
Warehouses often lack areas designated for specific functions, such
as receiving, shipping and storage for damaged and expired product, etc. As a result, it is not unusual that expired goods are still
sent to fulfill orders. Such poor organization can often lead to issues with capacity, inventory policy adherence (e.g., FEFO), discrepancies, and control. Effective warehouse management is key in
optimizing existing capacity, in terms of both storage and human
resources. Warehouse management also improves the accuracy of
logistics and inventory data. However, warehouse management
also requires human resource, financial, and physical capacities.
3.9. Temperature control
Another major cause of wastage is temperature failure of pharmaceutical products from exposure to hot or freezing temperatures. Such wastage results in large monetary loss and high risk
to patients as temperature exposure can reduce or destroy efficacy [12]. Every one percent of vaccine that is wasted or frozen
across countries supported by the GAVI Alliance will represent
millions of dollars annuallymillions that we cannot afford to
lose [13].
In storage under the manufacturers ownership, temperatures
are continuously controlled by refrigerated containers or cold
storage rooms. Once in-country, central level warehouses also use
refrigerated storage units or cold rooms, which are often measured,
but not always well monitored and frequently lack temperature
history charts. Interviewees noted that products spend most of
their storage time here. Subsequent supply chain stages most often
use refrigerated storage containers and/or insulated boxes with
ice or dry ice where temperatures are recorded two times per
day. Such periodic monitoring is insufficient and makes cold chain
procedures difficult to control.
In transit, temperatures cannot be continuously monitored.
Sensors to monitor temperature typically only report upon arrival
at intermediate points, which does not prevent temperature
failure.
Furthermore, after the central level, ice and dry ice are most
often used to transport cold chain products. The use of ice and
dry ice makes products vulnerable to freezing when not packed
appropriately (for example, directly touching ice or dry ice) and to
overheating when delays are poorly managed causing ice to melt.
Throughout the entire supply chain, temperature deviation most
typically occurs during in-transit delays or at the lowest supply
chain levels due to inadequate oversight.

Fig. 2. Dependency model.

Most often temperature and quality failure are unknown.


However, condition monitoring technologies, such as Vaccine
Vial Monitors (VVMs) and FreezeWatchTM tags, have been
developed specifically for global health settings. Though VVMs and
FreezeWatchTM tags cannot prevent freezing and overheating of
product, they can aid workers in identifying compromised product,
thus avoiding patient exposure. However, VVMs have further
potential to decrease wastage as they show cumulative heat
exposure, which can be used to more effectively manage inventory
to minimize the amount of vaccines that reach the critical
threshold of heat exposure. Nonetheless, interviewees assert that,
in reality, such advanced benefits of VVM have been difficult to
achieve mainly due to human resource and training limitations.
3.10. Shipment visibility
Once a shipment leaves the manufacturer, it becomes increasingly difficult to track and trace in the supply chain, most typically
becoming nearly invisible before it ever reaches its final destination. Accordingly, shipment visibility was noted to be between important and critical by 83% of survey respondents.
Current tracking of products before they are imported depends
on the supplier; most do not follow every package except for cold
chain products and narcotics. Even this visibility ends at the port of
import. At best, the national level receives a delivery alert from the
carrier within approximately one week of delivery, but this may
not be passed on to the central warehouse. Thus, even the national
level lacks basic information about when orders will arrive. From
this point onward, shipment location is only really known at
transfer points (shipment and receipt points). Past the central or
national level, there is a lack of communication and shipment
visibility deteriorates as products move further down in-country
supply chains. Due to this, it is often unknown if products make
it to intermediate warehouses, health facilities, or final recipients.
Likewise, recipients at most of these supply chain stages typically
have no information on when an order will arrive.
4. Conclusions
In analyzing these top ten GHPD supply chain issues, a relative
dependence emerges as illustrated in Fig. 2, which could be
considered as a dependency or key driver influence diagram.

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N. Privett, D. Gonsalvez / Operations Research for Health Care 3 (2014) 226230

This high level diagram shows human resources strongly


influencing nearly every GHPD supply chain issue mentioned:
system-wide issues, facility-level issues, and wastage issues. The
lack of personnel with supply chain knowledge and expertise
causes both inadequacy and inefficiency in GHPD supply chains.
An emphasis on capable supply chain personnel is lacking today in
most GHPD supply chains.
Lack of coordination between the various actors and functions in the GHPD supply chain and inaccurate or insufficient
demand information are systems-level issues, influencing performance throughout the supply chain. Lack of coordination in
the GHPD supply chain is a root cause issue whose existence
aggravates nearly every other issue directly or indirectly. In the
developed world one factor that helped reduce this lack of coordination in industrial supply chains was the growth of capable logistics providers with significant cross-functional knowledge and
operating efficiencies (e.g., the third party logistics providers). Incomplete demand information and lack of shipment visibility often
leads to just-in-case ordering and excess inventories. The resulting product spoilage results in extra costs in parts of the world that
can least afford it.
Facility-level management issues, related to inventory management, warehouse management, order management, and shortage avoidance are all interrelated and influence product wastage
through expiration and inadequate temperature control. Lack of
shipment visibility is a key driving factor behind inadequate inventory management while also contributing to inaccurate order
placement and either product shortage or wastage.
Given the dependency model (Fig. 2) of issues, it is recommended that future research and policies give special attention
to the top four GHPD supply chain issues as they constitute root
causes of all of the top 10 issues. These four issues are the lack of
coordination, insufficient demand information, shipment visibility
and, most notably, development of human resources (including expertise, training, and personnel capacity). Working on other issues
without addressing these key drivers will result in minimal improvement in practice. For example, we have seen sophisticated

quantitative inventory models deployed but unable to improve the


situation because of the lack of expertise in the user community
that viewed inventory as a side issue and rotated the inventory
manager position every year.
These results draw attention to both the needs and opportunities in GHPD supply chains, and hopefully will drive future actions,
policies, and research which can ultimately improve pharmaceutical delivery in developing regions and save lives.
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