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Inventory Management: Distribution, ICS, LMIS
Technical Briefing Seminar in Procurement and Supply Management
for HIV, TB and Malaria
Copenhagen, 1 February 2006
Dr. Jabulani Nyenwa(for JSI)
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
Other considerations
• Vertical or integrated system
• Full-supply or non-full-supply products
• Other ideas…?
Resources, Tools
• Guidelines for Managing the HIV/AIDS Supply Chain (comprehensive)
• Guidelines for Warehousing Health Commodities
• Guidelines for the Storage of Essential Medicines and Other Health Commodities (joint publication with WHO/UNICEF/JSI)
www.deliver.jsi.com