Supply planning is a critical process to avoid stock-outs and treatment disruption, overstocks and wastage. Accurate quantification, monitoring of consumption levels, establishment of minimum stock levels (the point at which re-ordering must happen) will minimize the risk of stock-outs and ensure continuity of treatment and value for money.
Once the quantification of needs is completed, it is necessary to determine when and in what quantities orders should be placed.
The quantification outputs should be broken down into monthly needs. If the coverage is expected to be equal throughout the year, the calculations can be made for one year then divided by 12 months. If, however, it is anticipated that coverage will increase as the programme scales up, then a new calculation will have to be made for each period in which coverage is expected to increase. Similarly, if, as is sometimes the case for malaria, there is a higher prevalence during certain months of the year, the calculations must reflect this.
It is also important that orders include some buffer stock in case of any unexpected delays in the supply chain, such as delayed arrival of subsequent orders, unexpected changes in consumption levels, or programmatic changes. Buffer stock should be expressed with time periods and calculated based on both the agility of the national supply chain and any programmatic constraints.
The most important factor in this determining when orders should be placed is the lead time for a product or product category. The lead time is the length of time between confirming an order with a manufacturer/supplier and actually receiving the products at the service delivery point.
Lead time and buffer stock levels provide the basis for calculating the minimum and maximum stock levels; once stocks reach the minimum level, order should be initiated at the various levels of the supply chain.
Practice
Pointer
The procurement officer should always start with the date when the end user
needs the product and work backwards to determine when the procurement
process should commence.
The following factors must be taken into account during planning:
The following factors must be taken into account during planning:
Lead times for the procurement process: This includes the time from
the business unit creating a request up until the time the purchase order is
issued to the manufacturer/supplier. The procurement process lead time will
vary depending on the selected procurement method (such as open competitive
bidding, limited competitive bidding among LTAs holders, direct contracting,
request for quotation, or micropurchasing. The procurement officer should
determine, in advance, the appropriate procurement method for each product
category and estimate the time it will take, according to the procurement
policies and guidelines. This includes taking into account any necessary
reviews by the local contracts committee, Regional Advisory Committee on
Procurement (rACP), or the Advisory Committee on Procurement (ACP).
The use of the UNDP Health procurement architecture noticeably reduces
the processing lead time, while ensuring compliance with the QA Policy.
The manufacturer’s / supplier’s lead time: An average lead time of
three to four months, from purchase order confirmation until products are
made available to ship, is typical for health products purchased
internationally. However, shortages (e.g., due to lack of availability of
raw materials or production capacity) happen regularly, resulting in
increased lead times. At the planning phase, procurement officers should
obtain estimates of the current lead times for the different product
categories to be procured to determine the time to launch the procurement
and ensure that products will be received when needed. While initial orders
will be based on these estimates, subsequent orders should consider prior
experience.
Quality monitoring – pre-shipment inspection, sampling and testing:
For most categories of products purchased through UNDP, pre-shipment
inspection and testing is not recommended. For certain categories of
products, the implementation of pre-shipment inspection and testing
activities may be required, as a risk mitigation measure rather than as a
quality assurance mechanism. Pre-shipment inspection with randomized
sampling and testing is required for the following product categories:
Finished Pharmaceuticals Products (FPPs) Recommended for Use by the WHO
Expert Review Panel (ERP); In-vitro Diagnostic Products Recommended for Use
by the WHO Expert Review Panel (ERP); Condoms, if the product selected is
not listed in the UNFPA list; and all Vector Control products. The lead time
for sampling and testing varies depending on the product category.
Shipping, delivery and logistics: It is also necessary to determine
how long it will take for the various product categories to be available
from the time the products are available “to ship” up to the “last mile”
delivery point. This estimate includes the time for customs clearance,
inspections, and transfer(s) from the central warehouse to the local
facilities where the product will be issued to, or used by, the
patient/client.
Practice
Pointer
Quality monitoring – post-shipment inspection, sampling and
testing: UNDP COs must perform post-shipment inspection at the time of the
reception of the goods by visual inspection and review of import
documentation that the products received are in line with the purchase
order and the specifications. UNDP GFPHST does not advise conducting
routine post-shipment quality control testing, except if the information
collected, on transit and logistic conditions, during the post-shipment
inspection indicates the likelihood of a risk on the quality or the
performance of the products procured (e.g., temperature excursions during
transit, extended periods at port without proper conditions).
Storage capacity: Some products, either due to their high volume
(e.g., bednets, condoms) or particular storage conditions (e.g., cold chain
products) may present challenges related to the available space/conditions
in country and, therefore, the supply plan may need to be adjusted, such as
through more frequent deliveries.
Shelf life of the product: Some products, particularly diagnostic
products, have a short shelf-life (less than two years, or sometimes only
one year) and therefore require more frequent deliveries.
When the above mentioned estimates are added together, the procurement
officer has a good idea of when to begin the procurement process. The Health
Procurement Action Plan (HPAP) is mandatory for all business units engaged
in the procurement of health products, regardless of the funding source and
the partner conducting health procurement (see
Health Procurement Architecture
). Using the relevant HPAP template (either
Global Fund
or
non-Global
Fund depending on the source of funding), the procurement officer should
always initiate the procurement process based on the date when the end users
need the products and calculate backwards based on the lead-time for each
product or product category. Guidelines for creating the HPAP are available
here
and
here.
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