The supply chain planning and design precede and encompass the other supply chain components namely, the management of inventory and warehousing; distribution and transportation; and supply chain coordination. Recommendations relevant to the planning and design of the supply chain are briefly listed below, and thereafter discussed under the relevant supply chain components in the subsequent sections.
The four main areas to address during strategic planning are customer service levels, facility location, inventory decision and transportation strategy. A supply chain design should be developed and implemented following planning. Figure 5.1 below, illustrates the recommended planning, and is subsequently followed by the design of the ARV drug distribution system.
Figure 5.1: Distribution system's supply chain planning
Source: Researcher's own design
As shown in Figure 5.1 above, the four main areas to define during the planning phase are the customer service level, facility location, inventory decisions and
transport strategy. The recommendations are listed below.
Customer service level: The Manapo Hospital currently uses a low customer service level as it has a centralised warehouse (ARV stores) location that services peripheral clinics through the use of less expensive transport. The low customer service level could, however, be improved by filling the ARV stores to capacity, to ensure constant inventory visibility.
Facility location: Concerning to the facility location, the sourcing point (the medical depot) and the stocking point (the hospital's ARV stores) are already established. What is therefore recommended is to determine the size capacity of the stocking location (ARV stores) so as to know how much stock is required to fill the stores to capacity.
Inventory decisions: A recommendation on inventory decisions is the use of the pull strategy as opposed to the push strategy currently in existence. The pull strategy facilitates the ordering of the stock when pre-determined levels
Planning
are reached. This strategy coincides with the inventory order method indicated in the FSDoH Inventory Management policy and the Fixed Order Quantity (FOQ) condition-certainty approach discussed in Chapter two.
Transport strategy: It is recommended that a system be set in place that easily tracks ART movement at all points namely, the depot, the hospital and the peripheral clinics. Decisions should also be made on which transport system will be the dominant format and which will be the back-up or alternative format.
The routing and scheduling of deliveries should be precisely determined.
Following supply chain planning, areas for recommendations on the distribution system's design are illustrated in Figure 5.2 below and discussed thereafter.
Figure 5.2: Distribution system's supply chain design
Source: Researcher's own design
Prior to the development and implementation of the supply chain model, the hospital's strengths, weaknesses, opportunities and threats should be defined (refer to Figure 5.2 above). One of the strengths of the organisation was previously identified as the procurement of medicine from pharmaceutical firms at low cost through the tender system. This strength should be turned into a long-term goal.
The weaknesses to be eliminated are the unreliable transport systems and the delivery of medicines that have short expiry dates. Opportunities to be converted are the collaborative use of both the outsourced and in-house transport systems already in existence. Finally, threats to be removed are the use of a single and rigid transport
Design (Development and Implementation) Identification of the business SWOT analysis Evaluation of Strategic focus areas and action plans using Key Performance Indicators. Development and implementation of Strategic focus areas and action plans.
system where alternative or back-up transport is not available, and the high occurrence of stock-outs experienced at the hospital.
The development and implementation of strategic focus areas and action plans should be considered following the identification of the business strengths, weaknesses, opportunities and threats. The action plans should further be evaluated on performance using the Key Performance Indicators (KPIs) as summarised in Table 5.1 below.
Table 5.1: Strategic focus areas, action plans and KPIs
Focus areas and action plans KPIs (scores)
Operational efficiency and effectiveness:
Order fulfilment cycle time Delivery performance
1. Stock is delivered within the specified lead- times and expected delivery dates
2. Stock is delivered at correct quantities
Reverse logistics:
Stock movement programme
3. Stock returns, reasons for the returns and rectifications are recorded
Inventory optimisation:
Effective order cycle Maintenance of stock levels Warehouse Management System
4. The order cycle is completed within a stipulated cycle time
5. Correct order quantities are delivered at the correct times
6. Good quality of stock delivered (i.e. no short expiries)
7. Stock location and movement at all points are managed
8. The stores are used to capacity
9. Time taken to perform activities is at a minimal
Risk management:
Security 10. Stock losses encountered are documented 11. Security system (i.e. secure windows, and security locks) are in place
Relationship management:
Supplier or depot performance 12. Timely delivery of correct order quantities
Supply chain planning:
Structures in place
13. Structures are in place to deal with inventory levels (i.e. order cycle)
Information management:
Accurate information data Availability of documents
14. Information is accurate and easy to retrieve 15. Information on orders, lead-times, expected
delivery dates and stock balances in the ARV stores and clinics is available
16. Stock levels at the clinics are maintained Source: Researcher's own design
These strategic areas and action plans should be developed and implemented, after which KPIs should be used to evaluate the performance of the action plans for better effectiveness and efficiency of the distribution system.
Following the planning and design of the hospital's supply chain, the recommendations were made on the management of inventory and warehousing, distribution and transportation, and supply chain coordination. The recommendations to the above supply chain components are discussed in the subsequent sections below.