Pharmaceutical Supply Chain Management

Aynoshe Adio

(B.Pharm, MSc. in Health Supply Chain Management)

 Course Syllabus

• Module Code: Phar-M4211

• Module Name: Social and Administrative Pharmacy

Course code: Phar 4212

• Course title: Pharmaceutical Supply Chain Management

• Course ECTS credits: 7 ECTS

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 Course outline
• National Drug Policy(NDP)

• Health Commodity Security (HCS)

• Essentials of Healthcare Supply Chain Management

• Logistics management system

• Monitoring and evaluation of Pharmaceutical supply

chain management performance

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 Course outcomes
After completion of this course the students will be able to :
 Explain the NDP and its application in healthcare delivery

 Understand the importance of health commodity security

 Differentiate supply chain, supply chain management, and

logistics management

 Identify different logistics management activities

 Assess supply chain management performance

 Use different tools/indicators to investigate medicine use

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Chapter 1: Introduction to pharmaceutical supply
chain management

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 Learning outcomes
• By the end of this chapter the trainees will be able to:
 Define the NDP
 Identify the goals and objectives of NDP
 Describe the key elements of NDP
 Describe NDP formulation and implementation
 Understand the concept of essential medicines
 Describe pharmaceutical sector transformation plan of
Ethiopia

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I. National Drug policy
 Introduction to National Drug Policy(NDP)

• NDPs are rules, principles, guidelines or frameworks that

are adopted or designed by an organization to achieve
health system goals.

• Particularly, it expresses and prioritizes medium to long

term goals set by the government for the pharmaceutical
sector

• It also identifies the main strategies for attaining these

goals.

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• NDP prioritizes access of quality and safe drugs for solving
the most important health problems of the population

• It covers both the public and the private sectors and involves all
the main actors in the pharmaceutical sector

• The NDP promotes the essential medicine concept and ways to

promotes use of Standard Treatment Guidelines (STGs).

• Priority is given to supply of vital & essential medicines

as an important mechanism to reach key goals of the NDP

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 Goals of NDP
• To ensure that all medicines which are imported or
locally manufactured, distributed and used are
effective, safe, and quality.

• To ensure that adequate quantity and quality of

essential medicines are determined correctly based on
the needs of the population

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• To promote rational use of drug (safe and cost-
effective use of medicines)
– Active implementation of STGs, drug and therapeutic
committees, drug information service, and activities to raise
awareness and prevent avoidable adverse and side effects of
drugs

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 Objectives of NDP

• To ensure reliable supply of essential medicines

• To ensure rational selection, procurement, storage and

distribution of medicines

• To establish key functions and services of a national

drug administration to registration, licensing and
Pharmaceutical market surveillance

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 – To develop and strengthen adequate technical human
resources in the field of pharmacy and medicine
management by appropriate training and continuing
education

– To establish a consensus and participatory mechanism and

organization for revision, development, & implementation
of STGs.

– To establish a range of quality assurance mechanisms by

efficient inspection system in public and private hospitals,
clinics & pharmacies throughout the country.
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 Key components of NDP

• Selection of essential drugs

– Adoption of the essential drugs concept
• Sound and adequate evidence on cost-effectiveness

– Procedures to define and update the national list(s)

of essential drugs.

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• Ensuring the Affordability
– For all drugs
• Reduction of drug taxes and tariffs, distribution
margins (3% to 30% of sales price), and pricing
policy
– For multi-source products
• Promotion of price competition through generic
substitution
• Good procurement practices (open tender)

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 – For single-source products
• Price negotiations

• Therapeutic substitution

• Trades Related Aspects of Intellectual Property Rights

(TRIPS)

– Compliant measures such as compulsory licensing,

“early workings” of patented drugs for generic
manufacturers and parallel imports (induce
competitors).

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 – Drug financing
• Commitment to improve efficiency and reduce waste

• Increased government funding for priority diseases for

the poor and disadvantaged individuals

• Promotion of drug reimbursement as part of public and

private health insurance schemes

• User charges as a temporary drug financing option

• Guidelines for drug donations

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 – Supply systems
• Public–private mix in drug supply and distribution
systems.

• Commitment to good pharmaceutical procurement

practices in the public sector

• Publication of price information on products

• Drug supply systems in acute emergencies

• Inventory control and prevention of theft and waste

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• Legislative and regulatory framework
– Government commitment to drug regulation

– Independence and transparency of the drug regulatory

agency relations with the MOH

– Functioning drug regulatory authority

– Stepwise approach to drug evaluation and registration

– Pharmacovigillance/post marketing surveillance

– Regulation of prescription and distribution

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 – Pharmaceutical quality assurance measures
• Inspection and enforcement to cGMP

• Access to drug control facilities

• Commitment to regulation of drug promotion

• Regulation of traditional and herbal medicines

• Systems development for ADR monitoring

• International exchange of information

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• Rational use
– Development of evidence-based clinical guidelines as the
basis for training on prescribing, dispensing and drug
utilization

– Establishment and support of DTC

– Continuing education of healthcare providers
– Independent and unbiased drug information source

• Research
– Operational research in drug access, quality and rational use
– Pharmaceutical development and clinical research

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• Human resources (HR) development
– Government responsibility for planning and overseeing the
development and training of the HR needed for the
pharmaceutical sector

– Define minimum education and training requirements for

each category of staff

– Career planning and team building in government service

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• Monitoring and evaluation

– Monitoring of the pharmaceutical sector

through regular indicator based surveys

– Independent external evaluation of the impact

of the NDP on the community and the
economy.

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 Formulating a NDP

• The NDP can be formulated or revised

• Formulating and implementing NDP is highly

political process

• A policy should promote equity to healthcare by

making pharmaceutical sector more efficient, cost-

effective, and responsive to health needs

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 Steps in NDP formulation
• Step 1: Organize the policy process
– MOH is the most appropriate agency to take the lead in
developing NDP

– The first step is how the formulation of the policy will be

achieved, who will be involved in the various stages, and
how finance will be obtained

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• Step 2: Identify and analyze the problems
– A second task when formulating NDP is performing a
thorough analysis of the main problem in the
pharmaceutical sector to set realistic objectives

– Recommendations to address the problem can be

formulated and discussed in multidisciplinary
workshop to prepare advice for government

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• Step 3: Set goals and objectives
– After high priority problems and related goals have been
defined, primary objectives can be defined

– If priority problem is availability of poor quality product,

one of primary objectives is to replace by good quality one
• Step 4: Draft the policy
– After thorough analysis of situation and an outline of the
main goals, objectives and approaches have been completed,
a draft of NDP should be written

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• Step 5: Circulate and revise the draft policy
– To get full support from all sectors the document
should be widely circulated for comments, first within
MOH and other government ministries and
departments
– Endorsement by ministries such as planning, finance,
education and commerce is of particular importance
• The success of decision regarding registration, foreign
exchange, human resource development depends on these
ministries outside health sector

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 – Revise the draft document based on the received
comments and finalized

• Step 6: Secure formal endorsement of the policy

– In some countries NDP is endorsed by cabinet or
parliament
– In others, it can be an administrative documents that
can be services as a basis for the implementation plan

– In certain cases, the NDP document become a law

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 • Step 7: Launch the NDP
– Launching NDP is a political task rather than merely a
technical one
• Good information, top level political support,
mobilization of highly qualified people

• Dissemination of information in appropriate channels to

reach target group
– Universities, schools, pharmaceutical industry, dispenser, and
prescribers

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 Implementing NDP

• Detail implementation strategy and “master plan”

• Activity profiling. That is priorities for

implementation should be
– Based on the severity of the problems
– Based on the potential for success in achieving the
objective
– Making an impact with available resources.
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 – The master plan should be broken down into
• Annual action plans and work plans

• Specify in detail who is responsible

• Listing the major tasks

• Describing the target output, the detailed time frame and the exact budget

• Responsibilities in implementation
– MOH or a separate unit within the ministry should oversee and
coordinate all activities

– Monitor the extent of implementation and the achievement of

targets.

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• Creating a national consultative forum
– To oversee policy implementation.
– To maintain country wide support for the policy
– To ensure the major stakeholders remain informed and
involved.
• Financial resources
– Actively seeking funds and be able to secure regular
funding from the government, international and local
donors.
– There should be no conflict of interest in accepting donor
contributions
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 Monitoring and evaluation of NDP
• Monitoring is a form of continuous review that allows senior
manager to assess the progress towards achieving defined
targets in each policy area and adjust strategies accordingly

• It can be carried out by using a combination of methods,

including supervisory visits and both routine and sentinel
reporting

• Evaluation is a way of analyzing progress toward meeting

objectives and goals

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• Evaluation should build on and uses the monitoring
system
– At start of a program: Evaluation is used to provide a clear
assessment of need

– At midterm of a program: Evaluation can provide valuable

information about how well the program is working

– At the end of program: Evaluation allows a complete

review of program achievements from which lessons can be
drawn for the future action

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 II. Essential medicines

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 Concept of essential medicine

• Essential medicine

– Medicines that satisfy the priority healthcare needs

of the population

– It should be available at all times, in adequate

amounts in appropriate dosage forms and at a price
the individual and the community can afford

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• Access

– Physical availability

• The type and quantity of product or service needed and

provided

– Affordability

• Users ability to pay for the products/services

– Geographical accessibility

• The location of the product/service and eventual user

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 The essential medicines target

All the drugs National list of

in the world Registered medicines essential medicines

Levels of use

CHW
S dispensary
S
Supplementary
Health specialist
center medicines
Hospital

Referral Hospital

Private sector

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 Formulary process
• The formulary process consists of preparing, using,
and updating lists of pharmaceuticals for health plan

• Formulary list or essential medicines list (EML)

• Formulary manual

• Standard treatment guidelines (STGs).

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The formulary list or essential medicines list
– They are lists of pharmaceutical products approved

for use in specific healthcare setting

• National formulary list & facility drug list

– They are alphabetically and therapeutically arranged
lists of drugs

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Advantages of essential medicines list
• Prescribing
– Training is more focused and simpler

– More experience with fewer medicines

– Non-availability of irrational treatment

– Reduction of antimicrobial resistance

– Focused drug information

– Better recognition of ADR

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• Supply
– Easier procurement, storage, and distribution

– Lower stocks/inventory holding cost

– Better quality assurance

• Cost
– Lower prices and more competition

• Patient use
– Focused education efforts

– Reduced confusion and increased adherence to treatment

– Improved medicine availability

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 Formulary manual

• The important summary information of medicines.

– It is drug centered

– Handy reference that contains selected & relevant

information to health worker

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• Basic information about each medicine
– Generic name
– Dosage and strengths
– Indications, contra indications and precautions
– Side effects
– Dosage schedule
– Instructions and warnings
– Interactions

• Supplementary information for medicines

– Price, regulatory category, storage guidelines, patient counseling
information,& labeling information

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 Standard Treatment Guidelines(STGs)
• It is also called treatment protocol or clinical guideline

• Systematically developed statements that help

practitioner in deciding on appropriate treatments for

specific clinical conditions.

• It reflects consensus on the optimal treatment option

within health facility or health system

• It is disease centered

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 • Information on STG
• Diagnostic criteria
• Treatment of first choice
• Important C/I & S/E
• Important drug information, warnings and precautions
• Referral criteria
• Index

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 Potential benefits of STG
• For health officials
– Identify cost effective treatments for common health
problems
– Provides a bases for assessing and comparing quality
of care
– Identifies most effective therapy in terms of quality
– Provides information concerning the institutions
standards of care
– Is a vehicle for integrating special programs
• Control of diarrheal disease, acute respiratory tract infection,
TB, malaria at the point of primary health care provider
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• For healthcare providers

– Provides expert consensus on most effective

economical treatment for specific setting

– Gives provider the opportunity to concentrate on

correct diagnosis

– Sets a quality of care standard

– Provide a basis for monitoring and supervision

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• For supply management staff
– Identifies which medicines should be available for the most
commonly health problem

– Facilitates pre packaging of course of therapy quantities of

commonly prescribed items

– Makes medicine demand more predictable and support

reliable forecasting and supply planning

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• For patients
– Encourage adherence to treatment through
consistency among prescriber at all location within
the healthcare system

– Ensures most cost effective treatment are provided

– Improves availability of medicines and treatment

outcomes

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 Problems Associated with STGs
• Development process
– Difficult and time-consuming

– Requires human and financial resources

• The need to update regularly to avoid STGs

becoming obsolete

• The danger of inaccurate or incomplete guidelines

– Providing wrong information to prescribers

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 III. Pharmaceutical Sector Transformation Plan

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 Pharmaceutical Sector Transformation Plan of
Ethiopia
• Ministry of Health is executing lots of efforts in the health care
system to improve access to and quality of health care services
– Placing and implementing effective policies and strategic plans regarding
• Pharmaceutical regulation

• Pharmaceutical industry

• Pharmacy services

• One of such effective policies, which was initiated in 2006, is

establishing a comprehensive pharmaceuticals supply chain system
– Integration of all products into one supply chain system

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• The Pharmaceutical Logistics Master Plan was
approved in 2006, and following this, the
Pharmaceuticals Fund and Supply Agency (PFSA) was
established by proclamation in 2007 (Proclamation
number 553/2007)

• The Agency is mandated to avail affordable and

quality pharmaceuticals sustainably to all public health
facilities and ensure their rational use.

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Chapter 2: Health Commodity Security

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 Learning outcomes
• By the end of this chapter trainees will be able to:
 Define health commodity security

 Identify the strategic pathway to commodity security

 Describe steps to implement commodity security strategy

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 Concepts of Health Commodity Security(CS)

• Commodity security
– When people are able to choose, obtain, and use affordable and
high quality medicines whenever and wherever they want them

• CS exists when supportive national policies are in place

and logistics management systems are functioning
– The national ordering and reporting process

– Commodity management skills at each level of the MOH system

are needed

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 Strategic Pathway for CS
• CS comprises many components such as logistics,
policies, financing, service delivery, and several other
functions

• Integrating one or a few of these components can help

support Cs

• A useful strategy to strengthen CS requires

– Program coordination, capital, and professional competence

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 Steps to implement health CS

1. Assess national level commitment

– Determining support for health CS at the national level

– Ensure robust data collection on commodities

2. Advocate at the sub-national level

– Helps local leaders make informed choices about health CS
policies using data from their own community
• Resource mobilization and supply chain management
– Collaborate with donors, civil society organizations, and the government

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3. Improve supply chain management
– Carry out a regular schedule for supply deliveries

– Collect data on product consumption at the time of

delivery

4. Train health workers on supply management

– A capacity building trainings on supply chain
management competency areas
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5. Monitor and evaluation of supply chain
– Commodity managers and dedicated logisticians
should quantify the stock status and management at
the national level.
• These include stock outs rate, reporting rates, and timely
and correct reporting of logistics data

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 Chapter 3: Essentials of Healthcare Supply
Chain Management

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 Learning outcomes
• By the end of this chapter trainees will be able to:
Understand the concept of supply chain

Understand the concept of supply chain management

Describe the health supply chain design strategy

Describe globalization and supply chain management

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 Supply Chain and Supply Chain Management
• Supply is the process of acquiring (through purchase
or manufacture) inventory to satisfy the inventory
requirements developed in the inventory master plan
• Pienaar W. (2009b) defines Supply Chain as “a
general description of the process integration
involving organizations to transform raw materials
into finished goods and to transport them to the end-
user”.

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• The Supply Chain Management (SCM) Professionals’
Council (2009) states that SCM includes the designing and
management of all activities involved in sourcing and
purchasing, transformation, and all logistics management
activities.
• Principally, it also includes coordination and partnership
with network partners, which can be suppliers, mediators,
third party service providers and customers.
• Fundamentally, SCM coordinates supply and demand
management within and across corporate

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 Key Supply Chain Terminologies and Concepts
• Bullwhip effect
– A customer demand is distorted and amplified toward the
upstream end of the supply chain resulting in large variations
of orders placed upstream.

• Strategic alliance
– Formal or informal arrangement between two or more
companies with a common business objective

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 – Inter-organizational cooperative strategies that entails
pooling of skills and resources to achieve strategic
objectives

• Horizontal/inter channel alliance

– Companies on the same level but different supply chains

• Vertical/intra channel alliance

– Companies on the different level but the same supply chains

• Lateral alliance
– Between clients company and logistics service providers

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• Push system
– The higher level or supplier determines what quantities of
medicines are to be issued to each lower level store or the health
facility
• Pull system
– Each health facility determines the medicines requirements to be
requisitioned or bought from the higher level warehouse

• Postponement
– The timing of the customization and positioning of inventory

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• Core competency

– It is the resource and capability that comprises the

strategic advantages of a business.

– Core competencies are the defining characteristics that

make a business or an individual stand out from the
competition.

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• Value Chain
– It is a progression of activities that a firm is operating
to deliver a valuable product and/or service to the end
customer.

– A business model that describes the full range of

activities needed to create a product or services

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 Developing Health Supply Chain designs

• Practically, all health program products move from one place to

another.

• The way they move may not be rational, the quantities of

products that move may not be based on actual data, and the
methods used to move the products may not be standardized or
optimized

• So, the purpose of designing is to optimize the flow of

commodities, information, and to standardize the related business
processes
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• Health supply chain design can help achieve strategic,
tactical, and operational improvements.

• However, design rarely represents an entire system

overhaul, instead incremental improvements to
interrelated components over time

• Whatever the design is, it should embody the

strategy’s principle

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 Health supply chain design process

• Scoping
– It is to identify whether a system requires design or re-
design, and if it needs to be re-designed, what elements need
to be updated
• Analysis
– Data available to support design decisions is necessary to
achieve improved functioning to meet the strategic objectives
of the supply chain.

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 Analysis areas

• Supply chain performance analysis

• Network analysis identifies the most efficient

network of storage nodes and transport routes

• Cost effectiveness analysis provides insight into

the cost drivers of supply chains

• Segmentation analysis considers the universe of

required products for a particular program

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• Designing
– The system design process should be driven by
evidence collected during the analysis phase.

– The process may include design of the entire system

• The organizational structures and functions

• Inventory control and information systems

• Business processes or just some of the

components.

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• Implementing
– Implementation is the longest, most resource and
time-intensive phase of the process.

– It includes all the activities required to put systems

and processes in place

– It ensures that the people involved in the supply

chain understand and have the capacity to play their
roles.

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 Globalization and Supply Chain

• With widespread free trade movements all across the

globe, most of the economies are increasingly open to
foreign investors.
• Foreign direct investment is a viable business strategy for
many multinational firms
– Increase their customer bases
– Create global economies of scale
– Spread out their business risks and
– Establish their brands in the newly emerging global marketplace

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• A global supply chain is destined to be a stronger than
a local supply chain for it takes the advantage of
international division of labor

• Specialization and cooperation in the global scenario

yields higher level of economy than that of any local
supply chains

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 Key Characteristics of Global supply chain

• Borderless
– National boarders are no longer limits supply chain
development in terms of sourcing, marketing,
manufacturing, and delivery

• Cyber-connected
– Globally, stretched multinational supply chains would not
be possible without cyber technology allowing large amount
of data to be transferred quickly and reliably

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• Deregulated
– Trade barriers around the world has been demolished or at least
significantly lowered

• Environmental consciousness
– The global movements toward green and eco-sustainable nature
of supply chain
• Social responsibility
– Fair trade and business ethics become increasingly the key
measures on business's social responsibility
– A significant group of consumers have begun their purchasing
decision based on supply chain’s ethical standard and social
responsibility
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 Quiz-I (10%)
1. Explain how objectives, strategies and goals of NDP are
interrelated during implementation of NDP?

2. Explain how does compulsory licensing ensure access to

single source or innovative essential medicine?

3. How does supply chain performance management ensure

health commodity security?

4. Explain the concept of global supply chain management

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Chapter 4: Logistics Management System
 Learning outcomes

• By the end of this chapter trainees will be able to:

– Define logistics management

– Understand the purpose of logistics

– Review major activities in the logistics cycle

– Understand the application of logistics operations in

pharmaceutical SCM

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 Introduction to logistics management
• “Logistics management is that part of supply chain
management that plans, implements, and controls the
efficient, effective forward and reverse flow and
storage of goods, services and related information
between the point of origin and the point of
consumption in order to meet customers’
requirements” (CSCMP, 2012)

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 Purpose of logistics
• Why logistics matters?
– Increasing program impact
• No product! No program!

– Enhancing quality of care

• It provides adequate & appropriate supplies to health providers

– Improving cost effectiveness and efficiency.

• It reduces losses, protects other major program investments,&
maximizes the potential for cost recovery

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• Logistics management includes a number of
activities that support the six rights
– Right quantities of the
– Right goods to the
– Right places at the
– Right time in the
– Right condition at the
– Right cost
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 Logistics cycle

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1. Pharmaceutical Selection
 Learning outcomes
• By the end of this section trainees will be able to:
 Define the pharmaceutical selection

Understand the selection criteria of pharmaceuticals

Describe the roles of supply chain personnel in the

pharmaceutical selection

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 Introduction
• Health product selection is a process of deciding the
type of needed products for the prevalent health
disease.

• The product selection process hinges on collaborative

decision making between several actors in the supply
chain

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• The rationale for selecting a limited essential health
product is that it may lead to better supply, more
rational use and lower cost.

• It done as:
– Health products represent a large part of the health
program budget but funds are limited

– Large number of drugs are available, but it is impossible to

keep up-to date with all the drugs in the market

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• Health product selection is done with the following
steps.
– Establish product selection team with different areas of
expertise
– Determine the prevalent health problems and patient
characteristics
– Decide which health problems may be treated at the level of
drug selection
– Choose the drugs to be used for the health problem
– Introduce the list of health products
– Update the list of health products

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 Selection criteria of essential medicines

• The WHO criteria for selection of essential medicines

– Pattern of prevalent disease

– Treatment facilities

– Training and experience of available personnel

– Financial resources

– Genetic, demographic and environmental factor

– Medicines which have sound and adequate data on efficacy and

safety (clinical studies, & evidence from general setting)

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 – Adequate quality including bioavailability and

stability under anticipated conditions of storage

When two or more medicines appear to be similar in

the above respects

– The choice is made by carefully evaluating their

relative efficacy, safety, quality, price and

availability.

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 – Cost
• Consider the cost of the total treatment rather than the unit
cost of the medicine

• The basis of a cost-effectiveness analysis.

– Other factors such as

• Pharmacokinetic properties and availability of facilities
for storage.

– Essential medicines formulated as single

compounds.
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• But fixed-ratio combination products are acceptable
only when
– The dosage of each ingredient meets the requirements
of a defined population

– The combination has a proven advantage over single

compounds

– Administered separately in therapeutic effect, safety or

compliance

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 Roles of health supply chain personnel

• To ensure that products selected in the public sector

health system are included on the national EML

• To update regularly to address any new products on

the market

• To collect products consumption data & convert to

appropriate stock keeping units

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2. Pharmaceutical Quantification
 Learning outcomes
• By the end of this section trainees will be able to:
• Define quantification

• Understand the importance of quantification in supply

chain management of health commodities

• Describe key steps in quantification: preparation,

forecasting, and supply planning

• Explain how the results of a quantification can be

used

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 Introduction

• Quantification
– It is the process of estimating the quantities and costs of the
pharmaceutical products required for a specific health
program or service

– Determines when the products should be delivered to ensure

an uninterrupted supply for the health program

• It comprises forecasting and supply planning

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 Importance of quantification

• Identify the funding needs and gaps for procurement of the

required commodities

• Leverage the sources and timing of funding commitments to

maximize the use of available resources

• Advocate for additional resources when needed

• Develop a supply plan to coordinate procurements and shipment

delivery schedules to ensure a continuous supply of

commodities.
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 Pre requisites to quantification
• For right product selection
– Clear, well-defined and disseminated STGs
– Testing protocols & laboratory testing menus for
specific products used
– Product characteristics
– Ensure service providers follow/adhere the STGs for
right quantification
– Data availability and quality: strong LMIS and HMIS

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 Key steps in quantification

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 1. Preparation process
• Most quantification teams have 6−15 members
• Team members should include
– Program managers

– Procurement specialists, monitoring and evaluation

officers or other information specialists

– Warehouse managers, service providers, donor

agencies, implementing partners, and technical experts
in quantification
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 2. Forecasting process
• Estimate the quantity of each product that will be
dispensed or used during each year of the
quantification.
– The basis for calculating the total commodity requirements
in the supply planning.

• Evaluate and organize the data

– The four primary types of data are consumption data,
demographic data, services data, and morbidity data

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• Sources of data for forecasting
I. Consumption data
– Records from the LMIS (stock cards, report and
requisition, and daily activity register)

– Records of quantities issued from the store room

– Require fewer assumptions than other types of data (the

lower the possibility for error in the forecast)

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 – Reflects supply chain and service delivery constraints

– If consumption data are available, forecast are often the

most reliable

• Challenges

– Past consumption may not be predictive of future use

• Especially when new methods or products are being introduced

– Stock outs & supply imbalances adjustment could

result in projections of past errors

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II. Services Data
– Historical data on the number and type of service recorded at
service delivery points (SDPs).

– Reliability of service statistics depends on the robustness of

the HMIS, Public Health Emergency Management (PHEM),
and Micro plan.

– Considers end user of the product

– Reflects supply chain and service delivery constraints

– Easier to modify the forecast to account for program service

targets
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• Challenges

– Low quality of HMIS report

– Services data may not provide enough detail on the

type of visit to be used for forecasting.

– Requires assumptions about providers’ compliance

with dispensing and clinical protocols.

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III. Demographic data
– The data include total population, population growth
rate, marital status, and population at risk, etc.

– The forecast needs to systematically narrows down the

total population into number of the population of
current users by each product.

– The total number of users is then converted into the

forecasted quantity of each product

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 – Source of data: DHS, national population census data ,
United Nations World Population database, and other
research studies and survey reports
– Do not need to collect historical data about
• The actual number of services provided or the exact
quantities of products dispensed.
– Helps to estimate the requirement for those with limited
access.
Very important when there are no any historical
consumption or services data.

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• Challenges
– Data may be outdated (1-5 years)
• May neither reflect the demographic characteristics, preferences, or
behavior of current and potential users

– Do not reflect actual number of services provided or

quantities of commodities dispensed or used.

– Limited accuracy and validity

• Ambiguity in answering survey questions

– Comparability of trend data over time

– Requires many assumptions

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IV. Program Targets
– National program planning policy and strategy documents
that define program priorities, objectives, and
implementation strategies

– Program performance monitoring and evaluation reports

– Materials published for awareness raising and advocacy.

– It is important
• When forecasting commodity needs for new programs;

• When new products are being introduced

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 • When available data are not predictive of future
consumption.

• In the absence of historical data program targets

supported by informed assumptions can be used to
forecast future commodity needs.

• Challenges
– Politically motivated

– Tend to be overly optimistic

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V. Morbidity data
– Data on estimated incidence or prevalence rates of specific
diseases.
– Data can be extrapolated to define total estimated need and
then refined to determine specific targets, or percentage of
total need to be reached.
– Morbidity data is not used to forecast for preventative
services such as family planning.

• Challenge
– Tend to overestimate commodity needs
– Needs combination of consumption and services data
04/04/2024 aynoshe.adio@amu.edu.et 118
 Quantification (Forecasting) Methods

I. Consumption method

• Through the use of the data recorded on the

stock/bin cards

• It is the simplest and often most accurate method

 Steps
1. Prepare list of drugs to be quantified

2. Determine the period of time to be reviewed for consumption

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3. Enter consumption data for each drug
– The total quantity used during the review period

– The number of the days in which the drug was out of

stock

– The lead time for the last procurement (average from

last several procurements)

• Sources of data: Stock records, distribution report,

invoices from supplier, and dispensing records

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4. Calculate average monthly consumption
CA= CT/(RM - (DOS/30.5)………..equation 1 (Preferred)
or
CA= CT/(RM - MOS)……….. (Alternative)
Where,
CA = Average monthly consumption, adjusted for stock out

CT = Total consumption during the review period in in basic unit

RM = Review period in months

DOS= Number of days an item was out of stock during the review period
5. Calculate projected AMC for expected changes in consumption pattern
CP=CA+ (CAxAU)
Where CP: Projected average monthly consumption
AU: Use adjustment

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6. Calculate the safety stock needed for each drug
SS = CP X LT ………………………………equation 2
Where, SS = Safety stock
CP = Projected average monthly consumption
LT = Average lead time
7. Calculate the quantity of each drug required in the
next procurement period
QO= CP x (LT +PP)+SS-(Si+So)
Where, QO = Quantity to order before adjustment for losses or program
change
PP= Procurement period
Si = Stock now in inventory

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 So= Stock on order
8. Adjust for losses
QA=Qo+(Qo x AL )

9. Compile decentralized quantification (if applicable)

10. Estimate costs for each drug and total costs

11. Compare total cost with budget and make adjustment

– Either obtain more funds or

– Reduce the number of drugs/or quantities ordered.

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 Exercise I
• Calculate the amount of Metronidazole 250 mg
capsule for the next six months (procurement period)
based on the following data
– CT=89,000 capsule SI=81,000caps
– So=58,000 caps LT=3 months
– Dos= 34 days Use is expected to↑ by 5%
– Loss/adjustment for 6 month=10%
– Estimated purchase price per capsule= 2.50 ETB
• A box contains 500 capsules

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II. Morbidity method
• Takes into consideration the prevalence of diseases in
the community and the number and ages of patients

• Pharmaceutical requirements are estimated using STG

• The method can be useful especially when you are

planning new programs or scaling up programs

• Its accuracy also depends on prescribers following

STG

May 25, 2023 aynoshe.adio@amu.edu.et 125

 Steps
1. Specify the list of health problems
2. Establish the list of medicines to be quantified
3. Establish standard or average treatments
• QE = DCUXNDXLD

– QE = Quantity of medicine needed for each treatment episode

N.B: Treatment episode is a patient contact for which a standard
course of drug treatment is required
– DCU= The number of basic unit in each average doses for health
problem in question
– ND= Average number of doses of each medicine per day for the
problem
– LD=Average number days of treatment for each medicine per
episode

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 4) Collect morbidity data for each health problems treated
• CE= C+(C x AU)
– CE = Expected total number of contacts in thousands
– C =Last total number of contacts
– AU= Expected rate of increase of contact
• Sources of information for morbidity data

– Epidemiological surveillance data

– Research data on incidence and prevalence of disease

– Health conditions in a given population

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5) Calculate the number of treatment episodes for each
health problem
• ET= CE x F
– ET: Number of treatment episodes

– CE: Expected total number of contacts

– F: Number of treatment episodes per 1,000 contacts

• This calculation must be done separately for each

discrete age range

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6) Estimate the quantity of dugs needed for each health problem
• QT=ET X QE X PT

– QT: Quantity of drugs needed

– ET: Number of treatment episodes

– QE: Quantity of drugs for each treatment episode

– PT: Percentage of cases that are treated with that

specific regimen

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7) Combine the estimates for each drug from the
various health problems into a master procurement
list
8) Adjust quantities to cover other health problems
9) Adjust quantities for expected losses
10) Estimate costs for each drug and total costs
11) Compare total costs with budget and make
adjustment

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 Exercise II
• Estimate the total quantity of medicines required for
the treatment of otitis media based on the following
information.
– Last total number of contacts (C)= 3,123,408

– 5% expected rate of increase

– Frequency treatment episodes per 1000 contacts (106 for <5,

29 for >5)

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• Treatment for otitis media
• Under 5
– Cotrimoxazole suspension 5ml BID for 10 days

– Paracetamol solution of 120mg/5ml, 1.5ml QID for

10 days

– Pseudoephedrine syrup 2.5ml QID for 5 days

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• Above 5
– Cotrimoxazole 960 mg tab BID for 10 days

– Paracetamol 500 mg tab, 2 tab QID for 5 days

– Pseudoephedrine 60 mg tab QID for 5 days

• All patients of otitis media are expected to be treated

by cotrimoxazole and paracetamol, whereas 80% of
patients treated with pseudoephedrine

04/04/2024 aynoshe.adio@amu.edu.et 133

 III. Proxy/adjusted consumption method

• Used when supply systems face a sever information

deficit (consumption and morbidity data).

• Uses known consumption data from one system

“standard” to estimate the drug needs in a similar or
expanded system “target”
– Population based: Defining drug use per 1,000 population

– Service based: Defining drug use per specified patient case

04/04/2024 aynoshe.adio@amu.edu.et 134

 Steps

• Step 1: Select the standard system for comparison and

extrapolation

– The standard and the target should resemble interms of

• Geography, climate, morbidity pattern, prescribing

practice, drug supply status
• The standard should have an adequate and uninterrupted
drug supply, rational prescribing practice, and complete
and accurate records of patient contact and inventory
movement
04/04/2024 aynoshe.adio@amu.edu.et 135
Step 2 : Develop the drug list

Step 3: Establish the time period to be covered in the

review

Step 4: Review records from standard system to compile

contact or population data

Step 5: Establish denominator for extrapolation

– Consumption either be thousands of patient contact or

inhabitants in the region

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• Step 6: Determine consumption rate in the standard
system
– Adjusted AMC
– Adjusted annual consumption
– Divided adjusted annual consumption by thousands of contact or inhabitants
• Step 7: Extrapolate the standard system’s consumption rate (SCR) to the
target system
– SCR (each drug) X estimated number of thousands of contacts or
inhabitants for the target facility
• Step 8: Adjust for expected losses (reliability?)
• Step 9: Estimate costs for each drug and total costs and make adjustment
against the available budget
137
aynoshe.adio@amu.edu.et
04/04/2024
 Exercise III
• Estimate Metronidazole 250mg required from the standard to
the target system based on the following information
• Standard system
– 50,000 inhabitants
– 32,500 outpatients
– 6 months total consumption= 89,000 capsule
– Out of stock=34 days
• Target
– 80,000 inhabitants
– Unknown outpatient
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IV. Service-level projection of budget requirements
• Information needed
– Average number of curative outpatient attendance,
non curative attendance and patient bed days for
each type of facility in the source health system

– The average cost per outpatient attendance, per non

curative attendance and per bed-day in each type of
facility

04/04/2024 aynoshe.adio@amu.edu.et 139

• Steps
1) Establish the categories of facilities and determine the number
in each category standard

2) Determine the patient contact denominator for each type of

facility and compile or estimate the average number of patients
contacts of each type at each category of facility

3) Calculate the average cost per contact

– The total drug purchases for the facility or facilities in class

divided by the attendances or bed-days

4) Calculate the total projected drug costs

04/04/2024 aynoshe.adio@amu.edu.et 140
 Supply Planning

• Organize and analyze data

– Data for the supply planning step are different from the
data for the forecasting step

– However, you can collect data for both the forecasting

and the supply planning steps at the same time

– The supply planning data focuses on

• Product, supplier, procurement method, funding,
distribution, and stock status

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• Build supply planning assumptions
– To account for missing or low quality data

– Timing of available funds

– Amount of available fund

– Lead times for each supplier

– Minimum and maximum stock levels for each level in

the system.

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• Estimate total commodity requirements and costs
– To determine the quantity of each product needed to
meet the forecasted consumption(i.e. the output from
forecasting)

– To ensure the in-country supply pipeline has adequate

stock levels to maintain a continuous supply to service
SDPs

– Costs per procurement unit plus freight, customs, and

other shipping fees will give you a total cost.

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• Develop the supply plan
– The shipment quantities and delivery schedules to ensure a
continuous supply of products to the country

– Developing the supply plan helps program managers to

• Track forecasted consumption data

• Identify funders and funding commitments by product

• Identify suppliers for each product

• Coordinate timing of funding commitments and procurements
• Schedule shipments according to lead times and stock levels in
country
• Assess stock outs and losses due to overstocking and expiry

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• Compare costs to available funding
– The final decision on the quantities to procure by the
amount of funding available for procurement of
products

– Adjusting the forecasting assumptions will reduce the

total quantities of products expected to be dispensed or
used

– Thereby, reducing the overall total commodity

requirements and costs.

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 Using the quantification results
• The quantification team should formally present the results of
the quantification to stakeholders.
• Presenting the results of the quantification is an opportunity
for the team to describe the national stock status of
commodities to all stakeholders
• These quantification outputs enable program managers,
funders, buyers, and suppliers to plan and schedule their
inputs.
 The quantification exercise is also an opportunity to identify
and advocate for other supply chain improvements.

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3. Pharmaceutical Procurement
 Learning outcomes
• By the end of this section trainees will be able to:
– Describe procurement management

– State the procurement process

– Describe good pharmaceutical procurement principles

– Describe procurement methods

– Identify different procurement challenges

– Identify ethical standards of procurement

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 Pharmaceutical Procurement
• Procurement is the process of acquiring goods, works, and
services through
– Purchase
• The actual commitment undertaken by the purchaser and the
supplier only in the case of goods (short term goal)
• It is purely transactional in nature when there is sourcing and
acquiring goods and services for the organization.

– Donation
– Manufacturing
– Small scale compounding

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 Health commodity procurement
• Procurement unit within the ministry of health or CMS or
similar entity manages procurement for public health
supplies.
• The unit purchases the appropriate quantities of quality
products, which are necessary for ensuring continuous
product availability.
• Health system instructs the procurement unit on what to
purchase with what funding sources including quantities
and the specifications of products to be purchased
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 Key stakeholders in the procurement process
• The procurement process involves different parties whose
input helps determine how, what, and when to procure

• Procurement coordinating committee help ensure all key

stakeholders are informed of each others’ activities and
plans

I. The program unit

– Determines what products need to be procured to support
their programs

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II. The National drug regulatory agency
• Ensures that the procured products are registered for
use in the country

• They may be involved throughout the process or at

specific milestones
– Issues pre-import permit, and import release permit

– Batch test samples from the eventual shipments before the

country receives them for distribution.

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III. Funding agencies
• Donor organizations, intergovernmental loans, or
national treasury funds managed by the Ministry of
Finance

• The procurement units must understand procurement

regulations and align procurement cycles with funding
availability

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IV. The suppliers and manufacturers
• They are responsible for registering products in
countries before procurement takes place

• Their past performance is standard evaluation criteria

in the tender document.

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 Definition of basic procurement terms

• Good
– Raw material, products and equipment and commodities
in solid, liquid or gaseous form, marketable software
and live animals

– Installation, transport, maintenance or similar

obligations related to the supply of the goods if their
value does not exceed that of the goods themselves

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• Service
– Means any object of procurement other than works,
goods and consultancy services: Maintenance, security,
janitorial, electricity, telecommunication and water supply
services

• Work
– Associated with the construction, reconstruction, up
grading, demolition, repair or renovation of a building road,
or structure

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• Consultancy Service
– An intellectual and advisory nature provided by
consultants

– This involves using their professional skills to study,

design and organize specific projects, advice clients,
conduct training and transfer knowledge

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• Tender
– The documentation and initiation of a process for soliciting
bids

– The specifications for the product/service desired and

opening the contract to the bidding process.

• Bid
– A written offer for a quantity of goods, works, or services,
at a stated price based on technical specifications and other
terms and conditions

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• Direct procurement
– Purchaser contracts for goods directly with a manufacturer
or its representatives.

• Indirect procurement
– Purchaser contracts for goods through an intermediary that
has or will purchase directly from a manufacturer.

• Prequalification
– This is a process of predetermining a specific product
from a specific manufacturer meets stated requirements.

04/04/2024 aynoshe.adio@amu.edu.et 159

 Procurement process
• Procurement planning
– It is the identification of the procurement method to be
used

– Outlines list of the key steps in the procurement process:

advertise bid, open bid, evaluate bid, award contract,
disburse payments, etc.

– Prepare schedule for completing each step of the process.

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• Developing bidding documents and inviting offers
– Technical performance and financial specifications of
the desired products

– Delivery dates and required destination of the shipment

(Incoterm)

– Regulations, procedures and timing for responding to

the bids

– Selection criteria/evaluation standards that will be used

to evaluate and select suppliers
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• Bid evaluation and selecting supplier
– Preliminary examination in order to confirm whether
the bids received were complete as required by the
bidding documents

– Technical and financial evaluation of the bid

• Selecting suppliers that will be able to deliver high-
quality goods and affordable cost within the
required time frame

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• Contract award
– Written and legally binding agreement between the
purchaser and a supplier, which establishes the terms
and conditions of the rights and obligations
• Foster good relations with the suppliers

• Establish a reputation for openness and transparency

• Encourage unsuccessful bidders to bid in the future

• Help prevent costly and time-consuming protests

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• Contract management
– Contract form for the same contractual
communications

• It contains crucial legal terms and conditions

• It makes the contract complete and fully legitimate

– A supplier provides contract security to compensate

any damage the public body may sustain as a result of
default.

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 – Liquidate damage
• It means the compensation stated in the contract as
being payable by contractor to the procuring entity for
failure to perform the contract within the periods under
the contract

• Payable by Contractor to the Procuring entity for any

specific breach identified in the contract

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 – Force majeure

• It refers to events which are beyond the

reasonable control of a supplier
– Official prohibition preventing the performance of a
contract

– Natural catastrophe such as an earthquake, fire,

explosion, lightening, and floods

– International or civil war

– The death or a serious accident of the supplier

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 – Performance security form
• Performance guarantee issued from bank
• Performance bond issued from insurance company
• Monitor contract performance
– Ensure that the established contract is adhered

– Ensure that supplies are received as planned

– Ensure delivery and receipt of the goods at the required

destination

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 Key steps in procurement process

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 Good pharmaceutical procurement principles
• Limited to EML

• Bulk purchases

• Formal supplier qualification and monitoring

• Competitive bidding process

• Commitment to a sole source

• Order quantities based on reliable estimate of actual need

• Reliable payment and good financial management

04/04/2024 aynoshe.adio@amu.edu.et 169

• Transparency and written procedures

• Separation of key functions

• Product quality assurance program

• Annual audit with published results(internal and

external)

• Regular reporting on performance by indicators

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 Procurement methods

• Open tender
– Formal procedure by which quotations are invited from
any suppliers on a local or worldwide basis

– The preferred procedure of procurement

– A method other than open bidding is used only where

conditions for use of such other method stipulated
under proclamation.

04/04/2024 aynoshe.adio@amu.edu.et 171

 Open bidding
 ICB = International Competitive Biddings

 NCB=National Competitive bidding

• Threshold >50million ETB

• The products have many suppliers (usually > seven

suppliers)

• Adequate time for procurement process management

04/04/2024 aynoshe.adio@amu.edu.et 172

Restricted tendering
– Interested suppliers must be approved in advance (pre
qualification process)

Conditions for restricted tendering

– The required object of procurement is available only
with limited suppliers

– The cost of procurement does not exceed the threshold

specified

04/04/2024 aynoshe.adio@amu.edu.et 173

• Could be both local or international

• Threshold less than 50 Million ETB

• Number of supplier range from 5 to 7

 Restricted procedure consists of two distinct stages

Election of suitable bidders

Evaluation of bids.

04/04/2024 aynoshe.adio@amu.edu.et 174

 Direct Procurement
– Purchaser establishes direct contact with suppliers or their
representatives.

 Conditions for direct procurement

– In absence of competitions or provided only by one candidate

– For additional deliveries of goods by the original supplier

– Additional works which have been not included in the initial

contract

– During emergency

04/04/2024 aynoshe.adio@amu.edu.et 175

 Framework contract
– General agreement of procurement establishing unit price
and other terms and conditions of contract
– Serves as a basis for supplies to be delivered under future
specific contract
– Establishing long term zero-contract framework
 Benefit
– Short notices for delivery
– Goods and services which have history for falling
under emergency

04/04/2024 aynoshe.adio@amu.edu.et 176

Request for quotations/pro forma

– For the purchase of readily available goods for

which there is an established market

– The estimated value of the contract does not exceed

an amount stated in the procurement directive.

04/04/2024 aynoshe.adio@amu.edu.et 177

• Can be local or international

• Threshold <200 thousand ETB

• Require 5 days for prepare proposal

• At least three different suppliers

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178
 Summary(Procurement method)

04/04/2024 aynoshe.adio@amu.edu.et 179

 Procurement challenges

• Lack of accurate quantification and forecast data

• Lengthy procurement process

• Delays in funding allocation and release

• Low product quality assurance test

• Lack of transparency

04/04/2024 aynoshe.adio@amu.edu.et 180

 Ethical issues in public procurement

• Conflict of interest

• Confidentiality

• Accuracy of information

• Gifts and hospitality

• Inducements

04/04/2024 aynoshe.adio@amu.edu.et 181

4. Inventory management
 Learning outcomes

• By the end of this section trainees will be able to:

Explain inventory management system
Describe inventory functions
Outline inventory classification methods
Identify inventory control systems
Understand warehousing and good medical store
management practice
Manage unusable Pharmaceutical products
04/04/2024 aynoshe.adio@amu.edu.et 183
 Introduction
• Inventories are stockpiles of items including raw
materials, components, semi-finished and finished goods,
that can be
– Processed, transported or used at a point of the supply chain.

• Inventory management is planning and controlling

inventory levels to meet customer demand through the
process of ordering, receiving, storing, issuing, and
recording inventory

04/04/2024 aynoshe.adio@amu.edu.et 184

• It plays a key role in meeting the objectives of the supply
chain strategy

• The pharmaceutical inventory policies are in place to

support the organization’s mission, goals, and objectives
related to health

04/04/2024 aynoshe.adio@amu.edu.et 185

 Functions of inventory

• Despite the pitfalls of holding inventory, there are a number of

reasons why many organizations keep inventory

• Buffer inventory (safety inventory):

– kept over an extended period to prepare for unexpected demand
surge and subsequently prevent potential stock outs

• Lot-size inventory(cycle inventory)

– Over purchasing and over-production to take advantage of economies of
scale

04/04/2024 aynoshe.adio@amu.edu.et 186

• Anticipation inventory
– Inventory built up in anticipation of future estimated
demand, price increases, promotional campaigns, seasonal
fluctuations, labor strikes, or plant shutdowns.

– This kind of inventory helps maintain level production or

distribution that prevents overtime or idle time in the future.

• Decoupling inventory
– Inventory that makes every stage of the supply chain
independent of any unexpected supply chain disruptions.

04/04/2024 aynoshe.adio@amu.edu.et 187

• Pipeline (or transit) inventory
– Products in transit can be considered to be inventory
because products that were pre-ordered but have not
reached warehouses, distribution centers, or retail stores are
still not available for customers.

– This kind of inventory can be reduced by using a faster

mode of transportation

04/04/2024 aynoshe.adio@amu.edu.et 188

 Inventory Classification
• One of the simplest methods of managing inventory is
to classify the inventory according to its importance

• Two common methods for segmenting public health

inventory are

ABC classification (where the money goes’)

VEN classification (on what the money is spent)

04/04/2024 aynoshe.adio@amu.edu.et 189

  ABC classification

 Category A items

 The most costly and the priority items.

Perhaps 10% to 20 % of the total inventory handled by

the supply chain represents a value of 50% or more of
the total annual value.

 Category B items

Constitute the next 10% to 20 % of items and represent

20 % to 30 % of total value.

04/04/2024 aynoshe.adio@amu.edu.et 190

 VEN classification
• In terms of critical nature of the product and the risk associated with
stocking out

 Vital drugs (V): Potentially life-saving or crucial to providing basic

health services

 Essential drugs (E): Effective against less severe but significant

forms of disease, but not absolutely vital to providing basic health
care

 Necessary drugs (N): Used for minor or self-limited illnesses

04/04/2024 aynoshe.adio@amu.edu.et 191

 Inventory control system
• Purpose of an inventory control system
– To determine when stock should be ordered/issued

– To determine how much stock should be ordered/issued

– To maintain an appropriate stock level of all products

• A well designed and well operated inventory control

system
– Prevents shortages, over supply, and waste of
pharmaceuticals

04/04/2024 aynoshe.adio@amu.edu.et 192

 Quantity

Lead time

Q1 Time Q2 Q4
Q3
04/04/2024 aynoshe.adio@amu.edu.et 193
 Key inventory control terms
 Max/Min inventory control system: A system that is
designed for ensuring the quantities of stock fall in an established
range.
 Maximum stock quantity: The largest amount of each
pharmaceutical a facility should hold at any one time
 Minimum stock quantity: The amount of stock at which actions to
replenish inventory should occur under normal conditions
 Review period stock: The routine interval of time between
assessments of stock levels to determine if additional stock is
needed
04/04/2024 aynoshe.adio@amu.edu.et 194
 Safety stock level: The stock that should always be on

hand to prevent stock outs.

 Lead time: The time between new stock is ordered and

when it is received and available for use.

 Emergency order point (EOP):It is the level of stock

that triggers an emergency order.

04/04/2024 aynoshe.adio@amu.edu.et 195

 Types of Max/Min inventory control Systems

A. Forced-ordering/Fixed system
 Trigger for ordering at the end of the review period

B. Continuous review system

 Trigger ordering when the facility reaches the minimum MOS

. C. Standard system
 Trigger ordering at the end of the review period for the
commodities that are at the minimum MOS.

►The difference between the three inventory control systems

is the trigger for placing an order or issuing resupply

04/04/2024 aynoshe.adio@amu.edu.et 196

 Current Health logistics system in Ethiopia

Maximum Minimum Emergency Order

Level Review Period
Months of Stock Months of Stock Point

Bi-monthly
Health centres 0.5 month (= 2
4 months 2 months
and Hospitals weeks)

0.25 month
Health Posts Monthly 2 months 1 month
(= 1 wk)

04/04/2024 aynoshe.adio@amu.edu.et 197

• Calculating order or issue quantities

– Order/issue quantity = Max stock quantity − Stock on

hand

• If there is not received previous order or issue,

– Order/issue quantity = Max stock quantity − (stock on

hand + quantity on order)

04/04/2024 aynoshe.adio@amu.edu.et 198

 Assessing stock status
– Purpose of assessing stock status is to determine
how long supplies will last.

04/04/2024 aynoshe.adio@amu.edu.et 199

 Exercise IV
• Calculate the quantity of Chloroquine to order if the
maximum stock level for Chloroquine is 4 months and
an emergency order point is 1 month. One case of 300
tablets of Chloroquine was ordered and has not yet
been received. Use an average of the last 6 months
data for your calculations (Please refer the table in the next slide)

04/04/2024 aynoshe.adio@amu.edu.et 200

 Chlorquine dispensed to users

October 11 178 tabs

November 11 552 tabs
December 11 540 tabs
January 12 846 tabs
February 12 630 tabs
March 12 578 tabs
April 12 812 tabs
May 12 508 tabs
Balance of chlorquine on hand is 756 tablets

04/04/2024 aynoshe.adio@amu.edu.et 201

 Exercise V
• A health center has a stock on hand of 40 bottles of a program
product and the calculated consumption is 55 bottles. If the
product was stocked out for 5 days in the review period, how
many bottles should the HC order?(Hint: Max. stock level 4 months
and review period 2 months)
A. 90 bottles

B. 80 bottles

C. 120 bottles

D. 25 bottles
04/04/2024 aynoshe.adio@amu.edu.et 202
 Exercise VI
• How many Months of Stocks (MOS) do you have at a
hospital if you have 50 tablets in the storeroom and
your average monthly issue is 500 tablets per month?

A. 0.1

B. 1. 0

C. 0.5

D. 2.0

04/04/2024 aynoshe.adio@amu.edu.et 203

 Forced-ordering Max/Min system
• The inventory control system of Ethiopia.
• All facilities are required to report on a fixed schedule for all
products
• Store keeper decision rule to resupply
– At the end of each review period, review all stock levels and order or
issue enough stock to bring the levels up to the max.
– Place an emergency order if the stock level for any item falls below
the emergency order point before the end of the review period.

04/04/2024 aynoshe.adio@amu.edu.et 204

 Forced-ordering max/min system
• Advantages of forced-ordering max-min inventory system
– Rule for resupply is simple.
– Easier to ensure the availability of transport resources
– Every facility orders or is resupplied at the end of every
review period
– No need of storekeepers constantly assess stock status,
unless they think a potential stock out is possible

• Disadvantage of a forced-ordering system

– Orders for some items may be for small quantities

04/04/2024 aynoshe.adio@amu.edu.et 205

 Forced-ordering max/min system
• Forced–ordering variation: Delivery truck system
– Topping up or bread truck system or Vendor Managed
Inventory (VMI) system.

– A truck is loaded with supplies at the end of the review

period.

– The truck and a delivery team travel to each facility

– Assess the stock & leave/topup an amount of each

product
04/04/2024 aynoshe.adio@amu.edu.et 206
• Advantages of the forced-ordering delivery truck
system
– The lead time is zero → lead time stock to zero

– Lowers the min and the max stock levels.

– Damaged or expired products can be put back on the

truck for disposal

04/04/2024 aynoshe.adio@amu.edu.et 207

 • Disadvantages of the forced-ordering delivery truck
system
– Max/min systems rely on their delivery trucks.

• System is vulnerable to breakdowns

• The whole system can break down

04/04/2024 aynoshe.adio@amu.edu.et 208

 Continuous review Max/Min system

• In a continuous review system, the trigger for

ordering is when the facility reaches the minimum
level

• A sufficient number of staff must be available in the

office. Team leaders are away making deliveries.

• Require larger trucks which always carry more stock

than they will actually deliver.
04/04/2024 aynoshe.adio@amu.edu.et 209
 • Store keeper decision rule
• Review the stock level of each item every time you
make an issue.

• If the stock level is at the min, or has fallen below the

min, order enough stock to bring the level up to the
max.

• The least appropriate for most health programs

04/04/2024 aynoshe.adio@amu.edu.et 210

• In a continuous review system
– The review period is not fixed
– The storekeeper must know both the max and
min stock levels.
– The storekeeper does not need an emergency
order point.
– Continuous review system must be a pull
system.

04/04/2024 aynoshe.adio@amu.edu.et 211

• Advantages of continuous review max/min system
– Rule for resupply is simple
• Reaching minimum

– The system is more responsive and flexible

– Small orders are eliminated.

• Disadvantages of a continuous review system

– Transportation resources are harder to schedule.
– Overload storekeepers in large facilities with a large
number of products
04/04/2024 aynoshe.adio@amu.edu.et 212
• Continuous review system variation
Two bins

– Resupply rule is the same, the difference is

• The way of determining when the min has been reached.

– Two equal-sized bins of each individual product

– When the first bin is empty, the min has been reached.

04/04/2024 aynoshe.adio@amu.edu.et 213

• Advantages continuous review system variation(two
bins).
– Require less training than a normal pull systems
• Empty bins
– No calculations are required and paper work is
minimal.
• Disadvantages
– Bin size must be continually reviewed if the
consumption for products is not stable

04/04/2024 aynoshe.adio@amu.edu.et 214

 Standard Max/Min system
• Resupply based on
 Reviewing all stock levels at the end of each review period.

• In a standard system
– Ordering/issuing new stock is based on the min stock level and the
review period.

– The storekeeper must know the min, max, and review period.

– The stock status must be assessed at the end of each review

period

04/04/2024 aynoshe.adio@amu.edu.et 215

• Advantages of standard max/min system
– Eliminate small orders
– Avoid the need to assess stock status continually
– Reduce the number of calculations
– Transportation can be scheduled for specific times

• Disadvantages
– Higher minimum stock level

– More training for the storekeepers may be required

04/04/2024 aynoshe.adio@amu.edu.et 216

 Medical stores and warehouse management
• Storage ensures the physical integrity and safety of
products and their packaging

• A storage warehouse is a commercial building that is

used for storage of goods and has loading dock too.

• Unlike the regular storage units, warehouses has

forklifts and cranes for loading and unloading bulk
products

04/04/2024 aynoshe.adio@amu.edu.et 217

• A warehouse may play one or more of the following
roles

• Raw material and component warehouses

– Hold raw materials at or near the point of
manufacturing or assembly process.

• Work-in-process warehouses
– Hold partially completed assemblies and products at
various points

04/04/2024 aynoshe.adio@amu.edu.et 218

• Finished goods warehouses
– Hold inventory used to balance and buffer the variation
between production schedules and demand

• Distribution warehouses and distribution centers

– Accumulate and consolidate products from various

points of manufacture within a single firm or

– From several firms for combined shipment to common

customers.

04/04/2024 aynoshe.adio@amu.edu.et 219

• Fulfillment warehouses and fulfillment centers
– Receive, pick, and ship small orders for individual
consumers.

• Local warehouses
– Distributed in the field in order to shorten
transportation distances to permit rapid response to
customer demand.

04/04/2024 aynoshe.adio@amu.edu.et 220

 Which one is good medical stores management
practice? Why?

A B

04/04/2024 aynoshe.adio@amu.edu.et 221

 Objectives of good medical stores management

• To guarantee a continuous supply of pharmaceuticals

• To maintain the quality of pharmaceuticals

• To minimize losses through expiration and deterioration.

• To control theft and corruption.

• To keep accurate inventory records.

• To provide stock movement information

04/04/2024 aynoshe.adio@amu.edu.et 222

 Key storage activities

• Material receiving and incoming inspection

– Visual inspection (damaged & quantities)

• Put away

– Move products from the unloading dock to their

designated storage area.

– Correctly record on the stock keeping records

04/04/2024 aynoshe.adio@amu.edu.et 223

• Picking and packing
– Products must be located, pulled from inventory,
and prepared for shipment.

– Label correctly any new packing or repacking

• Shipping
– Check the list of products and their quantities

– Load on appropriate vehicle

04/04/2024 aynoshe.adio@amu.edu.et 224

 Good storage practices

• Storage condition based on temperature information

directly from the manufacturer.

– In a deep freeze (-15°to -25oC)

– In a refrigerator/cold 2°C to 8°C

– Cool temperature 8°C to 15°C

– Room temperature 15°C to 25°C

04/04/2024 aynoshe.adio@amu.edu.et 225

• Store in clean and disinfect storeroom regularly
– Free from rodents and insects

– Avoid eating food and drinking

• Store supplies in a dry, well-lit, well-ventilated store

room out of direct sunlight & extreme heat air

04/04/2024 aynoshe.adio@amu.edu.et 226

 Storage guidelines
• Secure storeroom from water penetration.
– Repair leaky roofs and windows

– Use dehumidifiers

– Stack supplies off the floor on pallets

• Store condoms and other latex products away from

electric motors and fluorescent lights.
– Emit ozone → rapidly deteriorate condoms

– Proper packaging (i.e. boxes and cartons)

04/04/2024 aynoshe.adio@amu.edu.et 227
• Ensure that fire safety equipment is available and
accessible

– Personnel are trained to use it.

– Strictly prohibit smoking in the store.

– Check smoke detectors every 2–3 months to ensure that

they are working properly.

04/04/2024 aynoshe.adio@amu.edu.et 228

04/04/2024 aynoshe.adio@amu.edu.et 229
• Maintain cold storage, including a cold chain, for
commodities(biological products) that require it.
– Insulin, Oxytocin, and vaccines

– Refrigeration (electric or kerosene powered)

– Cold boxes or insulated coolers

04/04/2024 aynoshe.adio@amu.edu.et 230

• Keep narcotics and other controlled substances in a
locked place.

– Dangerous when misused

– Stolen for sale on the black market

• Should be stored in limit access to the storeroom and
track the movement of products.

04/04/2024 aynoshe.adio@amu.edu.et 231

• Stack cartons at least 10 cm off the floor, 30 cm away
from the walls and other stacks, and not more than 2.5
meter high.

– Promote air circulation

– Facilitate the movement of stock

• Stock on pallet, pallet racking, and shelves

04/04/2024 aynoshe.adio@amu.edu.et 232

• Store medical supplies away from insecticides,
chemicals, old files, office supplies, and other
materials.

• Arrange cartons so that arrows point up.

• Ensure visibility of
• Labels

• Expiry dates

• Manufacturing dates
04/04/2024 aynoshe.adio@amu.edu.et 233
• Store supplies in a manner accessible for FEFO,
FIFO, physical counting, and general management.

• Separate and dispose damaged or expired products

immediately.

• Security
– Only authorized person access to store

04/04/2024 aynoshe.adio@amu.edu.et 234

 Medicine Waste Management
• Medicine waste encompasses medicines with

– Counterfeit, substandard and adulterated

– Expired, unused, spilt and contaminated

– Improperly sealed or labeled/stored

– Prohibited or unauthorized, etc.

• Medicines which are unfit for use shall not be stored

more than six months

04/04/2024 aynoshe.adio@amu.edu.et 235

 • To request for approval of disposable of medicine
accompanied with lists of products to be disposed clearly
stating
– Trade name and/or generic name
– Strength, dosage form & pack size
– Quantity, lot number & expiry date
– Manufacturer, product price, country of origin &
supplier.

• Special emphasize shall be given to segregate and store

controlled drugs, antineoplastic and radiopharmaceuticals
04/04/2024 aynoshe.adio@amu.edu.et 236
 Pharmaceutical waste disposal
• Medicines Waste means waste which encompass the
followings
– All properly unsealed bulk products or loose tablets and
capsules

– All cold chain damaged, unexpired medicines that should

have been stored in a cold chain

– Counterfeit, substandard and adulterated

– Expired, damaged, and improperly sealed or stored medical

supplies and laboratory reagents, etc.

04-Apr-24 237
 Pharmaceuticals Disposal Methods
• Return of Medicines Waste to Supplier/Manufacturer/Donor

– There shall be a mechanism to return medicines waste,

which present disposal problems, to their origin for safe
disposal

• Controlled Non-Engineered Landfill

– Shall be located at least 50 meters away from any ground

water source.

– Shall be protected from flooding, water entry and runoff

04-Apr-24 238
• Highly Engineered Sanitary Landfill
– Shall be in compliance with Environmental Impact
Assessment (EIA)

– Shall consist of an evacuated pit isolated from watercourses

and above the water table

– Each day’s solid waste shall be compacted and covered with

soil to maintain sanitary conditions

04-Apr-24 239
• Landfill by Waste Immobilization: Encapsulation
– Clean drums made of steel or plastic shall be used for
encapsulation.
– Drums shall be filled to 75% capacity with solid and semi-
solid medicines waste and the remaining space shall be filled
with medium such as cement

• Landfill by Waste Immobilization: Inertization

– Packaging materials including blister packs, paper, cardboard
and plastic shall be removed from the medicines waste
– The medicines waste shall be ground and a mix of water,
cement, and lime
04-Apr-24 240
• Sewer
– Proper dilution to make liquid wastes neutral and PH monitored

– Diluted liquids, syrups, intravenous fluids and maximum of 50

liters/day of diluted disinfectants shall be flushed into sewers

– Disposal of anti neo plastics, undiluted disinfectants and antiseptics

into the sewer is prohibited
• Burning in open containers or place
– Paper and cardboard packaging, if they are not to be recycled, may
be burnt

– Polyvinyl chloride (PVC) plastic containers shall not be disposed

by burning.
04-Apr-24 241
5. Distribution and Transportation
 Learning outcomes
• By the end of this section trainees will be able to
– Define pharmaceutical distribution
– Outline pharmaceutical distribution modeling
– Identify factors influencing distribution models
– State the importance of good distribution practice
– Define transportation
– Understand how to optimize transportation cost
– Understand how to manage transportation
04/04/2024 aynoshe.adio@amu.edu.et 243
 Pharmaceutical distribution
• Distribution is the system or process of planning,
managing, and delivering products or materials to their
destinations

• It consists of moving pharmaceutical products down

the pipeline until they are dispensed to the final
customers or intended recipients

04/04/2024 aynoshe.adio@amu.edu.et 244

 Distribution Modeling
• A distribution model is a method companies use to
send products from the point of origination to the final
selling point/customer
– It is the process of planning commodity deliveries so that
they are both efficient and effective.

– It is to reduce distribution costs while still meeting the

demands at all points along the health service supply chain

04/04/2024 aynoshe.adio@amu.edu.et 245

 Distribution Models (Direct Vs Network)

04/04/2024 aynoshe.adio@amu.edu.et 246

04/04/2024 aynoshe.adio@amu.edu.et 247
 Factors influence distribution model
• Considerations during distribution design
– Location and distance of facilities from their suppliers
– Order size, range of products, and frequency
– Demand of products supplied to each health facility

– Staff competence
• Transportation, equipment operation, safety, delivery
schedule planning and execution, material handling, and
reporting

04/04/2024 aynoshe.adio@amu.edu.et 248

 Good distribution practice

• It is part of quality assurance that ensures the

quality of a pharmaceutical products.
• A tool to secure the distribution system from
infiltration of
– Counterfeits
– Illegally imported
– Substandard
– Adulterated products

04/04/2024 aynoshe.adio@amu.edu.et 249

 Transportation
• Transportation is the movement of people and
goods from one place to another by various means
such as road, rail, air, water, or pipeline
• It is the most expensive logistics activity representing
over 40% of logistics expenses
• The overall goal in transportation is to connect
sourcing locations with customers at the lowest
possible transportation cost
04/04/2024 aynoshe.adio@amu.edu.et 250
 Transportation terminology

• In a basic and typical transportation transaction

– A shipper pays a carrier to transport cargo from an
origin to a destination
– The consignee receives the cargo
– The payment made to the carrier is called a freight
payment
– The document describing and contracting the movement
of the goods is called a bill of lading.
04/04/2024 aynoshe.adio@amu.edu.et 251
 Transportation optimization

• The optimal transportation solution satisfy the

requirements set forth in the customer service policy
– Response time requirements

– Volume requirements

– Frequency requirements

– Minimal damage in route

04/04/2024 aynoshe.adio@amu.edu.et 252

 Transportation management (TMS)

• Transportation physically links the sources of supply

chosen in sourcing with the customers to serve.

• This requires rigorous day-to-day management and

planning.

• Development and implementation of a formal TMS

can contribute to supporting and sustaining a
successful distribution network.

04/04/2024 aynoshe.adio@amu.edu.et 253

• A comprehensive TMS should include the following
activities

I. Operations management
– To ensure that transportation practices are aligned with policy
• Scheduled delivery planning, vehicle allocation, & control over fuel
consumption

II. Fleet management

– To guarantee vehicle availability and good working conditions.
• Monitor the proper use of vehicles and plan for their preventive
maintenance and eventual replacement and disposal.

04/04/2024 aynoshe.adio@amu.edu.et 254

III. Human resources
– It is to ensure the availability of a well-trained operator for each vehicle

– Designated transport manager at every facility that provides

transportation services

IV. Performance monitoring and costs

– To monitor and control effective transport operations, it is
essential to define and apply KPIs.

– TMS can be a manual process, a computerized software

tool, or a combination of systems

04/04/2024 aynoshe.adio@amu.edu.et 255

6. Logistics Management Information System
 Learning outcomes
• By the end of this chapter trainees will be able to
– Define logistics management information system(LMIS)

– Differentiate logistics data items or elements

– Identify LMIS data tools used for recording and reporting

– Describe LMIS feedback mechanism and its benefit

04/04/2024 aynoshe.adio@amu.edu.et 257

 Logistics management information system
• The logistics management information systems is the
system of records and reports gathered across all levels
of the system

• It can be paper based or electronic that are used to

aggregate, analyze, validate, and display data to inform
logistics decisions and manage the supply chain

04/04/2024 aynoshe.adio@amu.edu.et 258

• Essential data items for decision-making
– Stock on hand
• The quantity of usable stock available on hand

– Consumption
• The quantity of stock dispensed to users

– Losses/adjustments
• Losses are the quantity of stock removed from the pipeline for any
reason other than consumption by clients
• Adjustments are the quantities of stock issued to or received from other
facility at the same level of pipeline

• Essential data elements are absolutely required to manage a

logistics system
04/04/2024 aynoshe.adio@amu.edu.et 259
 LMIS reporting and recording tools

• From a logistics point of view, only three things can

happen to supplies in a pipeline
– They can be stored, moved (in transit) or consumed

• To monitor products at all times in the pipeline, we

need three types of logistics records to track the
products

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 I. Stock Keeping Records
 Holds information about products in storage.

 They must contain the quantity of stock on hand, the quantity

of losses, and the quantity of adjustments

 Usually, products are not dispensed directly from the store

room to the customer.
Actual consumption data is not collected on a stock keeping
record

 Types of stock keeping records: stock cards, inventory control

cards, and bin cards.

04/04/2024 aynoshe.adio@amu.edu.et 261

04/04/2024 aynoshe.adio@amu.edu.et 262
04/04/2024 aynoshe.adio@amu.edu.et 263
 II. Transaction Records
– Holds information about products being moved from store to
other facility
– Transaction records are proof of requisition, issue and/or
delivery
– They do not need to include any of the essential data items
mentioned earlier.
– Sometimes, a transaction record will be combined with a type
of report and will include stock on hand, losses, and
consumption data

04/04/2024 aynoshe.adio@amu.edu.et 264

 III. Consumption Records

– Holds information about products being consumed or used

– They do not usually record stock on hand, or losses and

adjustments.

– Completed by service providers who dispense products to

clients

– Formats: Daily activity registers (DARs), Drug

dispensing registers logbook, daily usage registers or
logs, and tick/tally sheets.

04/04/2024 aynoshe.adio@amu.edu.et 265

 Benefits of LMIS

• Improve the availability of products

• Minimize wastage of resources

• Link the different levels (up and down) in the system

through information

• Provide information for decision makers to adjust their

supply system

• Make the SCM system more efficient

04/04/2024 aynoshe.adio@amu.edu.et 266

 Manual LMIS Versus e-LMIS

• An effective LMIS depends on the right combination

of people, processes, and technology

• Manual LMIS: It is a paper based logistics

management information system

• Electronic LMIS (e-LMIS): It is a digital data

repository system & available for administrators,
managers, policy and other decision makers.

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• Drawbacks of paper-based LMIS

– Aggregation and access to data is slow and cumbersome

– Long lead time

– Continuous printing and distribution of the tools

– Challenge in sending reports from one level to the next

– Errors in transcribing and reading illegible handwriting

– Inefficient

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 • Benefits of e-LMIS
– Faster, easier and more accurate reporting data
– Better visibility for managers (end-end data visibility)
– Better decisions regarding stock levels
– Better health outcomes
– Save cost for manual document preparation
– Decrease workload
– Improve data quality and time
– Increase accountability
– Easy for product tracing and tracking
04/04/2024 aynoshe.adio@amu.edu.et 269
 e-LMIS in Ethiopia

• The Health Commodity Management Information

System (HCMIS) is a locally developed warehouse
(Birana) and facility (Dagu) management information
system built by the USAID|DELIVER PROJECT

• HCMIS, is designed in such a way that a systematic

recordkeeping system can help efficiently to manage
daily transactions at facilities and warehouses

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• HCMIS provides a mechanism by which essential
logistics data well recorded and used for decison.
• HCMIS also helps managers at warehouses and/or
facilities to generate appropriate and timely stock reports
that help them to make sound decisions.
• HCMIS consists of two components
– Inventory Management (Bin card, expire data alarm, MOS,
FEFO, location….)
– LMIS (stock keeping, consumption and transaction records and
reports, feedbacks)

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 LMIS Feedback Reports
• Feedback reports inform lower levels about their
performance; improve capacity; give recognition; and, in
some cases, provide information about reporting from other
facilities.
• Feedback reports also inform managers at higher levels
about how the system is functioning.
• Managers can use feedback reports to gauge how well the
system is functioning.

04/04/2024 aynoshe.adio@amu.edu.et 272

 Exercise VII
• Fill in the bin card with the following information
• Health facility: Arba Minch General Hospital
• Item description: Amoxicillin 125mg/5ml of 100ml
• Unit issue: bottle
• The current balance on 12 January 2023 was 246 bottles
– 12 February 2023 received 1500 bottles from EPSS on Model 19/H with Doc.
No 123456 and an expiration date of 10/2026.

– 18 January 2023 issued 100 bottles to the ART pharmacy with an expiration
date of 3/2025 using Model 22/H with Doc. No 828303

– 18 February 2023 50 bottles were loaned to Secha Health Center with an

expiration date of 3/2025 using Model 22/H of Doc. No 828304

– 15 January 2023 issued 60 bottles to the OPD pharmacy with an expiration date
of 3/2025 using Model 22/H with Doc. No 828302.

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7. Managing Rational use of Medicines
 Learning outcomes

• By the end of this chapter the trainees will be able to:

– Define rational use of medicine

– Describe the strategies to improve rational use of medicine

– Explain how to promote rational prescribing practice

– Explain how to promote rational dispensing practice

– Explain how to promote rational patient use

– Outline impacts of irrational drug use

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 Rational drug use
• It is a condition of appropriate drug utilization in
which patients receive medications:
– Appropriate to their clinical need

– Doses that meet their individual requirements for an

adequate period of time

– At the lowest cost to them and their community

(WHO, 1985).

04/04/2024 aynoshe.adio@amu.edu.et 276

 Strategies to improve rational drug use
• Educational strategies

– Training of prescribers

– Availing of printed materials

– Approaches based on face-to-face contact

• Managerial and regulatory strategies

– Logistics operations (selection, procurement, distribution,
etc.)

– Prescribing and dispensing approaches

04/04/2024 aynoshe.adio@amu.edu.et 277
 Factors Influencing Medicine Use

04/04/2024 aynoshe.adio@amu.edu.et 278

 Impacts of irrational drug use

• Leading to increased morbidity and mortality

• Waste of resources

• Reduce availability of vital drugs and increased costs

• Increased risk of unwanted effects such as ADRs and the

emergence of AMR.

• Psychosocial impacts: Patients believe that there is “a pill

for every ill” this may cause an apparent/seeming increase
in demand for drugs.
04/04/2024 aynoshe.adio@amu.edu.et 279
Initiatives to improve logistics and supply chain
management
 I. Integrated Pharmaceuticals and Logistics
System(IPLS)

• According to the WHO framework for a health

system, access to medicine is one of the six building
blocks of a health system

• The provision of a complete healthcare requires

ensuring equitable access to medicines of assured
quality, safety, and efficacy

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• The government of Ethiopia, understanding the role of
access to medicines, established an agency, the
Pharmaceutical Fund and Supplies Agency (PFSA), in
2007 based on the Pharmaceutical Logistics Master
Plan (PLMP).

• The Pharmaceutical Fund and Supplies Agency is now

referred to as the Ethiopian Pharmaceutical Supply
Service (EPSS)

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• Prior to the establishment of PFSA, all program
medicines were managed vertically by each program

• The IPLS integrates the management of all

pharmaceuticals into one system.
• Standard Operating Procedures (SOP) Manual for health
facilities moves concept to detailed implementation step

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• The SOP manual guides the staff in the completion of
the following tasks:
– Recording and reporting on stock levels and usage of
pharmaceuticals.

– Ordering pharmaceuticals from supplier

– Receiving and storing pharmaceuticals

– Issuing pharmaceuticals between and within facilities

– Maintaining adequate amount of pharmaceuticals

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• The basic components of IPLS are
– LMIS

– Inventory control system

– Storage of Pharmaceuticals

• Records and Reports used in managing

Pharmaceuticals in IPLS are:
– Stock record and bin card (Stock keeping and to track stock
in storage)

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 – Internal Facility Report and Resupply Form(IFRR)
• Report and transaction of essential data elements

• Issue and receive pharmaceuticals within a health facility

– Report and Requisition Form (RRF)

• Report and transaction of essential data elements

• Order/request pharmaceuticals from EPSS

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• To help maintain adequate stock levels
– Maximum months of stock,

– Minimum months of stock

• An emergency order point established for each health facility in the
system.

• Storing pharmaceuticals
– De junking, logical organization, and arrangement
following good pharmaceutical storage practices

– Overall pharmaceutical management efficiency.

04/04/2024 aynoshe.adio@amu.edu.et 287

 II. Auditable Pharmaceuticals Transaction and
Service (APTS)
• APTS is a data driven package of interventions
designed to establish good pharmacy practice using
accountable, transparent, and suitable pharmacy
services for both patient and professionals.

• Prior to the introduction of APTS, once medicines are

issued from the main store there is no means to
effectively track their destination
04/04/2024 aynoshe.adio@amu.edu.et 288
 Rationale for APTS
• There was a lack of transparency and accountability
in the supply chain system

• The quality of service delivery was very poor

• Measurement of workload and deployment of the

workforce were not performed based on actual needs

• Infrastructure, equipment, and other facilities were

not up to the level required for the service provision

04/04/2024 aynoshe.adio@amu.edu.et 289

• There was little or no documentation practice to make
information available for decision-making
 Consequently, patient satisfaction with pharmacy service
was below expectations

 As an intervention tool, APTS was one of the strategic

initiatives designed to bring good pharmacy practice in
Ethiopian heath system

04/04/2024 aynoshe.adio@amu.edu.et 290

• There by, APTS improves pharmacy premise design
and workflow of pharmacy service

• It is a data-driven package of interventions designed

to establish an accountable, transparent, and good
pharmacy services

• It enables health facilities to optimize the utilization

of medicine budgets, improve access to medicines,
and decrease wastage

04/04/2024 aynoshe.adio@amu.edu.et 291

 Essential elements of APTS

04/04/2024 aynoshe.adio@amu.edu.et 292

 Efficient budget utilization
• Identify top disease of the catchment area and select
product

• Use updated facility specific medicine list reconciled by

ABC/VEN analysis matrix

• Regularly update stock status and consumption to stock

analysis
– Apply proactive measures to reduce wastage

– Establish effective mechanisms to manage sales of medicines

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 Transparent & accountable transaction
• Establishing a legal framework (APTS Regulation
directives guidelines)

• Use standard financial vouchers (Model 19/22/health,

sales tickets, Registers; Price control sheet and Model
20/Health)

• Record all pharmaceutical transactions

04/04/2024 aynoshe.adio@amu.edu.et 294

• Record full description of pharmaceuticals

• Daily reconcile cost of medication sold

• Establish individual accountability by implementing

bin management at all dispensing units

• Apply collective responsibility to ensure participatory

effort in managing medicines and transactions

• Conduct regular audit

04/04/2024 aynoshe.adio@amu.edu.et 295

Effective workforce development & deployment
• Total number of patient served per month should be
calculated and fulfilling workforce needs

• Provide all relevant in-service trainings including

APTS for pharmacy and finance professionals

• Integrate APTS principles in pre-service education

• Providing one stop shopping service (with entrance

and exit doors)

04/04/2024 aynoshe.adio@amu.edu.et 296

 Reliable information for decision making
• Generate monthly financial reports in cash, credit and for
free
• Generate service report which indicates number of patients
served per health facility & dispenser
• Generate information on stock and consumption analyses,
availability of medicines, rate of expiry, and affordability
of medicines
• Use reliable information (referring serial number of
receiving, issuing and dispensing tools)
04/04/2024 aynoshe.adio@amu.edu.et 297
 Improved customer satisfaction
• Patient knowledge on correct dosage (Dose, frequency,
duration, rout of administration)
• Improving availability of medicines
• Improving dispensing environment by using
ergonomic principle to make it suitable for patients
and professionals.
• Redesign the dispensing workflow: Entrance & exit
– Prescription evaluator and biller cashier dispense rand counselor

04/04/2024 aynoshe.adio@amu.edu.et 298

 Infrastructure design for dispensaries in health
facility

04/04/2024 aynoshe.adio@amu.edu.et 299

 Patient flow at dispensaries

04/04/2024 aynoshe.adio@amu.edu.et 300

Chapter 5: Monitoring and Evaluation of Pharmaceutical
supply chain management performance
 Learning outcomes

• At the end of this chapter the students you will be

able to
– Differentiate between monitoring and evaluation

– Identify tools to investigate SCM performance

– Describe tools to investigate medicine use evaluation

– Explain data collection methods for monitoring and

evaluation

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 Introduction
 Monitoring: Routine collection and analysis of measurements or
indicators to determine the ongoing progress toward objectives

• Comparison of a plan with performance (target Vs

achievement)

• Continuous function that uses systematic collection of data

on specified indicators,

• Performance measurement at individual, unit and

organization level

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 Evaluation: Periodic comparison of objectives, with
accomplishments to determine how well the objectives
were achieved

• It helps to make judgments about success or

failure of the program or intervention

• Provides credible information for decision

making and improvement
• It also provides evidence to ensure accountability

04/04/2024 aynoshe.adio@amu.edu.et 304

 Tools to investigate SCM Performance

• Performance measurement is the process of collecting,

analyzing, and reporting information regarding the
SCM

• Performance management involves monitoring key

performance indicators (KPIs)
– Measuring whether the organization is meeting its
objectives and overarching strategy

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• KPI’s exist for all SCM functions
– Goal level KPIs
• Supply availability, quality, and safety

– Functional level KPIs

• Warehousing, distribution and transportation, inventory
management, and procurement.

– Process level KPIs

• LMIS reporting rates, managing logistics operations

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• The indicators can be further categorized by their purpose

 Inputs
– Set of resources: human, financial, and capital needed to
implement a program

 Processes
– Set of interventions that use inputs to achieve objectives and
desired results

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• Outputs
– Results obtained at the program level
– Are the direct products of activities; these can be goods and
services produced for delivery.
– Can be defined as “what we produce or deliver”.
– They are immediate effects of program or intervention activities.

• Outcomes
– Results obtained at the population level following interventions
that is what changed as a result of the activities
– It is “what we want to change”.

04/04/2024 aynoshe.adio@amu.edu.et 308

• Impact
– Results that reflect the long-term or ultimate outcomes at
the population level.

– For example improved health status can be due to

aggregate effect of health, agriculture and education
programs implemented in the specific area

04/04/2024 aynoshe.adio@amu.edu.et 309

 Theory of change model

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 Tools to investigate medicine use performance

 Quantitative: Based approach using WHO/International

Network of Rational use of Drugs (INRUD) indicators.
• Core drug use indictors
– Prescribing indicators, Patient care indicators, &
Facility indicators

• Supplementary drug use indicators

 Qualitative: Interview, FGD, simulated survey, observation

04/04/2024 aynoshe.adio@amu.edu.et 311

 Drug use study methods(quantitative)

1. Core drug use indicators (12): These are highly

standardized, they do not need national adaptation and they
are recommended for inclusion in any drug use study

2. Supplementary drug use indicators (7): These are not

standardized, they need national adaptation

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 Core drug use indicators

A. Prescribing Indicators
1. Average number of drugs per encounter
• Purpose: To measure the poly pharmacy

𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑝𝑟𝑒𝑠𝑐𝑟𝑖𝑏𝑒𝑑

𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑛𝑐𝑜𝑢𝑛𝑡𝑒𝑟𝑠 𝑠𝑢𝑟𝑣𝑒𝑦𝑒𝑑

 Standard: Optimal level  2 drugs per patient

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 Core drug use indicators

2. Percentage of drugs prescribed by generic name

• Purpose : To measure the tendency to prescribe by
generic name

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑝𝑟𝑒𝑠𝑐𝑟𝑖𝑏𝑒𝑑 𝑏𝑦 𝑔𝑒𝑛𝑒𝑟𝑖𝑐 𝑛𝑎𝑚𝑒

*100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑝𝑟𝑒𝑠𝑐𝑖𝑏𝑒𝑑

 Standard: Optimal level 100%

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 Core drug use indicators
3. Percentage of patients with an antibiotic prescribed
• Purpose: To measure the overall level of use of
antibiotics

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑛𝑐𝑜𝑢𝑛𝑡𝑒𝑟𝑠 𝑤𝑖𝑡𝑕 𝑎𝑛𝑡𝑖𝑏𝑖𝑜𝑡𝑖𝑐𝑠 𝑝𝑟𝑒𝑠𝑐𝑖𝑏𝑒𝑑

*100
𝑇𝑜𝑡𝑎𝑙 𝒏𝒖𝒎𝒃𝒆𝒓 𝑜𝑓 𝑒𝑛𝑐𝑜𝑢𝑛𝑡𝑒𝑟𝑠 𝑠𝑢𝑟𝑣𝑒𝑦𝑒𝑑

 Standard: Optimal level  30%

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 Core drug use indicators

4. Percentage of patients with an injection prescribed

• Purpose : To measure the overall level of use of

injections

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑛𝑐𝑜𝑢𝑛𝑡𝑒𝑟𝑠 𝑤𝑖𝑡𝑕 𝑖𝑛𝑗𝑒𝑐𝑡𝑖𝑜𝑛 𝑝𝑟𝑒𝑠𝑐𝑟𝑖𝑏𝑒𝑑

*100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑛𝑐𝑜𝑢𝑛𝑡𝑒𝑟𝑠 𝑠𝑢𝑟𝑣𝑒𝑦𝑒𝑑

 Standard: Optimal level  10%

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 Core drug use indicators

5. Percentage of drugs prescribed from EDL or formulary

• Purpose: To measure the degree to which practices conform

to a NDP

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑝𝑟𝑒𝑠𝑐𝑟𝑖𝑏𝑒𝑑 𝑓𝑟𝑜𝑚 𝐸𝐷𝐿,𝑓𝑜𝑟𝑚𝑢𝑙𝑎𝑟𝑦 𝑜𝑟𝑆𝑇𝐺

∗100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑝𝑟𝑒𝑠𝑐𝑖𝑏𝑒𝑑

• Standard: Optimal level 100%

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 Core drug use indicators

B. Patient Care Indicators

1. Average consultation time
• Purpose: To measure the time that medical personnel spend
with patients in the process of consultation and prescribing
𝑇𝑜𝑡𝑎𝑙 𝑡𝑖𝑚𝑒 𝑓𝑜𝑟 𝑎 𝑠𝑒𝑟𝑖𝑜𝑢𝑠 𝑜𝑓 𝑐𝑜𝑛𝑠𝑢𝑙𝑡𝑎𝑡𝑖𝑜𝑛
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟𝑜𝑓 𝑐𝑜𝑛𝑠𝑢𝑙𝑡𝑎𝑡𝑖𝑜𝑛𝑠/𝑝𝑎𝑡𝑖𝑒𝑛𝑡𝑠

• Standard: Optimal level  10 minutes per patient

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 Core drug use indicators

2. Average dispensing time

• Purpose: To measure the average time that personnel

dispensing drugs spend with patients

𝑇𝑜𝑡𝑎𝑙 𝑡𝑖𝑚𝑒 𝑓𝑜𝑟 𝑑𝑖𝑠𝑝𝑒𝑛𝑠𝑖𝑛𝑔 𝑑𝑟𝑢𝑔𝑠 𝑡𝑜 𝑎 𝑠𝑒𝑟𝑖𝑜𝑢𝑠 𝑜𝑓 𝑝𝑎𝑡𝑖𝑒𝑛𝑡𝑠

𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑛𝑐𝑜𝑢𝑛𝑡𝑒𝑟𝑠

• Standard: Optimal level  1 minutes per patient

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 Core drug use indicators
3. Percentage of drugs actually dispensed
• Purpose: To measure the degree to which health
facilities are able to provide the drugs which were
prescribed

𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑎𝑐𝑡𝑢𝑎𝑙𝑙𝑦 𝑑𝑖𝑠𝑝𝑒𝑛𝑠𝑒𝑑

*100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑝𝑟𝑒𝑠𝑐𝑟𝑖𝑏𝑒𝑑

• Standard: Optimal level 100%

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 Core drug use indicators

4. Percentage of drugs adequately labeled

• Purpose: To measure the degree to which dispensers record

essential information on the drug packages they dispense
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔 𝑝𝑎𝑐𝑘𝑎𝑔𝑒𝑠 𝑤𝑖𝑡𝑕 𝑝𝑎𝑡𝑖𝑒𝑛𝑡 𝑛𝑎𝑚𝑒,𝑑𝑟𝑢𝑔 𝑛𝑎𝑚𝑒 𝑎𝑛𝑑 𝑑𝑜𝑠𝑎𝑔𝑒 𝑟𝑒𝑔𝑖𝑚𝑒𝑛
*100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔 𝑝𝑎𝑐𝑘𝑎𝑔𝑒𝑠 𝑑𝑖𝑠𝑝𝑒𝑛𝑠𝑒𝑑

• Standard: Optimal level 100%

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 Core drug use indicators

5. Patients’ knowledge of correct dose

• Purpose: To measure the effectiveness of the information
given to patients on the dosage schedule of the drugs they
receive

𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑎𝑡𝑖𝑒𝑛𝑡𝑠 𝑤𝑕𝑜 𝑐𝑎𝑛 𝑎𝑑𝑒𝑞𝑢𝑎𝑡𝑒𝑙𝑦 𝑟𝑒𝑝𝑜𝑟𝑡 𝑡𝑕𝑒 𝑑𝑜𝑠𝑎𝑔𝑒 𝑠𝑐𝑕𝑒𝑑𝑢𝑙𝑒
*100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝒑𝒂𝒕𝒊𝒆𝒏𝒕𝒔 𝑖𝑛𝑡𝑒𝑟𝑣𝑖𝑒𝑤𝑑

• Standard: Optimal level 100%

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 Core drug use indicators
C. Health facility indicators

1. Availability of copy of EDL, formulary or STG

Purpose: To indicate the extent to which copies of the
national EDL, formulary/STG available
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑕𝑒𝑎𝑙𝑡𝑕 𝑓𝑎𝑐𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑕𝑎𝑣𝑖𝑛𝑔 𝑡𝑕𝑒 𝑐𝑜𝑝𝑦 𝑜𝑓𝐸𝐷𝐿,𝑓𝑜𝑟𝑚𝑢𝑙𝑎𝑟𝑦 𝑜𝑟 𝑆𝑇𝐺
∗100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑓𝑎𝑐𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑠𝑢𝑟𝑣𝑒𝑦𝑒𝑑

 Standard: Optimal level 100%

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 Core drug use indicators

2. Availability of key drugs

• Purpose: To measure the availability of key drugs at health
facilities for the treatment of some common health
problems

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑘𝑒𝑦 𝑑𝑟𝑢𝑔𝑠 𝑖𝑛 𝑡𝑕𝑒 𝑠𝑡𝑜𝑐𝑘

*100
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑟𝑢𝑔𝑠 𝑖𝑛 𝑡𝑕𝑒 𝑐𝑕𝑒𝑐𝑘𝑙𝑖𝑠𝑡

 Standard: Optimal level 100%

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 Supplementary drug use indicator
• % of patients treated without medicines

• Average medicine costs per encounter

• % of medicine cost spent on antibiotics

• % of medicine cost spent on injections

• % of prescriptions in accordance with STG

• % of patients satisfied with care provided

• % of facilities with access to impartial drug

information
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 Data collection for monitoring and evaluation

• Data for Monitoring

– The routine collection and analysis of measurements or

indicators to determine ongoing progress toward
objectives.

– If the logistics management information or supervision

system is designed correctly, you should easily obtain
the information you need.

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• Data for Evaluation
– A comparison of objectives with accomplishments and
how the objectives were achieved

– Involves a more formal and structured system

assessment and requires extensive planning

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 The end

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