Supply chain transformation is on the tip of the tongues of many people working in international development and health systems strengthening, but what does it mean and how can it bring about excellence and performance in the public health sector in developing economies? Transformation projects involve a complete shift in ways of doing business, challenging the status quo and calling for organisations and sectors to think and act differently. Transformation is bigger than business process re-engineering and by no means a quick fix – it’s a long journey where benefits are achieved incrementally along the way.
Chemical company Du Pont is one of many major public companies – including GSK, Coca Cola and Proctor and Gamble – that have used supply chain transformation to stay at the top of their markets, while learning lessons and setting precedents that apply across both the private and public sectors. On its transformation journey, Du Pont identified five key strategic elements that needed to be targeted for successful transformation – customers and markets, metrics and measurement capability, supply chain and enterprise systems, processes and process capability and people development and competency. In targeting these five areas, Du Pont increased free cash flow and sold excess capacity, generating more than $3bn in bottom line benefits. Experience suggests that public health supply chains in developing economies will soon be bombarded with consultancies and donors seeking transformation in the footsteps of the success of the larger corporates.
In sub-Saharan Africa pharmaceutical supply chains that support state-provided health services are mostly in the hands of government controlled entities, which are mandated to ensure pharmaceutical products are available on the frontline. These entities often have difficulty delivering efficient supply chains, by staff whose expertise is not necessarily in delivering high performing supply chains. Their supply chains are typically deficient in their development of the five strategic elements stated above and suffer from limited funding, diverse stakeholder interests, inappropriate management and modestly rewarded staff.
Transformation of these supply chains requires a different mind-set when thinking about how to deliver successful change. Our experience working in sub-Saharan African countries has shown us that public health supply chains in Africa are not short of complexities: one has to balance government bureaucracy, individual donor interests, infrastructure limitations, vested interests and the influences of the wider political economy. Budget limitations feature highly not only for transformation projects but also for commodity procurement – to quote a senior Director in Zambia’s Ministry of Health: “We have a $100 need yet we only have $1.”
Support from donors until recent years has been focused on providing medical commodities to cover the shortfall left by national governments but has fallen short in support to formalise and strengthen national supply chains. Initiatives to transform supply chains have at best been piecemeal and have so far not provided a holistic solution to challenges faced.
Supply chain transformation projects in the public health sector in Africa can be complex ventures that present a need to balance and address competing interests from multiple stakeholders. Current evidence suggests that major corporate transformations take 10 years or more before they fully mature with small short term incremental benefits being realised along the transformation journey. Considering the successes and achievements made by major private sector companies transforming supply chains, it seems logical for one to simply take the solutions that worked in the private sector and replicate them in public health supply chains in Africa.
However, one of major pitfalls faced by successful, competent and experienced private sector practitioners when designing and implementing public health supply chain projects in Africa is the failure to discern the dynamics of the sector’s blurred lines of vested interest, genuine lack of knowledge, fragmented initiatives and lack of follow through on critical issues by staff running the business of government. Failure to recognise and reconcile these competing interests can in no uncertain terms lead to failure of a good change initiative no matter how robust the proposed solutions may be.
For a decade until 2014 Crown Agents worked with Medical Stores Limited (MSL), a Zambian state-owned pharmaceutical distribution company on its transformation journey. By engaging a private company through competitive tender to lead the change, the government of Zambia demonstrated determination and commitment to turn around the country’s pharmaceutical supply chain by first strengthening its national distributor. The gains made during this journey, steadily built confidence in the organisation and saw multiple distribution channels transition into a single nationally led distribution channel. The Board of Directors of MSL recognised that transformation was something that could not be achieved overnight but needed a long-term window of intervention hence successive governments continued to support the transformation project over the 10 years.
It is imperative that agencies entrusted with leading the change and transformation programmes in the public health sector in Africa identify and assimilate the often unrecognised competing forces in order to bring to bear change that contributes to positive health outcomes. There have been calls for greater collaboration between the private and public sector in Africa, these collaborations and solutions need to be applicable and relevant to the specific context and take into account the local political economy and multi-stakeholder interest. The point to take home is that however difficult successful supply chain transformations are to achieve in the private sector, it is much more so in the public sector particularly if you want the change to stick!
Innocent Dube is a Senior Consultant on Crown Agents’ Health Logistics team, with 13 years of international experience in logistics operations, procurement, management consultancy and business development in transitional and advanced economies.
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