CLICK TO ADD TITLE. The 6th Global Health Supply Chain Summit November 18 -20, 2013 Addis Ababa, Ethiopia. Performance Based Financing for Supply Chain Performance Improvements Cary Spisak – USAID|DELIVER PROJECT. [SPEAKERS NAMES]. [DATE].
The 6th Global Health Supply Chain Summit
November 18 -20, 2013Addis Ababa, Ethiopia
Performance Based Financing for Supply Chain Performance Improvements
Cary Spisak – USAID|DELIVER PROJECT
In the supply chain, PBF can encourage change amongst partners and within organizations
A new approach to applying technical assistance strategies
Increase investment in supply chain, infrastructure, systems, and human resources
Improve collaboration between development partners and supply chain partners
Use rewards to motivate staff/ beneficiary to reach targets and goals
Collaboratively establish performance benchmarks
Improve collaboration and cooperation within and between departments
Improve staff motivation (anticipatory) and morale (post-receipt)
Performance Based Financing (or Incentive) programs aim to provide a cash or non-monetary benefit against measurable actions or achievement of a defined performance target
Agree on the structure of the intervention
Ensure a clear understanding by all parties of the requirements of the intervention, and confirm support of key stakeholders
Identify the funding mechanism, its requirements, the amount of funds available, and the timing
Ensure an appropriate mechanism was available to convey the incentive component of the intervention
Confirm the flow of funds and comply with both USG and local regulations
Ensure payout could be directed to the beneficiary (CMAM) according to the funding mechanism
Prior to initiating the design, a number of pre-conditions were necessary. Extensive discussions took place to ensure alignment of all partners on key aspects of the intervention
Hold collaborative workshop with CMAM and development partners
Validate and finalize indicators, and collect baseline data
Develop reference materials for CMAM and USAID
Finalize and approve funding mechanism and its requirements
The PBF intervention facilitated engaging a large supply chain organization where change had historically been difficult to encourage broadly. Close partnering on each step reinforced commitment and feasibility
Recognizing the challenges that existed both in planning and execution of the intervention helped identify potential risks and success factors
Lack of trust within the organization reinforced functional silos rather than supporting performance of the overall organization
Early engagement of partners on both sides; ongoing commitment from CMAM and USAID
Long time line led to fatigue and at times, uncertainty of the value of continued effort toward the intervention
Effective communication of the intervention to managers and lower level staff
Ensuring flow of funds to CMAM without diversion
Timely validation of results and transfer of funds to CMAM
Necessary specificity of the agreement, the indicators, and the data sources
Use of funds by CMAM may affect staff motivation, particularly given the multiple payout periods
What are the advantages to such an approach?
What other opportunities in the supply chain exist to apply such an approach?
What are some general and contextual considerations when applying such an approach?
Is this approach sustainable – Will performance drop if the incentive is discontinued? Can savings/efficiencies be used to self-fund incentives?
What are the possible perverse incentives and can they be avoided or minimized?