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SOLUTIONS FOR CHILDREN UNICEF IN THE WORLD TODAY. standard 1 UNICEF&SD. Agenda. Procurement statistics Major commodity areas Drug Procurement Supply Distribution Case Study. SUPPLY DIVISION AT A GLANCE 2002. Total procurement: $541 million Offshore procurement:$353 million

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agenda
Agenda
  • Procurement statistics
  • Major commodity areas
  • Drug Procurement
  • Supply
  • Distribution
  • Case Study
supply division at a glance 2002
SUPPLY DIVISION AT A GLANCE 2002

Total procurement: $541 million

  • Offshore procurement:$353 million
  • Regional and local procurement: $188 million
  • Donations in Kind: $9 million
summary
Summary
  • An effective procurement process should:
    • Procure right drugs in right quantities
    • Obtain lowest possible purchase price
    • Recognized standards of quality
    • Timely delivery
    • Supplier reliability
drug procurement
Drug procurement

Procurement of pharmaceuticals differ from procurement of other commodities because the effect of receiving and utilizing a substandard/poor quality product can have severe consequences in terms of damage to the consumers health or treatment failure, because the product does not have the intended effect. Therefore a number of precautions need to be taken when buying pharmaceutical products and these should be followed in a systematic manner.

slide9

Strategic objectives for drugprocurement

  • Procure the most cost-effective drugs in the right quantities
  • Select reliable suppliers complying to GMP
  • Ensure high quality products
  • Ensure timely delivery
  • Achieve the lowest possible total cost
principles of good pharmaceutical procurement
Principles of Good Pharmaceutical Procurement
  • Procurement by generic name;
  • Limitation of procurement to the EML/National List;
  • Procurement in bulk;
  • Formal supplier qualification/monitoring;
  • Competitive procurement;
  • Sole-source commitment;
principles of good pharmaceutical procurement11
Principles of Good Pharmaceutical Procurement
  • Order quantities based on reliable estimate of actual need;
  • Reliable payment and good financial management;
  • Transparency and written procedure;
  • Separation of keys functions;
  • Product quality assurance programme;
sourcing
Sourcing
  • Through direct contacts
  • Special catalogues of manufacturers in a specific area, eg. drugs
  • Through trade missions in respective embassies
  • Exhibitions, fairs
  • UN Business Seminars
  • Internet

Important to realize: Regarding sales and marketing efforts, all UN organizations should be treated as individual companies, it is not sufficient to deal with only one of them and expect the information to be replicated automatically to everyone in the UN family.

slide13

Drug procurement scenarios

Who are the potential suppliers?

  • Pharmaceutical manufacturers
  • Pharmaceutical wholesalers
  • International drug supply agencies

Where are they situated?

  • Well-regulated countries
  • Less well-regulated countries
select reliable suppliers of high quality products
Select reliable suppliers of high quality products
  • What is the advantage of pre-qualifying suppliers?
    • Elimination of sub-standard suppliers
    • More efficient adjudication process
  • What should be considered in a pre-qualification?
    • Production standard (GMP)
    • Business viability
select reliable suppliers of high quality products15
Select reliable suppliers of high quality products

Who and how to pre-qualify?

  • Ask for references
  • Inspection of manufacturers
supplier registration process

Step 3

Supplier Profile Form

Step 2

Step 1

Supplier interested

UNICEF interested

Supplier Registration Process

Company Data

Financial Data

References

supplier evaluation
Supplier Evaluation
  • Suppliers are evaluated on their financial soundness, capacity, quality performance, technical capability, ability to service their products in the destination countries.
  • Preference is to purchase directly from manufacturers and not from dealers.
slide18

Request information about manufacturer

  • What is the link between the supplier and the product?

Marketing authorisation holder? Manufacturer? Distributor?

  • What is the regulatory situation in the country of manufacture?

Product currently registered and marketed? Registered but not marketed? Product registered for export only? No registration?

  • Regulatory situation in other countries?EU/USA
  • Request certificates:

Certificate of Pharmaceutical Product according to WHO Certification Scheme

Statement of Licensing status of Pharmaceutical Product according to WHO certification Scheme

  • Marketing license
  • Export license
slide19

First things to consider

  • Large/small quantities required?
  • Acceptable lead time?
  • National procurement capacity?
  • Financial resources available?
slide20

Procure the most cost-effective drugs in the right quantities

Questions to ask:

  • Drug selection -

Is there a national list of essential drugs?

Are drugs requested on this list?

If not, why are drugs requested - relevance to the pattern of prevalent diseases?

slide21

Procure the most cost-effective drugs in the right quantities, cont.

  • Quantification of drug requirements -

How many patients can be treated with requested quantities?

Does this tally with morbidity data or past drug consumption figures?

Can the quantity be used before expiry?

procure the most cost effective drugs in the right quantities cont
Procure the most cost-effective drugs in the right quantities, cont.

Questions to be asked:

  • Product specification - Is it a generic or a proprietary drug?

Patent situation?

Is drug registration requested?

If it is a generics drug - what quality of product are we aiming at supplying? Consider finished product specifications and quality of active ingredient, product stability, therapeutic equivalence.

Product specifications must be clear and detailed in the ITB

slide23

Example of contents of product specification

  • Name (INN)
  • Dosage form
  • Strength per dosage unit
  • Route of administration
  • Number of units/volume/weight per container
  • Type of container, in certain cases specification
  • Acceptable pharmacopoeias references/ standards

Request the following information

  • Finished product specification
  • Active pharmaceutical ingredient specification (DMF/CEP)
  • Stability: what testing has the product been subject to?
  • Label and insert information
  • Therapeutic equivalence
procurement cycle
Procurement Cycle

Determine

Quantities

Needed

Review

Drug

Selection

Reconcile

Needs and

Funds

Collect

Consumption

Data

Choose

Procurement

Method

Distribute

Drugs

Locate and

Select

Suppliers

Make

Payment

Specify

Contract

Terms

Receive

and

Check drugs

Monitor

Order

Status

procurement methods
Procurement Methods
  • Open tender
  • Restricted tender
  • Competitive negotiation
  • Direct procurement
special procurement types
Special procurement types
  • Direct Ordering
  • “Contract set up by SD allowing Country Offices to buy internationally”
  • Long Term Agreement
  • “Not binding frame agreement setting the terms and limits for contracts”
  • Typically 24 month agreements +
organization of the national procurement process
Organization of the national procurement process

Who will prepare invitation to bid (ITB) and handle the commercial aspects

Who decide on standards for product and production, quantities etc.

Who will adjudicate the bid

and take care of quality

assurance

Who will take care of delivery

and distribution and monitor

supplier performance

organization of the national procurement process cont
Organization of the national procurement process, cont.
  • Clear definition (and division) of responsibilities, authorities, procedures for
    • procuring
    • selection of drugs
    • pre-selection of suppliers
    • quantification of needs
    • standard-setting
    • technical adjudication
    • quality assurance
    • distribution

to ensure transparent process

supply division organisation

Contracting

Technical

Quality Assurance

Supply DivisionOrganisation

Bidding

RFQ/RFP

Contracts

- DO/LTA

Sourcing

Technical

specifications

Web catalogue

Supplier registration

Supplier evaluation

Inspections

invitation to bid

Bids or Requests for Proposals are adjudicated based on total cost, which includes:

INVITATION TO BID

Depending on the circumstances, qualified suppliers are either invited to bid or to submit a quotation.

  • Product - quality
  • Technical compliance
  • Cost of product
  • Cost of freight and delivery
  • Timeliness of delivery

Bid Opening. Bids are opened publicly and suppliers are welcome to attend.

VALUE FOR MONEY

Successful bidders are then notified.

Quality assessment of supplier’s capability takes place before final award.

slide31

Monitor and maintain quality

  • Pre- and post shipment inspection
  • Analytical drug testing
  • Appropriate storage, distribution, dispensing
  • Reporting system for complaints
supply
Supply

Drug supply systems need to achieve three main objectives:

  • a high level of service, as measured by low rates of shortages and stockouts;
  • efficiency, as measured by having low total costs for a given level of service;
  • quality,in terms of delivering drugs of satisfactory quality.
market mechanisms in public drug supply
Market mechanisms in public drug supply
  • Can market mechanisms help to ensure access to essential drugs in the public sector? Market mechanisms have been used to strengthen public drug supply systems. These mechanisms include:
    • autonomous drug supply agencies;
    • direct delivery contracts;
    • primary distributor systems.
organization of the supply system
Organization of the supply system
  • At least five different methods exist for supplying drugs to governmental and nongovernmental health services:
    • Central medical stores (CMS): This is a conventional drug supply system, in which drugs are procured and distributed by a centralized government unit. It is possible to decentralize this system by having medical stores at provincial or state level.
    • Autonomous supply agency: This is an alternative to the CMS system in that drug supply is managed by an autonomous or semi-autonomous drug supply agency.
organization of the supply system cont d
Organization of the supply system (cont’d)
  • Direct delivery system: This is a decentralized, non-CMS approach in which drugs are delivered directly by suppliers to districts and major facilities. The government drug procurement office tenders to establish the supplier and price for each item, but the government does not store or distribute the drugs.
  • Primary distributor (“prime vendor”) system: Another non-CMS system, in which the government drug procurement office establishes a contract with asingle primary distributor ("prime vendor"), as well as separate contracts with drug suppliers. The prime vendor is contracted to manage drug distribution by receiving from suppliers, storing and distributing all drugs to districts and major facilities.
organization of the supply system cont d36
Organization of the supply system (cont’d)
  • Fully private supply: In some countries, drugs are provided by private pharmacies in or near government health facilities.
slide38

Where do the Potential Bottlenecks occur along the Supply Chain?

The UNICEF Supply Chain can be

as short as one month, as long as one year

(excluding emergency responses)

Incomplete specifications

Rushed orders

Unrealistic TADs

What does the

programme want?

Long order processing

time

Order changes

PPO/PPA

SRQ

PO/DEL

SUPPLIER

Missed consolidations

Synchronising the arrival

of components

WAREHOUSING

DISTRIBUTING

CLEARING

RECEIVING

SHIPPING

Lack of Distribution Plan

Appropriate structure

Clear responsibility & procedures

Inventory system & reporting

Shipping status

Shipping docs

-Early clearance process

-Control

Supply evaluation

Inventory/History

RECEIVED

BY FINAL

BENEFICIARY

distribution cycle
Distribution Cycle

Port

Clearing

Receipt

and

Inspection

Drug

Procurement

Inventory

Control

Consumption

Reporting

Storage

Dispensing

to

Patients

Requisition

of

Supplies

Delivery

distribution systems
Distribution systems
  • Public distribution includes wholesale distribution and retail dispensing by government-managed drug supply and health services as well as distribution through state-owned enterprises (state corporations).
  • Private distribution includes private for-profit wholesalers and retailers, and not-for-profit essential drugs supply services.
distribution
Distribution
  • Dispensing clinicians
    • Doctors, clinical officers and nurses in private practice both prescribe and dispense drugs to their patients in many parts of the world
    • Clinicians dispense to their patients partly as a service, but also because they have learned that patients are often much more willing to pay for drugs than simply for consultation
    • In some countries, general practitioners derive 60% of their income from the drugs they dispense. This creates an obvious and measurable incentive to overprescribe
warehouse logistics center

UNICEF

Supply Division

Warehouse & Logistics Center

Inventory Management/

Purchasing

Packing

Production

Systems/

Process

Support

Delivery

Processing

Receiving

Shipping

40 Staff Members

slide43

Customer Service Center

Picking/Packing/Shipping

Technical Center

Material Master

Maintenance

Contracting Center

Finance

Purchase Orders

Issue of Purchase Req.

Cycle Counting

Settlement of Kits Production

Goods Receipts /

Stock Placement into WH

Sales Orders/Deliveries

All Centers

Goods receipt

Goods Issue of stock

Warehouse & Logistics Center

Inspection of shipments

Procedures Management

Quality Assurance Center

warehouse processing

UNICEF

Supply Division

Warehouse Processing

Purchase

order

-----------------

MRP

Delivery Creation

Warehouse

G/R

Picking

Sales Order Creation

Order processing time: 65 days

2001 target: 45 days

Booking of

Transportation

Printing & sending

shipping docs

Issuing goods

Packing

unicef warehouse
UNICEF Warehouse

Non-MedicalArea

Medical Area

GR area

Haz.Mat. Area

Bulk Area

Locked Area

Production

GI area

consignment stock unhcr ifrc

UNICEF

Plant 1100

Consignment Stock (UNHCR / IFRC)

UNHCR

UNHCR

IFRC

IFRC

WHO

Storage of technical files and documents

group discussion
Group discussion

You receive a request from the Ministry of Health for purchase of drugs for the national malaria and HIV/AIDS control programmes. You are given a list of 100 drugs requested.

  • What do you do with this list?
  • How do you decide what to purchase and where?
  • How do you ensure that the drugs will imported and distributed smoothly?