Session 2. SCM in Primary healthcare,Quantification & forecasting & quality assurance

1. Session: II -Strengthening supply chain mechanism (SCM) across primary healthcare

2. What is Primary Health Care (PHC) • Primary health care (PHC) addresses the majority of a person’s health needs throughout their lifetime. This includes physical, mental and social well-being and it is people-centred rather than disease-centred. • PHC is a whole-of-society approach that includes health promotion, disease prevention, treatment, rehabilitation and palliative care. • A primary health care approach includes three components: • meeting people’s health needs throughout their lives • addressing the broader determinants of health through multisectoral policy and action; and • Empowering individuals, families and communities to take charge of their own health - World Health Organization

3. Key Definitions Supply Chain Management- WHO – “A strong health supply chain supported by an effective logistic management system ensures that the right quality product, in the right quantities, and in the right condition is delivered to the right place, at the right time, for a reasonable cost. • Supply chain management is the active management of the flow of goods and services from the point of origin to the point of consumption • The objective of supply chain management is to ensure uninterrupted supply of medicines, diagnostics and other essential healthcare commodities at the Health and Wellness Centre (HWC)

4. Basics Of SCM – The Six R’s An effective supply chain management process seeks to ensure the availability of: the right medicines/health products in the right quantities at the right place at the right time at reasonable prices, and at recognized standards of quality

5. The Supply Chain System Source: USAID Deliver Project

6. Key Definitions for SCM used in NQAS

9. Key Term – Lead Time Lead time is the time interval between when new stock is ordered and when it is received and available for use Lead times should be determined for each level in the pipeline

10. Lead Time, an Example What is the lead time if— • Clinic sends order to District. • District takes 1 week to review and approve. • Warehouse then takes 2 weeks to pick and pack the order and approve shipment. • It takes 2.5 days for the delivery truck to arrive at the clinic. • It takes 3 days for the clinic nurse to receive and put away = 1 week = 2 weeks = .5 week = .5 week ONE MONTH!

11. Quantification & Forecasting of Essential Drugs

12. Quantification (Forecasting & Indenting) Quantification • Estimating the quantity of the public health commodities required for a specific health program (or service) • Determining when the public health commodities shall be delivered to ensure an uninterrupted supply for the program. • Process of quantification consist of two components- Forecasting and Indenting Forecasting Indenting Estimating the quantity of each public health commodity that may be consumed/ required during a particular time period Requisition of public health commodities from DWH as per the requirement of a particular health facility.

13. Why is Quantification so important? • Good quantification contributes to saving lives, reducing morbidity and saving money. • Medicines are often more than 40% of the healthcare budget – the largest single component. • No Medicines – No Program !

14. Forecasting Definition • Commodity forecasting is estimating the quantities of commodities that could be used by a program for a specific period of time in the future. Courtesy: SCMS

15. Forecasting Forecasting is the process of estimating how much of the selected products the HWC will need to reach the population to be served. Forecasting for EDLs is done mainly using two methods: Consumption Method 2. Morbidity Method 3. Service Data • Morbidity data include total population, population growth rates, incidence and prevalence of specific disease/ health conditions that may be available by population group or through surveillance or research study group • Consumption data are historical data on the actual quantities of health commodities that have been dispensed to patients or consumed at health facilities within a specific period of time • Services data are historical program-level or facility-level data on the number of patient visits to facilities, the number of services provided, number of disease episodes or health condition treated, or number of patients who receive a specific service or treatment within a given period. 01 03 02 Steps of Forecasting Process

16. I) Consumption Method The consumption method uses records of past consumption of individual medicines (adjusted for any stock-outs and projected changes in medicine use) to extrapolate future need Example Last year we dispensed 1,250 bottles, had no stock outs, and this year we expect to dispense 5% more, so:1,250 * 1.05 = 1,313 bottles required

17. II) Morbidity Method The morbidity method estimates the need for specific medicines based on: In effect, the estimated number of patients multiplied by the average amount of medicine needed per patient

18. Morbidity Method Example E.g. The population of ‘Dania’ State was 246,864,000 National TB incidence of Sputum Smear (ss) positive cases in ‘Dania’ are: 183 per 100,000 population Detection/Treatment level of ss+ TB: 85% So: 246,864,000* 183/100,000 * 85% = 383,996 patient requiring treatment

19. III) Service Level Data • Service-level projection of budget requirements uses the average medicine cost per attendance or bed-day in different types of health facilities in a standard system to project medicine costs in similar types of facilities in the target system • This method does not estimate quantities of individual medicines, but is exceedingly useful for providing a ‘reality check’ on cost calculations made by the other methods and really should be made on all major quantifications

20. Service Level Example • E.g. The average per patient-year medicine cost for anti Tb in ‘Dania’ is around INR 102 • In 2011, 432,285 there were patient on treatment • So medicine cost should be around INR 102 * 432,285 = INR 44,093,070 • If the quantification calculation budget using other methods (consumption/morbidity) is very different from this figure it should raise queries • It is quick and easy and provides a very useful reality check

21. Key Decisions – Who is in Charge Who will undertake the process? • Generally a team of specialists is required, physician, pharmacists, CHOs, finance person and PSCM staff • Good Governance requirements – an independent observer to the quantification process can contribute to ensuring Good Governance provisions

22. Indenting Submission of indent Determining Quantity of Indent • CHO submits the approved indent (with sign and seal) to PHC/CHC via e-niramaya Or via paper indent or through email/excel. Components of Indenting • Rounding off the quantity to order according to the packaging units. • Preparation of commodity wise indent for final submission and sign the indent form with all necessary details

23. Forecasting-Procedure For a Public Health Facility to forecast the quantity of public health commodities required for a particular month shall be calculated by using maximum minimum inventory control system Adjusted AMC (CA) Stock in Hand Quantity Order Buffer Stock Pipeline Stock • Average Monthly Consumption(AMC)- Average taken for last six months consumption • Safety/ Buffer Stock (SS) - Additional stock to cope up with variability in consumption pattern and lead time • Adjusted Average Monthly Consumption(CA)- Average monthly consumption, adjusted for stock outs • Stock in Hand(SH) - Amount of stock available, ready for issue • Pipeline stock(PS) - Pipeline inventory refers to stock that is currently in transit

24. Calculate the Quantity to Order For example, at the ‘Dania’ health center the AMC is 100 tabs, the following delivery is expected in three months, buffer stock is set at one month, the lead time is two weeks, and the stock on hand is 130: Average Monthly Stock required for 3 months: 100 x 3 = 300 tabs Buffer stock: 100 x 1 = 100 tabs Quantity used during lead time: 100 x 0.5 = 50 tabs Stock on hand: 130 tabs Quantity to order: 300 + 100 + 50 –130 = 320 tabs • The quantity to order is calculated as follows: • Determine the quantity needed for rotation stock • Determine the quantity needed for buffer stock • This is the AMC multiplied by the number of months of buffer stock required. • Add the quantity used during the lead time • That is the time from placing the order until it is delivered. Multiply the AMC with the lead time • expressed in number of months. • Subtract the stock on hand at the time of placing the order This is the AMC multiplied with the number of months until the following scheduled delivery. Example

25. KEY QUESTION When to place an order?

26. Placing an Order Another system is to place orders when a pre-defined stock level is reached. When that level is reached, it triggers the placing of an order. This is the “reorder level”, “reorder point”, because the stock on hand should not fall below this level without an order being placed. The most common system is to place orders at a set time, for example the first week of each month or each quarter. In this case, orders are calculated according to the stock on hand at the time, as illustrated in the example just shown. At a Pre-defined Level Set Time

27. INVENTORY MANAGEMENT

28. Inventory Management • Inventory Management Inventory Management is the scientific process by which an organization is supplied with the goods and services which needs to achieve its objectives at optimum cost. • Inventory control is the process of deciding as to when, what and how much of each item is to be kept in stock, minimizing the ineffective stock and optimizing the various causes associated with the inventories. Objectives of inventory management: 1. Utilize the available resources most efficiently and effectively. 2. Maintain availabilities of materials whenever and wherever required in optimal quantity 3. Minimize the in-effective stock 4. Optimize the various cost associated with the inventories An efficient inventory control system can: 1. Reduce costs 2. Improve service delivery 3. Increase return on investment 4. Improve liquidity 5. Improve service conditions 6. Increase efficiency of man and machine 7. And hence improve patients satisfaction

29. Purpose Of Inventory Control Determine how much stock should be ordered/issued 1 Determine when stock should be ordered/issued 2 Maintain an appropriate stock level of all products, avoiding shortages and oversupply. 3

30. Assessing Stock Status Why do we assess stock status? We assess stock status because we need to know how much stock we have in order to determine how long it will last so that we can be sure we have enough on hand to serve clients and so that we don’t have stock outs!

31. Assessing Stock Status Formula To assess stock status, we use a simple formula: STOCK ON HAND (SOH) Amount we have (NOW) How long it will last (IN NUMBER OF MONTHS) = Amount we use (EACH MONTH) MONTHS OF STOCK (MOS) ON HAND AVERAGE MONTHLY CONSUMPTION (AMC) (e.g. 3 months)

32. Assessing Stock Status Formula – Data Sources

33. Assessing Stock Status, an Example If you have 50 stripes of Paracetamol , how long will it last? We don’t know because we don’t know how much is being consumed each month! If I tell you that last month you issued an average of 250 tablets can you tell me how long it will last? Yes! Use the formula and tell us how long the stock will last! 1 strip of Paracetemol contains 10 tabs. So 50 strips will contain-[ 50*10=500] So avg consumption-[ 500 / 250] = 250 tabs i.e.

34. How do we get “stock on hand”? Conduct a physical inventory! A physical inventory is the process of: Counting by hand the total number of units of each commodity in your store or health facility at any given time; and Comparing actual stock on hand for each commodity with the amount recorded on the stock card/ stock register.

35. How do we calculate “average monthly consumption”? Formula for Calculating Averages: By calculating an average of how much is being consumed! • Averages help us account for unexpected highs and lows: = Add consumption for a selected # of months # of selected months Average • Example! If we dispensed the following amounts of Paracetamol mg Tabs., what is our average consumption rate? • Cycles of Paracetamol 500 mg Tab • Dispensed: • 1250 in April • 1261 in May • 1252 in June 1,254.33 or 1,255 tabs Round up to the nearest whole number (1,250 + 1,261 + 1,252) = 3

36. Another example! Formula for Calculating Averages: = Add consumption for a selected # of months # of selected months Average • If we dispensed the following amounts of IFA tab, what is our average consumption rate? • IFA tabs dispensed: • 1000 in Jan • 950 in Feb • 600 in Mar • 875 in Apr • 750 in May • 910 in June (1000 + 950 + 600 + 875 + 750 + 910) 847.5 tabs or 848 tabs (Round up to the nearest whole number) = 6

37. Methods available for managing inventory • ABC analyses • VED analyses - Vital, Essential and Desirable • FSN analyses - Fast moving, Slow moving, Non moving • Min- Max Inventory Control System

38. ABC Analysis • A-B-C analysis is a basic analytical management tool. It is also known as “Always Better Control.” It is based on value of consumption of item per year. A – (Highest annual usage) around 10 – 20% of the drugs would cost for 70 - 80 % of the resources. B - (Moderate annual usage) 10 - 20 % of the drugs generally consume 15 - 20% of the resources. C – (Low annual usage) remaining 60 - 80% of drugs would consume just about 5 - 10% of the resources. • Steps to perform ABC Analysis: • 1. List all items purchased or consumed and enter the unit cost. • 2. Enter consumption quantities (over a defined period of time e.g. one year). • 3. Calculate the value of consumption. • 4. Calculate the percentage of total value represented by each item. • 5. Rearrange the list, rant items in descending order by value starting at the top with higher value. • 6. Calculate the cumulative percentage of the total for each item beginning with the first item at the top; add the percentage to that of the item below it in the list. • 7. Choose cut-off points or boundaries for A, B, and C drugs

39. VED Analysis • “V” Items are vital drugs, without alternatives, forming about 10% of the total drugs whose absence cannot be tolerated. Every attempt is to be made, at whatever cost, to avoid the Out-Of-Stock position of these drugs. Eg: Adrenaline, tetanus toxoid, insulin injection etc. • “E” Items are the Essential items that constitute 40% of the items and their absence can be tolerated for the short stretch of time. They could be made available in a day or two or the alternative medicine can be made available. Eg. antibiotics, ranitidine, chloroquine, phenytoin etc. • “D” items are the desirable items which are the remaining 50% of the drugs and their non-availability can be tolerated for longer period. They may be required for chronic and less serious patients. Eg. Vitamin E capsules, sun screen lotions

40. F S N Analysis • In this analysis the quantity and rate of consumption is studied and categorized accordingly :- • F - Items are fast moving items that have large consumption and managers have to give due attention to fast-moving items. Keeping F items closer to dispatch/dispensing area where it should be easily accessible. • S - Item are slow moving item where pharmacists should follow their drug expiry date tracking chart closely and find possible solutions to minimize the risk of wastage due to overstocking • N - Item are non moving items- N items required low stock and low control, they could be either transferred to other health facilities where it can be utilized or disposed of early

41. Quality Assurance & concepts for Storing, receiving & distribution of drugs

42. Why Inspect ? • Patient Risk Physiological Implications • Chemical and microbiological Implications • Compendial Requirements • Regulatory Requirements • Process Knowledge and Continuous Process Improvements What to Inspect ? To detect and eliminate defective units from the lot like- Extraneous particulate matter in solution • Product precipitates • Sealing/Crimping defects • Cracks/ non-integral container closure • External Packaging • Volume variations • Regulatory requirement • Details of API, Manufacturer, Batch Number, Manufactured and Expiry Dates • Whether closures of any internal containers is intact or airtight • Texture, shape, dimension, colour, form is homogenous and free from lumps

43. Checking Medicine Quality

44. Detecting Quality Problems It is very important to make sure that the medicines are in good condition before they are distributed, or are dispensed to users. Quality Checkpoints • Medicine quality should be checked at several points:  • When they arrive at the storage or service facility • Immediately before they are dispensed to the user • If they have been in storage for more than six months or if the storage conditions are poor, for example, high heat or humidity • When conducting a physical inventory • When the medicines are close to their expiration date • If the medicines show signs of damage

45. DISTRIBUTION, STORAGE, RECEIVING STOCK

46. Storage Space Estimation Factors to Consider for Calculating at a Net Storage Space Available for your Warehouse: • Collect data related to products (size, volume, weight) to be stored in the warehouse • Define for each SKU, depending on the level of packaging used for issuing or receiving – Primary, Secondary & Tertiary • Keep margins for fluctuations in demand and supply of an individual products through buffers stock levels to be maintained • The thumb rule is only half or two third of the gross shelving capacity (shelf, drawer, shelving bay, pallet racking bay etc) can be occupied by products with utilisation factor between 0.5 and 0.65. • In fixed method each SKU is always stored at a specific place. In fluid storage system, any SKU is assigned to any free location. • Most bulk supplies are to be stored on pallets and loose items on shelves. A fixed location system is used for items stored on shelves while a fluid location system is used for pallets stored on pallet racks. • Do not pile the carton beyond its compressibility strength (usually 8 ft but must refer to the manufacturer’s instructions)

47. Art of De-junking!

48. Distribution

49. What is the ‘distribution cycle’? • A good distribution cycle helps maintain a healthy supply system; i.e. avoid stock outs, expiries, or maintain adequate products in inventory, adequate storage space for shipments in pipeline etc. Receipt and Inspection Receipt and Inspection The medicines are received by the organisation that ordered the goods or an agent acting on their behalf, and they are expected to ensure that they meet the requirements of the order. Port Clearing (for Imported Products) Taking deliveries of medicines across country boarders. This involved exporting the products from one country and importing them into another. Government customs agents are usually involved. Shipping ports and airports are the most common places for ‘clearing’. Care should be taken to ensure temperature sensitive medicines are dealt with quickly. Delivery With concern for the storage and security of the medicines involved, they are transported to their required destination using a range of transport modes (e.g., truck, motorbike, pushbike, walking and boat.) Requisition of Supplies Using a designated ordering system, medicines are either requested (Pull ordering system), or sent directly (Push ordering system) to secondary warehouses or health facilities. Storage Medicines are stored in national, regional and district warehouses or directly at health facilities, depending on the medicines ordered. Medicines are usually stored in one of three temperature regulated environments: below 25 degrees Celsius (e.g., paracetamol, aspirin), +2 to +8 degrees Celsius (e.g., insulin, vaccines) and specified freezing temperature (e.g., Ebola vaccine). Inventory control Newly arrived medicines are received into the warehouse or the order is immediately broken down and sent to the required facilities. The goods are carefully monitored to ensure their quality and safety. Dispensing to Patients Health care workers provide the appropriate medicine to patients, consistent with their diagnosis and compliant with physician prescription. Care is given to consider the quantity required, usage and home storage instructions Inventory control Storage Requisition of Supplies Delivery Dispensing to Patients

50. Elements of a distribution system- Storage Receiving / Unloading Checking Order Picking You need to pay special care while storing the pharmaceuticals in a warehouse Inspection Packing Storage Inventory Control Loading / Shipping Items from storage are picked, based on the pick list and confirmed inventory control department; physical inventories are also performed Incoming supplies are moved to picking/storage location and confirmed with inventory control department Sample from shipment is drawn and inspection / testing is arranged. Report is sent to inventory control department, materials are count and checked against invoice, any discrepancies are noted. Supplies to/from storage are moved; Information to management on receipts, issues, and stock balances are provided; inventories are reconciled and physical inventories coordinated Outbound carrier is loaded, paperwork completed, and reported to inventory control. Supplier vehicles are unloaded; materials are moved to inspection area Orders are packaged marked and labelled for customers Picked orders are checked for accuracy of item, quantity, and condition; and to ensure compliance, compare quantity, quality, labelling, and address with customer’s order.