CLICK TO ADD TITLE The 5th Global Health Supply Chain Summit November 14 -16, 2012Kigali, Rwanda Risks in Health Supply Chains: Simple Solutions Prof. Yehuda Bassok University of Southern California And Center for Health Education and Research (CHEaR) [SPEAKERS NAMES] [DATE]
What is CHEaR? A group of people in academia that is dedicated to provide training in Health Care Supply Chains.
What is risk? • Risk • The negative effects of uncertainty on objectives. • In this definition, uncertainties include events (which may or not happen). Some times we know the probability of these events • Uncertainties caused by ambiguity or a lack of information. • There are two ingredients that are needed for risk to exist: • Uncertainty about the potential outcomes. • The outcomes have to matter in terms of providing utility. • Example: Demand Risk • Demand for a new drug • Events: 1. The demand will be 1M tablets per year 2. The demand will be 0.5M tablets per year 3. The demand will be 0.25M tab per ear
What is risk (cont.) • How many units should be ordered? • Notice that whatever we do one of two things may happen: • Shortages • Excess inventory • Demand risk affects not only the countries • It also affects the pharmaceutical, who might be reluctant to develop and produce drugs for LMIC
Types of Risk • Example: Supply Risk • An order for 1m units is placed but only 0.5m units are delivered. • Goods are not of the quality desired • How many units should be ordered • Perhaps 2 million units • Example: Funding Risk • Donors promise to provide the funding to purchase a certain quantity of a drug and they renege on their promise.
What are the effects of risks? • Who suffers from risks? • The patients • The donors • The countries • The pharmaceuticals
What can be done? • Risk is part of life. • There are methods to reduce risk. • There are methods to reduce the outcome of risk. • Reduce risk • Better data to better forecast the demand • What is a good forecast? • Partial shipments reduce wastage of drugs • Example: Country makes a commitment to an annual purchase of a drug. • Drug is delivered every three month for a total of the annual order. • What are the advantages of such an approach? • Expiration date is delayed and wastage is eliminated
What can be done? • Make long term commitments with some flexibility • Example:
Safety stock • How to calculate safety stock? • Safety time • Order early enough