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The 5th Global Health Supply Chain Summit
Risks in Health Supply Chains: Simple Solutions
Prof. Yehuda Bassok
University of Southern California
And
Center for Health Education and Research (CHEaR)
[SPEAKERS NAMES]
November
14 -16, 2012[DATE]
Kigali, Rwanda
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
Example of Demand Risk
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
Thank You