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Return on Investment: Strengthening People, Processes, and Technology Improves Supply Chain Performance in Tanzania

Sep 30, 2015

Posted in People, Practices, Products

Ousmane Dia, Senior Immunization Technical Advisor, JSI
Marasi Mwencha, Deputy Country Director, JSI/Tanzania
Chris Wright, Senior Technical Advisor, JSI

Like many of the countries involved with the BID Initiative, Tanzania identified data visibility to stock status, especially from lower levels of the health system, as one of its primary challenges. In 2013, Tanzania launched its eHealth strategy as a way to improve data flow across the various systems in use. The strategy includes a national electronic logistics management information system (an eLMIS) as one of the objectives to ensure adequate quality and quantities of health commodities are always available. Embracing the strategy, Dr. Dafrossa Lyimo, program manager for Immunization and Vaccine Development in the country, has been aligning immunization partners with the overall strategy and incorporating vaccine requirements into the national eLMIS.

Achieving the goal of providing quality health services requires an integrated, optimized, and efficient supply chain that ensures the adequate and continuous supply of vaccines, essential medicines, and other health commodities to clients when and where they are needed. The hallmark of an integrated supply chain is end-to-end visibility of quality logistics data that is used by a core team of stakeholders to drive operational decisions and continuously improve supply chain performance (figure 1). [1]

Integrated supply chains are more cost-effective, efficient, agile, and reliable, and achieve better outcomes by linking all the actors involved in managing health commodities into one cohesive supply chain management organization.
Tanzania has been progressing along the supply chain evolution from ad hoc to organized to more integrated for over a decade, initially with an emphasis on reengineering supply chain processes. In late 2013, Tanzania and its development partners, including USAID, invested $3.3 million in two key interventions as a major revamp of its public health supply chain management. The enhancements included establishing a Logistics Management Unit (LMU) and introducing a national eLMIS. The LMU is responsible for coordinating, monitoring, and supporting all of the logistics activities for various commodity groups. Using data from the eLMIS, LMU personnel identify supply chain bottlenecks, develop solutions for those challenges, and implement corresponding interventions. The eLMIS was fully deployed in 2014 and is used to report essential logistics data from health facilities and to manage requisitions from Medical Stores Department, the public sector distributor of essential medicines, vaccines, diagnostics, and other health commodities. The eLMIS is currently being extended to include a vaccines information management system (VIMS); the BID initiative has been closely involved in the VIMS development process.

Because this investment in the LMU and eLMIS represents a significant financial commitment to the public health supply chain, a baseline study was undertaken in 2013, and a further analysis in 2015, to evaluate the supply chain performance, cost, and cost-effectiveness of these management upgrades and the return on investment of the current system. In addition to providing economic and performance data on supply chain management practices, the analysis also points to areas where these interventions could provide improved supply chain efficiency and generate cost savings.

From the quantitative analysis that was conducted, stock out rates for all product goods dropped from 32 percent to 23 percent, with the frequency of stock-outs greater than 7 days dropping from 24 percent to 15 percent. The annual cost of the supply chain increased from $66 million to $76 million, while the throughput of the supply chain also increased from $168 million to $197 million. Despite these increases in costs and throughput, performance of the supply chain improved from 68 percent to 77 percent. While the upgraded supply chain system costs were higher, the analysis found that it is operating much more efficiently; the cost per value of commodities adjusted for performance shows a decrease from 58 percent at baseline to 50 percent in year 1.

At a time when Gavi and other development partners are increasingly concerned not only with performance but also cost-effectiveness, Tanzania has demonstrated that its evolution to a more integrated supply chain with greater end-to-end visibility and a core team of supply chain specialists is yielding real returns on investment.

[1] John Snow, Inc. 2014. Getting Products to People: The JSI Framework for Integrated Supply Chain Management in Public Health. Arlington, VA: John Snow, Inc.

Tags: LMIS, supply chain, Tanzania