The Logistics Handbook - World Health Organization

1 The Logistics Handbook A practical guide for the Supply Chain Management of Health Commodities 2011. This publication was produced for review by the Agency for International Development. It was prepared by the USAID | DELIVER PROJECT, Task Order 1. The Logistics Handbook A practical guide for the Supply Chain Management of Health Commodities The authors' views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. USAID | DELIVER PROJECT. The USAID | DELIVER PROJECT, Task Order 1, is funded by the Agency for International Development under contract no. GPO-I-01-06-00007-00, beginning September 29, 2006. Task Order 1 is implemented by John Snow, Inc., in collaboration with PATH; Crown Agents Consultancy, Inc.; Abt Associates; Fuel Logistics Group (Pty) Ltd.

2 ; UPS Supply Chain Solutions; The Manoff Group; and 3i Infotech. The project improves essential Health commodity supply chains by strengthening Logistics management information systems, streamlining distribution systems, identifying financial resources for procurement and supply chain operation, and enhancing forecasting and procurement planning. The project encourages policymakers and donors to support Logistics as a critical factor in the overall success of their Health care mandates. Recommended Citation USAID | DELIVER PROJECT, Task Order 1. 2011. The Logistics Handbook : A practical guide for the Supply Chain Management of Health Commodities. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 1. Second edition (First edition 1998). Abstract The Logistics Handbook : A practical guide for the Supply Chain Management of Health Commodities offers practical guidance in managing the supply chain, with an emphasis on Health commodities.

3 This Handbook will be particularly useful for program managers who design, manage, and assess Logistics systems for Health programs. In addition, policymakers, system stakeholders, and anyone working in Logistics will also find it helpful as a system overview and overall approach. Key terms and concepts are clearly defined and explained; the document includes detailed information about the design and implementation of Logistics management information systems and inventory control systems. Overviews of quantification, procurement processes, as well as storage, transport, and product selection, are also included. Acknowledgments The USAID | DELIVER PROJECT would like to express its appreciation to the many people who worked on and contributed to The Logistics Handbook : A practical guide for the Supply Chain Management of Health Commodities. The original Handbook was based on the flagship Logistics course taught by the USAID | DELIVER PROJECT staff (then the Family Planning Logistics Management project staff).

4 In 1992, Barbara Felling and Walter Proper developed the course, and offered it to logisticians outside the project for the first time. The project's Performance Improvement team continued to develop the course, providing many iterations and additional material. In 1998, to increase the number of participants for the course, Barry Chovitz, a trainer and course developer since 1992, developed the Handbook and led the effort to turn the extensive training curriculum into a textbook. Barbara Felling updated the Handbook in 2004 to reflect new project knowledge. In 2010, a team of USAID | DELIVER PROJECT technical advisors and staff solicited input from all technical teams to make the most significant revision and update to the complete Handbook since it was first published in 1998. Major contributers included Claudia Allers, Dana Aronovich, Jaya Chimnani, Todd Dickens, Paul Dowling, Barbara Felling, Carolyn Hart, Alexis Heaton, Rich Owens, Leslie Patykewich, Gregory Roche, Eric Takang, and Edward Wilson.

5 The lead review team included Lilia Gerberg, Kelly Hamblin, Erin Hasselberg, Naomi Printz, and Ashley Smith. Gus Osorio designed the graphics and the layout. Pat Shawkey was the editor. The stand-alone Handbook is based on a wide range of knowledge and information from staff throughout the project. Cover photo: During the rainy season an ox cart is the only reliable way to get Health commodities across the flooded plains to rural Health centers in Zambia's western province. (USAID | DELIVER PROJECT 2010). USAID | DELIVER PROJECT. John Snow, Inc. 1616 Fort Myer Drive, 11th Floor Arlington, VA 22209 USA. Phone: 703-528-7474. Fax: 703-528-7480. Email: Internet: Contents . vii ix 1 . 1.. What Is Logistics ? ..1.. Why Logistics . Logistics System ..3.. Logistics Cycle: Organizing Logistics System Activities ..5.. Key Logistics Terms ..9.. More Logistics Terms.

6 11.. Chapter 16.. 2.. 17. 17.. Logistics Management Information Systems .. 18.. Essential Data for 18.. Three Types of Logistics Records .. 19.. Reporting Systems and Summary 33.. Using an LMIS for Decisionmaking .. 41.. Chapter 42.. 3.. 43. 43.. Assessing Stock Status .. 43.. How to Assess Stock 44.. When to Assess Stock Status .. 46.. Stock Status Assessment at Any Level in the System .. 46.. Chapter 53.. 4.. 55. 55.. Purpose of an Inventory Control System .. 55.. Key Inventory Control 56.. Three Types of Max-Min Inventory Control Systems .. 57.. Determining How Much to Order or Issue .. 57.. Determining When to Place an Order or 58.. Setting Max-Min 64.. Two Design Issues for Inventory Control Systems .. 69.. Selecting an Appropriate Max-Min System .. 71.. Chapter Summary .. 75.. 5.. 77. 77.. Purpose of Product Selection .. 77.. National Essential Medicines List.

7 78.. Registration of Pharmaceutical Products .. 79.. Standard Treatment 80.. Donor Requirements .. 81.. Laboratory Supplies and Equipment Standardization .. 81.. Chapter 83.. iv THE Logistics Handbook A practical guide fOR THE SUPPLy CHAIN MANAGEMENT Of Health COMMODITIES. 6.. 85. 85.. Importance of Quantification .. 86.. Key Steps in Quantification .. 86.. Using the Quantification 95.. Reviewing and Updating the Quantification .. 96.. Chapter 98.. 7.. 99.. Why Procurement in the Supply Chain Is 99.. Procurement Process ..101.. Key Challenges faced in Procurement ..108.. Chapter . 8.. Storage ..114.. Visual . Storage Space Requirements ..120.. Physical Inventory Count ..122.. Health Care Waste . Distribution ..124.. Chapter Summary ..126.. 9.. Monitoring and Evaluation . Developing an M&E Plan ..132.. Indicators for M&E of Supply Chains ..135.. Data Collection Methodologies.

8 137.. Data Collection Tools ..139.. Providing feedback and Reporting . Chapter Summary ..142.. 10.. Logistics System Design . System Design Elements ..148.. Other Design Considerations ..152.. Chapter . Figures figure 1-1: Correlation between Contraceptive Prevalence Rate and Product Availability ..3.. figure 1-2: The Logistics Cycle ..5.. figure 1-3: Typical Public Sector In-Country Supply Pipeline .. 10.. figure 2-1: The Logistics Cycle .. 17.. figure 2-2: bin 21.. figure 2-3: Inventory Control 22.. figure 2-4: Stores Ledger (cover, table of contents, product page).. 23.. figure 2-5: Issue and Receipt Voucher .. 25.. figure 2-6: Issue and Receipt Voucher 26.. v figure 2-7: Requisition, Issue, and Receipt Voucher .. 27.. figure 2-8: Requisition, Issue and Receipt Voucher flow .. 28.. figure 2-9: Daily Activity Register .. 30.. figure 2-10: Daily Usage Log.

9 31.. figure 2-11: Tick 32.. figure 2-12: Sample Logistics Reporting System: National Vaccine Program .. 34.. figure 2-13: Monthly Report and Request for ARVs (last page of a four-page form).. 37.. figure 2-14: feedback 40.. figure 2-15: Decisionmaking Process .. 41.. figure 3-1: Stock Status Assessment .. 49.. figure 4-1: fuel 56.. figure 4-2: Lead Times .. 64.. figure 5-1: The Logistics Cycle .. 77.. figure 6-1: The Logistics Cycle .. 85.. figure 6-2: Steps in Quantification .. 86.. figure 7-1: The Logistics Cycle .. 99.. figure 8-1: The Logistics Cycle ..113.. figure 8-2: Sharps . figure 9-1: Program Cycle for Supply Chain Systems . figure 9-2: Relationship between Goals, Objectives, Interventions, and Indicators ..135.. figure 10-1: Logistics System Design . Tables Table 1-1: Advantages and Disadvantages of Allocation and Requisition 12.. Table 2-1: Three Essential Logistics Data 19.

10 Table 4-1: Sample Max-Min 69.. Table 4-2: factors for Selecting a Max-Min Inventory Control 73.. Table 6-1: Preparation Process .. 87.. Table 6-2: forecasting 88.. Table 6-3: Types and Sources of Data for forecasting Product Consumption .. 89.. Table 6-4: Data Quality Analysis for ARV Drug Quantification in Tanzania .. 90.. Table 6-5: Conversion of Data into Product 91.. Table 6-6: Supply Planning 93.. Table 6-7: Supply Planning Data Requirements .. 93.. Table 7-1: The Product Supply Process (PATH 2009) ..102.. Table 8-1: Storage . Table 8-2: Common Product Quality Problems ..119.. Table 8-3. How to Calculate floor . Table 9-1: Objectives and Interventions . Table 9-2: M&E Workplan Worksheet ..134.. Table 10-1: Summary of Implications of System Design . vi THE Logistics Handbook A practical guide fOR THE SUPPLy CHAIN MANAGEMENT Of Health COMMODITIES. Acronyms.