Navigating the Path Forward: 4 Trends in Global Health Supply Chains

Nearly four years later, the experience of the COVID-19 pandemic still casts a long shadow over supply chain thinking. The product shortages, volatile prices, and inequities in access to critical products experienced during the pandemic are still fresh in our minds. Preparedness for the next pandemic – and strategies to increase supply chain resilience more broadly – will likely continue to play a significant role in shaping the strategies of governments and donors. In addition, high-inflation and a dramatic increase in violent conflicts around the world also has the potential to impact international logistics operations (as we are already seeing in the Red Sea) and elections in 74 countries around the world may generate opportunities for, and risks to, supply chain strengthening initiatives.

Against this backdrop, Chemonics* works closely with USAID and local health stakeholders to procure and distribute life-saving health commodities in over 60 low-and-middle-income countries (LMICs) and helps strengthen supply chains by combining our supply chain technical expertise with nuanced understanding of country contexts to make critical products available when and where they’re needed and build more resilient supply chains.

As we step into 2024, here are some of the trends we see shaping global health supply chains.

Data-Driven Supply Chains

Data is the foundation for a transparent, collaborative, and efficient supply chain. Industry associations and experts such as the Association of Supply Chain Management (ASCM) and Gartner have overwhelmingly stated the importance of visibility, big data analytics, use of artificial intelligence (AI), and cybersecurity to achieve more efficiency and resiliency. LMICs are at different stages of their digitization journey to collect, store, protect, and analyze supply chain data for forecasting and supply planning, procurement, inventory management, track and trace, and advanced analytics. “With the advancement of technology that enables leveraging the internet of things, machine learning, and AI to process data automatically, the desired health supply chain future is today,” says Deo Kimera, Country Director for the USAID Global Health Supply Chain Program-Procurement and Supply Management (GHSC-PSM) project in Zambia. “GHSC-PSM works with the Ministry of Health in Zambia, and Zambia Medicines and Medical Supplies Agency (ZAMMSA) Dispatch Route Optimization (DRO), and electronic proof of delivery (ePOD). Before testing and scaling the DRP tool in Zambia, ZAMMSA was facing transportation planning challenges due to reliance on static routes and vehicle assignments for health facility orders that changed in volume from week to week. Now ZAAMSA is able to optimize cargo space and distribution routes with a schedule in advance of dispatches, which saves time and ensures the best use of resources.

Sustainable and Self-Reliant Supply Chains?

The idea of increasing country independence from donor support at strategic, technical, and financial levels has been part of the discourse for some time. Our experience has taught us that context is king – the way in which this is done and the pace of transition will be different in each country. For example, in Kenya, Chemonics, through the Afya Ugavi project, helped establish Health Products and Technologies Units (HPTUs) in all of the country’s 47 counties to improve governance and coordination of supply chain work at the sub-national level in a sustainable way. The HPTUs are now recognized in Kenya’s national supply chain strategy and receive funding from the county government to coordinate supply chain activities with increasing independence from donor support. The establishment of HPTUs has been critical for building county capacity to effectively manage and take ownership of supply chain activities,” said James Riungu, Chief of Party for the Afya Ugavi project.?

Private Sector Engagement?

The private sector is a vital driver of global economic growth and sustainable development. In LMICs, they have the potential to become a catalyst for better health outcomes by advising on best practices, managing supply chain operations, investing in research and innovation, and financing supply chains. We have consistently experienced the benefits of outsourcing supply chain functions from governments to specialized experts, such as local warehousing firms and transporters. A robust local supply chain market promotes competitive pricing and efficiencies that benefit the people we serve. For example, in Angola, GHSC-PSM implemented competitive contract bidding for in-country distribution services starting in July 2020. As a result of this process, the average cost savings from competition is 36 per cent between the highest and lowest received offer from the two 3PL providers for identical scopes of work. By maintaining competition across the life of the subcontract, GHSC-PSM in Angola has saved US$300,000 in distribution costs since IQS inception through approximately two years of implementation.

Increasingly, donors and their implementing partners are challenged to achieve higher impact with the same or fewer resources. The private sector can also support this objective by improving efficiencies in the supply chain and enhancing the pace of change. By supporting Africa-based innovators through the Investing in Innovation in Africa Initiative (i3) and UNLEASH to design, test, scale, and commercialize solutions within LMICs, we are able to do just that in a way that is both cost-effective and locally-driven.

Regionalization of Supply Chains in Africa?

In the aftermath of COVID-19, many African nations and regional institutions are seeking to reduce the continent’s dependence on external sources of supply. Several initiatives are underway which aim to increase manufacturing activities on the African continent, many of which have started or accelerated following the COVID-19 pandemic. The creation of the African Medicines Agency as a continent-wide pharma regulator has the potential to provide manufacturers with a single route to market across all, or the majority of, the continent. The Southern Africa Development Community has developed a pooled procurement scheme for member states which gives suppliers the opportunity to supply to multiple countries through a single tender, and other regions may follow suit. Aligning regulatory requirements with procurement targets will be a critical focus for global supply chain work in the next few years. GHSC-PSM is coordinating efforts among GHSC partners to align the program’s activities towards USAID regionalization targets. For country-level technical assistance programs, activities that support countries’ journeys towards greater local and regional manufacturing are likely to increase, and strategic support to regulatory and procurement functions will be particularly important.?

What global health supply chain trends are you seeing in your work? Where are the greatest opportunities and gravest risks? Let us know in the comments below!

* Through the Global Health Supply Chain-Procurement and Supply Management (GHSC-PSM), GHSC-Technical Assistance (GHSC-TA) Francophone Task Order (FTO) and Zambia Program for Advocating Supply Chain Outcomes (PASCO) programs, all funded by USAID. ?

This article was authored by Giuliana Canessa Walker , senior global supply chain practice lead, and Tom Brown , principal supply chain management advisor.

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