Supply Chain Module Fro Central Level-1

1
REPUBLIC OF RWANDA
MINISTRY OF HEALTH
Health Supply Chain Management

Module for RMS branches and
Central level
March 2021
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! ! Foreword
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Strong public health supply chains require trained and skilled staffs who are both
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and are also,&! 8#%/"
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compounded by a lack of recognition among many health institutions of the vital role
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career, to fulfill
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chain cadres
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quantification, warehousing, distribution, etc.).
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resources.
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out with the support of MOH and other stakeholders over many years now.
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standardized materials or training manual for such in service training which tends
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and central
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The Ministry of Health is pleased to introduce the first training manual intended to be
used for in-service training of the supply chain cadres working at both RMS branches
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and central level. This training manual will also be used for self-learning and on job
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training purposes. The manual will serve as a standard tool that can be used not only to
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build capacity but as a one of the sources for identifying examples of supply chain
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management best practices.
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0#!1/$?,-/!4/+,?/$2!(%,&#1!,&!N70&40:!
I 91(1)090(%",02%"*&1.%#.02;"
would like to urge all stakeholders from government institutions to use this manual for
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the purpose intended for. I also appreciate the pharmaceutical sector development
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()$(%1/!
partners ,&#/&4/4!
for their6%$:! @! 0+1%! 0(($/-,0#/!
continued #./! (.0$80-/)#,-0+!
support to Rwanda’s 1/-#%$! 4/?/+%(8/&#! (0$#&/$1! 6%$!
health development.
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" Dr. NGAMIJE M. Daniel
"#$!%&'()*+!($!",-./0!!
" Minister of Health
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Acronyms
MOH Ministry of Health
SDPs Service Delivery Point
NBTC National Blood Transfusion Centre
ACT Artemisinin combination therapy
AMC Average Monthly Consumption
BCG Bacillus Calmette-
Guerin
BUFMAR Bureau des Formations Médicales Agréées du Rwanda
CHW Community health worker
COSA Comité de Santé
DH District hospital
DHMT District Health Management Team
DP RMS District Branch
DTC Drug and Therapeutic Committee
EML Essential medicines list
EOP Emergency order point
FEFO First to expire first out
FIFO First in first out
HC Health Centre
JSI John Snow Inc.
LMIS Logistics Management Information System LT Lead Time
M&E Monitoring and Evaluation
MoS Months of stock
RMS Ltd Rwanda Medical Supply Ltd
MSH Management Science for Health
NGO Non-Governmental Organization
NML National Medicine List
NMP National Medicine Policy
NRL National Reference Laboratory
OP Ordering period
POD Proof of delivery
PVC Polyvinyl chloride
QMIA Quality management improvement approach
RBC Rwanda Biomedical Center
RBTC Reginal Blood Transfusion Center
RDTs Rapid Diagnostic Tests
RPPA Rwanda Public Procurement Authority
SO Stock on order
SOH Stock on hand
SOP Standard operating procedure
SS Security stock
SS Safety stock
STG Standard treatment guidelines
UNDP United Nations Development Programme
GHSC- PSM United States Agency for International Development Global Health Supply
Chain- Procurement and Supply Management
VEN Vital, Essential and Non-essential
WHO World Health Organization
RCE-V IHSCM Regional Centre of Excellence for Vaccines, Immunization and Health
Supply Chain Management
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Background
In 2006, WHO identified health workforce performance as one of the six building
blocks essential to strengthening health systems. An essential component of a robust
health system is an effective supply chain which provides health workers and clients
vital public health commodities. An effective supply chain, in turn, involves engaging
the right people in the right quantities with the right skills in the right place at the
right time to implement the procedures that direct supply chain operations and ensure
the supply of health commodities.
Strong public health supply chains require trained, skilled staff who are both familiar
with the standard operating procedures required for each logistics function and are
also empowered to participate in decision and policy-making processes related to
health supplies and supply chains. A lack of trained staff with the right skills is a
frequent cause of supply chain system breakdown and poor performance, ill-
functioning product management, and, ultimately, product stock outs. This is
compounded by a lack of recognition among many health institutions of the vital role
supply chain personnel play in the performance of health systems.
The training manual on supply chain management was developed to assist district
and central levels health supply chain staff to plan and conduct their day-to-day roles
and responsibilities. Many of the techniques described in this training manual are
helpful to users to ensure they are performing their duties well. Additionally, some
of the information may be helpful to new recruited staff who do not have robust
logistics management knowledge. This training manual may also serve as a checklist
of systems and procedures that need to be in place to manage health products well.
Sometimes, in -country management of health products receives little attention which
could result in poor delivery of health products to facilities that need them. The
manual focuses on the in-country management of health products and should be used
as a complement to other documents developed to address the management of
medicines and related supplies.
This training manual explains the basic of logistics and supply chain management for
health products. It seeks to provide practical guidelines for district and central level
staff involved in the management of health product. For more information on logistics
and health supply management, users have been provided with further links in the
reference section.
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Table of Contents
UNIT 1: INTRODUCTION TO HEATH SUPPLY CHAIN AND LOGISTICS MANAGEMENT ... 1
Objectives ..................................................................................................................................................... 2
1.1. Introduction ..................................................................................................................................... 2

1.1.1. Supply Chain and Logistics Management ..................................................................................... 2
1.1.2. Supply Chain Cycle ....................................................................................................................... 2
The Supply Chain Management Cycle ...................................................................................................... 2

1.1.3. Major Components of the Logistics cycle ..................................................................................... 3
1.2. The importance of effective logistics/supply chain system .......................................................... 4
1.3. Supply Chain Integration ............................................................................................................... 4

1.3.1. Characteristics of an Integrated Supply Chain System ................................................................. 5
1.3.2. Rwanda health supply chain system .............................................................................................. 6
Diagram 1: Flow of Health products and Information ............................................................................ 7
1.4. Introduction to Health Supply Chain management online resources ........................................ 8
UNIT 2: HEALTH PRODUCT/TECHNOLOGIES ................................................................................ 9
SELECTION AND QUANTIFICATION ................................................................................................. 9
Objectives ................................................................................................................................................... 10
2.1. Introduction ................................................................................................................................... 10

2.1.1. National medicine policy/Pharmaceutical legislation and regulation .......................................... 10
2.1.2. Pharmaceutical laws and regulation ............................................................................................ 10
2.1.3. What are the differences between pharmaceutical laws, regulations and guidelines? ................ 10
2.1.4. Why pharmaceutical laws and regulations are important? ........................................................... 11
2.1.5. Standard treatment guidelines ...................................................................................................... 11
2.1.6. Essential medicines list ................................................................................................................ 11
2.2. Selection criteria............................................................................................................................. 11

2.2.1. Why use of generic names is more preferred than brand names? ................................................ 11
2.2.2. The purpose of product selection ................................................................................................ 11
2.2.3. Roles and responsibilities in product selection ............................................................................ 12
2.3. Quantification ................................................................................................................................ 12

2.3.1. Introduction: ................................................................................................................................ 12
2.3.2. Quantification and related terms .................................................................................................. 12
2.4. The purpose of quantification ....................................................................................................... 13

2.4.1. Quantification is done to ensure:.................................................................................................. 13
2.4.2. Key steps and processes in quantification .................................................................................... 13
Diagram 2: Key steps and processes in quantification........................................................................... 14

2.4.3. Five steps of Planning ................................................................................................................. 14
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2.5. Quantification methods ................................................................................................................. 16

2.5.1. There are two common methods of quantification:...................................................................... 17
2.6. Selection and Quantification online resources ............................................................................. 19
UNIT 3: PROCUREMENT ...................................................................................................................... 21
Objectives ................................................................................................................................................... 22
3.1. Introductions .................................................................................................................................. 22
Table 1: Procurement Incoterms ............................................................................................................. 22
3.2. The purpose of procurement in health supply chain is to: ......................................................... 24
3.3. The Procurement Cycle ................................................................................................................ 24
Diagram 3: The Procurement Cycle ........................................................................................................ 24
3.4. Good Pharmaceutical procurement practices and management ............................................... 25
3.5. Good Pharmaceutical procurement practices and principles .................................................... 25
3.6. Good Pharmaceutical procurement principles ............................................................................ 25
3.7. Methods used for public procurement ......................................................................................... 26

3.7.1. Open method ............................................................................................................................... 26
3.7.2. Closed or restricted method ......................................................................................................... 26
3.7.3. Request for quotations ................................................................................................................. 26
3.7.4. Single-source procurement or direct contracting ........................................................................ 27
Table 2: Different procurement methods with advantages and disadvantages of each. ..................... 27
3.8. Procurement process.................................................................................................................... 27
3.9. Assuring Pharmaceutical Quality in Procurement ..................................................................... 28
Table 3: Examples of questions during supplier’s selection process and or prequalification ............ 30
3.10. Procurement performance indicators .......................................................................................... 31
3.11. Key procurement stakeholders in Rwanda.................................................................................. 31
3.12. General Procurement Steps for Pharmaceuticals ....................................................................... 31
Step 4: Price and Terms ............................................................................................................................ 32
Step 5: Purchase Order ............................................................................................................................. 32
Step 6: Delivery .......................................................................................................................................... 32
Step 7: Expediting and Procurement follow up....................................................................................... 32
3.13. Procurement online resources ....................................................................................................... 32
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UNIT 4: INVENTORY MANAGEMENT .............................................................................................. 34
(RECEIVING, STORAGE, INVENTORY ............................................................................................. 34
CONTROL, AND DISTRIBUTION) ...................................................................................................... 34
Objectives ................................................................................................................................................... 35
4.1. Inventory management.................................................................................................................. 35

4.1.1. Inventory management ................................................................................................................ 35
Diagram 4: Inventory Management Cycle .............................................................................................. 35

4.1.2. Importance of inventory management ......................................................................................... 36
4.2. Receiving products ......................................................................................................................... 36

4.2.1. Receiving products ...................................................................................................................... 36
4.2.2. Importance of receiving products ................................................................................................ 36
4.3. Storage ............................................................................................................................................ 38

4.3.1. The importance of good storage................................................................................................... 38
4.3.2. Key storage activities ................................................................................................................... 38
4.3.3. Storage procedures ....................................................................................................................... 38
4.3.4. Storage best practices ................................................................................................................... 38
4.3.5. Products that require special storage conditions .......................................................................... 41
4.3.6. Cold chain storage instructions .................................................................................................... 41
4.3.7. Use of cold box and a vaccine carrier .......................................................................................... 42
4.3.8. Temperature monitors .................................................................................................................. 42
4.3.9. Stock rotation and expiry monitoring........................................................................................... 43
4.3.10. Summary of good storage practices ......................................................................................... 43
4.4. Inventory controls .......................................................................................................................... 44

4.4.1. Assessing stock status .................................................................................................................. 44
4.4.2. How to assess stock status ........................................................................................................... 44
4.4.3. Physical count .............................................................................................................................. 45
4.4.4. Management of donations ............................................................................................................ 47
4.5. Management of unusable (Expired, damaged and quarantined) pharmaceutical products .. 48
Table 4: Waste Management Methods .................................................................................................... 49
Table 5: Inventory management checklist .............................................................................................. 50
4.6. Typical pharmaceutical distribution system................................................................................ 51
4.7. Inventory management online resources ..................................................................................... 55
UNIT 5: LOGISTICS MANAGEMENT................................................................................................. 56
INFORMATION SYSTEM (LMIS) ........................................................................................................ 56
Objectives ................................................................................................................................................... 57
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5.1. Introduction ................................................................................................................................... 57

5.1.1. Logistics management information system ................................................................................. 57
5.1.2. The importance of a logistics management information system .................................................. 57
5.2. Essential data for decision making ............................................................................................... 57

5.2.1. types of records ............................................................................................................................ 58
Sample Stock Card .................................................................................................................................... 59
5.3. Electronic logistics management information system (eLMIS) ................................................. 60

5.3.1. eLMIS functionalities................................................................................................................... 60
5.3.2. Importance of recording and reporting through an eLMIS .......................................................... 60
5.3.3. Data interpretation steps .............................................................................................................. 61
5.4. LMIS online resources................................................................................................................... 62
UNIT 6: MONITORING & EVALUATION .......................................................................................... 63
AND SUPERVISION ................................................................................................................................ 63
Objectives ................................................................................................................................................... 64
6.1. Introduction ................................................................................................................................... 64
6.2. Conducting monitoring and evaluation (M&E) and supervision .............................................. 66
6.3. Using indicators for monitoring and evaluation.......................................................................... 66
6.4. Some common pitfalls in monitoring and evaluation.................................................................. 67
6.5. Monitoring and Evaluation online resources .............................................................................. 68
UNIT 7: RESOURCE MANAGEMENT ................................................................................................ 69
Objectives ................................................................................................................................................... 70
7.1. Introduction ................................................................................................................................... 70
7.2. Financial management .................................................................................................................. 70
7.3. What supply chain managers need to know ................................................................................ 71
7.4. Tracking commodity financial flows ........................................................................................... 71
7.5. Typical financing process steps..................................................................................................... 72
7.6. Budgeting........................................................................................................................................ 72
7.7. Supply Chain Costing .................................................................................................................... 73

7.7.1. The importance of supply chain costing ...................................................................................... 73
7.7.2. Supply chain costing methodology .............................................................................................. 73
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7.8. Economic Evaluation ..................................................................................................................... 73
7.9. Human resources management .................................................................................................... 73

7.9.1. Human resource crisis interventions ............................................................................................ 74
7.9.2. Effective ways towards addressing human resource challenges .................................................. 74
7.9.3. Things that strengthen human resource management system ...................................................... 74
7.10. Managing supervisee through supervision .................................................................................. 74

7.10.1. Examples of tools used during supervision of the health supply chain .................................... 75
7.11. Resources Management online resources .................................................................................... 75
UNIT 8: COMMUNICATION, LEADERSHIP ..................................................................................... 77
AND CHANGE MANAGEMENT ........................................................................................................... 77
Objectives ................................................................................................................................................... 78
8.1. Introduction.................................................................................................................................... 78
8.1.1 Communication methods ............................................................................................................. 78
8.1.2 Things that affect communication ................................................................................................ 78
8.2. Leadership ...................................................................................................................................... 80

8.2.1 Leadership styles ......................................................................................................................... 80
8.2.2 Good Leadership Traits................................................................................................................ 80
8.2.3 Other Good Leadership traits ....................................................................................................... 81
8.3. Change Management ..................................................................................................................... 82
8.4. Leadership and Change Management online resources ............................................................. 84
Participants List......................................................................................................................................... 86
Reference documents................................................................................................................................. 87
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1
Unit 1: Introduction to Heath Supply

Chain and Logistics Management
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Objectives
By the end of this chapter, users will be able to:
• Define supply chain and logistics management related terms
• Describe the logistics cycle and components
• Briefly describe Rwanda’s health supply chain system
1.1. Introduction
1.1.1. Supply Chain and Logistics Management

1. Supply chain refers to flow of products, services, resources, and information that ultimately
fulfill customer’s request.
2. Supply chain management is the process of managing and coordinating flows of goods, services,
information, and resources from the source to end-users.
3. Logistics management refers to management of what happens within an organization while

purchasing and delivering materials from suppliers to end-users.
1.1.2. Supply Chain Cycle

A Supply chain cycle shows how the different components of health supply chain systems are
interdependent.
The Supply Chain Management Cycle
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1.1.3. Major Components of the Logistics cycle

• Product Selection
This is the process of determining list of health products needed by certain health setting and done
based on the essential medicines list (EML) and standard treatment guidelines.
• Quantification
Quantification is the process of estimating quantities and costs of health products in the future and
determining when they should be delivered to ensure an uninterrupted supply.
• Procurement
Procurement is a critical function within the supply chain that ensures health products are
purchased and made available to customers as planned.
• Inventory Management
Inventory management is the practice of tracking and controlling orders, their usage and storage,
it should apply the principle of maximum and minimum levels to avoid overstock or under stock.
Storage and distribution are part of inventory needed to ensure product reach the end-users without
their quality being compromised.
• Serving customers
The logistics system is designed to optimize customer service. Each person who works in logistics
should know that he or she selects, quantify, procures selects, procures, stores, or distributes
products to meet customer needs.
• Logistics management information system (LMIS)

A logistics management information system (LMIS) is a system of records and reports whether
paper-based or electronic, used to aggregate, analyze, validate, and display data from all levels of
the logistics system. This is at the heart of logistics cycle.
• Other activities at the heart of the logistics cycle

Other activities that help to drive or support the logistics cycle include organization and
staffing/supply chain workforce, budget/financing, supervision, and monitoring and
evaluation/performance management and risk management.
• Policy and Legislation

These are government laws, regulations and guidelines, which affect all elements of a logistics
system.
• Adaptability
The adaptability of the logistics system is the ability to obtain resources needed to address increase
in demand. It may also mean ability and flexibility to respond in a positive way to changes in policy
and legislation.
• Quality monitoring
It is important to understand the role of quality monitoring in ensuring an efficient and effective
logistics system. Quality monitoring refers not only to the quality of the product, but also to the
quality of service and the quality assurance built into processes and procedures in the system, also
aimed to improve quality.
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Quality monitoring appears four times in the logistics cycle:

1. Between product selection and quantification and procurement to emphasize why quality
monitoring is important role in selection quantifying and procuring the right products.
2. Between quantification and procurement and inventory management to ensure quality of health
commodities during distribution and at the time of receipt.
3. Between inventory management and serving customers to ensure quality is maintained during
storage and when patient receive them for use.
4. Between serving customers and product selection to determine if customers are satisfied with
quality of both products and service they received.
1.2. The importance of effective logistics/supply chain system
• Effective supply chain enhances quality of care by providing adequate, appropriate supplies
to health providers, and increasing professional satisfaction to deliver a higher quality of
service.
• Effective supply chain improves cost efficiency and effectiveness by reducing losses due to
overstock, expiry, damage and pilferage.
• Effective supply chain reduces the cost of lost treatment, if there are no products, patients are not
treated and may die. This a loss to the community.
An effective supply chain system includes the following components:
• Warehouses from central, intermediary and other storage facilities where health commodities
are held until given to another facility or patients.
• Transportation assets from large trucks to smaller trucks that move products from the
warehouses to health facilities.
• Service delivery point where customers receive the products that they need. These include
hospitals, health centers and health posts. Patients may also receive products in the community
from community health worker.
1.3. Supply Chain Integration
Countries achieve an integrated public health supply chain through three sequential phases:
1. Ad hoc phase is when stakeholders have little common understanding about the supply chain
and have no formal procedures for its operation, leading to fragmented supply chain system
efforts
2. Organized phase is when a supply chain system, including LMIS, are designed and implemented
based on clear basic logistics functions roles and procedures, and sufficient financial and human
resources are mobilized to operate the system.
3. Integrated phase is when people, functions, levels, and entities of the supply chain are linked and
managed under an interconnected supply chain organization.
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Moving from Ad Hoc to Organized
• Assess as-is system us ing process mapping, network optimization, and costing analysis
• Undertake technology assessments to improve information for decision making
• Employ system design process for all logistics functions and products using segmentation
analysis
• Roll out system, including logistics training and dissemination of job descriptions, standard
operating procedures, and supervision guidelines
• Perform regular quantification of commodities.
Moving from Organized to Integrated
• Create a logistics management unit and establish central level technical groups and committees
• Professionalize supply chain managers
• Optimize performance with analysis and design tools Introduce flexible procurement processes
• Diversify financing schedules and sources
• Strengthen automated processes for data aggregation, analysis, and sharing
• Generate and publish routine logistics reports
• Develop performance management plans with indicators and incentives.
1.3.1. Characteristics of an Integrated Supply Chain System

• Clarity of roles and responsibilities: roles, responsibilities, and processes (such as reporting or
resupply procedures) are established and made known throughout the supply chain.
• Agility: logistics functions are performed quickly, accurately, and effectively so products,
information, and decisions can move swiftly through the supply chain to respond promptly to
customer needs.
• Streamlined processes: bureaucratic issues and processes that interrupt the flow of information
and commodities are eliminated.
• Visibility of information: data are visible throughout the supply chain, usually through
computerization, so different levels can see where products are and what the demand is and use
this information to better meet customers’ needs.
• Trust and collaboration: a collaborative environment exist that can help break down existing
functional and organizational barriers to improve supply chain performance.
• Alignment of objectives: organizations and levels have a compatible vision, goals, and objectives
to ensure consistency in direction within the supply chain.
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1.3.2. Rwanda health supply chain system

The Rwanda health supply chain system is an `integrated system whereby MOH coordinates the
supply of medical products and technologies through the Rwanda Medical Supply Ltd (RMS Ltd);
Bureau des Formations Médicales Agréées du Rwanda (BUFMAR) and private pharmaceutical
wholesalers which procure and distribute products to Public and private pharmacies and health
facilities.
At RMS Ltd Branches, medical products and technologies are stored and distributed to health
facilities (district hospitals, health centers, health posts etc.). Health Centers distribute medical
products and technologies to community health workers. All health facilities and community health
workers serve the end users/clients. The health supply chain information flow in reverse direction
from community health to health centers, to district hospitals report to RMS branches. After
aggregation of information, all RMS branches report to the national level. More details are embedded
in the other chapters.
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NB: See below diagram
Diagram 1: Flow of Health products and Information
FLOW OF INFORMATION AND COMMODITIES IN RWANDA SUPPLY CHAIN SYSTEM
RMS Ltd
Branches
HEALTH DISTRICT
POSTS
Flow of Information
Flow of Commodities
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Introduction to Health Supply Chain management online resources

All online resources are free, and you will need to create an account as some of the links requires to
access training. For the UNDP link, register with a non-UNDP email address
https://www.undp-psmtraining.com/login/index.php
https://www.undp-psmtraining.com/course/view.php?id=2&section=1
https://elearning.jsi.com/mod/scorm/view.php?id=1 Topic 1
https://www.globalhealthlearning.org/course/logistics-health-commodities
http://supplychainhandbook.jsi.com/wp-
content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.1_Final.pdf
https://www.msh.org/sites/default/files/mds3-jan2014.pdf
https://www.jsi.com/JSIInternet/Inc/Common/_download_pub.cfm?id=11497&lid=3
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Unit 2: Health Product/Technologies

Selection and Quantification
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Objectives
• Explain the role of the national medicine policy in product selection
• Describe pharmaceutical legislation and regulation
• Describe the differences between pharmaceutical laws, regulations and guidelines
• Describe the importance of laws and regulations
• Describe health product selection process
• Explain the purpose of selection.
• Describe the purpose of quantification
• Apply quantification methods
2.1. Introduction
Health product selection is the process of determining list of health products needed by certain
health setting. To achieve this, the national medicine policy/legislations/laws, standard treatment
guidelines, and essential medicines list should be used.
2.1.1. National medicine policy/Pharmaceutical legislation and regulation

All countries have a national medicine policy (NMP) which outlines country goals to consider when
selecting and procuring medicines. The same policy also explains roles and responsibilities of the
parties involved in the supply of medicines as well as those who use medicines at the service delivery
level. It is very important that any organization involved in supply and distribution of medicines
should abide by this policy and must keep a copy for reference.
The aims of using national medicines policy are:

• To make and maintain the laws (legislation) and rules (regulations) to ensure
availability and accessibility of adequate essential medical products and technologies
• To select essential medicines to be used in the country
• To provide guidance for medical product and technologies supplies financing
• To ensure the medical products and technologies supply system works well
2.1.2. Pharmaceutical laws and regulation

These documents are used alongside the national medicine policy to guide the process of product
selection.
2.1.3. What are the differences between pharmaceutical laws, regulations and guidelines?
• Laws are based on by the government to issue regulations and passing laws require a lengthy
process.
• Regulations can pass or altered more rapidly and simply than laws and has same powers as laws
when approved.
• Guidelines can be more easily modified and updated and usually offer informal information on
what the government’s thinking is, regarding the best way to implement laws and regulations.
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2.1.4. Why pharmaceutical laws and regulations are important?

• To prevent the use of ineffective, poor-quality, or harmful medicines that can result in
therapeutic
failure, exacerbation of disease, resistance to medicines, and sometimes lead to death.
• To ensure confidence in health systems, health professionals, pharmaceutical manufacturers, and
distributors are not undermined.
• To protect public health, governments need to approve comprehensive laws and regulations and
to establish effective national regulatory authorities to ensure that medicines are regulated
properly.
2.1.5. Standard treatment guidelines
A standard treatment guideline document aims to guide decisions and criteria regarding diagnosis,
management, and treatment of diseases. Standard treatment guidelines show the best way to treat a
disease in the country. A committee of health professionals (physicians, nurses, and pharmacists) with
the best understanding of what happens in your country is responsible for developing these guidelines.
After being approved by MOH, standard treatment guidelines are often printed as small booklets and
disseminated to all health care providers and facilities.
2.1.6. Essential medicines list
The EML is a set of medicines that satisfy the priority health care needs of the population; they should
therefore be available always in adequate amounts and in appropriate dosage forms, at a price the
community can afford.
An EML helps not only to ensure procurement of the medicines that are both efficacious and cost-
effective, but also helps to determine which category of health facility levels are appropriate for these
medicines.
2.2. Selection criteria
Recommended treatments and drugs selected depend on many factors, such as use of generic names,
the pattern of prevalent diseases, treatment facilities, the training and experience of available
personnel, financial resources, and genetic, demographic, and environmental factors. Other reasons
may apply such as in certain rare instances, selection may be based on prescriber’s preference for
brand products instead of generic products. This is however to be discouraged.
2.2.1. Why use of generic names is more preferred than brand names?
• Generic names are more informative than brand names and facilitate the purchase of products
from multiple suppliers.
• Generic products are often less expensive and affordable than brand products.
• Generic prescribing facilitates product substitution whenever appropriate.
2.2.2. The purpose of product selection
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• Enables development and implementation of a coordinated logistics system

• Facilitates access to more affordable commodity price
• Identifies the products from the essential medicine list that should be quantified, as funding may
be limited. This makes the procurement process easier
2.2.3. Roles and responsibilities in product selection

RMS branch and central level representatives are involved in national product selection exercise.
Other representatives include members of the Drug Therapeutic Committee (DTC) at other levels and
can contribute to the revision of the EML as described in the DTC’s terms of reference.
2.3. Quantification
2.3.1. Introduction:
Quantification considers the expected demand for commodities, unit costs, existing stocks, stock
already on order, expiries, lead time, buffer stocks and shipping costs. All this information helps
quantification committee to calculate estimates of both total commodity requirements and costs for
the program. These two are then compared with the available mobilized funds to determine final
quantities to procure.
2.3.2. Quantification and related terms

• Quantification is the process of estimating the quantities and costs of the products required for
a specific health program and determining when the products should be delivered to ensure an
uninterrupted supply for the program. Quantification is a combination of forecasting and supply
planning.
• Forecasting is the process of making future predictions by basing on the past and present data
most commonly by analyzing the trends.
• Supply planning is the process of detailing the quantities required to fill the supply pipeline, costs,
orders, and arrival dates of shipments-this is the final output of the quantification.
• Supplies, commodities, goods, products, and stock are all the items that flow through the
supply chain system.
• Users, clients, patients, and customers are people who receive supplies to use.
• Pipeline is the entire chain of storage facilities and transport links through which supplies move
from the manufacturer to the consumer. Links including port facilities, central warehouse, regional
warehouses, district warehouses, all clinics, hospitals, and transport vehicles.
• Push System is a system in which staff at the next higher level decide how much stock to send
to the next lower level. The decision is made at the higher level and is based on data in reports
from the lower level. This is based on lower-level usage rate and remaining stock on hand.
• Pull System is a system where the staff at the lower level decide how much stock they want to
order. This is also based on their usage rates and remaining stock on hand.
• Lead-Time is the time between placement of an order for supplies and receipt of the supplies at
the medical store and thereafter available for use.
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• Ordering period is how often an order is placed in a system, and this varies across all levels.
• Dispensing/consumption data is the quantity of items dispensed to clients or patients and it is
usually measured in units consumed within a specific period.
• Issues data is information of supplies shipped from one level of a system to another, and it can
be used to predict use in case dispensing data are not available.
• Demographic data is information on numbers and characteristics of the population that will
desire, require or be offered a service for which commodities are required (these are not products
that are required to treat a health condition or disease).
• Morbidity data is information on prevalence and incidence of a disease or health condition in a
given population.
• Procurement data is information on amounts of products procured in the recent past by the
national government, NGOs, or amounts planned for upcoming procurement.
• Service data is information on number of visits, number of services provided, or number of cases
treated over a specified period.
• Stock on order is stock ordered during the procurement period but have not yet received
• Stock on hand is stock available at the health facility for dispensing or warehouse for
distribution, including safety stock. It is also called working stock
• Buffer/Safety stock is minimum stock kept on hand to protect against stock-outs.
• Losses and adjustments are stock removed from the pipeline for any reason other than
consumption by clients (such as expiration, theft, damage, and so on).
• Adjusted monthly consumption is a quantity of stock consumed for one month after adjustment
for unusual situations such stockout.
• Average monthly consumption is the number of units that a facility is likely to use in a
month.
• Security stock is stock kept on hand to protect against stockouts caused by delayed delivery or
increased demand. This is also called safety stock
• Ordering interval/review period is the period after which stock should be ordered, and review
period is the time between two routine orders.
2.4. The purpose of quantification

2.4.1. Quantification is done to ensure:
• Accuracy in forecasting, supply planning, procurement planning, and budgeting.
• Mobilization and allocation of funds for commodity procurement.
• Advocacy for funds to identified and concerned stakeholders to fill commodity gap/need.
• Coordination of multiple sources of funding for procurement.
• Identification of areas for advocacy such as strengthening data collection, reporting system,
inventory management procedures and funding.
2.4.2. Key steps and processes in quantification
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Diagram 2: Key steps and processes in quantification
1. Preparation: This involves assembling a quantification team, assessing the program, describing
the program performance as well as strategic plans, defining the purpose and scope of the
quantification exercise, and collecting required data.
2. Forecasting: This involves organizing, analyzing, and adjusting data to obtain consensus on the
forecasting assumptions while calculating future consumption for each product, as well as
comparing and reconciling results of different forecasts.
3. Supply planning: This involves organizing data for analysis, building supply planning
assumptions, estimating total commodity requirements, developing a supply plan, and
comparing costs to available funding.
NB: Before any quantification exercise is done, planning is very important to ensure its success.
This includes all the preparatory steps such as assessing the program, defining the scope and
coverage of the quantification including the target population, and compiling the list of products
to be quantified.
2.4.3. Five steps of Planning

Five steps of Planning include describing the program, defining the scope, defining the target
population, compiling a list of medicines to be procured based on standard treatment guideline, and
determine the sources of available data. Planning also includes preparing a preliminary written
schedule for the quantification process, which includes travel schedules, appointments with key
officials, and preparation of the quantification exercise.
1. Preparation process
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During preparation for the quantification exercise, team members begin to collect program
background information and data from as many sources as possible.
Four steps of preparation process:
Step 1: Assemble a quantification team

Most quantification teams have 6-15 members such as program managers, a procurement specialist,
an M&E officer or other information specialists, warehouse managers, service providers, donor
agencies, implementing partners, and technical experts in quantification.
Step 2: Describe the program performance, policies, and strategic plans
Step 3: Define the purpose and scope of the quantification exercise, e.g. timing and
products. For example. The purpose of the quantification is to estimate the commodity needs and
costs to support diagnostic testing and treatment for the national malaria program fo5r 2015-2019.
Step 4: Collect required data (for forecasting and supply planning)
A data capturing template is usually developed with a checklist of all data to be collected. This will
make sure all data are available before the exercise begin. It also presents the gap in data for
stakeholders to deliberate on while making feasible assumption around generated data gaps.
2. Forecasting process
Forecasting, the second step in the quantification process, uses the data collected during the
preparation step to estimate the quantity of each product that will be dispensed or used during each
year of the quantification.
Four steps of the forecasting process:

Step 1: Organize, analyze, and adjust data
After collecting the available data, you need to assess its quality before estimating the data to be
reported. This means one should adjust for incomplete or unreliable consumption, service and
demographic data. For example, if the program experienced a stockout, adjust the reported
consumption data to account for that. Some types of data require conversions.
Step 2: Build and obtain consensus on the forecasting assumptions

In many cases, data are incomplete, outdated, unreliable, or unavailable. Therefore, to develop the
forecast, it will be necessary to make some assumptions about program performances, targets, and
future demand.
Step 3: Calculate the forecasted consumption for each product
Regardless of the data the quantification team uses for the exercise, the team must document the
sources of the historical data, actual data collected, data quality issues, and any data adjustments.
For each product, estimate the future consumption, the future type and number of services that will
be provided, or the average absolute number of increase or decrease from one reporting period to the
next.
Step 4: Compare and reconcile results of different forecasts
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If availability and quality of data permits, the quantification team can use different types of data to
conduct multiple forecasts. The forecasting steps must be repeated for each of these data types. Use
at least two types of data and prepare separate forecasts, if possible. Compare the final forecast
consumption quantities from each forecast and consider the implications of the different forecast for
the program, including service capacity, storage and distribution capacity, funding availability, and
other issues that could affect demand, supply, and use of commodities, past and current reports on
expiration.
3. Supply planning process

To be successful, public health programs must always have enough medicines and supplies to meet
the needs of their clients. At the same time, programs must avoid surpluses that waste products and
money. Supply planning is used to estimate the total commodity requirements and costs for the
program within a specific period. To calculate this estimate, start with the forecasted consumption for
each product. Consider the stock on hand, any quantities of product already on order but not yet
received, and the established maximum and minimum stock level. Be sure to include procurement
and supplier lead times and provide a buffer stock for unexpected delays. Pipeline, a desktop software
tool, has helped program managers in many countries to plan optimal procurement and delivery
schedules for health commodities, and it monitors procurement orders throughout the supply chain.
Supply Planning Process Steps
Step 1: Organize and analyze data

Data for the supply planning step are different from the data for the forecasting step. However, it is
important to collect both data types at the same time. Examples of data required for supply planning
include stock on hand in the program, in-coming shipments, expiration dates and suppliers/vendors
etc.
Step 2: Build supply planning assumption
As with the forecasting step, make assumptions in the supply planning step to account for missing,
or low-quality data. However, the data user will then need to build consensus around the assumptions.
Remember, it is important to document clearly and specifically the sources of information and the
key informant inputs on the assumptions.
Step 3: Estimate total commodity requirements and costs
To estimate the total commodity requirements, you must determine the quantity of each product
needed to meet the forecasted consumption and ensure the in-country supply pipeline has adequate
stock levels to maintain a continuous supply to service delivery points.
Step 4: Develop the supply plan
Developing a supply plan, including the shipment quantities and delivery schedules, will ensure a
continuous supply of products to the country. Developing the supply plan helps program managers
to enter and track forecasting consumption data, identify funders and funding commitments for each
product, identify suppliers for each product, coordinate timing of funding commitments and
procurements, and schedule shipments according to procurement lead times.
2.5. Quantification methods
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2.5.1. There are two common methods of quantification:

Consumption method: past consumption records of individual medicines are used to project future
needs. It is essential to adjust for stockouts, projected changes in utilization (program scale up), and
losses (pilferage, wastage, damage). In other words, the consumption method estimates the quantity
of products expected to be consumed. This is the most precise method of quantification, provided
consumption data are complete, accurate, and properly adjusted.
The main source of consumption data is LMIS. This system contains data on consumption which are
dispensing data from dispensing registers or other point-of-service registers.
Consumption data is typically retrospective data on the quantities of ACT and RDTs that have been
dispensed to patients within a particular period. When these data are not available, reports of stocks
issued from the lowest level possible may be used. However, using issue data as a proxy for
consumption data can result in an overestimation or underestimation, because quantities issued may
not correlate well with the actual quantities dispensed.
Consumption data may be reported monthly or quarterly and may be aggregated with clinical and
patient-specific data to enable observation on whether the consumption matches the number of cases
treated.
Reporting rates of less than 50% should be considered unacceptable to use for quantification data. At
very low levels of reporting (<50%), there will be serious inaccuracies.
Limitations of the consumption method

• Complete consumption data from a full supply are hard to find, so programs tend
to settle for data extracted from a system with interrupted supplies and a non-full
supply system
• The consumption data might not reflect rational use of the products (i.e., use
according to the STGs)
• It cannot be used for a program that is new or scaling up, where consumption
is unpredictable
Incomplete consumption data may be adjusted. Adjusted consumption is the monthly consumption
adjusted considering the number of days of stockout and the morbidity information.
In the absence of quality consumption data from health facilities and community health workers, the
morbidity-based quantification method can be used.
Morbidity method estimates the need for specific medicines based on the expected number
of attendances, the incidence of common diseases, and standard treatment (as per national STGs) for
the diseases and then translates these into the number of products expected to be consumed. This
method is based on morbidity statistics, prevalence and morbidity data are used to estimate national-
level prevalence of a disease and are usually available through routine information systems or
surveillance or research and extrapolated to obtain national-level estimates. Morbidity data are
usually expressed as incidences per 1000 or 100,000 population.
Incidence is a measure of disease that allows us to determine a person's probability of being diagnosed
with a disease during a given period.
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Limitations of this method

• Compared to the other methods, the morbidity method is the most complex and time-consuming.
• It requires conversion of sick people to medicines
• Morbidity data may not be easily available for the disease condition
• This method requires strict adherence to the STGs, but standard treatments may not be
used or correctly followed by prescribers in that area
How to calculate the quantity to be ordered:

The quantity to be ordered is obtained using the following formula, based on consumption:
Quantity to be ordered = AMCj X (LT+OP) +SS-(SOH+SO)
AMCj: Adjusted average monthly consumption

LT: Lead time
OP: Ordering period
SS: Security stock
SOH: Stock on hand
SO: Stock on order
If the result is >0, then the calculated amount must be procured for the program to satisfy
estimated demand and still maintain the desired stock at end of the period.
If the result is <0, there is a possible oversupply situation; in such cases, no procurement is needed for
the period.
Formula based on morbidity:
QE=DXDDXTD
QE= Quantity to order by condition episode D=
Quantity per dose per day
DD= Frequency of dose per day TD=
Treatment duration
Other methods include:

Proxy consumption method: Proxy consumption method is used when there are no consumption
and morbidity data for a standard system (known facility with standard and known data). The method
involves extrapolating information for use from a facility that have consumption and morbidity data.
Both facilities must share the same characteristics such as service to same population in the same
geographic and climatic environment.
Proxy consumption method also mean the use of issue data for forecasting instead of dispense-to-user
/consumption data. The issue data that is advisable are the ones from the health facility stores to the
dispensary. The father the issue data is to dispense-to-user data, the more inaccurate the forecast.
NB: If central level data are incomplete, but data exist for some representative or standard facilities
or districts, the proxy consumption method can be used.
Steps for using Proxy consumption-based method for forecasting
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• Select the standard system for consumption and extrapolation

• Review records from the standard system for the determined review period
• Calculate the adjusted consumption in a review period
• Calculate the projected average monthly consumption for expected changes in consumption pattern
• Obtain the total projected average monthly consumption
• Obtain the total projected consumption in the review period
• Obtain rate of consumption use per 1000 treatment episodes
• Obtain the projected amounts of products needed in the target system
Issues to consider in quantification (forecasting and supply planning)
• Preparing an action plan for quantification
• Using centralized or decentralized quantification approach
• Using manual or computerized methods for quantification
• Estimating the time required
• Developing and organizing the medicines list
• Filling the supply pipeline
• Estimating the procurement period
• Considering the effect of lead time
• Estimating safety stock
• Adjusting for losses and other changes
• Cross-checking the results of quantification
• Estimating total procurement costs
• Adjusting and reconciling final quantities
• Preparing for possible program expansion
• Reconciling forecasts of different data sources
Reviewing quantification for ordering

Quantification does not end after determining the final quantities and costs. It involves an ongoing
process of monitoring, reviewing, and updating the forecasting data and assumptions, and
recalculating the total commodity requirements and costs as needed. For the quantification exercise
to be useful and more effective, the forecasting assumptions and supply plan should be reviewed at
least every six months. Ongoing monitoring and updating of the quantification lead to making timely
decisions.
Reviewing and updating the quantification includes the following activities:
• Reviewing and updating the forecasting data and assumptions
• Calculating or recalculating the forecasted consumption
• Updating the stock on hand for each product
• Assessing national stock status for each product
• Reviewing and updating shipment delivery schedules to ensure continuous supply and maintain
desired stock levels
• Computation of forecast accuracy for tracer products as a means of verifying some assumptions
used in a forecast such as scale up rate
Selection and Quantification online resources
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https://www.undp-psmtraining.com/login/index.php
https://www.youtube.com/watch?v=M1c-jR_hPMg The Art of
forecasting
video
http://supplychainhandbook.jsi.com/wp- Product
content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.4_Final.pdf selection
http://supplychainhandbook.jsi.com/wp- Quantification
https://www.youtube.com/watch?v=Hwsa6Epm568 Quantification
for Community
Case
Management
access training. For the UNDP link, register with a non-UNDP email address
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Unit 3: Procurement
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Objectives
• Define procurement and related terms
• Describe the purpose of procurement
• Understand the procurement cycle
• Describe Good pharmaceutical procurement practices and management
• Describe procurement principles and methods
• Describe procurement process
• Identify procurement key stakeholders
• Be familiar with guidelines on prequalifying suppliers
• Define Pharmaceutical quality
• Describe the purpose of quality assurance
• Understand how to assess pharmaceutical quality
• Describe the determinants of pharmaceutical quality
• Explain practical approaches to quality assurance
• Describe quality verification of procured pharmaceutical products
• Explain pharmaceutical quality monitoring
• Identify risks in procurement process
3.1. Introductions
Procurement is the procedure through which an entity acquires good or services from suppliers in
return for a price. Procurement is a major determinant for health products/technologies availability
and utilization. Therefore, procurement process should be ensuring the supplier and buyer
relationship should be transparent and ethical, right medicines are procured in the right quantities,
quality standards are met while doing procurement, timely delivery is attained to prevent stock-outs
and purchasing schedule is prior to procurement process.
Procurement Incoterms are a set of rules, which define the responsibilities of sellers and buyers for
the delivery of goods under sales contracts. Each term conveys a set of pre- determined rules that
parties should acknowledge, agree to and abide by.
Table 1: Procurement Incoterms
TYPE OF INCOTERMS COMMENT

It states that the seller’s responsibilities include everything up to
FOB (Free on Board)
getting the goods loaded onto the vessel at the agreed port. The first
charge to the buyer is the freight costs and then they are responsible
for all the costs to get the goods to their destination.
It states that pretty much everything is the responsibility of the

EXW (ExWorks)
buyer. The only obligation the seller has is to make the goods
available for collection. The buyer pays all the costs to get the goods
from the supplier to the destination. When written, Ex Works
shipping terms are often followed by the supplier’s collection
address which is where the buyer’s responsibility starts.
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When using CFR shipping terms, the seller’s invoice includes

the cost of the goods, and the freight to send them to the agreed
CFR (Cost and Freight)
country. The seller pays for everything up to and including the
freight to a named destination port, the first charge to the buyer
is the terminal handling at the destination port. CFR terms can
look attractive but in reality, it’s very difficult for the buyer
to control their costs.
CIF (Cost, Insurance and The buyer will also include insurance in the cost. The buyer
Freight) pays for everything after the goods arrive at the destination just
as in CFR terms. Like CFR terms, when using CIF terms, it can
be very difficult for the buyer to control their costs.
Shipping terms state that the seller bares all of the responsibility
DAT (Delivered at Terminal)
up to and including unloading the goods at the named terminal
at the destination port. The buyer pays for customs clearance,
import duties, taxes and delivery costs.
Delivered at place terms state that the seller pays for and takes
DAP (Delivered at Place)
responsibility for everything involved in the shipment all the
way to delivering to an agreed destination. All the buyer pays
for is import duties and taxes.
For the buyer, this is a great option for minimizing risk. DDP
DDP (Delivered Duty Paid)
terms mean that the buyer will purchase the goods before the
seller pays all the costs to get the shipment to its destination. The
seller also pays any import duties and taxes accrued in the
b u y e r ’ s country of delivery. All the buyer must do is unload
their goods from the truck parked outside.
It requires the seller to deliver the goods to a named location

FCA (Free Carrier)
where the designated carrier operates. The seller also clears the
goods for export from the country of origin. After this point all
costs, risk and responsibility lie with the buyer.
This term states that once the seller has done everything up to
FAS (Free alongside Ship)
getting the goods alongside the ship ready for loading, they
have fulfilled their obligations. This includes customs clearing
the goods for export. The first charge for the buyer is terminal
handling at the port of origin
Carriage Paid To’ terms are very similar to CFR shipping

CPT (Carriage Paid To)
terms, the difference being that CPT terms can be used in any
mode of transport (Air/Sea etc).
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3.2. The purpose of procurement in health supply chain is to:
• To manage risk associated with purchasing and dealing with suppliers

• To ensure the right products and their specifications are provided for health programs via
the following:
1. Promote transparency and accountability by using documented procedures, transparency
criteria for the selection of suppliers, and regular reporting to the donors/government based
key performance indicators in the procurement assessment plan
2. Ensure that the products meet national quality requirements and are featured on the
essential medicines and national formulary lists
3. Ensure that medicines to be procured are identified using their international nonproprietary
name
• Acquire the largest possible quantities to achieve economies of scale and savings.
• Ensure suppliers are pre-qualified to supply quality products, reliable services based
on defined criteria.
3.3. The Procurement Cycle
Diagram 3: The Procurement Cycle
The procurement cycle includes most of the decisions and actions that need to be followed for the
procurement process to be more efficient.
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3.4. Good Pharmaceutical procurement practices and management

Pharmaceutical procurement practices vary widely from country to country. However, decades of
experience with essential medicines programs and many more years of experience with large
government-run pharmaceutical supply services in many countries, as well as regional and global
pooled procurement schemes, a number of key procurement principles have been suggested to
promote good pharmaceutical procurement.
3.5. Good Pharmaceutical procurement practices and principles

Pharmaceutical procurement practices vary widely from country to country. However, decades of
experience with essential medicines programs and many more years of experience with large
government-run pharmaceutical supply services in many countries, as well as regional and global
pooled procurement schemes, a number of key procurement principles have been suggested to
promote good pharmaceutical procurement.
3.6. Good Pharmaceutical procurement principles

• Reliable payment and good financial management: this includes developing mechanisms for
prompt and reliable payment, which might bring down prices more than bulk discounts.
Establishing financial mechanisms with separate pharmaceutical accounts to allow procurement
cycle to operate on a separate schedule from the treasury cycle.
• Procurement by generic name (International Nonproprietary Names) for fair competition
and specify quality standards for medicines with similar bioavailability problems.
• Procurement should be limited to essential medicines or formulary lists for safe and cost-
effective medicines to be procured.
• Procurement in large volume to reduce total prices
• Formal supplier qualification and monitoring: this include using formal supplier
qualification based on pharmaceutical quality, service reliability of pharmaceutical sources
with certificates of analysis, sound knowledge of good manufacturing and distribution
practice and financial viability, licenses and registration with government. Approve suppliers
before tendering (prequalification) or after (post qualification) and use a formal monitoring
system to ensure continued supplier qualification.
• Competitive procurement to obtain the best prices, allow only prequalified suppliers to
compete in restrictive tenders, and evaluate suppliers after submission of bids in open tenders.
• Monopsony commitment: this includes procuring all contracted pharmaceuticals from
winning supplier in a particular bid for which the supplier was preferred and enter into no
separate deal with noncontracted suppliers.
• Order quantities based on reliable estimates of actual need: Realistic need developed from
actual quantification with detailed specification is meant for procurement.
• Transparency and written procedures: this include developing and follow on written
procedures for all procurement actions and make information on the tender process and results
public to the maximum extent possible.
• Separation of key functions: this includes separating key functions that require different
expertise and functions that involve different committees or individuals.
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• Product quality assurance program: this include establishing and maintaining a formal
system for product quality assurance including product certification, inspection and targeted
laboratory testing.
• Annual financial audit with published results: this include conducting an annual financial
audit to assess compliance with procurement procedures, promptness of payment, and related
factors, and present results to the appropriate public supervising body.
• Regular reporting on procurement performance: this includes reporting key procurement
performance indicators against targets at least annually and use of key indicators such as ratio
of prices to world market prices, supplier lead times, percentage of purchases made through
competitive tendering, and planned versus actual purchases.
Fundamental Procurement Principles applied in Rwanda are:

• Transparency means applying procedures in a manner which is open, clear, easily accessible,
and predictable. Bidders should see the procurement as being transparent.
• Competition means providing the bidders with equal opportunity and treatment in bidding
for procurement contracts. Competition should be seen to be open and fair.
• Economy: Procurement should prioritize the best value for money, with value comprising both
price and quality. The lowest initial price may not equate to lowest cost over the operating
life of the item procured. The ultimate purpose of sound procurement is to obtain maximum
value for money.
• Efficiency means being simple, timely, practical, and adhering to the budget of the procuring
entity to achieve positive results without any unnecessary delays in the program
implementation.
• Fairness is about being impartial, consistent, and reliable.
• Accountability is about bestowing a sense of responsibility by enforcing established rules and
procedures. Good procurement holds its practitioners responsible for enforcing and obeying
the rules.
3.7. Methods used for public procurement
3.7.1. Open method

This is a formal procurement process in which local or international suppliers (or their
representatives) are invited to submit bids. It allows for the widest selection of potential suppliers,
but it is time-consuming and complex.
3.7.2. Closed or restricted method

This method restricts bidding to suppliers who meet certain conditions, e.g., suppliers with certain
financial capacity or suppliers producing health commodities of a certified quality.
3.7.3. Request for quotations

The procuring entity may request quotations from at least three bidders. Request for pricing of
products that is based on defined specification.
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3.7.4. Single-source procurement or direct contracting

Products are purchased directly from one supplier. This is the simplest method but very expensive
because purchasers do not seek better value by checking out other suppliers.
Table 2: Different procurement methods with advantages and disadvantages of each.

When it comes to pharmaceuticals and other medical products, quality is non-negotiable. Any
deployed procurement method must deliver quality medical products, or the patient suffers or even
die.
Method Advantage Disadvantage
Open • Competition (tender is open to all) • Long time in assessment due to

• Low prices many bids
• Transparency • High workload
• New suppliers, experience, and • Long lead times
technologies • Need for assessment is high
Restricted • Known suppliers (in terms of • Less price competition

performance) • No chance to get new suppliers
• Prices are usually favorable • Less transparency
• Long time in establishment
(prior prequalification of
suppliers)
• Need for assessment is high
Request for • Known suppliers • Less transparency

quotations • Reduce prices • Need for assessment is high
• Short lead times
• Prices can be favorable
Direct purchase • Very short lead time • High prices

(Single source • Low workload • No competition
tender) • Need for assessment is high
3.8. Procurement process
Competitive tenders are recommended for most pharmaceutical systems, to maximize the benefit of
pharmaceutical purchases, and minimize corruption and favoritism in procurement. A formal tender
process includes procurement planning, preparation of tender documents, collation of offers,
publication, motivation to bid, formal bid opening, evaluation, notifications, contract awarding,
performance monitoring and evaluation.
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Procurement tenders can be structured as follows:

• Restricted versus open tender
• Local or international
• Estimated or fixed tenders
• Split or single tender awards
• Primary/secondary contracts or rebids
• Required or optional use of local agents in international tenders
• Annual or biannual tenders versus multiple tenders in a year
3.9. Assuring Pharmaceutical Quality in Procurement
Pharmaceutical quality
The quality of pharmaceutical products is determined right from the starting materials, equipment,
and technical know-how that go into producing ang packaging it. Unlike a steel, a medicine is a
dynamic product whose color, consistency, weight, and even chemical identity can change between
manufacture and ultimate consumption. A medicine that passes all laboratory tests upon receipt may
be useless within a few months if the packaging, storage, and transportation conditions are not
maintained properly.
The purpose of quality assurance
Pharmaceutical quality assurance is done to help ensure that each medicine reaching a patient is safe,
effective, and of appropriate quality. Note that quality assurance in pharmaceutical supply is not the
same as quality control in manufacturing. The quality assurance framework includes document
review, inspection of local/imported product samples or manufacturing sites or marketplace, product
testing and reporting. Once these activities are done, analysis and evaluation of data obtained from
these activities lead to decision making and enforcement to ensure patients are using quality
medicines.
Assessing poor pharmaceutical quality
Quality of medicines can be defined and tested in many ways, but the most common way is assessing
medicines compliance with specifications concerning identity, purity, strength, potency. A poor-
quality medicine is one that does not meet these specifications and the use of such medicine may
lead to undesirable clinical and economic effects. Clinical effects can include prolonged illness or
death or adverse reactions. On the economic side, limited financial resources may be wasted on
poor-quality medicines which may lead to poor health system credibility from prolonged illnesses
even with medication.
Determinants of pharmaceutical quality
The quality of a medicine product coming off the production line is determined by the start- up
materials, plant environment, manufacturing equipment, and technical know-how invested in
developing and manufacturing the pharmaceutical. The medicine that ultimately reaches the patient,
however, is further affected by packaging and by transportation and storage conditions. Things to
consider under start-up materials that determine the quality of medicines include the quality control
of the manufacturing process, pharmaceutical formulation, active ingredients, immediate packaging,
external packaging, shipping conditions, port conditions, transportation conditions, warehousing
conditions, repackaging procedures, storage conditions, dispensing conditions and patient handling.
Temperature, humidity and cleanliness are things to consider under plant environment, one of the
four main determinants of pharmaceutical quality.
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Global quality-monitoring options
The procedures to establish a comprehensive quality assurance program can be divided into
three categories:
1. Procedures to ensure that only medicine products that meet current standards for
quality are bought. These include:
• Careful product selection
• Careful supplier selection
• Certificate of analysis for each batch of product
• Certification of good manufacturing practices
• Batch certification (WHO-type certificate of pharmaceutical product)
• Inclusion of detailed product-quality specifications in the contract
2. Procedure to verify that shipped goods meet the specifications. These include:
• Pre-and post-shipment inspection
• Analytical pharmaceutical testing
3. Procedures to monitor and maintain the quality of pharmaceuticals from the moment they
are received until the medicine is finally consumed by the patient. These involve:
• Proper storage and distribution procedures
• Appropriate dispensing
• Instructions to the patient on proper use of medications
• Product defect and pharmacovigilance reporting programs.
Verifying the quality of shipped products
The quality of products received should be verified as soon as possible by physically inspecting each
shipment and testing selected products in the laboratory as required by regulation. In addition, more
advanced product-tracking technologies have been introduced to help ensure the integrity of the
pharmaceutical supply chain.
Maintaining and Monitoring pharmaceutical quality

This refers to maintaining medicine quality during storage conditions and transport down to when
pharmaceutical products are being dispensed to patients. Despite every effort, defective products
occasionally slip through, and the quality of even the best-manufactured product may deteriorate.
For monitoring purposes, quality assurance program staff should carefully analyze all reports like
using laboratory testing reports. If problems are identified through lab testing, product problem
reports should be generated to provide information for product recalls.
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Table 3: Examples of questions during supplier’s selection process and or prequalification
Status Is the supplier a primary manufacture or distributor? Does

the supplier manufacture all products in-house?
Who is the primary manufacture for each product offered?
Quality control Does the supplier use good manufacturing practices?

Does the supplier have an on-site quality control laboratory?
What tests are routinely performed? (before and after manufacture)
Are special tests performed for stability in tropical areas?
Inspection What official have inspected the facility?

What are the results of the most recent inspections?
What certification documents available from regulatory agency?
Personnel and What are the qualifications of key personnel? What is
facilities the capacity of the supplier’s plant? Does the supplier
have the capacity to supply?
Will the supplier have to subcontract portions of large awards?
Trade references What other local or foreign buyers work with the supplier? How
long has the supplier served the above?
What is the experience of buyers with this supplier?
Financial status Is the supplier financially stable?
Will the supplier’s existence remain for the entire contract period?
Corporate Is the supplier a subsidiary, a parent or known by another supplier?

associations How long has the supplier been supplying the goods?
Local reputation How is the supplier regarded by local buyers or prescribers? How
are products of the suppliers regarded by the same?
Is there any information from public sources concerning his performance?
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3.10. Procurement performance indicators
• Percentage by value of Ministry of health (MOH) medicines purchased through a central

procurement system (Formula: Value of procured products by Public Central Medical
Store/Value of tendered products x 100)
• Percentage by value of MOH medicines purchased through competitive tender (Formula: Value
of products procure through competitive tenders/ value of all procured products x 100).
• Percentage by value of medicines purchased from local manufacturers (Formula: Value
of products procure form local manufacturers/ value of all procured products x 100)
• Average lead time for a sample of orders (Calculated separately for all suppliers, local
manufacturers, foreign suppliers) (Formula: Number of days or months for a specific supplier
to deliver health products for a defined period)
• Average time for payment for a sample of orders (calculated separately for all suppliers, local
manufacturers, foreign suppliers) (Formula: Number of days or months in excess for public
central medical store to pay specific supplier from the contract defined payment period/time)
• Percentage of pharmaceuticals (batches) that failed quality control tests (Formula: Number of
batches that fail QC tests/ Total number of batches submitted for QC test for defined
periodx100).
3.11. Key procurement stakeholders in Rwanda
• Rwanda Biomedical Center (RBC)

• Rwanda Medical Supply Ltd (RMS Ltd)
• BUFMAR
• RMS Ltd Branches
• Referral, provincial, and district hospitals
• Teaching hospitals
• Health Centers Health Posts
• Rwanda Public Procurement Authority (RPPA) Ministry of Health
• Ministry of Finance
• Donors/ Health related Non-governmental Organization Private sector
• Health Insurances
• Other health-related nongovernment organization Ministry of Infrastructure
• Rwanda Food and Drug Authority (Rwanda FDA)
3.12. General Procurement Steps for Pharmaceuticals
Step 1: Need Identification stage

Every procurement begins with the demand by a client. The demand of several clients can be pooled
together. Product selection and quantification determine medicine needs and demand of a country or
a program. The essential medicine needs are generated at central supplying organizations (RMS Ltd
and BUFMAR)
Step 2: Specification stage
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A standard product list to include generic names, pack sizes, packaging, labelling and the time the
product is to be delivered is determined in this stage. The technical officers at central supplying
organizations (RMS Ltd and BUFMAR) work to get these specifications for correctness. The
procurement process takes time and it is advisable to get this right.
Step 3: Source Options
The technical officers at central supplying organizations (RMS Ltd and BUFMAR) need to determine
where to obtain the product. There may be pre-qualified vendor list. If not, they will need to search
for a supplier using appropriate tender process and procurement method allowable by the procurement
policy.
Step 4: Price and Terms

The technical officers at central supplying organizations (RMS Ltd and BUFMAR) will investigate
all relevant information to determine the best price and terms for the product and review multiple
suppliers/vendors before making final decisions.
Step 5: Purchase Order
The need, price, specifications and terms and conditions of the product or service and any additional
obligations are used to create a purchase order. The purchase order is used to engage the vendor.
There becomes a binding contract with terms and conditions
Step 6: Delivery
The purchase order is delivered, usually by fax, mail, personally, email or other electronic means.
Sometimes the specific delivery method is specified in the purchasing documents. The recipient then
acknowledges receipt of the purchase order. Both parties keep a copy on file.
Step 7: Expediting and Procurement follow up
The RMS Ltd follow up with vendor to provide status of the order placed regularly. This is to manage
expectations and timeliness of products delivery. It becomes especially important to have a plan B if
there are any delays. Also, payment of vendor for products delivered should not be delayed.
Step 8: Receipt and Inspection of Purchases
Once the vendor delivers the product, RMS Ltd warehouse and technical officers accepts or rejects
the items. Acceptance is based on thorough physical inspection of delivered products to ensure they
meet with specifications stated in the procurement order. These include the pack size, shelf life of
product at the time of receipt, quantity and quality of the pharmaceuticals etc. Acceptance of the items
obligates the payment automatically. Evidence of delivery is the proof of delivery (POD) which must
be signed by recipients.
Step 9: Invoice Approval and Payment
Three documents must match when an invoice requests payment - the invoice itself, the receiving
document and the original purchase order. The agreement of these documents provides confirmation
from both the RMS Ltd and the vendor/supplier. Any discrepancies must be resolved before the
recipient pays the bill. Usually, payment is made in the form of cash, check, bank transfers, credit
letters or other types of electronic transfers by the Rwanda Biometric Center (RBC).
Step 10: Record Maintenance
In the case of audits, the warehouse and procurement unit must maintain proper records. These
include purchase records to verify any tax information and purchase orders to confirm warranty
information.
Procurement online resources
access training. For the UNDP link, register with a non-UNDP email address.
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https://www.youtube.com/watch?v=QJNVrY_Z2NM&list=PLCD3E338A3E58 Quality Management

E906&index=11 video
http://supplychainhandbook.jsi.com/wp- Procurement
content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.6_Fin
al.pdf
https://www.jsi.com/JSIInternet/Inc/Common/_download_pub.cfm?id=11497&
lid=3
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Unit 4: Inventory Management

(Receiving, Storage, Inventory
Control, and Distribution)
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Objectives
By the end of this chapter, participants will be able to:

• Define inventory management and its importance
• Define receiving process of health products and its importance
• Demonstrate the process of receiving health products
• Define good storage practice and its importance
• Describe key storage activities and procedures
• Describe cold chain storage instructions
• Discuss inventory management control terms
• Explain the management of donations
• Explain the management of unusable pharmaceutical products
• Define distribution and its importance
• Discuss good distribution practices
• Explain the national distribution system
4.1. Inventory management
Inventory management is not difficult, but it requires recognition of the value of health supply
chain management to the public health system. Therefore, the government should be committed to
mobilize funds and resources to ensure health supplies are well managed and do finally get to end-
users timely.
4.1.1. Inventory management
comprises the activities related to ordering, receiving, storing, distributing and issuing, and re-
ordering commodity stock. All these activities are tracked and documented; thus, good record-
keeping is critical. There are two types of orders. Procurement orders which are received in central
or regional warehouses and re-supply orders/requisitions which are received in the health facilities
and from the warehouses/RMS Ltd Branches
Diagram 4: Inventory Management Cycle
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4.1.2. Importance of inventory management

Inventory management is important for the following reasons:
• To ensure availability in most drug supply systems
• To maintain patient and health facility personnel confidence in the health care system
• To avoid the costs of stockout: If emergency orders are needed to prevent or manage a stockout,
the unit cost will likely be much higher than for a regular order.
• To avoid the costs of excess stock and product loss
• To minimize procurement costs: Procurement costs increase when products are ordered
frequently.
• To minimize transport costs: Good inventory management will enable less frequent deliveries
of health commodities, allowing more efficient use of transportation.
• To cope with variability in demand: Changes in demand for specific health commodities are
often unpredictable, and adequate stock management allows the system to mitigate the effect
of variability in demand.
• To monitor quality of medicines through visual inspection
4.2. Receiving products
4.2.1. Receiving products

Receiving products is one of the steps of supply chain cycle where purchased or/and donated
products are distributed within a health institution and all stock are processed for storage in
accordance with requirements. A staff member should receive all orders at the time of delivery. A
reception committee receives and checks products and makes reception reports that serves as
reference for administration purposes (feedback to suppliers, payment if applicable). In case any
products are refused, the reception committee fills out and signs the commodity return form with
approval by the top facility manager, and products are returned to the supplier (see commodity return
form in appendix).
4.2.2. Importance of receiving products
• Guarantee the quality of products

• Ensure the availability of right quantity
• Avoid financial losses caused by products ordered but not received, damaged, and/or expired
Detailed steps for receiving commodities are described below
A. Check the quantity of received products:

1. Check for pilfered or damaged products
a. Check all the boxes ordered.
b. Check if any of the boxes have been opened, are wet, or are damaged.
c. If any order is not complete or stock is damaged, contact the RMS Ltd Branch.
2. Check the products received against the items on the purchase order and delivery notes:
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a. The RMS Ltd Branch includes delivery notes and invoices with the details of products supplied.
b. Remove the products from the box and group all items that are the same together.
c. Read the delivery notes and check off each item.
d. Check received products against ordered ones on the purchase order.
e. Make sure that the quantity received have a good shelf life.
B. Check the quality of received products.
To check for signs of damage or deterioration:
a. Check refrigerated items.

Refrigerated items should be stored first. If refrigerated items are not
packed in cold packs, do NOT accept them. If refrigerated items are not
cold, contact supplier.
b. Check the color of products.

If products are discolored, they have deteriorated; do NOT accept them.
c. Check for broken containers. Check for leaks.

Carefully remove broken containers. If there is a leak, remove any
products damaged from the leak.
d. Check for unsealed or unlabeled items.

If items are unsealed, someone may have tampered with them. Also, it is
dangerous to use unlabeled items. Do NOT accept them.
e. Check for unusual odor of products.

If products have unusual odors, they may have deteriorated. Do NOT accept
them.
f. Check injectable liquids.

Shake the vial and then hold it to the light. Clear liquids should have no
particles that reflect light. If a vial has small particles, the medicine has
deteriorated. Do NOT accept the vial.
3. Sign documents related to product delivery (e.g. delivery notes)

After checking the products, all parties should sign delivery notes. However, if the products are
not checked for any reason, the documents should be indicated as “unchecked.”
4. Fill in management tools (e.g. stock cards, eLMIS)

After checking and signing documents, an authorized person should fill in management tools
according to standard operating procedures (SOPs)
5. File signed delivery notes, invoices and purchase orders
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Authorized persons should file the related documents appropriately. A copy of delivery notes will be
filed in main store while original invoices, delivery notes, and purchase orders will be sent to financial
departments.
6. Ensure the storage area is enough, clean and in good condition
4.3. Storage
Storage is keeping health products in a safe, secure, accessible location while awaiting to be used.
4.3.1. The importance of good storage

Good storage conditions ensure that the quality of the products is maintained.
4.3.2. Key storage activities

The key storage activities in the supply chain are medicines receiving, visual inspection, put away
(putting supplies in their respective storage areas), picking, and packing.
Visual inspection of delivered products is done to ensure there are no damages during
transport.
What to look for when conducting visual inspections:

• Number of containers delivered is correct
• Number of packages in each container is correct
• Quantity in each package is correct
• Drug is correct (do not confuse generic and brand names)
• Dosage form is correct (milligrams, percentage concentration, other measurements)
• Unique identifiers are present, if required (article code, Ministry of health stamp or other
codes)
• No visible evidence of damage (describe if present)
4.3.3. Storage procedures
Irrespective of the location system, medicines must be stored within each zone in a way that would
make them easily accessible to personnel while protecting their integrity. They can either be put on
shelves (for small volume and weight), pallets, block-stacked pallets, and pallet racks.
The storage room has designated areas for receiving, usable stock, and quarantine space. The
quarantine space can be divided for unusable products to be disposed, and for products awaiting a
quality control check.
4.3.4. Storage best practices
1. Always follow manufacturer or shipper’s directions when stacking and follow labels for
storage conditions
2. Keeping products in a store makes it easy to always know what is available.
It is also an easy way to keep products safe. The store should be large enough to fit all the products.
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The store should be a secured room or locked cupboard. To secure the store, keep it locked and give
keys only to persons who are responsible for the supplies in the store. Keep an extra set of keys in a
safe place. Secure all openings with grills or bars to prevent theft. Keep the store locked always when
it is not in use.
3. Keep the store in good condition.
High temperatures, light, or humidity may damage products. Heat affects liquids, ointments, and
suppositories. Some medicines, such as injectables and eye or ear drops, spoil quickly when exposed
to light. Tablets and capsules can easily absorb water from the air, making them sticky and damaged.
The following actions are needed to keep the products in good condition:
a. Inspect the physical structure of the store regularly.
Repair any damage to the roof, walls, door, windows and floor.
b. Control the temperature in the store.
Check that there is a ceiling in the store.
Allow warm air to escape.
Open the door and windows while someone is in the store. Install air vents/conditioners.
Record temperature twice a day.
c. Control the light in the store.
Block any direct light that enters the store through windows.
Either paint the windows white or hang curtains.
d. Control humidity (moisture) and prevent water damage.
Check that there is good drainage. There should be drainage channels around your store.
The roof should have gutters. Secure drainage areas.
Allow air to move freely. Secure air vents and windows.
Repair leaks as soon as they occur to reduce moisture and water damage. Containers of tablets
and capsules may be packed with a sachet of desiccant (nonedible drying crystals). The desiccant
keeps the inside of the container dry. Do NOT open the sachet. Keep the sachet in the container.
Keep the container closed except when dispensing medicines. Keep all cartons on pallets.
e. Keep the store free of insects and pests.
Some common pests are rats, roaches, ants and wasps.
Clean spills, which may attract pests and remove broken containers immediately.
Use screens to keep out insects.
4. Keep your store clean and organized.
In a clean and organized store, it is easy to find products.
The supplies are likely to be in good condition and ready to be used.
To organize the store:

a. Clean the store and keep it tidy.
Dust contaminates products and makes labels difficult to read. Spills and breakages collect dirt.
Mop the floor, dust the shelves, and wipe down the walls regularly. Do not sweep the floor in the
storeroom.
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b. Store products on shelves.

Using shelves is an easy way to organize products. Place the boxes or boards on pallets.
Do NOT put boxes or boards directly on the floor, which might be wet. Moisture can rot the
cardboard or wood.
How to store health commodities on shelves

• Arrange products on shelves off the floor in groups according to your order form e.g.
externals, internals, and injectables).
• Store tablets, capsules, and other dry medicines (such as ORS packets) in airtight containers
on the upper shelves.
• Store liquids, ointments, and injectables on the middle shelves.
• Do not put dry medicines below them.
• If liquids leak, the dry medicines may spoil. Otherwise, liquid products can be kept on the
bottom shelves.
c. Products arrangement in a small store.
Products can be arranged in one of three ways in small stores.
1. Alphabetical order by generic name
Often seen in both large and small facilities. Arrange and label medicines by the generic
names in alphabetical order and allow enough space for each item. Print the label and
attach to the front of the shelf. Group products by expiry dates following FEFO method.
2. Therapeutic or pharmacologic category

Most useful in small storerooms or dispensaries where the health care worker knows what
the medicines are used for (e.g. antibiotics, pain, non- communicable diseases).
3. Dosage form
Medicines come in different forms, such as tablets, syrups, injectables, and external use
products such as ointments and creams. In this system, medicines are categorized according
to their dosage.
Note: Arrange cartons above the shelve or on the pallet but not on the floor. Make sure identification
labels, expiry dates, and manufacturing dates are visible, if not, write all this information on the visible
side of the carton.
1. Products arrangement in a larger store (warehouse)

1. Health system level: In this system, items for different levels of the health care system
are kept together.
2. Frequency of use: Fast-moving products are placed in the front of the working area in
this system, to minimize the amount of movement required to pick and pack the items
that are ready for dispatch to the customer.
3. Random location: A specific storage space, such as a pallet or shelf, is assigned
a unique location code that corresponds to its aisle, shelf, and position on the shelf.
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2. Keep some products in an environment with controlled access

Identify products that are at risk of theft or abuse or have legal or regulatory requirements in a
controlled access area. Controlled products include medicines such narcotics, opioids, strong
analgesics, psychotropic medicines, ARVs and ACT.
4.3.5. Products that require special storage conditions

Storage of flammable and corrosive products require special temperature-controlled conditions as
follows:
• Flammables: Some flammable liquids such as acetone, anesthetic ether, alcohols and kerosene
should be kept in a separate location away from the medicines. Instead, they should be kept in a
steel cabinet in a well-ventilated area, away from open flames and electrical appliances in the
store.
• Corrosives: these are substances such as acetic acid, concentrated ammonia solutions, silver
nitrate and sodium nitrate. These too should be stored in a separate steel cabinet to prevent
leakage. Protective gloves and eyeglasses should be used when handling these items.
• Temperature-controlled products: The potency of vaccines, blood products, test kits, and many
other items depends on cold storage. Vaccines, in particular, must be kept at precisely controlled
temperatures from the point of manufacture to the point of administration.
4.3.6. Cold chain storage instructions

Cold chain is the supply system used to keep vaccines and other medical supplies at full strength by
keeping them at temperature suggested by manufacturers. This temperature needs to be
maintained from the manufacturer until the moment the vaccine is used. The cold chain manager is
responsible for all cold chain equipment repairs on refrigerators, vaccine carriers, and cold boxes.
This person is the main contact for questions about the cold chain.
Storing vaccines and using the fridge correctly

• Check the fridge temperature DAILY and record it on the FRIDGE TEMPERATURE
CHART.
• The layout in the picture above is the best way to organize your fridge.
• NEVER let Hepatitis B, DPT or TT vaccines FREEZE or come in direct contact with
ICE.
• Keep vaccines in separate containers in the main compartment of the fridge.
• Stack the vaccines carefully so that air can move between the boxes.
• Keep the diluent (to reconstitute measles and BCG) in the MAIN compartment with the
vaccine.
• Freeze ice packs in the FREEZER only two at a time so that you do not exceed the
cooling power of the fridge.
• Only open the door when you need to get refrigerated medicines and vaccines out
(opening the door lets the HOT air in).
• NEVER keep food in the fridge. Food makes the temperature of the fridge uneven, which
can damage vaccines.
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• NEVER keep EXPIRED vaccines or PARTLY USED BCG and measles vaccines.
• Dispose of properly.
• All vials of opened BCG and measles vaccines MUST be discarded at the end of the day or
six hours after diluent has been added, even if they are kept at a sustained temperature of
+2oC to +8oC.
4.3.7. Use of cold box and a vaccine carrier

Vaccine carriers and cold boxes have thick walls and lids. They are insulated.
This means that they are made of special material which does not allow heat to pass through it. An
insulated container cannot keep vaccines or ice packs cold, but only a refrigerator can make them
cold.
Cold Boxes
Cold boxes usually have a cold life of two to seven days.
Cold boxes are used to transport vaccines from the Expanded Vaccination Program store all the way
to the health facility, and from the facility to the immunization sites.
Vaccine Carriers
Vaccine carriers are smaller than cold boxes. They can keep vaccines cold for only 48-72 hours (1-
3 days), and only if used carefully.
Vaccine carriers are used to:

• Take vaccines to outreach sites and for temporary storage during health centre immunization
sessions.
• Transport vaccine easily by motorbike or walking.
• Temporarily store vaccines to be used during immunization sessions.
• Store vaccines for a short time while defrosting the fridge, or when the fridge breaks down.
Note: When an order is placed, the RMS branch must inform health facilities when it will
be delivered. Vaccines should not be kept in cold boxes for a long time and should be placed
in a fridge upon receipt.
4.3.8. Temperature monitors

Temperature monitors are used to show when a fridge, icebox, or vaccine carrier has reached a
temperature too warm or too cold for safe storage of vaccines.
Thermometer and Chart
The main way to monitor the fridge temperature is to use a fridge thermometer and temperature
record chart.
The fridge thermometer is designed to read temperatures above and below zero the temperature
is recorded by looking where the silver or red line has risen.
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Some fridges have a digital thermometer which displays the temperature in numbers.
The fridge temperature should be checked twice daily to make sure it is correct. These temperatures
should be recorded on a Fridge Temperature Record Chart. This chart acts as a record of the fridge
temperature and can be used to tell if there are problems with the fridge. A sample chart appears at
the back of this manual.
The facility should keep a record of its completed monthly temperature record chart to show
supervisors that the fridge has been working properly over many months. If the temperature deviates
from the normal range, this should be reported to the upper level and appropriate measures should be
immediately taken.
4.3.9. Stock rotation and expiry monitoring

FEFO (First to Expire = First Out!)
FEFO means that the medicines with earliest expiry date are distributed first, regardless of the order
in which they are received. When the order is unpacked, the stock with a long shelf life should be
placed in the back and stock with the earliest expiry date should be moved to the front. This is called
“stock rotation. This is most advisable to use for medicines.
FIFO (First In = First Out!)
FIFO means that you use the medicines that have been in your facility the longest first. If your
medicines have the same expiry date or you have medical sundries with no expiry date, then you
should use the item that has been in your facility the longest first. It is advisable not to use medicines
without expiration dates. FIFO is not popular with Pharmaceuticals but can be for some medical
equipment and consumables.
4.3.10. Summary of good storage practices

1. Clean and disinfect storeroom regularly.
2. Store supplies in a dry, well lit, well ventilated storeroom out of direct sunlight.
3. Secure storeroom from water penetration.
4. Ensure that fire safety equipment is available and accessible, and personnel are trained to
use it.
5. Store condoms and other latex products away from electric motors and fluorescent lights.
6. Maintain cold storage, including a cold chain, for commodities that require it.
7. Keep narcotics and other controlled substances in a locked place.
8. Store flammable products separately from other products. Take appropriate safety
precautions.
9. Stack cartons at least 10 cm (4 in) off the floor, 30 cm (1 ft) away from the walls and other
stacks, and not more than 2.5 m (8 ft) high.
10. Store medical supplies away from insecticides, chemicals, old files, office supplies, and
other materials.
11. Arrange cartons so that arrows point up. Ensure that identification labels, expiry dates,
and manufacturing dates are clearly visible.
12. Store supplies in a manner accessible for FEFO, counting, and general management.
13. Separate and routinely dispose of damaged or expired products.
Note: Narcotics and psychotropic medicines and other controlled medicines must be stored
in a double-locked cupboard as required by law No03/2012 of 15/02/2012 governing narcotic
drugs, psychotropic substances, and precursors in Rwanda.
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4.4. Inventory controls
4.4.1. Assessing stock status

Assessing stock status is a management function primarily to guide decisions related to
resupply. Stock status assessments should be conducted regularly at least monthly to avoid
stockouts. Stock status should also always be assessed during quantification exercise.
The importance of assessing stock status:

Being able to determine how long the stock will last will tell if supplies are running too low or if the
stock might expire before use. It helps also to know the stock value in terms of money or whether the
facility is overstocked.
4.4.2. How to assess stock status

Stock status is knowing how long your stock will last. It is calculated by dividing stock on hand by
average monthly consumption.
Stock on hand (SOH)

SOH is the quantity of usable stock at the facility. (Items that are unusable are not considered as part
of stock on hand.) SOH is obtained from store cards or from eLMIS after running a physical count.
Stock position is the sum of stock on the hand (working and safety stock) and stock on order,
minus any stock back-ordered to clients. Overstocks may occur if several months’ worth of stock
are on hand or on order when a new order is placed.
Average monthly consumption (AMC)

AMC is the amount of stock used on average in one month. The quantity of medicines used over time
must be known to calculate this. AMC can be calculated by using your stock card or eLMIS. The best
way to calculate your AMC is to use information on stock given to the patients (consumption data).
To calculate the AMC, first calculate a simple average by finding the sum of a set of monthly
consumption, and then divide by the number of months used. This information can be found from:
• the daily consumption registers
• eLMIS
• tick sheets
• patient registers
• stock cards
Because AMC can change over time, it is important to derive an average from the last three
to six months, and AMC should be checked about every six months for changes.
Safety stock
Safety stock is the stock that should always be on hand to prevent stockouts. When lead times and
consumption are predictable and stable, the reorder level does not necessarily need to include safety
stock, however, when consumption patterns and lead-times are highly variable, additional stock will
be needed. SS= Lead time x Average Consumption
Max (maximum stock level)
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Max is short for maximum stock level in a Max/Min inventory control system. It represents the
highest acceptable stock level needed to satisfy demand until the next order after the current one is
received. Any order placed should not exceed the maximum level, which is either 3 or 6 times the
AMC (the former for the RMS branch, and latter for the Central level). Maximum stock is calculated
as the average monthly consumption multiplied by the procurement period or resupply cycle.
Min (minimum stock level)/reorder level
Min is short for minimum stock level. It is the quantity of remaining stock that should trigger a
reorder. If the ordering system is working well, stock should not be lower than the min level when
the next order arrives. The store manager is responsible for ensuring that stock never goes below the
minimum. Min stock is calculated as the average lead time multiplied by the average quantity
consumed during the lead time. At the RMS branch level, the minimum is defined as: AMC x 2 =
Min. At Central level, the minimum is defined as: AMC X 3=Min
Minimum and maximum stock-level formula: this formula is often used in scheduled purchasing
with set order intervals. Using this approach, one defines a theoretical maximum stock for each item
to provide sufficient, but not excessive, stock to last from one order to the next, as well as a minimum
stock level or reorder level that determines at what point an order should be placed. Safety stock may
be included in the minimum stock level, or an additional quantity may be assigned to protect against
variations in demand and supplier performance.
Procurement period is the time from when the first order is placed until when the next regular order
will be placed. In any scheduled system, the period might be in the multiples of one month or
days/weeks (which needs to be converted to months by dividing number of days per 30.5 days) in a
perpetual system. Procurement period for essential medicines is resupply period for program
medicines
Months of stock (MOS)
This is the length of time in months that the stock will last. This can be calculated when the AMC
and SOH are known. MOS is calculated by dividing SOH by AMC.
Emergency order point (EOP)
The EOP is the level at which stock is at high risk of stocking out, necessitating immediate placement
of an emergency order. Emergency order point is reached when a stock level reaches a safety stock
level. Efforts must be made beyond regular ordering processes to get the products to avoid a stockout.
The EOP is calculated as: EOP=0.25 X Min
4.4.3. Physical count

Physical inventory is the process of counting by hand the number of each type of product in the store
at a particular given time. The process allows one to check that the stock on hand matches stock
keeping records. This is always done at the end of the month. There are two common methods of
physical inventory: a complete physical inventory and a cyclic or perpetual physical inventory.
Complete physical inventory: this kind of physical inventory ensures all products are counted at the
same time. This is usually done at least once a year in all stores but more frequent inventories
(quarterly or monthly) are recommended. A complete physical inventory is easier to conduct regularly
at small facilities. Large warehouse may need to close the facility for a day or longer.
Cyclic or perpetual physical inventory: this kind of physical inventory, selected products are
counted and checked against the stock keeping records on a rotating or regular basis throughout the
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year. This is appropriate at facilities that manage large quantities of products and should be done at
least once during the year.
Before doing any kind physical inventory, always check that all the stock is in its correct place, and
that it is not expired or damaged. After conducting a physical count, compile a report disclosing some
of the inventory information: item description, park size, lot number, quantity, expiry date and the
value (see annex). The report should be signed by the team which participated in the inventory before
it is approved by management team.
Instructions on conducting a physical inventory

• Check that the stock is in the correct place.
• Clean the shelves to remove dust and insects.
• Check for expired/damaged stock.
• If stock is expired/damaged, remove it from the shelf, write it out on the stock card, and put
it in the quarantine zone. (Don’t forget to note this on your inventory reporting form too.)
• Any expired/damaged stock and opened containers should NOT be counted.
• Carefully count the number of full current units you have.
• Write this number on the stock card and on your inventory reporting form. (Watch
carefully that you count using the SAME units that you use on the stock card, e.g.
tablets or bottles of 1000.)
Maintaining the quality of products in storage

Checking for physical damage, cleaning, heat and humidity control, water damage
prevention, protection against fire, preventing pests and protection against theft are some of the
measures that can be adapted to ensure the quality of products is maintained throughout the
entire storage period. The following list describes what to look for to prevent the quality from
being compromised.
Type of Indicator to look for

products
All products Broken or ripped packaging
Missing, incomplete, or unreadable labels
Blackening of the packing, which may indicate fungal growth in the packing
material.
Liquids Discoloration
Cloudiness
Sediment
Broken seal on bottle
Cracks in ampoule, bottle, or vial
Dampness or moisture in the packaging
Latex Dryness
products Brittleness
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cracks
Lubricated Sticky packaging
latex Discolored product or lubricant
products Stained packaging
Leakage of the lubricant
Tablets Discoloration
Crumbled pills
Missing pills from blister pack
Stickiness
Unusual smell
Injectables Liquid that does not return to suspension after being shaken
Foreign particles
Sterile Torn or ripped packaging
products Missing parts
(including Broken or bent parts
IUDs) Moisture inside the packaging
Stained packaging
Capsule Discoloration
Stickiness
Crushed capsule
4.4.4. Management of donations
Often visitors from other countries may have medicines with them that they want to donate to you.
These visitors include travelers, foreign workers, church groups, or visiting medical teams. Donations
can be useful, but they can also be dangerous or even illegal, and sometimes can cost you money and
waste your time.
Problems with donations

Many different types of pharmaceutical donations exist, and each has its own set of specific problems.
These are some of the common problems:
• Pharmaceutical donations in emergency situations may not be relevant for the situation, or
health workers may not be familiar with the donations or may not be registered in the
recipient country and may not comply with local treatment guidelines.
• Pharmaceutical donations between government as part of development aid may interfere
with the implementation of national registration procedures, quality assurance, and
inspection schemes, as a result may not be in line with promotion of rational medicines use.
• Donations of returned or unwanted pharmaceuticals that doctors may be forced to prescribe
to patients, yet the same medicines may not be consistently available.
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For ALL donations, use the following guidelines:

• People must have permission from Rwanda Food and Drug Authority or the Ministry
of Health BEFORE they donate any health commodities. (Check before accepting)
• ALL donations should be on the Essential Medicines List.
• They should be from a reliable source. (If not sure then don’t accept.)
• All medicines should be labeled in English/French with the medicine name, strength, form,
batch and expiry, storage conditions and manufacturers name clearly printed. (If you can’t
read it don’t accept it.)
Procedures need to be developed to define needs, prioritize requirements, coordinate donations, decide
which supporting documents is needed, establish a criteria for accepting or rejecting donations, arrange
for transportation and storage area, agree on who will pay for all the involved costs, agree on how
donations are to be valued in budget and expenditure reports, agree on whether to charge or not to
charge donations, dealt with donated products not registered in the country, supervise the distribution
of donated medicines to prevent them from being diverted for commercial sale, and plan how worthless
donations will be disposed.
Note: Donated medicine management may sometimes require a separated room from the general
storage room based on donor’s requirements. When this is the case, donated medicines will have
to be stored apart from general stocks, and separate stock records and reports should be kept.
You DO NOT have to accept all medicine donations.

If they DO NOT comply with the rules, say NO THANK YOU.
4.5. Management of unusable (Expired, damaged and quarantined) pharmaceutical products
Expired and unwanted medicines need to be disposed properly. Disposing of medicines helps ensure
the safety of the local people and the environment. Keep expired and unwanted medicines separate
from the normal medicine and equipment supplies. Dispose of them properly according to the standard
operating procedures.
Tips on how to dispose health commodities:

• Separate each unusable (expired and damaged) medicine from the stock in use immediately
after its identification and quarantine it prior to disposal.
• Mark the quarantine zone, by sorting of unusable medicines should be done carefully with
respect to national SOPs in place.
• Make a list of all medicines to be disposed. The list must include the following
information: the name, strength, form, batch number, expiry date, monetary value of each
item on the list, and the quantity for each medicine. The list must be approved by a competent
authority at the health facility level. For district hospitals, the board of directors will approve
the list; for health centers, the list will be approved by COSA (comité de santé) (reference:
law no 50/2008 of 9/9/2008 determining the procedure for disposal of state private assets).
• The disposal process is conducted using the nearest appropriate incinerators. Provide report to
competent entities and include the date of activity, disposed volume (kg), and monetary cost.
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Table 4: Waste Management Methods
Category Disposal Methods Comments

Solids Landfill No more than 1% of daily municipal
Semisolids Waste encapsulation waste should be disposed of in an
Powders Waste inertization untreated form in a landfill
Medium-and high-temperature
incineration
Liquids Sewer Antineoplastic should not be disposed
High-temperature incineration of in the sewer due to the high risk
they present to anyone coming into
contact with them
Ampoules Crush ampoules and flush Antineoplastic should not be disposed

diluted fluid into sewer of the sewer due to the present to
anyone coming into contact with them.
Anti-infective Waste encapsulation Liquid antibiotics may be diluted with

medicines Waste inertization water, left to stand for several weeks,
Medium-and-high-temperature and discharged to a sewer
incineration
Antineoplastic Return to donor or manufacturer Not to landfill unless encapsulated

Waste encapsulation Not to sewer
Waste inertization No medium-temperature incineration
High-temperature incineration
Chemical decomposition
Controlled Waste encapsulation Not to landfill unless encapsulated

medicines Waste inertization
Medium-and-high-temperature
Aerosol canisters Landfill Not to be burnt, may explode

Waste encapsulation
Disenchants To sewer or fast-flowing No undiluted disinfectants to sewer or

watercourse: small quantities of watercourses
diluted disinfectants Maximum 50 L per day diluted to
sewer or fast-flowing watercourse
No disinfectants at all to slow-
moving or stagnant watercourses
PVC plastic, glass Landfill Not for burning in open containers
Paper, cardboard Recycle, burn, landfill
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Table 5: Inventory management checklist
Record Keeping Are the inventory records up to date? Check the stock cards to see how
recently they have been used?
Stock levels Are minimum and/or maximum stock levels calculated for each item?
Has the average monthly consumption been calculated recently and
accurately?
Has the store successfully avoided stock outs?
Quality Is there a system for performing quality checks to make certain that all
assurance medicines are of good quality?

Are medicines and supplies checked for quality immediately upon arrival
and before they are dispensed to patients?
Are all reported problems documented?
Are all documented problems reported?
Physical Is a physical inventory conducted at least once a year? Small facility should
inventory do this at least once a month or every two-six months.
Ordering If the facility orders its supplies, are orders placed on time in order to
maintain inventories at agreed stock level?
Are the quantities to order calculated correctly?
Has an ABC and/or VEN analysis been performed?
Reporting Are reports submitted on time?

Are any reports missing in the last six months?
Are reports filled out correctly?
Is the information in the reports accurate?
Disposal Is there an annual survey of expired or damaged medicines and supplies, or

physical inventory of unusable stock that is set aside?
Are damaged or expired products removed and disposed of according to
government guidelines?
Materials Is there an up-to-date supply manual available to staff?

Is th er e an adequate supply of the correct forms for recording stock
movements, reporting, and ordering?
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4.6. Typical pharmaceutical distribution system
Distribution begins when pharmaceuticals are dispatched by the manufacturers or suppliers and ends
with patients. The distribution system includes port-clearing, receipt and inspection, inventory
control, storage, requisition of supplies, delivery, dispensing to patients and reporting consumption.
The primary distribution management goal is to maintain a steady supply of pharmaceuticals and
supplies to facilities where they are needed while ensuring that resources are used in the most effective
way. A good distribution system is a cost-effective system that provides an acceptable level of service.
Effective pharmaceutical distribution relies on good system design and good management. A well-
designed and well-managed distribution system should:
• Maintain a constant supply of medicines
• Keep medicines in good condition throughout the distribution process
• Minimize medicine losses caused by spoilage and expiry
• Maintain accurate inventory records
• Rationalize medicine losses caused by spoilage and expiry
• Maintain accurate inventory records
• Rationalize medicine storage points
• Use available transportation resources as efficiently and effectively as possible
• Reduce theft and fraud
• Provide information for forecasting medicine needs
• Incorporate a quality assurance program
A distribution system needs to be able to move medicines from a central warehouse to lower levels
of the supply chain. The following considerations should be kept in mind when setting up a
distribution system:
• Define appropriate roles in the distribution system

• Design an efficient network of storage facilities with the fewest number of levels appropriate
to the country’s geography
• Select an appropriate strategy for delivery
• Keep reliable records of medicine stocks and consumption Allocate supplies based on actual
workload andt8treatment needs
• Maintain accountability procedures and securet8storage at each level of the system Construct or
renovate facilities to be appropriate fort8storing medicines
• Manage storage facilities to maintain pharmaceutical quality and efficiently serve health units
• Make reliable transport arrangements
• Reinforce reporting and supervision arrangements
The importance of distribution

Medicine distribution is a key element of the medicine management cycle, and its primary objective
is to ensure the smooth delivery of medicines and medical supplies to the final user, the patient,
through different internal services. The process of ensuring optimal operation of distribution in the
supply chain is also known as optimization.
Good distribution practices of health commodities ensure that:
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• There is a constant and uninterrupted commodity supply

• Commodities stay in good condition until they are used
• Losses due to spoilage and expiry are minimized
• Theft and fraud are prevented
• Adequate stock is maintained
• Storage locations that allow for on-time delivery are used
• The collection of accurate information for forecasting is enabled (World Bank, 2004)
Push and pull systems

Distribution schemes can be defined by which levels of the system order medicines and which, if any,
passively receive medicines distributed from higher levels. The two basic alternatives are:
Pull system: Each level of the system determines what types and quantities of medicines are needed
and places orders with the supply source using the information from the recipient level. This type of
system is sometimes called an independent demand or requisition system.
Push system: supply sources at some level in the system determine what types and quantities of
medicines will be delivered to lower level using the information from the lower (recipient) level.
Allocation is when resupply decision is made at a higher lever to a lower level without using
information from that lower level.
Pull system are preferred whenever the capacity exists to manage them effectively. When the capacity
does not exist at the lower level but are available at higher level, push system will be preferred. Yet
an allocation system can be useful in certain situations, such as disaster relief and when the supply
pipeline does not function at all levels of the system.
Other conditions favoring a pull system are:

• Lower-level staff members are competent in assessing needs and managing inventory
• Sufficient supplies are available at supply sources to meet all program needs
• A large range of products is being handled
• Field staff members are regularly supervised, and performance is monitored.
• Good data are available to decision makers
Other conditions favoring a push system

• Lower-level staff members are not competent in inventory control
• A limited number of products is being handled
Conditions that may favor rationing and allocation:

• Disaster relief is needed, or the situation calls for short-term supply through prepacked kits
• Demand greatly exceeds supply, making rationing necessary
Factors that determine distribution frequency

• Storage capacity at each level of the system
• Availability, order size, carrying capacity, and cost of transport
• Seasonal factors that influence transport reliability
• Staffing levels and competence of staff at each level of the system
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• Other factors, such as expiration dates, security against pilferage, cash flow, and other locally
relevant concerns
Transport
Transport managers should make the best use of available transport through careful route
planning and delivery scheduling and should carefully consider private-sector alternatives.
Delivery schedules
• Good planning is needed to ensure that each facility receives supplies regularly and on time.
• When determining delivery schedule consider storage capacity, increased transport costs per unit
supplied, efficient vehicle usage and climatic factors.
Things needed for effective distribution management

• Experienced and professional logistics managers
• Reliable management information systems for coordinating the distribution network
• Good communication for pharmaceutical distribution system
Steps to follow in order to transport medicines safely

• Fill voids in cartons with packing material and prevent breakages
• Load vehicles carefully and systematically (first-in/last-out) and save time when unloading
• Secure vehicle doors to prevent losses or theft or physical damage
• Protect supplies from sun or rain to minimize deterioration of pharmaceuticals during transit
• Stay near the vehicle to guard against theft
• Start early in the day and drive with care, especially on hazardous roads and avoid nighttime
driving to prevent accidents
• Ensure safe and timely delivery
Techniques for the theft control right from port clearance to transportation
• Containers at the port should be physically secured to reduce both major and petty theft
• Containers should be cleared at the port within the shortest time possible to reduce chances of
products being stolen ports where security is weak
• Select products that are likely to be pilfered or be misused and check against its delivery
records
• Check packing seals to check if they were not tempered with
• Use portable strongboxes or built-in compartments with padlocks or tamper-proof strings
should be used
National distribution
The distribution system in Rwanda begins with products flow from central medical stores to
districts. The distribution plays an essential role in the medicines logistics system and consists of
moving products down the pipeline from the national central warehouse until they are dispensed to
the patients.
Country distribution starts when the goods arrive to the country and are released from customs (port
clearing) for delivery to the central warehouse. In Rwanda, products flow through a supply system
that consists of a central medical store that carries out procurement, storage and delivery to RMS
branches. The national distribution system to supply pharmaceuticals across the country is mostly
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active. The central warehouse delivers medicines to RMS branches, which in turn supply health
facilities.
At the district level, health facilities place orders at the RMS branch based on their need, and the
district distributes ordered products. Medicine orders are placed through the eLMIS.
The “Active Distribution” operational in Rwanda is designed for the upper level that supplies
product to lower level be responsible for the cost of transportation. However, the lower takes the
cost in emergency requisition scenario. This makes lower level to ensure the right quantity of
products are always requested.
Product recalls
Pharmaceutical products found to be defective should be recalled quickly. The quality
assurance unit should develop standard procedures for carrying out the recall. Recalls may be
classified according to the degree of risk to the consumer when the product is likely to cause
serious illness or death, temporary or mild illness, and no adverse clinical effect. Once
products are detected to be causing one of these three problems, the quality assurance
program should monitor the quality and ensure recalls are done on time.
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Inventory management online resources
All online resources are free, and you will need to create an account as some of the links requires
to access training. For the UNDP link, register with a non-UNDP email address
https://elearning.jsi.com/mod/scorm/view.php?id=1 Topics 3, 4
and 5
https://www.youtube.com/watch?v=- Transportation
ZpHiMTwOdM&list=PLCD3E338A3E58E906&index=4 and Logistics
video
https://www.youtube.com/watch?v=kpGLsvjdOiA Disposal of
Waste video
http://supplychainhandbook.jsi.com/wp- Inventory
content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.7_Final.pdf strategy
http://supplychainhandbook.jsi.com/wp- Warehousing
content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.8_Final.pdf and
Distribution
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Unit 5: Logistics Management

Information System (LMIS)
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Objectives
By the end of this chapter participants will be able to:
• Define logistics management information system (LMIS)
• Explain the importance of LMIS
• Explain the six “rights” for logistics data
• Describe the essential data needed for decision making
• Explain the importance of LMIS vs. eLMIS
5.1. Introduction
5.1.1. Logistics management information system
A logistics management information system (LMIS) is the system of records and reports that one
uses to collect, organize, and present logistics data gathered across all levels of the system.
An effective LMIS enables people involved in health product management to make informed
decisions that will ultimately improve medicines availability to patients.
5.1.2. The importance of a logistics management information system

Information is the engine that drives the entire logistics cycle. We collect data for appropriate
information to make decisions; the better information we have, the better decisions we can make.
The LMIS can be used to make decisions in a variety of areas, including:
• Quantification
• Procurement
• Inventory management and control at the health facility level Monitoring program performance
• National pipeline monitoring
• Redistribution of health commodities when necessary
• Capturing information on where consumption is highest or lowest, which helps determine
whether more resources are required
An effective LMIS for health products will thus contribute to preventing stockouts and stock
imbalances of medicines at health facilities. However, it heavily relies on good record- keeping
practices of the staff responsible for medicines management at health facilities.
The six “rights” for logistics data

The logistics six “rights,” which also apply to data, are the six key elements needed for an
effective LMIS. MOH and programs need:
1. the right data (also called the essential data items),
2. at the right time (in time to act),
3. at the right place (the place where the decisions are made), and
4. in the right quantity (having all essential data from all facilities).
The data must be of
5. the right quality (we must believe that the data are complete and accurate) and Right Condition
6. at the right cost (we should not spend more to collect information than we spend on supplies).
5.2. Essential data for decision making
To make supply decisions, three pieces of information are needed:

• stock on hand: Quantities of usable stock available at any level or at all levels of the system at
a point in time.
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• rate of use (consumption): The average quantity of commodities dispensed to users in a given
time.
• losses and adjustments: Losses are the quantity of health commodities removed from the
distribution system for any reason other than consumption by clients (e.g., losses, expiry, and
damage). Adjustments may include receipt or issue of supplies to/from one facility to another at
the same level (e.g., a transfer) or a correction for an error in counting. Losses/adjustments
may therefore be a negative or positive number.
These are the three MINIMAL and ESSENTIAL data required to manage a logistics system. They must
be recorded as well as reported through the LMIS.
5.2.1. types of records

In the supply pipeline, only three activities can happen: supplies are stored, moved (in transit), or
consumed (used). Because we want to be able to monitor supplies always in the pipeline, we need three
types of records to track the supplies.
1. Stock keeping records
These keep information about products in storage (stock on hand, receipts, issues, losses, and
adjustments). Anyone who receives or issue stock from storage and takes a physical inventory should
complete the stock keeping records. When the stock keeping record is full, a new record should be
started using the ending balance from the previous record. Examples are stock cards and store ledgers.
2. Transaction records
These keep information about products being moved from one storage to another (requesting, receiving,
and reporting form as well as delivery notes). Sometimes, a transaction record will be combined with a
type of report and will include data like current stock on hand, and depending on the system design,
losses and consumption data. Warehouse personnel or pharmacy personnel or nurses. Examples are
‘issued’ and ‘receipt’ vouchers as well as combined requisition.
3. Consumption records
These keep information about products being used (consumption data — this can be found, for example,
in the Daily Consumption Register, which records the medicines dispensed to patients or end user at a
facility). Usually, products are not distributed (dispensed) directly from the storeroom to the customer;
therefore, actual consumption data is not collected on a stock keeping record. Issue data is often a
substitute for consumption data. Service providers who dispense products to clients or use products at
SDPs complete this type of record. Examples are daily activity register, daily usage registers and
pharmacy dispensing register
Note: A stock card is an individual stock keeping record that holds information about a single product
by lot number or batch number. The card should note the stock on hand, losses and adjustment of a
product for that batch number only. An inventory control card is an individual stock keeping record that
holds information about all the lots of a single product, it can also be known as a summary of many bin
cards for a product. To ensure each lot is managed correctly in large warehouse, it usually advised to
maintain both inventory control cards and bin cards. In small storerooms, stock keeping record or stock
card or inventory control cards can be used. Apart from these record tools, an electronic logistic
management information system (eLMIS) also can be used for recording, moving, and reporting data.
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Sample Stock Card

REPUBLIC OF
RWANDA
STOCK CARD No.
Maximum Stock: !
MINISTRY OF HEALTH
P.O. BOX 84, KIGALI Emergency Order Point:
Product Description:
Province: !
(Name, Dosage, Form)
District: Unit of Issue: !
Storage Condition: !
Facility Name:
Product Code !
Months
Received from/ Batch Expiry
Date Received Issued Balance of Observations Signature
Issued to Number Date
Stock
&676>F5!)6DD=5B!+ADH!6DB
&
& &
& &
&
& &
& &
& &
& &
& &
& &
& &
& &
& &
& &
& &
Monthly January February March April May June July August September October November December
Consumption/
Distribution -- -- -- --
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5.3. Electronic logistics management information system (eLMIS)
The Ministry of Health has strengthened national supply chain management planning by implementing
an electronic logistics management information system (eLMIS) to improve supply chain processes and
best standard practices, and to ensure availability of accurate logistic data in a timely manner for
informed decision making.
5.3.1. eLMIS functionalities

An eLMIS has various components, with its users' roles and responsibilities assigned depending on
health care levels. These components are order management, inventory management, transportation,
warehouse management, price configuration, and replenishment planning.
5.3.2. Importance of recording and reporting through an eLMIS

Rwanda is benefiting from the use of an eLMIS to collect and use more complete and accurate data
which allows for a timely decision-making process.
The advantages of using an electronic version over a paper-based system include reducing stockouts,
managing waste and losses, and operating an effective and efficient supply chain. In addition, preparing
a summary and feedback report is easier and less time consuming when the LMIS is automated. An
eLMIS application can automatically populate report elements, especially if the system is also used for
routine inventory control, and for opening balance, receipts, consumption, losses, or adjustments that are
recorded with every transaction.
With the click of a button, the eLMIS can generate a summary report and a requisition order with
suggested replenishment quantities. The eLMIS can also streamline and customize a feedback report
by generating and transmitting notifications, reminders, and alerts.
A notification might be a short message to a manager to log in, review, and approve a requisition, or
to a health care worker that a consignment is ready for pick up or delivery.
A reminder can help personnel to attend to routine activities, such as conducting physical inventory at
the end of the month and submitting their requisition orders.
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An alert flags a problem, such as a product that has limited shelf life remaining, or an impending
stockout.
An eLMIS can also enable routine reporting to other stakeholders, programs, and divisions within the
Ministry of Health and development partners.
Likewise, an eLMIS enables analysis of supply chain performance by displaying dashboards that are
specific to each user and role within the system. At higher levels, these dashboards can help supply
chain managers see the big picture based on key performance indicators, and to drill down into specific
indicators.
Finally, an eLMIS can be integrated into the broader supply chain and health information systems to
enable deeper analysis, better workflows, and greater visibility across health domains. An eLMIS can
be linked with electronic medical records and other eHealth systems.
An LMIS is at the heart of key decisions making in the supply chain. It is therefore important that:
• Health center (HC) and hospital health supply chain staff review their data before entering it in
the eLMIS.
• Both HC and hospital health supply chain staff enter data into the eLMIS on a regular basis.
5.3.3. Data interpretation steps

• Check if the data is correct by reviewing if calculations were done correctly by working closely
with data validation committee
• Check if the data is representative by ensuring that aggregation and analysis of data is based
on a representative sample of data to ensure that a majority of units are reporting on time.
• Check if any of the figures seem high or low Compare the figures with previous figures
Compare figures for different geographic areas
• Check what might be the cause of differences identified in the reports (check if seasonal
variations and economic problems were responsible for the difference or not)
• Act after interpretation by discussing reports with colleagues, provide feedback and work together
to agree on possible actions.
• Gather more data to correct the problem
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LMIS online resources
access training.
https://www.youtube.com/watch?v=SXDvHgjRNDQ&list=PLCD3E338A3E58E906&index=12 IT
Systems
video
http://supplychainhandbook.jsi.com/wp-
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Unit 6: Monitoring & Evaluation

and Supervision
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Objectives
By the end of this chapter participants will be able to:
• Define monitoring and evaluation (M&E) and supervision
• Describe the purpose of M&E and supervision
• Describe the process of M&E and supervision and related tools
• Describe how to solve problems systematically throughout M&E and supervision
findings
6.1. Introduction
Monitoring is the systematic collection and analysis of information as a project progress. It is a

planned, systematic process of observation that closely follows a course of activities and compares
what is happening with what is expected to happen.
Evaluation is the comparison of actual project impacts against the agreed strategic plans. It looks at
what you set out to do, what you have accomplished, and how you accomplished it. The process
assesses an achievement against present criteria. The process of evaluation follows distinct
methodologies (process, outcome, performance, etc).
Supervision in this context is defined as the way of supporting often health care workers and ensuring
the quality of the health services they provide, for example by introducing interventions to improve
performance. However, supervisory visits require time and transport and can be relatively costly.
Supervision plays a critical role in effecting change both at the facility and within the health care
system.
The purpose of monitoring and evaluation (M&E) and supervision
M&E shows whether a service/program is accomplishing its goals. It identifies program weaknesses
and strengths, areas of the program that need revision, and areas of the program that meet or exceed
expectations. It also helps to document lessons learnt and qualitative narratives supporting
documented quantitative progress
Monitoring helps identify shortcomings and provides guidance to modifying original plans during
implementation. It also provides elements of analysis as to why progress fell short or above
expectations.
Evaluation attempts to measure service’s relevance, efficiency, and effectiveness. It measures

whether and to what extent the program’s inputs and services are improving the quality of people’s
lives. It aims to determine the extent to which service needs and results have been or are being
achieved and analyses the reasons for any discrepancy.
The process of monitoring and evaluation allows one to:

• Review progress to determine whether activities are being carried out as planned
• Measure achievement of short-term targets
• Identify problems in planning and/or implementation to initiate corrective action Identify an d
reinforce good performance and strengthen weak performance to improve project or
organizational efficiency, effectiveness, and impact;
• Keep the work on track and let management know when things are going wrong. If done
properly, it will help the team tackle problematic areas early.
• Assess whether activities are having their expected effects
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In the context the medicines supply chain, logistics monitoring is essential to inform managers on
how logistics operations are impacting service delivery; for example, if they are providing enough,
not enough or too much medicines, or whether the management of the supply chain effectively
contributes to the achievement of health care system goals.
Data collected through continuous monitoring and measurement can be used to improve logistics
systems to be more cost effective, have a greater impact on service quality and utilization, and to
adequately support all other activities aiming to achieve program goals.
Using the monitoring system to improve performance
A monitoring system gives managers a way to identify potential problems with program and staff
performance and to improve performance. A formalized monitoring system facilitates the development
of improvement plans and performance targets, all of which must be clearly communicated at all levels
of the pharmaceutical management system. For the monitoring system to be useful, managers should
review and share the results regularly and take timely action to follow up. The ongoing monitoring
activities will determine if follow-up actions achieved the desired results.
Five types of actions a manager can take to reach desired results are:
• Provide positive feedback to high-performing units or staff to encourage
continued good performance
• Provide corrective feedback to staff or units that have not met expectations, but that should
be able to take specific steps to improve their performance; many problems can be corrected
through supervision and retraining.
• Reallocate resources or reassign staff to achieve a better fit between the task to be
accomplished and the resources or staff available
• Make plans and targets more realistic based on actual experience
• Request additional information to further define a specific performance
problem and the reasons for the problem
Supervision
Regular supportive supervision by knowledgeable staff is key to ensuring that data used to assess
whether the right medicines are available in the right quantities and at the right places are reliable and
accurate.
Supervision allows the DP (RMS branch) and central level to check that:
• Patients get the health commodities needed when they need them;
• Planned logistics activities are carried out according to schedule;
• Records are correctly maintained, and reports submitted in a timely manner for resupply
and decision making;
• Qualified health professionals are in place and performing supply chain activities;
• Pharmaceuticals management activities are performed according to the norms and
guidelines.
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6.2. Conducting monitoring and evaluation (M&E) and supervision
Monitoring can be conducted using various methods

• Supervisory visit, which consists of overseeing and providing direction, guidance, and
instruction
• Routine reporting of data, using a management information system
• Sentinel sites — for more detailed reporting and monitoring of developing situations, most
passive surveillance systems receive data from as many health workers or health facilities as
possible. This is called a sentinel system.
• Special studies to gather additional information or to resolve problems in the health facility
by conducting investigative studies to analyze the root causes of the problems that could not
be highlighted in the reports generated based on the other three methods
Evaluation can be conducted using three methods
1. Needs assessment (situation analysis)
2. Formative evaluation (midterm review)
3. Summative evaluation (final evaluation)
These three methods can be used in self-assessment, limited assessment, and structured assessment.
The choice of assessment approach depends on available financial and human resources, timing,
sponsorship, and intended uses of the results. Evaluation can be conducted through five phases;
planning for evaluation, selecting appropriate evaluation methods, collecting and analyzing
information, reporting findings and implementing evaluation recommendations
M&E is part of “Quality Assurance” as it contributes to the continuous improvement of

quality. Because information is so important in the medicines supply system, it is necessary to
monitor that all required information is available on a regular basis.
Methods of supervision
Supervisee self-report: The report is prepared and reported by the supervise with no much efforts of
the supervisor.
Observation supervision: The report is prepared fully by the supervisor.
Co-therapy: The report is prepared with the effort of the supervisor and the supervisee.
6.3. Using indicators for monitoring and evaluation
Indicators are variables that measure change in performance of particular supply chain activities or
the overall supply chain system. They may be numerical and can be expressed in terms of numbers,
percentages, or averages. They may also be expressed as binomials such as yes or no.
Performance indicators are applied in:

• Monitoring of the workplans implementation
• Evaluating achievement of long-term goals
• Assessing the performance of individual units
• Identifying relative strength and weakness in current policies and systems
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• Measuring the effect of new policies or management systems

• Self-monitoring to improve performance
• Demonstrating needs to treasury, donors, or other funders
• Reporting on progress to senior officials, donors, or other interested parties
Characteristics of good performance indicators

Logistics performance can be tracked in a variety of ways; regardless of the method used, it is
important to focus on indicators that have the following characteristics:
• Measurable (quantitative): rates, proportions, percentage, common denominator (e.g.
population), or “yes/no” response
• Motivates “correct” behavior
• Defined mutually by the parties concerned (including health facilities staff)
• Multi-dimensional: balance among quality, utilization, and performance!
• Benefits of the measure outweigh the costs of collection and analysis!
• Clear: easily understandable by everybody!
• Useful: represent all the important dimensions of performance
• Measurable easy to measure quantitatively
• Reliable: can be collected consistently by different data collectors
• Valid: measure what we mean to measure!
6.4. Some common pitfalls in monitoring and evaluation
• Failure to identify the basic questions that are clear and easy to be answered
• Over-ambitiousness in collecting information such as collecting more information with
less accuracy, yet the team has less time to analyze the information and give timely
feedback
• Complexity due to using cumbersome systems that have often been designed from top down
with insufficient testing and input from staff involved in generating and using monitoring
information
• Lack of integration with planning and implementation
• Failure to build on existing systems
• Inadequate resource for both monitoring and evaluation
• Lack of objectivity into assessing process
• Jumping to wrong conclusions without crosschecking of the findings
• Lack of comparison (baseline) data against which findings can be compared to know if the
apparent changes are real and are as a result of the effort put in during implementation.
• Failure to develop a monitoring and evaluation plan with defined times
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Monitoring and Evaluation online resources
Al online resources are free, and you will need to create an account as some of the links requires to
access training.
https://elearning.jsi.com/course/index.php
https://elearning.jsi.com/enrol/index.php?id=6
https://www.globalhealthlearning.org/program/monitoring-and-evaluation
https://www.youtube.com/watch?v=R4HPYYR5iLw&list=PLCD3E338A3E58E906 Measuring
&in dex=10 performance video
http://supplychainhandbook.jsi.com/wp- Performance
content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.9_Final Management
.pdf
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Unit 7: Resource Management
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Objectives
• Understand the process involved in financial management
• Describe the process of tracking commodity financial flows
• Explain a typical process of financial management stepwise
• Understand supply chain costing method and its importance
• Describe the process of economic evaluation of health products and
technologies in public health supply chain management
7.1. Introduction
Resource management is the process by which businesses manage their various resources
effectively. Those resources can be intangible (people and time) and tangible (equipment, materials
and finances).
It involves planning so that the right resources are assigned to the right tasks. Managing resources
involves schedules and budgets for people, projects, equipment, and supplies
With limited public financial and human resources allocated to pharmaceutical supply management,
managers are responsible for ensuring that both resources are used in the best way possible, with the
goal of achieving health care objectives. To achieve good financial management, managers must be
able to:
• Prepare long-range plans to project the need for services, devise the most cost- effective
way of providing them, outline the amount of money needed, and help secure government and
donor funding.
• Prepare and communicate program policies and procedures
• Set sales prices that are affordable, competitive, and meet program cost-sharing goals Prepare
and use budgets to plan and monitor expenses
• Prepare cash flow forecast to ensure the availability of cash to cover anticipated financial
obligations
• Analyzes costs to assess cost-effectiveness and monitor efficient Control and manage the
collection, safekeeping, and spending of funds
• Keep proper accounting records and prepare reports for management, government, and donors
7.2. Financial management
In recent years, many governments have begun to follow the private-sector principle of
demonstrating “value for money” through the effective and efficient use of resources. In addition, a
changing public-sector environment, featuring health care reforms such as decentralized
responsibilities and autonomous management, greatly affects how a country carries out its health
sector financial management. When possible, an accrual (which recognizes receivables and payables
without a cash exchange) basis should always be used. However, if a cash basis must be used because
of government rules, elements of an accrual system should be used to complement the government
accounting figures and provide more complete information. In order to track pharmaceutical
transaction on an accrual basis, accounts should be opened for stock, accounts payable, and
accounts receivable.
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7.3. What supply chain managers need to know
Supply chain manager needs to know the following about financing-:

• Cost of the health care products that are required by the health care system
• Source of funding for these products and the extent to which commitments are sufficient to
meet requirements in the short and long term
• Cost of the supply chain operations to deliver those products to the last mile.
• Cost can be thought of as operating costs to procure, store, distribute and manage the products,
capital cost, and advisory cost
• Strategy and plan for efficiently meeting the costs to operate and strengthen the supply chain
7.4. Tracking commodity financial flows
Adequate funding for essential health commodities is to ensure that patients have access to health
services they need and deserve. Tracking commodity financial flows involves seven steps which are:
Step 1: Defining financial tracing objectives involves monitoring funding, analyze funding by main
sources and uses, comparing funding over time, advocating for more funding to overcome funding
bottlenecks, ensuring funders meet commitments, gauging the success of commodity security efforts,
facilitate procurement decision making, improving transparency, anticipating funding gaps, and
responding more effectively to spending surveys.
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Step 2: Developing a tracking team and steering committee to effectively track finances. This team
should have people who are familiar with government accounting mechanisms, have in- depth
knowledge about the national health system and health policies, specific knowledge about the national
health system and health policies, specific knowledge about actors in the specific health program,
experience with advocacy and the likes.
Step 3: Mapping the commodity financing players. Once the tracking team is formed and the list
of commodities to track agreed upon, the team should identify the financing schemes, financial agents
and financing sources for commodities that make up the health commodity financing system.
Step 4: Determining data analysis
In general, information needed will include funding needs, commitments, and spending for
commodity procurement. While entities within the financing system operate on different fiscal years,
the recommended approach is to select a single year of analysis and then convert all the information
to that year. Because government funding is usually the focus, the logical choice is to use the
government’s fiscal year as the unit of analysis.
Step 5: Analyze data to know the amount of funding requirements commitments and spending in a
variety of ways in support of your defined objectives. For example, the analysis can be done in terms
of commitment as percentage of need, comparison of requirements, commitments and spending,
spending as a percentage of need, total commitments, and commitment by source, and public share
of spending on health commodities for the government scheme.
Step 6: Mapping the funding process to understand the financing processes and flows. This will
help the team to track and influence spending more effectively. For each funding source, the team
can map funding processes, including the timing and decision makers for each step then identify
advocacy entry point for mobilizing funds for procuring health commodities.
Step 7: Use the tracking information for decision making and advocacy. The financial tracking
information provides the evidence to strengthen decision making and advocacy. Advocacy with in-
country stakeholders is often an under-valued activity. However, it is critical in monitoring and
mobilizing more funds and ensure accountability. Information gained from tracking can also be used
for ensuring funds are converted to commodities, identify and follow up on bottlenecks including
delaying procurements, determining quantification timeline, ensuring spending and gauging success.
7.5. Typical financing process steps

1. Identify commodity financing needs 6. Officially allocate or obligate funds
2. Develop budget requests 7. Release funds for use
3. Negotiate request 8, Disburse funds for procurement of commodities
4. Match request against needs/balance budget 9. Procure commodities
5. Finalize budget
7.6. Budgeting
Budgeting process begins early because it takes time for budgets to be approved. This is because all
the resources indicated in the budget should be obtained and that process takes long to be ascertained.
Two types of budgets are operating budget and capital budget.
Operating budget covers the cost of all items consumed during the year, including salaries,
allowances, medicines, transport, travel, postage, telephone, office supplies, heat, electricity, water,
and office rent. Any donated items such as medicines or office supplies should be shown and
identified in relation to a specific funding source. When assets are to be replaced from sales revenue,
depreciation should be included here as an expense.
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Capital budget must show all land and buildings to be bought or built, as well as vehicles and
equipment to be purchased. All assets that have a long life (more than a year) or a significant value
should be included. The definitions of life and value should be in accordance with government
regulations or with current accounting standards, if not, covered by regulations. A donated item, such
as a vehicle, should be shown in the capital budget and identified in relation to a specific funding
source.
Budgeting Method
All budgets should be prepared according to needs, the amounts approved should follow a historical
year’s budget and adjusted by a percentage to reflect the expected change in funding. This should be
achieved by identifying, quantifying and costing resources needed then determine the level of
available funds and finally adjust expenditures to the expected level of funds.
7.7. Supply Chain Costing
Essential health commodities are key to improving health outcomes in developing countries, and
strong supply chain play a critical role in protecting commodity investment and ensuring these
commodities are available where a when users need them. Yet the true costs to optimally operate the
supply chain are often overlooked or unknown. Understanding these costs helps managers identify
sources and mobilize resources and drive performance improvement decisions. Examples of supply
chain costing include costs for storage space, staff involved in supply chain, transportation costs,
warehousing costs, information systems and tools, management and overhead.
7.7.1. The importance of supply chain costing

Knowing the total cost of the system as well as its components provides useful information to assist
governments and partners in meeting the financial requirements of operating and strengthening a
country’s supply chain. A supply chain costing exercise helps decision makers understand these costs
and use the results of the study to advocate and plan for funding, provide for better planning and
management system designs, inform decision making on supply chain policies and financing, provide
a clear understanding of funding sources for the supply chain, procurement, transportation, storage,
and management.
7.7.2. Supply chain costing methodology

The process of costing the supply chain includes four main steps: planning, data collection, data
analysis, and reporting results. Data collection can be challenged by how readily available the
information is, and this must be taken into consideration
7.8. Economic Evaluation
Once the supply chain cost data collection is complete, economic evaluation guides decision makers
to make informed choices about the best way to strengthen and improve the performance of public
health supply chains. Economic evaluation compares the costs and consequences of alternative
courses of action as a way to guide decisions about the efficient use of scarce resources.
Economic evaluation includes two broad categories of analysis i.e. cost-effectiveness analysis and
cost-benefit analysis, sometimes referred to as return on investment analysis. A cost- effectiveness
analysis related the costs of different approaches to a common measure of supply chain effectiveness,
such as stock status, order fill rate, or a composite performance measure. Whereas cost-benefit
analysis measures costs and consequences of alternative approaches but in monetary terms. The
benefits can include savings to the supply chain that result from better system performance due to
lower drug costs when inventory is reduces, fewer expired or spoiled products, lower transportation
and labor cost.
7.9. Human resources management
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Human resources are central to planning, managing, and delivering health services, including
pharmaceutical services. In many countries, personnel account for a high proportion of the national
budget for the health sector, often more than 75%. In addition to staffing shortages, the health system
faces many human resources challenges, including human resources planning, recruitment,
deployment, training, staff motivation and staff development. The root causes of these issues can be
traced to years of neglect, low salaries, poor workplace climate, and limited capacity to train and
update staff skills.
7.9.1. Human resource crisis interventions

Interventions needed to alleviate the human resources crisis include short-terms actions, such as task
shifting, while in the long term, countries need to expand their capacity to train enough staff to fill
needs. Some issues need to be addressed at the national level (for example, compensation) but many
can be addresses through better leadership and human resource management at the facility level. In
pharmaceutical sector, the goal is to develop and sustain adequate supply of skilled professionals who
are motivated to provide a high level of pharmaceutical care.
7.9.2. Effective ways towards addressing human resource challenges

• Improved leadership and management at all levels
• Recruitment of the right skilled human resources who meet the desired expectations
• Good relationships between leaders/managers and their human resource
• Collaboration between human resource and their supervisors
• Motivate human resource by giving effective supervision, treating them fairly, describe
their roles and responsibilities clear
• Create working environment that makes them feel valued and appreciated
7.9.3. Things that strengthen human resource management system

• Employees understanding their work and how that contribute to the mission and goals of the
organization
• Employee viewing performance appraisals as an opportunity to learn about their skills and
competencies
• The supervisor’s role is valued and supported by the organization
• Job descriptions are up-to-date and readily available to all employees
• Employees are routinely considered for job vacancies and other opportunities for promotion
• Employees understand the organization’s policies on salaries and benefits and consider them fair
and equitable
• Organization engages in long-term planning towards human resource development Improving
staff motivation and performance through better human resources practices
7.10. Managing supervisee through supervision
The supervisory activities comprise assessing the comprehensiveness of the implementation,

identifying challenges, and proposing solutions without delaying the implementation process. The
supervisory teams comprise representatives or those in charge of the CHW activities at all the health
system levels (district hospitals, district pharmacies, health centers), including the directorate of
maternal and child health, MOH planning and budgeting, HMIS, the MOH health financing unit, and
chief accountants in the MOH.
During supervision, the data quality is assessed using a three-step process:
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• Records and forms check: Which LMIS records and forms are being used?
• Records and forms review: Are the records and forms properly maintained and kept up to
date?
• Cross check for data consistency within facilities: Are the records within this facility
consistent with one another? That is, do shipping/receiving records match stock cards? Do
stock records match a physical inventory taken at the time of the assessment for some tracer
commodities?
This involves checking data consistency:
• between inventory record and physical inventory (balance on hand)
• between inventory record and daily activity register (quantity dispensed to consumers)
• between daily activity register and stock report (quantity dispensed to consumers)
• between inventory record and delivery notes and invoice (quantity received)
• between quantity ordered and quantity received
7.10.1. Examples of tools used during supervision of the health supply chain
Currently the following tools exist for supervising and evaluating the supply chain:
• Integrated supervision checklist, which includes some indicators relevant to inventory
management and medical products and technologies storage conditions
• DHMT Supervision Checklist
• Quality Management Improvement Approach (QMIA) checklist
Resources Management online resources
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https://www.youtube.com/watch?v=kS-5QXSc3Hc Why invest in

Supply Chains
video
https://www.youtube.com/watch?v=ohrm-PGLydg Supportive
supervision video
http://supplychainhandbook.jsi.com/wp- Organization and

content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.10_F capacity Workforce
inal.pdf
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Unit 8: Communication, Leadership

and Change Management
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Objectives
• Describe the role of communication in leadership and change management
• Describe different communication methods available for use
• Explain feedback and its importance in communication
• Describe things that affect good communication
• Define leadership and management
• Explain different types of leaderships
• Describe process of problem solving
• Explain the process of change management
8.1. Introduction
Communication is the way people share their ideas, information, opinions, and feelings with others
directly or indirectly. Communication is very important and should be done well so that leaders are
able to effectively inform their subordinates and collaborate well to reach the intended goals and
objectives. Change management is inevitable too without effective communication between the
leader and change agents.
8.1.1 Communication methods

Communication can be:
• Face-to-face with verbal and non-verbal messages, e.g. to a patient at the dispensary window,
to health workers on the wards and fellow staff.
• Verbal only (non-face to face), e.g. over the telephone or on the radio.
• Written, e.g. letters, memos, faxes, and e-mails
• Good communication requires skills in listening, understanding the messages and giving
feedback to the one sending a message because for communication to work well, it must be a
two-way process.
Feedback
Feedback is getting information from the person receiving the message to find out whether the
message was understood. Feedback helps the communicator to see if enough information has been
given, and it allows the communicator to give clarity where there is ambiguity.
8.1.2 Things that affect communication

People
We each have thoughts and things that happened in our lives that make us different from others. The
more shared experiences you have with others, the easier it is to communicate with them.
Not everyone sees or hears things in the same way. While communicating, think about the needs and
experience of the receiver.
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Needs
We all have the same basic human needs of survival, making friends, and feeling good about
ourselves, and we like to be part of making things. Individual needs are different from one person to
the other and from one situation to the next. This affects communication because one may understand
or misunderstand a message depending on his/her needs at the time. For example, if a person is feeling
pain then he/she may not feel like spending time with people.
Background
The way we are brought up, our culture, and what village we come from affects our needs, values,
and expectations.
Education
How much and what type of education we have affects the way we think and understand life. For
example, peoples understanding of their body and health’ – where people have not had the education
to understand how their body works and how medicines work then they will need more support and
explanation to ensure they follow instructions and understand why
Language
The way we speak and the words we understand, and use affect our communication. If English is not
a first language, then it is harder to understand it.
Interests
Whether we like reading books, listening to music, playing outdoor activities, sports, or staying at
home affects how we think about things.
Occupation
Our jobs lead us to have different ideas and outlooks.
Personality
Whether we are energetic, quiet, mix well with people, shy, secure, or scared, these all affect the way
we communicate.
Race
Our nationality or the village we come from affects the way we see and respond to the world.
Age
People of different ages have different interests, thoughts, and needs. You would probably speak to
an old person in a different way than you would to a person of your own age.! Therefore, be aware
that these things can affect the way we communicate with other people. It will help you to
communicate better with them.
Attitude
Our attitude to those we communicate to will affect our communication with them. It is very important
to respect the person you are communicating with.
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Body language
What you say with your body can say more than your words. The impressions you send is very
important. Avoid sign language as much as possible because the meaning of sign may differ by race
and age
Appearance
Appearance leads others to form “first impressions" about us. Their first thoughts about our
appearance can influence what they think about us as a person or a health care worker.
8.2. Leadership
Good leadership is exhibited when health facilities can provide services to the community in an
appropriate, efficient, equitable, and sustainable manner. A leader is anyone who is trying to close
the gap between the way something is and the way it could be.
A leader is anyone who is trying to close the gap between the way something is and the way it could be.
8.2.1 Leadership styles

Autocratic, transactional, democratic, transformational and Laissez-faire are the different
leadership styles.
• Autocratic leadership also known as authoritarian leadership, is a leadership style characterized

by individual control over all decisions and little input from group members. Autocratic leaders
typically make choices based on their ideas and judgments and rarely accept advice from followers.
Autocratic leadership involves absolute, authoritarian control over a group.
• Democratic or participatory leadership allow the team to give input but still make the final
decisions. This type of leadership guide rather than direct and help team members feel valued and
develop their skills in the process.
• Transformational leadership is a leadership style in which leaders encourage, inspire and
motivate employees to innovate and create change that will help grow and shape the future success
of the company. This is accomplished by setting an example at the executive level through a strong
sense of corporate culture, employee ownership and independence in the workplace
• Transactional leadership, also known as managerial leadership focus on supervision,
organization, and performance. It is a style of leadership in which leaders promote compliance by
followers through rewards and punishments.
• Laissez-faire leadership, also known as delegative leadership, is a type leadership in which
leaders are hands-off and allow group members to make the decisions.
8.2.2 Good Leadership Traits
Effective leadership maybe looked at from the perspective of an effective leader who has the
following traits:
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1. Dominance
Effective leaders take charge but are not overly bossy nor do they use bullying style of
administration.
2.High energy
They are optimistic, positive and have high stamina which shapes their decision to lead.
3.Self confidence
On a continuum from strong to weak they are self-assured in their judgment, decision making,
ideas and capabilities.
4.Locus of control
They are internalizers and believe that they control their fate and that their behavior directly affects
performance of their organization.
5.Stability
They are emotionally in control of themselves and don’t let their anger have negative outcomes.
6.Integrity
They are honest, ethical and trustworthy which is essential in running a successful business.
7.Intelligence (general mental ability)
They have a cognitive ability to think critically solve problems and make decisions.
8.Flexibility
They can adjust to different situations.
9.Sensitivity to others
They understand group members as individuals, what their position on issues are and how best to
communicate with and influence them.
8.2.3 Other Good Leadership traits
• Time management is very important in leadership and change management because once time
is wasted it can never be regained.
Leaders need to analyse how they spend their time and learn on how to save time effectively.
Unanticipated interruptions, procrastinating, making unrealistic, time estimates, unnecessary errors
that would require one to do things over again, poor organization, micromanaging or failure to
delegate responsibilities, doing urgent other than important tasks, poor planning and lack of
contingency plans, and lack of policies and standard operating procedures are some of the examples
of time wasters.
To manage time well, leaders need to make decisions timely, concentrate in doing one task at a time,
establish daily to short-term to log-term priorities, establish deadlines, maintaining accurate
calendars, know when to stop a task, use checklists or to-do lists, and adjust time according to
priorities.
• Improving facilitation skills require a facilitative leader to use facilitation as a style in an
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environment of rapid change such that no single person can see what is going on or what needs
to be done. These skills include helping others to do things, to find a view and understand it, to
concentrate, to think and communicate their thoughts, to articulate a shared vision and common
mission or purpose and to respond to things that are not common.
• Continuing Professional Development is the lifelong process of learning and continuing

personal development. It is the means by which you can maintain and enhance your knowledge
and skills to complement both current and future career progression. Leaders should promote
continuing professional development by encouraging others to do the following:
• Learn new skills and keep up to date with the current knowledge
• Perform better in their current role
• Gain a competitive and improve their future employment opportunities
• Increase self-confidence
• Enhance professional reputation
• Achieve tangible evidence of great competence and professionalism
8.3. Change Management
Change management is a structured approach to transitioning individuals, teams, and organizations

from a current state to a desired future state, to fulfill or implement a vision and strategy. It is an
organizational process aimed at empowering employees to accept and embrace changes in their
current environment
(Kotter, John P. “Developing a Vision and Strategy”. Leading Change (1996). 72. Library of
Congress Cataloging-In-Publication Data. Web. Feb 1. 2011)
We live in a world where change in inevitable. Therefore, any leaders should be prepared to manage
change well. There are many theories about how to "do" change. Many originate with leadership and
change management guru, John Kotter.
Step 1: Create a Sense of Urgency

For change to happen, it helps if the whole organization really wants it. Develop a sense of urgency
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around the need for change.

What should a leader do?
• Identify potential threats and develop scenarios showing what could happen in the future.
• Examine opportunities that should be, or could be, exploited.
• Start honest discussions and give dynamic and convincing reasons to get people thinking.
• Request support from external stakeholders to strengthen your argument.
Step 2: Form a Powerful Coalition

Convince people that change is necessary. This often takes strong leadership and visible support from
key people within the organization.
• Identify the true leaders in the organization, as well as key stakeholders.
• Ask for an emotional commitment from these key people.
• Work on team building within the change coalition.
• Check the team for weak areas and ensure there a good mix of people from different
departments and different levels within the organization.
Step 3: Create a Vision for Change

A clear vision can help everyone understand why asking them to do something. When people see for
themselves what the organization is trying to achieve, then the directives they are given tend to make
more sense.

• Determine the values that are central to the change.
• Develop a short summary (one or two sentences) that captures what you see.
• Create a strategy to execute that vision.
• Ensure that your change coalition can describe the vision in five minutes or less.
• Practice the "vision speech" often.
Step 4: Communicate the Vision

Don't just call special meetings to communicate the vision. Instead, talk about it every chance. Use the
vision daily to make decisions and solve problems. When the vision is kept fresh on everyone's minds,
they will remember it and respond to it. It's also important to "walk the talk."
• Talk often about the change vision.
• Address peoples' concerns and anxieties, openly and honestly.
• Apply the vision to all aspects of operations; from training to performance reviews.
• Tie everything back to the vision.
• Lead by example
Step 5: Empower actions
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Removing obstacles can empower the people needed to execute the vision, and this can help the change
move forward
• Identify, or hire, change leaders whose main roles are to deliver the change.
• Look at the organizational structure, job descriptions, and performance and reward systems
• Recognize and reward people for making change happen.
• Identify people who are resisting the change and help them see what is needed.
• Act to quickly remove barriers.
Step 6: Create quick wins

Create short-term targets, not just one long-term goal. The change team may have to work very hard
to come up with quick targets, but each "win" attained can further motivate the entire staff.

• Look for projects that can be implemented without help from any strong critics.
• Do not choose early targets that are expensive.
• Thoroughly analyze the potential pros and cons of the targets.
• Reward the people who will help to meet the targets.
Step 7: Build on the Change

Quick wins are only the beginning of what needs to be done to achieve long-term change. To reach
that tenth success, leaders need to keep looking for improvements. Each success provides an
opportunity to build on what went right and identify what can be improved.
• After every win, analyze what went right and what needs improving.
• Set goals to continue building on the momentum achieved.
• Keep ideas fresh by bringing in new change agents and leaders for change coalition.
Step 8: Make it stick

This will help give the desired change a solid place in the organization. It is during this that
organizational leaders continue to support the change to be adopted by all its existing staff.
• Talk about progress every chance
• Include the change ideals and values when hiring and training new staff.
• Publicly recognize key members of the original change coalition
Leadership and Change Management online resources
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https://www.dropbox.com/sh/5idbuzg4coqzv1h/AAB1IFxFSrim8PO_iPaWIrK0a?dl=0 What makes a

great
communicator
webinar
https://www.dropbox.com/sh/050lo9lngrradoj/AABcfnJ227mGw4a1oQh-eOvba?dl=0 Improving your

facilitation skills
webinar
https://www.dropbox.com/sh/hgybzoi4xg376l0/AAAdYfx900hv9hEnsl12oZH2a?dl=0 Continuing
Professional
Development
webinar
https://www.dropbox.com/sh/wa2jdhi92fr2ccx/AABt5HtBt4CLgWFPBr730A74a?dl=0 Leadership
Webinar
http://supplychainhandbook.jsi.com/wp- Financing
http://supplychainhandbook.jsi.com/wp- Risk
content/uploads/2017/01/JSI_Supply_Chain_Manager's_Handbook_Chpt.12_Final.pdf Management
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Participants List
Names Institution Position
Clement Rurangwa Bugesera DP Pharmacy Director

Ephrem Mfizi Nyamagabe DP Pharmacy Director
Eugene Shumbusho Rutsiro DP Pharmacy Director
Evariste Ndaribumbye Kayonza DP

Pharmacy Director
Fiacre Rutaganda Ngoma DP Pharmacy Director
Francois Mbonyinshuti Kirehe DP Pharmacy Director
Gasabo DP
Gaspard Harerimana Pharmacy Director
Gatsibo DP
Joseph Desire Nyirimanzi Pharmacy Director
Kamonyi DP
Thelesphore Habimana Pharmacy Director
Theogene Hakuzimana Gakenke DP Pharmacy Director
Evariste Byomuhangi Ministry of Health Pharmacist in charge of Management
Information System
Theobald Habiyaremye Ministry of Health CPDS technical coordination officer
Olivier Ngenzi Wane Ministry of Health Senior MCCH logistic Officer
Biziyaremye Floribert RBC/TB TB drug management senior officer

Ndekezi Ignace RBC/RMS LTD Procurement Specialist
Stella Matutina Tuyisenge WHO NPO/WHO Specialist

Patrick Nganji Pharmacy Council Pharmacy Council Executive
Secretary
Felix Hitayezu GHSC-PSM Senior Health System Strengthening
Anitha Batamuliza Kalema GHSC-PSM Workforce Development Advisor
Vincent Sabagirirwa GHSC-PSM eLMIS Techinical Lead

Nathalie Ngabo GHSC-PSM Malaria Logistics Advisor
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Reference documents
Rwanda MOH 2014. Pharmacy Policy.
Rwanda MOH 2014. Rwanda drugs management SOPs at health facilities.
Rwanda MOH 2012. Logistics Management Office (LMO) provisional terms of reference.
Rwanda MOH 2010. The Coordinated Procurement and Distribution System, governance
document.
UNFPA’s supply chain for reproductive health commodities
http://www.unfpa.org/public/home/procurement/supplychain
USAID DELIVER project. The guidelines for proper storage of health commodities
http://deliver.jsi.com/dlvr_content/resources/allpubs/guidelines/GuidStorEsse_Pock.pdf.
USAID 2013. Rwanda: Harmonized LMIS System Design Review and SOP/Curriculum
Development - Technical Report
http://deliver.jsi.com/dlvr_content/resources/allpubs/countryreports/RW_HarmLMIS.pdf
USAID DELIVER project. The Logistics Handbook: A Practical Guide for the Supply Chain
Management of Health Commodities;
http://www.jsi.com/JSIInternet/Inc/Common/_download_pub.cfm?id=10340&lid=3
Initiating In-Country Pre-Service Training in Supply Chain Management for Health

Commodities: Process Guide and Sample Curriculum Outline
http://deliver.jsi.com/dlvr_content/resources/allpubs/guidelines/InitiatInCount_PreServeTrain
.pdf
WHO. The role of education in rational medicine use

http://apps.who.int/medicinedocs/documents/s16792e/s16792e.pdf
Vaccine stock management - Guidelines on stock records for immunization programme and vaccines
store managers
http://whqlibdoc.who.int/hq/2006/WHO_IVB_06.12_eng.pdf
WHO 2004. Management of Drugs at Health Centre Level

http://apps.who.int/medicinedocs/pdf/s7919e/s7919e.pdf
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Assessment o f M e d i c i n e Quality Assurance in Rwanda: Overview of Findings and

Recommendations for Consideration
http://apps.who.int/medicinedocs/documents/s18411en/s18411en.pdf
WHO Operational principles for good pharmaceutical procurement www.who.int/3by5/en/who-edm-

par-99-5.pdf
WHO good distribution practices for pharmaceutical products

http://www.who.int/medicines/areas/quality_safety/quality_assurance/GoodDistributionPracti
cesTRS957Annex5.pdf
WHO Guide to good storage practices for pharmaceuticals

http://apps.who.int/prequal/info_general/documents/TRS908/WHO_TRS_908-Annex9.pdf.
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1

Health Supply Chain Management

UNIT 1: INTRODUCTION TO HEATH SUPPLY CHAIN AND LOGISTICS MANAGEMENT ... 1

1.1. Introduction ..................................................................................................................................... 2

The Supply Chain Management Cycle ...................................................................................................... 2

1.2. The importance of effective logistics/supply chain system .......................................................... 4

1.3. Supply Chain Integration ............................................................................................................... 4

Diagram 1: Flow of Health products and Information ............................................................................ 7

1.4. Introduction to Health Supply Chain management online resources ........................................ 8

UNIT 2: HEALTH PRODUCT/TECHNOLOGIES ................................................................................ 9

SELECTION AND QUANTIFICATION ................................................................................................. 9

2.1. Introduction ................................................................................................................................... 10

2.2. Selection criteria............................................................................................................................. 11

2.3. Quantification ................................................................................................................................ 12

2.4. The purpose of quantification ....................................................................................................... 13

Diagram 2: Key steps and processes in quantification........................................................................... 14

2.5. Quantification methods ................................................................................................................. 16

2.6. Selection and Quantification online resources ............................................................................. 19

UNIT 3: PROCUREMENT ...................................................................................................................... 21

3.1. Introductions .................................................................................................................................. 22

Table 1: Procurement Incoterms ............................................................................................................. 22

3.2. The purpose of procurement in health supply chain is to: ......................................................... 24

3.3. The Procurement Cycle ................................................................................................................ 24

Diagram 3: The Procurement Cycle ........................................................................................................ 24

3.4. Good Pharmaceutical procurement practices and management ............................................... 25

3.5. Good Pharmaceutical procurement practices and principles .................................................... 25

3.6. Good Pharmaceutical procurement principles ............................................................................ 25

3.7. Methods used for public procurement ......................................................................................... 26

3.8. Procurement process.................................................................................................................... 27

3.9. Assuring Pharmaceutical Quality in Procurement ..................................................................... 28

3.10. Procurement performance indicators .......................................................................................... 31

3.11. Key procurement stakeholders in Rwanda.................................................................................. 31

3.12. General Procurement Steps for Pharmaceuticals ....................................................................... 31

Step 4: Price and Terms ............................................................................................................................ 32

Step 5: Purchase Order ............................................................................................................................. 32

Step 6: Delivery .......................................................................................................................................... 32

Step 7: Expediting and Procurement follow up....................................................................................... 32

3.13. Procurement online resources ....................................................................................................... 32

UNIT 4: INVENTORY MANAGEMENT .............................................................................................. 34

(RECEIVING, STORAGE, INVENTORY ............................................................................................. 34

CONTROL, AND DISTRIBUTION) ...................................................................................................... 34

4.1. Inventory management.................................................................................................................. 35

Diagram 4: Inventory Management Cycle .............................................................................................. 35

4.2. Receiving products ......................................................................................................................... 36

4.3. Storage ............................................................................................................................................ 38

4.4. Inventory controls .......................................................................................................................... 44

4.5. Management of unusable (Expired, damaged and quarantined) pharmaceutical products .. 48

Table 4: Waste Management Methods .................................................................................................... 49

Table 5: Inventory management checklist .............................................................................................. 50

4.6. Typical pharmaceutical distribution system................................................................................ 51

4.7. Inventory management online resources ..................................................................................... 55

UNIT 5: LOGISTICS MANAGEMENT................................................................................................. 56

INFORMATION SYSTEM (LMIS) ........................................................................................................ 56

5.1. Introduction ................................................................................................................................... 57

5.2. Essential data for decision making ............................................................................................... 57

Sample Stock Card .................................................................................................................................... 59

5.3. Electronic logistics management information system (eLMIS) ................................................. 60

5.4. LMIS online resources................................................................................................................... 62

UNIT 6: MONITORING & EVALUATION .......................................................................................... 63