In many low- and middle-income countries, health supply chains have historically been structured around funding sources and individual health programs. Separate supply chains emerged for HIV and AIDS, family planning, maternal and child health, malaria, tuberculosis, immunizations, and other programs. In some cases, separate supply chains were even required to track products provided by specific donors.
The result is often redundant processes and investments that increase costs and can make it harder to meet the health needs of the population. In many countries, private sector supply chains serving private pharmacies and clinics add another layer, handling many of the same products and delivering to the same communities.
More recently, countries and donors have recognized the value of reconsidering how these supply chains are designed, and where integration could improve product availability and lower costs. Some are starting to use design and modeling tools, like those from Design for Life, to evaluate opportunities for integration and inform decision-making. In May, the Supply Chain Funders’ Forum and Integration Task Force released a report on the importance of integration, along with several case studies examining health supply chain integration in practice.
Consider tuberculosis prevention and treatment products. TB has distinct programs and distribution channels in many countries, while also being a focus of HIV treatment programs with separate distribution networks. Yet these products are distributed within the same communities and sometimes to the same recipients. These are clear opportunities for integration.
At the same time, not every supply chain should be fully integrated. Immunizations, for example, have distinct requirements, including tightly controlled cold chains, a patient population largely made up of infants and young children, and distribution methods that often include regional campaigns. Ultimately, effective integration requires understanding not only where systems can come together, but where distinct approaches remain necessary.
Integration can take many forms
Integrating program supply chains can deliver significant value. When applied strategically, integration can reduce redundancy by moving common products together and aggregating demand, creating opportunities for economies of scale through larger shipment sizes and shared resources. It can also simplify services at the facility level, allowing clinicians to consolidate orders across programs and spend less time navigating program-specific administrative processes.
Integration can occur in a range of ways, from changes in planning and execution processes to broader changes in infrastructure, networks, and organizational structures. It is beneficial to use supply chain models or design tools to test integration approaches to support planning.
Tactical approaches tend to focus on process and systems changes, such as integrating planning processes and forecasting tools or adjusting inventory and transportation policies so products can move together and demand can be aggregated across programs. More strategic changes can involve redesigning distribution networks, including opening or closing locations, as well as restructuring budgets and organizations. These larger changes can deliver significant benefits but typically require more time and coordination to implement.
Integration starts with segmentation
Though it may seem counterintuitive, integrating supply chains starts with segmentation: categorizing different products according to their supply chain needs rather than the programs they belong to.
Segmentation can account for:
- Demand needs, such as campaign-based versus routine distribution, volatility, and quantity
- Network factors, including transportation times, location security, and facility capacity
- Product characteristics, such as cold chain requirements, size and weight, and shelf life
- Supplier profiles, including lead times, order quantities, and quality history
By identifying products with similar requirements, segmentation provides a foundation for determining where integration makes sense. Instead of designing distribution around program boundaries, supply chains can be organized around how products need to move and the populations they serve. Products serving the same populations through the same channels can then reach clinicians and patients together.
Designing an integrated network
Because integration involves redesigning how a supply chain operates, design tools can play an important role in helping supply chain managers develop the right strategy.
These tools create models of existing supply chains that can be used to test different integration scenarios and evaluate their potential effects on cost and product availability, allowing decision-makers to compare options, understand the tradeoffs, and identify the right integration design.
Modeling can also help translate strategy into implementation. Design tools can identify operational details needed to make an integrated network function effectively, like delivery frequencies and transportation routes. These details can then inform the policies and procedures used throughout the supply chain.
Designing around health needs
Health supply chain integration has significant potential to improve product availability and reduce costs by shifting the focus from individual program structures to the needs of patients and clinicians.
Realizing these benefits means rethinking how supply chains are structured based on the procurement, distribution, and clinical characteristics of health products, and designing them around health outcomes instead of programmatic structures. Detailed analysis supported by supply chain design tools can help identify the right approach and position supply chains to better serve the current and future needs of patients and clinicians.
