Kenya

This section shares examples drawn from a combination of desktop research and interviews of outsourcing to private sector partners. i. Reform and change management: KEMSA Context Pre-2013, the shift to outsourcing in Kenya started by the Ministry of Health and KEMSA acknowledging the need to change Kenya’s complex and unsustainable health supply chain operating model. There were at least ten parallel supply chains for different commodities that had to be integrated into one, a weak legal framework and poor governance structure. During the period 2008-2013, KEMSA had been facing challenges of a lack of funding or erratic funding flows, poor data visibility, a lack of infrastructure capacity, and diminishing public confidence in the agency to perform its mandate (UNICEF, 2017).

A national task force was appointed to determine the key functional areas of strength and weakness to streamline the supply chain, as described earlier, and it revealed that KEMSA had been providing services that were considered non-core. An urgent need arose to redefine KEMSA’s mandate – the resultant reform programme was enacted in the KEMSA Act 2013 and drawn up in the new organisational policy.

Outcomes and benefits

The impact of KEMSA’s reform programme resulted in:

• Increased accountability within the KEMSA operational unit
• Focus on core functions of demand planning, procurement, and central warehousing
• Hand-over of the regional warehouse's responsibilities to the private sector. This welcomed the advent of a warehouse management system, a modern infrastructure for fast processing, cold chain storage capabilities and well-trained warehouse staff
• The use of outsourced transport which brought a distribution fleet tracked by a GPS and integrated into a central planning system
• Greatly reduced wastage and stockouts at the facility level
• Substantially improved availability of medicines for patients with the ability to reach every facility nationally on a minimum 90-day cycle. After the reform, the availability of essential medicines is at 80% and specific programme medicines at 95% (UNICEF, 2017)
• County purchasing of medicines from KEMSA increased by 40-50 percent (UNICEF, 2017)

ii. Freight forwarding: DHL Context DHL is a leading international logistics company who provide freight forwarding and customs clearance services to KEMSA in-country. As described above, KEMSA approaches contracting in a centralised manner with a revised RFP process which has improved the tender process. DHL was put on 3-month trial by KEMSA to demonstrate capability and their ability to deliver measurable benefits. Thereafter, a multi-year contract with KEMSA was signed (up to 3 years). Outcomes and benefits The multi-year nature of contracts with KEMSA has permitted DHL to develop mutually beneficial outcomes. They have subsequently invested in systems and staff as a strategic freight forwarding supplier to the Kenyan government which has seen benefits of improved performance and collaboration at the ports. DHL has identified an opportunity for the government to have improved ‘early warning’ mechanisms for freight forwarders to go online and view, in real-time, the order details, volumes and timelines for delivery to Kenya. This could significantly optimise clearing timelines and enhance downstream supply. iii. Insight for a logistics glossary: DHL Context The logistics and supply chain sectors have a unique language and a vast set of terminology that has the potential to be misunderstood. DHL see the opportunity to develop a glossary that clarifies prioritised terminology (terms and definitions), weights, dimensions, and volumetric logistics relevant to the sector or functional area. Outcomes and benefits This would provide a strong foundational tool to ensure public sector officials and private sector partners are aligned to a common understanding before embarking on an outsourced partnership. It would act as a reference document as the partnership gets underway, thus enhancing communication between partners, and ensuring consistency from project planning to implementation phases. iv. Insight for supplier forums: DHL Context DHL are a private sector partner of the Kenyan government and when asked about ways to create more engagement opportunities with the public sector, such as Supplier Forums between government, counties, and the private sector, it was strongly supported. Supplier Forums present a platform for networking and structured, informative meetings between public officials and private sector partners centred around a health programme (e.g. HIV/AIDS) or a functional activity. Outcomes and benefits The observed benefits of Supplier Forums include good practice sharing from the private sector, opportunities for advocacy, enhanced planning and public-private collaboration for more sustainable working relationships, sharing of national regulatory updates or processes, and the collective opportunity to support government efforts to improve the supply chain system. DHL indicated that they would attend a Supplier Forum with their competitors to see these intended benefits come to fruition. v. Truck driver KPIs: KEMSA Context KEMSA having outsourced distribution fully to private sector service providers and focused on holding these partners accountable to KPIs. KEMSA has set a key contractual requirement of mitigating the risk associated with truck drivers. Instances of poor behaviour by truck drivers and health workers in the past have resulted in the resolution that contracts will be broken if transporters do not apply strict measures to monitor fleet and delivery cycle performance between the district warehouses and last mile. Outcomes and benefits The skills and capabilities of the truck drivers are pivotal to ensuring sound delivery of pharmaceuticals. The frequent driver changes during delivery cycles result in some drivers with poor understandings of important processes (knowledge of cold chain, delivery times for acceptance at a facility, administrative documentation). Some drivers drop stock without a receipt at the health facility which often leads to pilferage. KEMSA utilises KPIs to mitigate this. This has created a need for the private sector to assign officers and surveillance systems to run daily track and tracing of vehicles to optimise the quality and performance of final delivery to the last mile.