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Mozambique had historic challenges with drug distribution, culminating in the Strategic Pharmaceutical Logistics Plan / Plano Estratégico de Logística Farmacêutica (PELF) in 2013 which aligned Central Medical Store / Central de Medicamentos e Artigos Médicos (CMAM), donors and implementing partners around key distribution concepts:
- Comando Unico – CMAM would assume management control over distribution country-wide
- Reducing the tiers of the supply chain: Removing district warehouses in favour of intermediate warehouses (IW’s)
- Outsourcing distribution where possible, recognizing this is not a core competency to be developed within CMAM
Mozambique has conducted several projects that provide examples of good practice and important lessons learned in implementing the PELF. The Last Mile Supply Chain (LMSC) project led by VillageReach has worked on outsourcing distribution over an increasing portion of the last mile supply chain since 2016. An operational level toolkit for managing the transition of last mile distribution from the public to the private sector has been developed, called the Transport Services Solutions Toolkit.
Several studies have been performed to map and optimise the transportation network in the country:
- VillageReach partnered with CMAM, Project Last Mile, The Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) and Coca-Cola Sabco to develop a route optimisation tool with projected cost savings of $3.06-$3.09 per kilometre.
- Due to the extremely challenging terrain in Mozambique, Project Last Mile conducted a nationwide survey of all routes to serve health facilities and has recommended optimum routes
- GFF / PSISC has conducted an overall investment case that estimates total storage and transportation costs so that CMAM can advocate for the budget to enact ‘Comando Unico’
To address the challenge of limited supply chain visibility, in 2015 USAID’s Global Health Supply Chain Programme – Procurement Supply Management (GHSC-PSM) project partnered with the Clinton Health Access Initiative (CHAI) to launch an electronic logistics management system (eLMIS) called SIGLUS that captures data at health facilities and is now operating in over 900 health facilities (55%+).
- Warehousing (Important: a study is investigating the benefits of sharing some warehousing with fourth-party logistics providers (4PLs))
- Upstream distribution is shared between CMAM and third-party logistics providers (3PLs)
- Last mile distribution is increasingly outsourced to 4PL partners who manage smaller 3PLs
These examples illustrate tools for outsourcing regarding policymaking, advocacy and the management of stakeholder expectations, last mile distribution, the capacity and capability building in the public sector, route optimisation and the implementation of electronic logistics management information systems (eLMIS).
Health sector policy
The health sector in Mozambique is guided by the Plano Estratégico do Sector da Saúde / Health Sector Strategic Plan (PESS). The PESS 2014-2019 provides a strategic framework towards universal health coverage with the two strategic pillars:
- (a) More and better healthcare services, and
- (b) Reform and decentralisation agenda.
One of the seven strategic objectives supporting these two pillars is the strengthening of private sector partnerships based on mutual respect to promote increased efficiencies (PESS, p. 14). The PESS states the importance of the private sector in health through the formation of public-private partnerships (PPPs) and large private investment projects. The National Directorate for Planning and Cooperation / Direcção de Planificação e Cooperação (DPC) is working on a strategy for PPPs in health (USAID MMEMS, p. 3). The PELF, written in December 2012 by the Ministry of Health, National Directorate of Medical Support and CMAM, guides major reforms to improve the structure of pharmaceutical logistics to meet the needs of a decentralised health system in Mozambique, outlined in the PESS. It sets the strategic drive to outsource activities that are considered subsidiary.
The healthcare supply chain
The supply chain for public health in Mozambique is centralised by two institutions: CMAM and the Supply Centre (CA), falling under the Ministry of Health (MISAU). The private sector is actively involved across various supply chain activities in Mozambique. Figure 1 below illustrates the four-tier structure of the health supply chain in Mozambique, covering pharmaceutical products and other health products. The planned merging of the provincial and district warehouses in a future model of thirty intermediary warehouses is shown in the yellow box.
PRIVATE SECTOR OUTSOURCING – EXAMPLES
This section shares examples of outsourcing to private sector partners. The examples shown below are drawn from a combination of desktop research and interviews. i. Last Mile Supply Chain (LMSC) Project: VillageReach
Context In partnership with the Government of Mozambique/MISAU, Provincial Health Directorate (DPS), Provincial Warehouse (DPM), USAID, and technical partners Bolloré Transport & Logistics (Tete and Zambézia provinces) and Agility (Nampula province), with VillageReach acting as the technical assistant, the Last Mile Supply Chain (LMSC) project uses outsourced 4PLs to manage the distribution of vaccines, antiretroviral drugs (ARVs), tuberculosis drugs and other medical supplies from the provincial warehouses to health facilities at the last mile. The LMSC project works in challenging geographical terrains that involve huge volumes for transportation. It aligns with long-term supply chain strategies and reforms of the Mozambican government (PELF strategy) and recognises the central role of strategic partnerships to ensure effective results. Outcomes and benefits The LMSC project began in two districts in Zambézia province in October 2018 and now reaches 22 districts and 235 health facilities in the province. It has also expanded to 949 health facilities in Sofala, Tete, Inhambane, and Nampula (VillageReach, 2020). The 4PL arrangement of the LMSC project builds on VillageReach’s outsourced arrangement with third-party logistics providers (3PLs) that began in five districts in Tete province in late 2015 – this project demonstrated initial evidence of increased transport capacity (data collection and reporting) and increased efficiencies (stock management and patient care) that proved the benefits case for outsourced distribution in the last mile (VillageReach, 2017). After 6 months of outsourcing, stock-outs of vaccines decreased from 42% in the first month (November) to 4% and ARV stock-outs decreased from 27% to 12% (VillageReach, 2017: p. 6)
The LMSC project encompasses the following strategic principles:
- Strengthened stakeholder and technical management: establishing provincial logistics technical working groups (TWG) composed of DPS and supply chain transport partners to improve planning and accountability systems
- Improved data collection and systems for end-to-end visibility: embedding a Visibility and Analytics Advisor to integrate distribution and stock management data to promote the use of reliable data with an end-to-end supply chain view for key decision-making and better results
- Capacity building to support logistics management: extensive training for the DPS staff to support the management of 4PL and data analytics, and ongoing training for transport providers, health centres, lab, and warehouse staff.
- Transfer to government: prioritising documentation of processes, tools, methods and provision of associated training and technical support to ensure CMAM and provincial government stakeholders can operate autonomously. The development of a Transport Services Solutions Toolkit (discussed in the next section).
ii. Transport Services Solutions (TSS) toolkit: VillageReach Context Under the LMSC project, VillageReach developed the TSS Toolkit that offers a standardised and structured approach to ways of engagement and governance between the public sector and outsourced partners, namely 4PLs or 3PL transport companies, across the various levels of the Mozambican supply chain. Before this, public-private participation in Mozambique was ad hoc and unstructured. The TSS Toolkit includes 50-60 essential tools, often drawn from private sector good practice, in easy-to-use formats and codified under three overarching sections relevant to last mile distribution:
(i) Monthly operational management activities
(ii) Quarterly or event-based management activities
(iii) Deployment-related activities. To identify these areas and the tools therein, a comprehensive user needs analysis was conducted by VillageReach. Importantly, the TSS Toolkit was developed by VillageReach in partnership with its intended users.
Outcomes and benefits The collaborative process established early buy-in to the TSS Toolkit, ensured it remains contextually relevant and allowed public sector officials to fully understand tool processes which aids change management. Advocacy is a key prerequisite to the successful development and implementation of the TSS Toolkit. Other pre-requisites included:
(i) Integrating other technical partners and
(ii) Integrating Mozambique’s parallel commodity supply chains.
Key learnings from the TSS Toolkit have been incorporated into the Outsourcing Toolkit (interview VIllageReach, 02/07/2020). iii. Route Optimisation: Project Last Mile (PLM) Context Over a period of three to four years, Project Last Mile worked with CMAM and partners (The Global Fund and local bottler, Coca-Cola Sabco) to design a distribution system that caters to different wet and dry season conditions across Mozambican provinces by travelling overland from the 157 district warehouses to respective health facilities. With technical assistance from Frontline Market Research company, the project developed a mapping system that considers travel time to each health facility in the different seasons using SpatialXL and RouteXL tools. The analysis developed a time and distance matrix between all storage depots and health facilities that enabled vehicle recommendations based on a simulated distribution plan and optimal routes.
Outcomes and benefits The project was executed in the Nampula Province and resulted in the verification and geo-tagging of 240 health facility and warehouse locations. Over 260 high-risk points, which have the potential to disrupt distribution, were mapped and photographed. More than 20,000 kilometres of recorded GPS tracking data was used to modify the Nampula road network. Local insights were gained on the best-suited vehicles and roads to use in Nampala for both wet and dry seasons (e.g. vehicles equipped for road gradients). Through optimised routes, projected cost savings were $3.06 to $3.09 per kilometre when shifting from a district warehouse to an intermediary warehouse model. The project took into account both current and future scenarios of the Mozambican supply chain and provided a comprehensive costing of last mile delivery for CMAM which allows the organisation to make more informed decisions (interview José Neves Project Last Mile, 03/07/2020; interview James Flood Frontline, 08/07/2020).
iv. SIGLUS Project for Improved Supply Chain Visibility: Global Health Supply Chain-Procurement and Supply Management Context Mozambique has limited end-to-end visibility of the supply chain, often emanating from data gaps in terms of consumption and stock levels from paper-based systems at lower levels of the supply chain. In 2015, USAID’s GHSC-PSM project in partnership with the Clinton Health Access Initiative (CHAI) launched a cloud-based logistics management system (eLMIS) called SIGLUS that captures data at health facilities: stock on hand, quantity issued, quantity received, adjustments, quantities requested, patients by regimen for ARVs. Health facilities use SIGLUS to automatically generate and send monthly or quarterly requisitions, and thereafter SIGLUS data is sent to the district warehouses to be synchronised with the SIMAM system. SIGLUS operates on both a mobile application (app) and a Web Portal and has the capacity to send real-time alerts for low stock levels, overstocking, understocking, and upcoming expiries.
Outcomes and benefits SIGLUS was piloted in 2015 in four provinces and then expanded three years later to 9 provinces, thus covering 40 percent of Mozambique’s health facilities. In 2018, the implementation for a further 140 facilities was underway taking the total coverage to 53 percent (OpenLMIS, 2020). SIGLUS is currently operational in approximately 900 health facilities (interview José Neves Project Last Mile, 03/07/2020).
v. Transport Outsourcing Investment Case: Global Financing Facility / PSISC Context Mozambique became a country funded by the Global Financing Facility (GFF) in 2018. Partners and the Government developed an investment case to prioritize and accelerate efforts to implement the PESS in 2016. However, this investment case lacked a component of supply chain strengthening. Mozambique asked GFF for support related to outsourcing of last mile distribution in April 2018. GFF agreed to support through its partnership (Private Sector Innovation for more effective Supply Chains - PSISC) with the Bill & Melinda Gates Foundation, MerckforMothers and United Parcel Service (UPS). The project consolidates research and recommendations from other partners to create an overall estimate of the budget that will enable CMAM to carry out an expanded mission as envisaged in the PELF. CMAM will need sufficient centralized funding to manage outsourced transportation contracts that meet country-wide demand where these budgets are currently de-centralized to provinces and districts or managed directly by donors and their prime contractors.
Outcomes and benefits The first phase of the project (completed in August 2020) identified the total funding requirement and estimated increase in headcount at CMAM, as well as risk ratings for five different scenarios for outsourced contract management could work. Funding estimates consolidated renovation of warehouses, operating costs of warehouses, purchase and operating costs of vehicles for upstream and last mile transportation as well as management and staff costs. The estimated budget over ten years was ca. $200m, however, several opportunities were identified to save money, especially capital investment in infrastructure and vehicles. Phase two of the project has results expected in Q1 2021. Alternative network designs and private sector engagements will be evaluated that should substantially reduce the capital investment required and ongoing running costs.
The health sector in Mozambique is guided by the PESS on a five-year termly basis and the operations of the healthcare supply chain follow the PELF. The private sector is actively involved across various supply chain activities in Mozambique, including production and distribution of health commodities for government entities. They have been working on downstream activities in Mozambique (provincial and district levels) since 2001, in partnership with the MISAU and other local partners. The VillageReach LMSC project and the associated TSS Toolkit are considered good practise for developing the Outsourcing Toolkit. Project Last Mile has partnered with CMAM, The Global Fund and Coca-Cola Sabco to develop and implement a route optimisation tool that resulted in projected cost savings of $3.06 to $3.09 per kilometre. In 2015, USAID’s GHSC-PSM project partnered with the CHAI launched an electronic logistics management system (eLMIS), called SIGLUS that has now been rolled out to over 900 facilities. This is a strong example of a supporting system for supply chain management that has been outsourced successfully. The projects described in this case study provide good-practice examples and useful inputs for the development of the public sector outsourcing toolkit.
Interview: James Flood, Frontline Market Research, 08/07/2020. Interview: José Neves, Project Last Mile (PLM), 03/07/2020. Interview: Joseph Roussel, Ruth Bechtel, Lucilla Bonaventure, VillageReach, 26/06/2020. Interview: Joseph Roussel, Lucille Bonaventure, Alvaro Lopes, VillageReach, 02/07/2020. Interview: Ed Llewellyn, Africa Resource Centre, 02/07/2020. Ministry of Health (MISAU). 2014. Health Sector Strategic Plan: 2014-2019 (PESS). Government of the Republic of Mozambique. Ministry of Health (MISAU), National Directorate of Medical Support (DNAM), Central Medical Store (CMAM). December 2012. Strategic Plan for Pharmaceutical Logistics (PELF). Government of the Republic of Mozambique. OpenLMIS, 2020. Mozambique: SELV and SIGLUS. Project Last Mile (PLM). 21 June 2019. Mapping a Way in Mozambique. ThinkWell Global. September 2019. Last Mile Supply Chain Program: Capability Assessment Report. United States Agency for International Development: Mozambique Monitoring and Evaluation Mechanism and Services (USAID MMEMS). April 2019. Overview of Private Actors in the Mozambican Health System and Rapid Assessment of the Supply Chain: Technical Report. USAID. VillageReach. 2020. Last Mile Supply Chain (LMSC): Ensuring the availability of medical products at health facilities. VillageReach. 2017. Outsourcing Transport to Improve Health at the Last Mile: A Case Study.