MLS 316

SUPPLY CHAIN MANAGEMENT

 OUTLINE
 Introduction to laboratory supply chain management and logistics.
 Supply chain logistics.
 Supply chain operation and control.
 Supply chain planning.
 Introduction to supply process management.
 Introduction to purchasing and procurement and distribution.
 INTRODUCTION TO LABORATORY SUPPLY
CHAIN MANAGEMENT (SCM) AND LOGISTICS
 Laboratory’s Supply Chain Management involves the planning, coordinating and
controlling of series of interconnected activities involved in moving a laboratory’s
raw materials, equipment component parts and finished products from suppliers to
end users in order to increase service or reduce system wide costs.
 It also refers to the systematic process of overseeing and controlling the flow of lab
supplies, ranging from essential reagents and test kits to sophisticated diagnostic
equipment.
 The successful management of supply chain aim to increase productivity and
efficiency in medical laboratories.
 It encompasses various functions such as procurement, inventory control , quality
assurance, and logistics. Effective supply management ensures that the right
products are available at the right time, in the right quantity, and at the right cost,
all while maintaining compliance with healthcare regulations and standards.
 This process is vital for maintaining the operational efficiency of a lab, ensuring
the reliability of test results, and ultimately, supporting patient care and medical
research.
 THE CRUCIAL ROLE OF SUPPLY
MANAGEMENT
 Firstly, it directly impacts lab operations: Efficient supply management ensures
that labs have the necessary items to perform tests without interruption, thus
maintaining operational continuity and productivity.

 It also affects the accuracy and reliability of test results; the quality of supplies
directly influences the precision of diagnostic outcomes.

 Moreover, supply management is crucial for patient care. Delays or errors in

supply can lead to delayed diagnosis or incorrect treatment plans, affecting
patient outcomes.

 Promotes the exchange of information among members of the network.

 Promoting the exchange of technical expertise between institutions involved in

laboratory diagnosis and monitoring of disease conditions in the region.
 SUPPLY CHAIN LOGISTICS
Definition of key terms
 Logistics: A component of SCM that focuses on the planning, implementation, and
control of the efficient movement and storage of goods and services, from the point
of origin to the point of consumption in order to meet the customers requirement.

 Logistics Management: is an integrating function that coordinates and optimizes

all logistics activities, as well as integrates, logistics activities with other functions
including marketing, sales manufacturing, finance and information technology.

 Pipeline: The entire chain of physical storage facilities and transportation link
through which supplies move from the manufacturer to the user including the
transport vehicles, central warehouse, community- based distribution network,
e.t.c.

 Service delivery point: Any facility where users receive supplies related to health
services. They are usually hospitals, health centers, but may also include mobile
units, community based distributors, laboratories and health posts.
 SUPPPLY CHAIN LOGISTICS CONT’D
 Lead time: The time between when new stock is ordered and when it is
received and available for use.

 Inventory log: Is a record of all items in stock, it includes information about

stock levels, expiration dates, and other relevant data.

 Stock on hand: Quantities of usable stock available at any level or at all levels
of the system at a point in time.

 Losses/Adjustment: The quantity of commodities removed from the

distribution system for any reason other than consumption by clients
(misplacement, expiry, damage). Adjustment may include receipt or issue of
supplies to/ from one facility to another at the same level (transfer) or a
correction for an error in counting. Losses/ adjustments may therefore be a
negative or a positive number.
 TYPES OF LOGISTICS SYSTEM
 Centralised: In a centralized system, a central authority manages logistics
for multiple facilities. It promotes economies of scale, but can lead to delay.

 Decentralized: In a decentralized system, each facility manages its

logistics. It offers more control but can be less efficient.

 Integrated: An integrated system combines aspects of both centralized and

decentralized system, aiming for the best of both worlds
 LOGISTICS SYSTEM
The six rights of logistics

 The RIGHT goods

 In the RIGHT quantities

 In the RIGHT condition, delivered

 To the RIGHT place

 At the RIGHT time

 For the RIGHT cost

LOGISTIC CYCLE
 LOGISTIC CYCLE CONT’D
 SERVING CUSTOMERS: The logistics system ensures customer service by
fulfilling the six rights by series of activities promising commodity security
which contributes to excellent customer service. The ultimate goal of medical
laboratory supply chain management is to ensure clients satisfaction through
proper selection of commodity, procurement and quantification based on logistics
management information system, inventory management by appropriate
distribution and storage in place. Serving clients is the purpose of a logistics
system and so understanding customer needs is essential as they should inform
product selection.

 PRODUCT SELECTION: The health logistics system require that product be

selected based on certain performance characteristics or specifications with the
goal of meeting clients health needs by the medical laboratory testing. The
Medical Lab Scientist has been trained and empowered by law governing the
professional practice to ensure compliance with appropriate standards of
professional best practices by end users. When a need is identified, commodities,
technologies and other health products needed to address the needs are selected.
Products should be selected based on predetermined standard specifications.
 LOGISTIC CYCLE CONT’D
 FORECASTING/ QUANTIFICATION: Quantification is a broader process that
includes forecasting (predicting future demand for a product based on historical
data, trends, seasonality and other influencing factors). It is the process of
estimating the quantity and cost of the products required to ensure an uninterrupted
supply as well as determining when the products should be procured and
distributed using a supply plan. Following the selection of the right product the
quantities needed in the short and long term are determined through quantification,
the medical laboratory scientist is saddled with the responsibility of the
quantification using the consumption rate or historical data generated as well as
putting into plan the procurement, storage and distribution network .

 PROCUREMENT: Procurement is the process in which commodities are

obtained via international, regional, or local sources of supply or even through a
local agent. However, transparency and openness is required following a set of
specific procedures to achieve the six rights of logistic management. The
procurement process is usually preceded by selection and quantification of
commodities. Having developed a supply chain plan, a procurement can be done
even by a non-medical lab scientist provided it is verified and certified by a
Medical lab scientist. Commodities must be procured after selection and
quantification of the products.
 LOGISTIC CYCLE CONT’D
 INVENTORY MANAGEMENT: At the completion of product
procurement and commodity received by the health program, the product
must be warehoused and then transported to the service delivery points
where the client will receive the product. This process is called inventory
management, product are received, assessed, and stored until they are
distributed to the next level or until the customer needs them. A third party
logistics (3PL) are usually charged with this responsibility of storage and
distribution system
 LOGISTIC MANAGEMENT INFORMATION
SYSTEM (LMIS)
 Logistic management information system (LMIS) is important for laboratory
product selection, quantification, procurement and distribution. Information about
a product consumption and inventory levels should be gathered to guide the
manager to know how much of the product to request or procure.
 Moreover, LMIS guides decisions at different levels of the system such as, How
long the supplies will last?; Do I have enough stocks until my next order is
received?; Do we need an emergency order?; How to determine the order
quantity?; where is the consumption highest?; Which unit needs more
resources ?; Are we experiencing losses from the system that require us to take
action?; Are products about to expire ?; Is there need to retrieve and distribute to
other health facilities before they expire? It is the responsibility of a medical
laboratory scientist to ensure appropriate laboratory commodity inventory
management, storage and distribution.
 The Medical laboratory Scientist should also determine the product shelf life and
storage condition of the commodity, assign different maximum and minimum
stock levels for slow moving and fast- moving commodities, maintain laboratory
LMIS to track the actual consumption stock on hand(SOH) and when
redistribution is needed to avoid expiration.
 SUPPLY CHAIN PLANNING
 Supply chain planning (SCP) is the coordination of material flows, capacity
usage, and information to make optimal decisions and meet demand
sustainably and profitably.
 The chief components of supply chain planning include demand planning,
demand forecasting, distribution planning, inventory management production
planning and scheduling, and purchase planning, culminating in an integrated
business planning (IBP) process.
 End-to-end supply chain planning integrates all functions and sectors to ensure
agility, minimize risks, and stay competitive in a highly interconnected supply
chain environment.
 Supply chain planning can also be in levels such as;
Strategic Planning: A long term planning that sets the overall direction of the
supply chain.
Tactical Planning: Mid-term planning that focuses on specific operational
goals, such as production schedules and inventory levels.
Operational Planning: Short-term planning that deals with day-to-day
activities, such as order fulfillment and logistics
 SUPPLY CHAIN PLANNING CONT’D
ESSENTIAL BENEFITS OF SUPPLY CHAIN PLANNING
 Cost reduction: Optimal planning minimizes excess stock and transportation
expenses, reducing overall operational costs. This leads to significant savings and
better allocation of financial resources.
 Improved customer satisfaction: Timely and accurate deliveries enhance product
availability and customer loyalty. Happy customers are more likely to visit again and
refer the business to others.
 Increased efficiency: Proper planning streamlines operations and optimizes
resource utilization, boosting workforce productivity. Efficient processes reduce
downtime and improve overall operational performance.
 Enhanced decision-making: Better strategic decisions result from real-time insights
and scenario planning capabilities. Informed decisions help businesses quickly adapt
to market changes and demands.
 Risk mitigation: Great planning processes improve supply chain resilience and
balance inventory levels to handle demand variability. Proactive risk management
prevents disruptions and maintains smooth operations.
 Sustainability. Better decisions result in reduced waste and efficient resource use.
Sustainable practices enhance a company’s reputation and compliance with
regulations.
 SUPPLY PROCESS MANAGEMENT
 Supply process management is a subset of supply chain management, that
focuses on internal processes within the organization to support the supply
chain. Supply process management is essentially the internal component of
supply chain management while Supply chain management encompasses both
internal processes (like supply process management) and external relationships
with suppliers and customer.

 The SPM emphasizes planning, ordering, receiving, storing, and using supplies
efficiently. For example; In a Medical Lab, how the lab forecasts reagent needs,
places purchase orders, tracks inventory, and distributes items within lab
departments.

 SPM helps ensure that the internal processes are efficient and effective,
contributing to the overall success of the supply chain. It is the set of processes
and tools used to manage the day-to-day operations within that framework.
SUPPLY CHAIN OPERATION AND CONTROL
 Supply Chain Operation refers to the day-to-day activities and processes
that move goods, services, and information through the supply chain —
from suppliers to end users.

 Supply chain operation in a medical laboratory includes the steps needed to

ensure that reagents, equipment, and consumables are available, handled
properly, and used efficiently for laboratory testing.

 Supply chain control refers to the processes, systems, and strategies that
companies use to manage, monitor, and regulate the flow of goods,
information, and finances across the entire supply chain from raw materials
to final product delivery. It ensures that operations are efficient, costs are
minimized, quality is maintained, and customer expectations are met.
 SUPPLY CHAIN CONTROL
The supply chain control include;
 Inventory Control
Monitoring stock levels to avoid overstocking or stock outs.

 Logistics Management
Managing transportation, warehousing, and distribution to ensure timely delivery.

 Quality Control
Ensuring products meet required standards throughout the supply chain.

 Supplier Management
Evaluating and overseeing supplier performance, contracts, and compliance.

 Risk Management:
 Contingency plans for supply disruption (e.g., during pandemics).
 Multiple suppliers or local sourcing options.
 SUPPLY CHAIN DISTRIBUTION
 “Supply chain distribution” is a key component of supply chain, it refers to the
process of delivering products from the point of production to the end
customer, which includes everything from raw material sourcing to product
manufacturing and final delivery.

 Classes of supply distribution;

 Direct Distribution: Manufacturer sells directly to the customer . For example,
a brewery that brews its own beer and sells it to customers at its own brick-and-
mortar location employs a direct channel of distribution.
 Indirect Distribution: Involves intermediaries like wholesalers or retailers.
 Hybrid or Dual Distribution: A combination of direct (a brand selling online)
and indirect channels (retail stores) is used to reach different customer
segments.
Example:
A manufacturer selling directly through their website but also using retailers to
sell in specific geographic areas.
 SUPPLY CHAIN DISTRIBUTION CONT’D

Goals of Effective Distribution:

 Timely delivery

 Cost efficiency

 Customer satisfaction

 Flexibility and responsiveness to demand changes

THANK YOU