Course Name: Pharmaceutical

Supply Chain Management(PSCM)

Course Code: Phar4212
Course ECTS: 7/4Chr
Course prerequisite: Health
Service Management and Policies

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 Chapter One: Essentials of
Healthcare Supply Chain
Management
By; Fitsum.T (B.Pharm, MSc in
PSCM)

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Learning Objectives:
 At the end of this chapter, students will able to;

• Define pharmaceutical supply chain management.

• Identify supply chain and supply chain management.

• Describe key supply chain terminology and concepts.

• Explain the benefits of supply chain management.

• Describe globalization and supply chains.

• Explain the importance and integrity of the supply

chain to global health.
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1.1. Introduction to Pharmaceutical Supply
Chain Management (PSCM)
 Pharmaceutical supply chain management: is a
continuous process of ensuring availability of needed
products of proven quality, safety, and efficacy.
• It encompasses the planning and management of all
activities involved in sourcing and procurement,
manufacturing and

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Con’t…
• all pharmaceutical logistics activities such as
warehousing, inventory management, distribution and
transportation, & customer services.
• Importantly, it also includes coordination and
collaboration with pharmaceuticals channel partners,
which can be suppliers, intermediaries, third party
service providers, and customers.
• It promotes rational use of pharmaceuticals.
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 1.2. Supply Chain and Supply Chain
Management?
 Supply chain: is a network, that includes vendors of
raw materials, plants that transform those materials
into useful products, and distribution centers to get
those products to customers.
• The components of supply chain include; procedures,
vendors, warehouse, transportation companies,
distribution centers & retailers.

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Con’t…
 Supply chain management: the managing of supply
and demand, sourcing raw materials and parts,
manufacturing and assembly, warehousing and
inventory tracking, order entry and order
management, distribution across all channels, and
delivery to the customer.
• It integrates supply and demand management within
and across channel partners.
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 1.3. Key Supply Chain Terminology and
Concepts
1.3.1. Key Supply Chain Terminologies
• The followings are the most commonly used supply
chain terminologies in pharmacy settings:
 Pharmaceuticals: are substances used in the
diagnosis, treatment, or prevention of disease and for
restoring, correcting or modifying organ functions.
• It includes; drugs, medicines, medical supplies,
medical equipment's, chemicals and reagents.
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Con’t…
 Drug: means any substance or mixture of substances
used in the diagnosis, treatment, mitigation or
prevention of a disease in man or animal.
 Medicine: a substance or preparation used in treating
disease.
 Medical supplies: means any article that may be used
on the inner or outer part of the body for diagnosis or
treatment of disease in man or animal.
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Con’t…
 They are consumables:

• Disposable syringe with needles,

• Gloves (sterile, examination and utility)

• Suturing materials (cat gut, silk)

• Fluids ( normal saline, ringer lactate & others)

• Cleaning and disinfecting supplies etc…

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Con’t…
 Medical equipments: these are permanent or re-
usable materials that can be used for longer period.
• E.g. Delivery set, tooth extraction set, dressing set,
scissors, forceps, sterilizers (oven, autoclaves).

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Con’t…
 Clients: usually refers to someone who receives a
treatment or service.
 Patients: is a term often associated with a persons
receiving treatment for an illness, such as those in an
antiretroviral therapy (ART) program.

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Con’t…
 Prescription: means any order for pharmaceuticals
written and signed by a duly licensed or authorized
medical practitioner, then issued to a patient in order
to collect pharmaceuticals from dispensing unit.
 Dispensing: means to prepare drugs and/or medical
supplies and distribute them to their users.

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Con’t…
 Shelf-life: means the length of time a drug product may
remain on the shelf, in the original package and under
usual environmental conditions and retain an acceptable
level of its original potency and overall quality.
 Expired date: reflects the time period during which the
products is known to remain stable/functional, which
means it retains its strength, quality and purity when it
is stored according to its labeled storage conditions.

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Con’t…
 Adverse drug reaction: means a noxious and
unintended effect of drug, that occurs in doses
normally used in humans or animals for the diagnosis,
prophylaxis or treatment of disease.
 Side effect: means an expected known effect of drugs
that is not the intended therapeutic outcome.
• It is possibly related to a drug.

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Con’t…
 Service delivery point: any facility, where users
receive supplies related to health services.
• Service delivery points (SDPs) are usually hospitals
and health centers, but may also include case units,
community-based distributors, laboratories, and
health posts.
• These facilities are called SDPs, because services are
provided and products are used or dispensed at these
locations.
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Con’t…
 Pipeline: is the entire chain of storage facilities and
transportation links through which supplies moves from
manufacturer to clients.
• For examples including port facilities, central warehouse,
regional warehouse, district warehouse, all service deliver
points and transportation vehicles.
 Lead time: is the time interval between when new stock is
ordered and when it is received and available for use.

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Con’t…
 Stock: means the amount of drugs and/or medical
supplies available in drug retail outlets.
 Inventory control system: stock management
system, that ensures to maintain an appropriate stock
level of all products, avoiding shortage, wastage,
overstocks.

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 1.3.2. Supply Chain Concepts
• Supply chain management (SCM) system is mainly
important to ensure that every person is able to obtain
and use quality essential health supplies whenever he
or she needs them.
• SCM tries to achieve this goal by achieving the six
rights of supply chain management.

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Con’t…
• The six rights of SCM;
 The RIGHT goods
 in the RIGHT quantities
 in the RIGHT condition
 delivered…to the RIGHT place
 at the RIGHT time
 for the RIGHT cost

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 1.4 Benefits of Supply Chain Management
•Well-functioning supply chains benefit public health
programs in important ways by;

a) Increases program impact

 If the system provides a reliable supply of

pharmaceuticals, more people are likely to use health
services.

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Con’t…
 Customers feel more confident about the health
system and the facilities, when they have a constant
supply of pharmaceuticals.
 It motivates them to seek and use services.

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Con’t…
b) Enhances quality of care

 Well-supplied health facilities can provide superior

service, while poorly supplied health facilities cannot.
 Likewise, well-supplied health workers can use their
training and expertise fully, directly improving the
quality of care for clients.

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Con’t…
 It helps in increasing their professional satisfaction,
motivation, and morale.
 Motivated staffs are more likely to deliver a higher
quality of service.
 Customers will also benefit from the consistent
availability of commodities.

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Con’t…
c) Improves cost efficiency and effectiveness
• Reduces losses due to overstock, waste, expiry,
damage, pilferage, and inefficiency;
• Protects other major program investments

• Maximizes the potential for cost recovery

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 Why do we manage drugs and medical
supplies?
• Their availability or absence will have a positive or
negative impact on health.
• The issue of medicine is not the responsibility of only
health workers.
• It has political, economic and social dimensions.
 Access to medicines is a fundamental human right.

 Poor medicine management obstructs access to

medicines; results in wastage and health hazard.

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Advantages of good pharmaceutical supply
chain management

• It avoids over stocks of the pharmaceuticals

• It avoids the shortages of pharmaceuticals

• It avoids distortions of pharmaceuticals distributions

• It avoids financial wastage and budget constraints

• It helps in forecasting (future planning)

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 Why worry about pharmaceuticals and
their management?
• Pharmaceuticals save lives and improve health,

• Pharmaceuticals promote trust and participation in

health services,
• Pharmaceuticals are costly for individuals,
households, government health institutions, country &
• Pharmaceuticals are different from other consumer
products.

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 1.5 Globalization and supply chains

• A supply chain is made up of all the stages involved in

the production and sale of a specific product.
• The chain follows the product from its source as raw
material to its final destination in a shop or
warehouse.
• Supply chain management plays an important role in
equitable access to essential medicines and services in
low and middle income countries (LMICs).
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Con’t…
• United state-aid (USAID) makes significant investments in
global health supply chains to ensure healthcare commodities
get to those in need while strengthening systems to foster
self-reliance.
• The Global Health Supply Chain (GHSC) program activities
include providing lifesaving healthcare commodities, such as;
HIV/AIDS antiretroviral therapy (ART) medicines and
malaria bed nets, and transferring knowledge on managing
healthcare commodities.
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Con’t…
• The Bureau for Global Health provides oversight of USAID’s
worldwide supply chain management activities through an
established management structure consisting of officials
from five offices within the bureau:
 Offices of HIV/AIDS;

 Infectious Disease;

 Population and Reproductive Health;

 Maternal/Child Health and Nutrition; &

 Health Systems.
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Con’t…
• These five offices provide technical expertise and take
the lead in overseeing the supply chain program.
• Managing the GHSC program involves working with
stakeholders at headquarters and in the field at missions
worldwide across all elements of the supply chain.
• The six commonly adopted supply chain elements are;

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Con’t…
1. Product selection; selecting drugs based on national
treatment guidelines and approval.

2. Forecasting and supply planning; estimating the

quantity of commodities needed to ensure an
uninterrupted supply.

3. Procurement; contracting with suppliers to obtain

drugs within agreed upon production and delivery time
frames and costs.

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Con’t…
4. Warehousing; maintaining appropriate security and
environmental conditions.

5. Inventory management; monitoring for shortages and

waste due to expired products, keeping accurate records
of available and anticipated stock, and preparing for
distribution.

6. Distribution; managing the flow of commodities from

the point of production to the end user.
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Con’t…
• The exact pathways for commodities vary depending
on multiple factors, including country requirements
and commodity type, figure shows the typical flow of
commodities through an in-country supply chain.

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1.6. Importance and integrity of the supply
chain to global health
• The term “global supply chains” refers to;
 the cross-border organization of the activities
required to produce goods or services and
 bring them to consumers through inputs and various
phases of development, production and delivery.

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Con’t…
• Ensuring the integrity of the supply chain requires;
 close collaboration between suppliers, manufacturers,
distributors, and customers,
 as well as the implementation of effective systems and
processes for tracking, monitoring, and
 evaluating the quality and reliability of the supply
chain.

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 1.6.1 Integrated logistics framework
• The goal is to achieve customer satisfaction (ensuring
CS) at the lowest total cost.
• Decisions in one functional area will impact cost of all
others.
• We integrate the logistical functions into a coherent
framework.

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Five interrelated functions of logistical work

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a) Order processing
• Order processing is the transmission of customer
requirements to the supply chain.
• Accurate information is needed to achieve superior
logistical performance.
• Responsive supply chains require accurate and timely
information about customer purchase behavior.
• Fast information flow enables improved work
balancing.
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b) Inventory
• Inventory or stock refers to the goods and materials
that a organizations holds for the ultimate goal of resale,
production or utilization.
• Inventory requirements of a firm are directly linked to
the facility network and the desired level of customer
service.
• Inventory strategy seeks to achieve the desired customer
service with the minimum inventory commitment.

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c) Transportation
• Transportation is the operational area, that
geographically moves and positions inventory.
• There are basic ways to satisfy transportation
requirements;
 Contract with dedicated transport specialists.

 Engage carriers that provide different transportation

services as needed on a per shipment basis.

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d) Warehousing, materials handling and
packaging

• These work activities are integral parts of other

logistical functions.
• Effective integration of these functions, facilitates the
speed and overall ease of product flow throughout the
logistical system.

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e)Facilities network

• The number, size and geographical relationship of

facilities used to perform logistical operations directly
impacts customer service capability and cost.
• Types of facilities in the logistics network include;

 Manufacturing plants, warehouses, cross-dock

operations and retail stores.

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Logistical integration requires achieving
six objectives simultaneously;
 Responsiveness…(is the ability of a firms to recognize
and respond to changing customer needs.)
 Variance reduction….( minimizing service interruption
because of products shortage)
 Inventory reduction (reducing unnecessary stocks)
 Shipment consolidation…(aggregating small
shipments)
 Quality
 Life cycle support

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 Thank You!

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