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An intervention to improve forecast accuracy and stock availability – a success story from Tanzania

Tanzania’s problem with medical stock outs and overstock

As is the case for many other countries in Africa, Tanzania frequently experiences stock outs and overstock of medical supplies due to poor forecast accuracy or unavailability of reliable and consistent forecast data from public health care service providers. Two logistics systems are in place in the country that deal with essential medicines: an integrated logistics system (ILS) and a hospital logistics system (HLS). However, these systems on their own are not sufficient to overcome the problem of stock outs and overstock in Tanzania’s health commodity supply chain.

The role of Tanzania’s Medical Stores Department

Tanzania’s Medical Stores Department (MSD) is responsible for the procurement and storage of medicines, medical supplies, laboratory reagents and medical equipment in the country, and their distribution to public health facilities and authorized non-government health facilities. MSD’s mission is to make available to all Tanzanians, at all times, medicines and medical supplies that are of an acceptable quality and at affordable prices. Within the MSD the body responsible for enabling the MSD to tailor its service capacity to meet variations in demand is the Demand Planning Unit.

MSD’s Demand Planning Unit received training from Pamela Steele Associates

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Figure 1: Tanzania team – Director of Logistics, Warehouse Supervisor, and Marco Masala, Demand Planning receive certificates from the PSA Director

Since he works for the MSD’s Demand Planning Unit, Marco Masala was aware that the problems of stock outs and overstock in the current health commodity supply chain meant that the MSD was not fulfilling its mission of providing medicines and medical supplies to Tanzanians at all times. He therefore wanted to learn about ways in which the supply chain could be improved.

Thus, on behalf of the MSD, in February 2015 Marco attended supply chain capacity development (SCCD) training provided by Pamela Steele Associates Ltd (PSA) in Dubai. The training was funded by the public health consultants John Snow, Inc. (JSI), under the United States Agency for International Development (USAID).

Through the training Marco learned about the key enablers that make supply chains function, and about acquiring a winning mind-set for supply chains, as well as about managing the entire health supply chain to ensure successful and sus
tainable customers.

Developing the Financed Demand Driven Forecast (FDDF) initiative

Armed with the skills and knowledge gained from the PSA course on health supply chains, Marco Masala and the MSD’s Demand Planning Unit set out to resolve the stock out and overstock problems that currently plague Tanzania’s health commodity supply chain.

To do so, they first considered the Tanzanian health commodity supply chain in its broader context, in terms of governance, financing, forecasting, workforce and information flow. They then considered how the ordering system and inventory control system, which are most commonly used in Tanzania, are aligned to the forecasting process and methodologies.

Marco and the Demand Planning Unit concluded that in order for Tanzania’s health commodity supply chain to function sustainably it needs to have the following elements:

  • a forecasting process and methodology that is aligned to the pull ordering system and forced ordering version inventory control system in Tanzania;
  • enough skilled staff with
    excellent communication, accountability, and levels of commitment – and incentives to encourage those staff in their work;
  • the right working tools;
  • a good supply chain policy, finance and governance; and
  • a link between the health commodity supply chain and top government officers (Minister of Health and Social Welfare, Prime Minister and the President), so that the enabling environment can be improved.

With these ideas in mind Marco and the Demand Planning Unit developed a concept paper on Financed Demand Driven Forecast (FDDF), which was presented to the MSD’s management for approval.

The FDDF initiative in detail

The FDDF is a decentralized forecast approach, the goal of which is to enable public health service providers in Tanzania to efficiently and effectively forecast their needs by linking to their financial capabilities. The FDDF initiative developed by Marco and the Demand Planning Unit aims to work closely with key Tanzanian stakeholders (hospitals, health centres and dispensaries) in order to improve forecast accuracy and to strengthen capacity to address bottlenecks and gaps by furnishing reliable and consistent financed demand driven forecast data from public health service providers. It is hoped that the FDDF initiative will improve accountability and commitment at the lower level (hospitals, health centres and dispensaries), while also strengthening political will on the part of top government officers (Minister of Health and Social welfare, Prime Minister and the President).

On the issue of political will, under the FDDF initiative the MSD will partner with the Prime Minister’s Office for Regional Administrative and Local Government, the Ministry of Health and Social Welfare’s Pharmaceutical Services Unit, and the Ministry of Health and Social Welfare’s Policy and Planning Department. In this partnership, four forums, termed “Health of our People” (HoP), will be held each year to discuss issues related to stock availability in the country, working tools and incentives of health workers in the health sector. The Minister of Health and Social Welfare will be required to chair three forums each year (every four months), and once a year the President of Tanzania will chair one forum. It is hoped that this will help to enhance good governance in Tanzania’s health commodity supply chain

Benefits and outcomes of the FDDF initiative

It is anticipated that the FDDF initiative will have the following key benefits:

  • improved cost efficiency (centralized purchases, increased bargain power and reduced losses due to retail prices);
  • improved lead times (reduced administration burden and a standardized ordering process);
  • sharing of risks (balancing stock outs and overstock by way of aggregated demand);
  • increased quality (through central quality control); and
  • increased transparency (due to the implementation of formal procurement procedures).

The FDDF pilot

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Figure 2: Marco receives SCCD certificate from Pamela Steele and Gilles Marion

After six months of planning, and drawing on the skills and knowledge acquired in PSA’s training on supply chains, in July 2015 the MSD, under the leadership of Marco Masala and in collaboration with the internal stakeholders (the Customer Service Unit and Zonal offices) and external stakeholders (the Prime Minister’s Office for Regional Administrative and Local Government, and the Ministry of Health and Social Welfare’s Pharmaceutical Services Unit and Policy and Planning Department) started to pilot the FDDF in two MSD zones: Moshi and Mbeya. The pilot is expected to end in June 2016.

Challenges and solutions

The biggest challenge faced during implementation of the FDDF pilot so far has been the lack of focus on the initiative by some of the stakeholders. This is because many Tanzanians have been preoccupied with the ongoing campaign for the presidential and parliamentary elections. However, by working with the Prime Minister’s Office for Regional Administrative and Local Government and the Ministry of Health and Social Welfare Marco and the MSD have succeeded in collecting financed demand driven forecast data from the hospitals, health centres and dispensaries in Moshi and Mbeya where the pilot study is being carried out. At the same time, planning is underway to carry out awareness-raising activities in the next financial year.

Evaluation of the FDDF pilot

In order to establish if the FDDF pilot is successful in dealing with the problems in the health commodity supply chain in Moshi and Mbeya, an evaluation of the pilot within MSD is being carried out. This evaluation applies an operation and sales planning (O&SP) approach, which consists of holding two stock-tracking meetings and one Executive Management Team (EMT) &SP meeting each month.

The bi-monthly stock-tracking meetings are cross-functional operational working sessions at the manager level focused on accurately capturing and reviewing the pipeline of inventory at MSD. The purpose of the bi-monthly meetings is to gather and confirm pipeline information, to discuss existing or potential pipeline issues, and to ensure actions are being taken to meet the call off plan and to avoid any potential issues.

The monthly EMT meetings are focused on O&SP: in these meetings directors review key performance indicators (KPIs), the demand plan, the call off plan, and the inventory plan, and discuss critical issues escalated from the bi-monthly O&SP meetings. They also provide strategic guidance for longer term planned activities. EMT and all managers attend the EMT meetings, which are chaired by MSD Director General

Critical success factors for the FDDF initiative

From the experience so far, and from the planning carried out by Marco and the Demand Planning Unit, it has been identified that there are a number of factors that will need to be in place for FDDF to be successful in Tanzania:

  • forecasted data from each primary health facilities, supported by sources of funds;
  • full commitment and ownership by hospitals, health centres and dispensaries;
  • commitment letters from each primary health facility setting out there requirements;
  • support from the Prime Minister’s Office for Regional Administrative and Local Government and from the Ministry of Health and Social Welfare; and
  • support from MSD’s Executive Management Team.

Next steps

It is now necessary to finalize the standard operating procedure (SOP) for the FDDF. The SOP will provide guidance and directives for the MSD regarding conducting the FDDF: it will identify the steps and procedures that should be followed by MSD zones during annual conducting of FDDF and will describe how FDDF should be updated on a quarterly basis. It will also identify the persons responsible for each activity in the whole process of initiating and conducting FDDF.

A second next step is for Marco Masala to present the concept of the Health of our People (HoP) forums to the Ministry of Health and Social Welfare via the MSD’s Executive Management Team. This is expected to be done after the presidential and parliamentary elections have taken place which is in 25 October 2015.

If Marco can secure buy-in by the MSD and the top government officers, and if the pilot is proved to be successful, it is hoped that the FDDF initiative can be rolled out across Tanzania, and that, by applying the skills and knowledge of supply chain management gained from PSA’s training, the problems of stock outs and overstock can be resolved once and for all.


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