Opti Supp Chai
Opti Supp Chai
Improved Performance
Effective supply chains must be flexible and responsive to the
changing dynamics in the marketplace, in manufacturing and
technology, and in consumer expectations. This is also true for
public health supply chains, which must respond and adapt to
USAID | DELIVER PROJECT 2009
In Guatemala: What type of trucks, and how many, are needed for national distribution of HIV, malaria,
and tuberculosis (TB) products?
In Haiti: In a unified supply chain, what are the ideal warehouse locations, capacities, and—for
delivering commodities—the distribution routes?
In Nigeria: What are the optimal routes and resources needed for a new direct delivery top up system in
Bauchi state?
In Swaziland: What is the best approach for collecting expired commodities from multiple locations and
transporting them to a central waste disposal facility?
In Tanzania: What supply chain infrastructure does the country need to deliver public health
commodities in 2020?
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Product data includes product name, value, pack size, unit
volume (m3), and unit weight.
Site data includes facility type, global positioning system
(GPS) coordinates, business hours, storage capacity (m3), as
well as costs.
Demand data includes site-specific quantities, by product,
requested over time.
Other data that can be collected from stakeholders, or other
sources, includes road network dataset; available vehicle assets by
type, quantity, and capacity, including their operating costs;
standard operating procedures; and policies related to delivery
strategy, inventory control policies, and supply sourcing.
Optimization modeling brings together
various pieces of data to generate maps
Steps in the Optimization Process and other decisionmaking tools.
To design or improve the supply chain, the first step is to determine what questions need to be answered.
After these questions are identified, you can determine if optimization analysis will help answer them. If so,
it may be useful to engage a team of consultants, including the tools required to analyze the current situation
and propose scenarios, based on your data and assumptions.
The next step is to organize and analyze the data from your supply chain described above. The data are
entered into software, which links it to produce maps, charts, and other visual representations of the raw
data. The software enables you to set the parameters for each scenario; for example, maximum load per
truck, maximum time or distance per route, and maximum lead times to work with the existing schedules
and resources. Optimization modeling uses this information to identify redundancies that can be eliminated,
as well as gaps that must be filled.
In the third step, multiple possible scenarios are presented to stakeholders; these will answer some of the
initial performance questions. To determine a way forward, the stakeholders can then consider the scenarios
and assess the likely impact of different responses.
The final step is to adopt and implement the optimized supply chain design, based on the results of the
modeling exercise; but, the process doesn’t need to end here. Remember, optimization can be used for
continuous improvement—as the system operates, data can be collected and fed back into the existing
software model so the original predictions can be validated in real time. Adjustments may be needed; you
can find them by rerunning the scenarios with new data and better assumptions, based on the experience of
operating the optimized system.
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its hub on Pemba. The network and transportation optimization analysis examined the three parallel supply
chains, as well as the location of the Pemba hub, to help identify network and distribution strategies for cost
savings. This was particularly important given the increase in the number of products moving through the
ZILS system compared to the kits system.
Table 1 displays the number of routes, total distance, total time, and average duration of each route—all
have cost or resource implications. This helped ZCMS examine the relative efficiency of the proposed
routes (baseline) versus the optimized routes, and examine how the number and characteristics of the routes
change under varying conditions.
Moving from the baseline to the optimized distribution reduces the number of routes needed to deliver all
shipments from 29 to 24; a 400 kilometer decrease in distance traveled or a ~23 percent reduction.
Optimized routes are shorter in total time, but the average route duration is longer, which maximizes a
working day. ZCMS can increase shipment volume by 30 percent before reaching the 29 routes originally
envisioned (USAID | DELIVER PROJECT 2013b).
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Nigeria, Routing for New Vendor Managed Inventory System
In the Nigerian state of Bauchi, the state MOH is considering a Legend
new vendor managed inventory distribution system—13 different Selected
Roads
health commodities will be delivered directly to the health Bad
Local
Scenario A B
Number of trucks 4 5
Maximum of 5 days out
70 kilometer per hour speed
Truck size 5m3 5m3
Percentage of shipments routed 88% 100%
Sensitivity to increase in volume N/A 300%
In addition to providing guidance on the system design, the analysis also provided criteria that could be used
to assess the bids from the transport services providers. Bidders whose cost proposals were low could be
tested in the model to determine if they had proposed sufficient resources to meet service-level
expectations; if they failed the test, their proposals were eliminated (Inglis 2013).
Conclusion
In recent applications of supply chain optimization analysis, initially, the stakeholders didn’t think they had
the data they needed, but they discovered that much of it could be exported from their existing warehouse
management system. In other cases, the supply chain organization never knew their throughput volumes, or
even the capacity of their warehouses. The optimization analysis presents staff with data they might already
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have, but in a more manageable, very visual framework. Furthermore, the analysis enables supply chain
organizations to continue refining their processes and system designs. This is not a one-off exercise; after
the initial design model is created, it can be updated with new data and the simulation rerun to check
operational reality against the original predicted performance. New scenarios can be run when new
opportunities and challenges arise.
Supply chain optimization analysis is a powerful tool that yields real results, with quantifiable savings and
measurable performance improvements. It is a common tool and best practice in commercial supply chains;
it should also be used in public health supply chains.
References
Inglis, Andrew. 2013. “A New Roadmap to Supply Chain Efficiency: Bauchi, Nigeria.” Presentation in
Arlington, Virginia at John Snow, Inc. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 4.
USAID | DELIVER PROJECT, Task Order 4. 2012. “Haiti Supply Chain Analysis.” Presentation to Haiti
Ministry of Health via WebEx on June 25, 2012. Arlington, Va.: USAID | DELIVER PROJECT, Task
Order 4.
USAID | DELIVER PROJECT, Task Order 4. 2013 (a). Supply Chain Network Analysis for Country
Program Strengthening: Experience and Opportunities. Presentation in Arlington, Virginia on August 1,
2013 at John Snow, Inc. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 4.
USAID | DELIVER PROJECT, Task Order 4. 2013 (b). Zanzibar Central Medical Store (CMS) Network and
Transportation Optimization Analysis. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 4.
The authors’ views expressed in this publication do not necessarily reflect the views of the U.S. Agency for
International Development or the United States Government.
USAID | DELIVER PROJECT
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