Public sector management of private sector service provider helps scale up distribution of health commodities in Zambia

Sub Title
Zambia’s Medical Stores Limited implements collaborative 3PL service initiative
Related Supply Chain Topics
Related Global Health Areas
Lead Paragraph/Summary

In Zambia, the public health supply chain operating model has been changing rapidly, due in large part to an expansion of the country’s Essential Medicines Logistics Improvement Program (EMLIP) to support a new, universal test-and-treat initiative to reach UNAIDS’ 90-90-90 goals. Since implementation of EMLIP 2009, orders processed through Medical Stories Limited (MSL), Zambia’s central medical store, have increased from 300 to more than 2,000 orders being processed per month. In addition, MSL has taken ownership of last-mile delivery to more than 2,500 health facilities, and the number of distribution routes has increased from 34 to 71 due to MSL’s expanded mandate to include last-mile distribution and an increased number of facilities. This increase in complexity and scale up of services put additional strain on an already over taxed system with insufficient infrastructure and resources.

Map of Zambia
Map of Zambia
Body Text

The USAID Global Health Supply Chain Program-Procurement and Supply Management (GHSC-PSM) project supported MSL to implement an innovative health commodity distribution system through a third-party logistics (3PL) service model. The 3PL system consists of routine deliveries of commodities from MSL’s central store to regional hubs and high-volume service delivery points (SDPs).

Zambia’s 3PL subcontractor mandate includes:
•    Coverage of four provinces to deliver commodities from MSL central stores to the hub and high-volume facilities representing 43 percent of total MSL distribution. 
•    Estimated coverage of 409,000 HIV/AIDS patients.
•    Ability to deliver emergency orders to districts or individual facilities to alleviate low- or no-stock situations.

“Under the 3PL model in Zambia, a tripartite contract was established between the three primary actors in the public health supply chain, and each of these three parties plays a specific role.”The 3PL subcontractor provides fleet for distribution. MSL provides purchase orders, loads commodities, and monitors the fleet. GHSC-PSM provides support and technical assistance to MSL to manage the 3PL subcontractor

Implementation of the 3PL subcontract required key logistics information on commodity pick-up dates, availability of the delivery trucks, loading time at MSL, and transit-time to the delivery points. Initially, this information was not readily available, making management of the 3PL subcontract difficult. MSL and GHSC-PSM worked together to establish key performance indicators (KPIs) to improve management and performance of the 3PL provider. The KPIs also promote commodity security by increasing the availability of essential operations data for performance monitoring, decision making, continuous improvement, and capacity building in contract management for MSL.

Over the first four months of KPI implementation:
•    Sharing of alert notices – which are triggered when a 3PL truck is needed at MSL – improved from 37 percent to 100 percent 
•    3PL vendor response (within 24-48 hours) to alert notices improved from 26 percent to 100 percent, allowing for timely loading of trucks at MSL
•    MSL’s loading time – measured at a maximum of eight hours – improved from 74 percent to 87 percent, allowing for timely dispatch of trucks for delivery
•    The 3PL provider increasingly met the target for delivery within 24 hours from pickup, from 68 percent to 100 percent

In this joint effort, MSL and GHSC-PSM have effectively built the capacity and responsiveness of the 3PL provider to deliver commodities reliably, and for MSL to eventually take over full management of the program.