07-08-2014 Read More >>
QUANTIFICATION FOR SUPPLY CHAIN
(Forecasting & Supply Planning)
Quantification incorporates both forecasting and supply planning.
Quantification answers the question: “How much will be procured and when will it be delivered?” It includes both forecasting and supply planning. It is the process of estimating the quantities and costs of the products required for a specific health program (or service), and determining when the products should be delivered to ensure an uninterrupted supply for the program.
Forecasting answers the question: “How much is needed, in quantities and cost, to meet the health demand of the population?” It is the process of estimating the expected consumption of commodities based on historical consumption, service statistics, morbidity and/or demographic data or assumptions when data are unavailable, to calculate the quantities of commodities needed to meet demand during a particular timeframe”.
Supply planning details the quantities required to fill the supply pipeline, costs, lead times, and arrival dates of shipments to ensure optimal procurement and delivery schedules.
What is the problem?
The quantification of commodities relies on access to good data, knowledgeable personnel, and the coordination of key stakeholders. Without these three key components, quantification exercises often lead to inadequate forecasts of commodity needs, resulting in an under- or oversupply of life-saving commodities. Forecasting and supply planning are two distinctly different tasks that require unique resources and skill sets.
In addition to knowledgeable personnel, forecasting requires access to accurate data and a high level of programmatic knowledge. It also needs a solid foundation in quantification methodology, the ability to apply programmatic considerations to morbidity and consumption data, and the ability to make educated assumptions about commodity utilization and need. Forecasting functions best when there is a high level of coordination among supply chain personnel, program staff, commodity coordinating committees, and other relevant stakeholders. The supply plan is developed from the forecast. The supply plan is the link between forecasting and procurement in that it defines what products will be procured, how much it will cost, how much to procure, and how long it will take. Supply planning is best carried out by logistics staff with knowledge of the entire supply chain as they must be able to factor in the capabilities and limitations of each supply chain function.
There are many barriers that inhibit accurate forecasting and effective supply planning in low- and middle-income countries (LMIC). Countries often lack the necessary staff and technical expertise to conduct the right forecasting activities or to develop accurate supply plans. Inaccessible or non-existent policies and poorly defined or misunderstood methodologies further inhibit the effective implementation and success of forecasting and supply planning. Countries also struggle to find appropriate tools to help them with their quantification activities, applying one-size-fits-all approaches to address gaps in quantification capacity and knowledge that are often inappropriate. While the tools themselves are important to quantification, ultimately, it is adequate and accessible data that make for an accurate forecast and effective supply chain.
The following promising practices may mitigate barriers to effective functioning and lead to improved forecasts and supply plans: Read the full Quantification brief here.
Indicators to Measure Progress in Quantification
♦ The recommended performance indicator for quantification measures whether a forecasting tool or method is used routinely for forecasting needs for medicines and medical services.
♦ Additional important indicators are:
♦ The Forecast accuracy percentage
♦ The percentage of life-saving commodities for which a country supply plan was developed during the last year and updated every six months
♦ The percentage of purchase orders/contracts issued as emergency orders
Read the full Supply Chain Management Indicators Guidance here.
The Supply Chain Technical Resource Team (TRT) contributed to the development of several guidance documents to support quantification:
- The Supply Chain TRT, in consultation with all the Commodities Commission TRTs, created forecasting guidance: Quantification of Health Commodities: RMNCH Supplement. The tool includes algorithms for each of the 13 priority commodities and a section on additional forecasting and supply planning tools and resources
- Guidance and Resources for Inclusion of Reproductive, Maternal, Newborn, and Child Health Commodities in National Commodity Supply Coordination Committees
- Considerations for the Integration of HMIS and LMIS (Health Information Management System and Logistics Management Information System)