supply planning

1. Principles of
Stock monitoring &
Supply planning
DR. MOE KYAW KYAW
GHSC-PSM, MYANMAR
MARCH, 2017

2. Purpose of Supply Planning
o To Ensure continuous availability of products
o To prevent stock excess, expiry and shortages
o To maintain stock levels between established maximum and
minimum levels (Optimum Stock)
o To manage storage
o To coordinate the timing of funding disbursements with
procurement lead times and supplier delivery schedules

3. Summary of data needed for supply
planning
Consumption (end-user consumption)
Procurement period
Expected arrival date: shipment schedules by supplier
Lead times: planning to ordering, ordering to shipping, shipping to arrival,
arrival to receiving
Stocks on hand (SOH)
Adjustments: expiries and other adjustments
Established minimum and maximum stock levels
Prices
Freight and logistics costs
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4. Months of supply
Looks at current stock quantity in terms of how long it would last at current
(forecast) consumption rate
Examples:
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Current Stock
Product A 1,000
Product B 1,000
Product C 1,000
Stock on Hand
AMC
Months of
Stock on Hand
=
AMC
100
500
1,200
Months of Supply
10
2
0.8

5. Min/Max stock levels
Maximum stock level: the level of stock above which
inventory should not rise under normal circumstances.
- Expiratory
- Storage problem
Minimum stock level: the level of stock at which actions to
replenish inventory should occur under normal
circumstances
- Safety stock (buffer) - considered for delayed deliveries, significantly
increased consumption, or other unexpected events
- Lead time: the level of stock that would be used between the time an
order is placed and the new stock received and available for use
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6. Establish Minimum Stock Level
Min stock level (SMIN) = LT + SS
SMIN = Minimum stock level, in months
LT = Lead time (total), in months
SS = Safety stock = LT in months
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7. Establish Maximum Stock Level
Max stock level (SMAX) = SMIN + PP
SMAX = Maximum stock level, in months
SMIN = Minimum stock level, in months
PP = Procurement/ Forecasting period
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8. Example: Ideal Situation
8
Levels Procurement
Period (month)
Lead Time
(month)
Safety
stock
(month)
Min
(month)
Max
(month)
Central 12 8 8 16 28
Regional 6 1 1 2 8
H. Facility 1 0.5 0.5 1 2

9. Supply Planning parameters
(example)
Chloroquine 250 mg base (phosphate), 1,000 tablet bottle
Programme/facility
Minimum stock level 4 months
Maximum stock level 9 months
Stock at 1 January 2014 10,000 units
Forecast consumption
2014  1,000 units/month
2015  1,100 units/month
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13. Estimating total lead time (Example)
Activity Number of months
Plan to order -----------------------------------> 2
-Estimate quantity,
-Prepare documentation
-Obtain authority to order,
-Manage tender
Order to shipment ----------------------> 3
- Vendor manufactures
- Quality testing
Shipment to receipt -------------------------> 1
- Transit from vendor to hospital
- Storeroom receipt
Total lead time = 6 months
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15. Inputs: Transactions
1. Shipments
3. Stock Adjustments
Inventory Control System
Facilities (warehouses & SDPs)
+ -
+ -
2. Consumption

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