For every Child Health , Education , Equality , Protection and ADVANCED HUMANITY

1. SOLUTIONS
FOR
CHILDREN
UNICEF IN THE
WORLD TODAY
standard 1 UNICEF&SD
By
Tahir Mehmood

2. 2
Agenda
 Procurement statistics
 Major commodity areas
 Drug Procurement
 Supply
 Distribution
 Case Study

3. SUPPLY DIVISION AT A GLANCE
Total procurement: $541 million
 Offshore procurement:$353 million
 Regional and local procurement: $188 million
 Donations in Kind: $9 million

4. 4
220
53 45 38 38 30 23 17 16 14
Vaccines/B
iologicals
Education
Supplies
M
edicalS
upplies
&
Equipm
ent
W
aterand
Sanitation
IT
&
O
ffice
SuppliesTransport
Printing
Pharm
aceuticals
N
utrition
C
old
C
hain
Equipm
ent
Commodities Purchased by UNICEF in 2002
(Offshore, Regional and Local Procurement)
(Millions of United States Dollars)
SUPPLY DIVISION AT A GLANCE

5. Top 10 Supplier Countries 2002
101
54
47
32 30
21 19
141618
Belgium
India
France
Italy
Denm
ark
Japan
Pakistan
United
States
Turkey
Republic
ofKorea
(Millions of United States Dollars)
SUPPLY DIVISION AT A GLANCE

6. 6
17 17 17 18
20 21
31 32
47 48
Eth
iopia
K
enya
C
ongo, D
em
. R
ep
.
N
igeria
G
hana
B
angladesh
P
akistan
Iraq
A
fgh
an
istan
India
Receiving countries 2002
(Millions of United States Dollars)
SUPPLY DIVISION AT A GLANCE

7. 7
Summary
 An effective procurement process should:
 Procure right drugs in right quantities
 Obtain lowest possible purchase price
 Recognized standards of quality
 Timely delivery
 Supplier reliability

8. 8
Drug procurement
Procurement of pharmaceuticals differ from
procurement of other commodities because the effect
of receiving and utilizing a substandard/poor quality
product can have severe consequences in terms of
damage to the consumers health or treatment failure,
because the product does not have the intended
effect. Therefore a number of precautions need to be
taken when buying pharmaceutical products and
these should be followed in a systematic manner.

9. 9
Strategic objectives for drug
procurement
 Procure the most cost-effective drugs in the
right quantities
 Select reliable suppliers complying to GMP
 Ensure high quality products
 Ensure timely delivery
 Achieve the lowest possible total cost

10. 10
Principles of Good Pharmaceutical
Procurement
 Procurement by generic name;
 Limitation of procurement to the
EML/National List;
 Procurement in bulk;
 Formal supplier qualification/monitoring;
 Competitive procurement;
 Sole-source commitment;

11. 11
Principles of Good Pharmaceutical
Procurement
 Order quantities based on reliable estimate of
actual need;
 Reliable payment and good financial
management;
 Transparency and written procedure;
 Separation of keys functions;
 Product quality assurance programme;

12. 12
Sourcing
 Through direct contacts
 Special catalogues of manufacturers
in a specific area, eg. drugs
 Through trade missions in
respective embassies
 Exhibitions, fairs
 UN Business Seminars
 Internet
Important to realize:
Regarding sales and
marketing efforts, all UN
organizations should be
treated as individual
companies, it is not
sufficient to deal with only
one of them and expect
the information to be
replicated automatically to
everyone in the UN family.

13. 13
Drug procurement scenarios
Who are the potential suppliers?
 Pharmaceutical manufacturers
 Pharmaceutical wholesalers
 International drug supply agencies
Where are they situated?
 Well-regulated countries
 Less well-regulated countries

14. 14
Select reliable suppliers of high
quality products
 What is the advantage of pre-qualifying
suppliers?
 Elimination of sub-standard suppliers
 More efficient adjudication process
 What should be considered in a pre-
qualification?
 Production standard (GMP)
 Business viability

15. 15
Select reliable suppliers of high
quality products
Who and how to pre-qualify?
 Ask for references
 Inspection of manufacturers

16. 16
Supplier Registration Process
Company Data
Financial Data
References

17. 17
Supplier Evaluation
 Suppliers are evaluated on their
financial soundness, capacity, quality
performance, technical capability, ability to
service their products in the destination
countries.
 Preference is to purchase directly from
manufacturers and not from dealers.

18. 18
Request information about
manufacturer
 What is the link between the supplier and the product?
Marketing authorisation holder? Manufacturer? Distributor?
 What is the regulatory situation in the country of manufacture?
Product currently registered and marketed? Registered but not
marketed? Product registered for export only? No registration?
 Regulatory situation in other countries? EU/USA
 Request certificates:
Certificate of Pharmaceutical Product according to WHO Certification
Scheme
Statement of Licensing status of Pharmaceutical Product according to
WHO certification Scheme
 Marketing license
 Export license

19. 19
First things to consider
 Large/small quantities required?
 Acceptable lead time?
 National procurement capacity?
 Financial resources available?

20. 20
Questions to ask:
 Drug selection -
Is there a national list of essential drugs?
Are drugs requested on this list?
If not, why are drugs requested - relevance to
the pattern of prevalent diseases?
Procure the most cost-effective drugs in
the right quantities

21. 21
Procure the most cost-effective drugs
in the right quantities, cont.
 Quantification of drug requirements -
How many patients can be treated with
requested quantities?
Does this tally with morbidity data or past drug
consumption figures?
Can the quantity be used before expiry?

22. 22
Procure the most cost-effective drugs
in the right quantities, cont.
Questions to be asked:
 Product specification - Is it a generic or a proprietary
drug?
Patent situation?
Is drug registration requested?
If it is a generics drug - what quality of product are we
aiming at supplying? Consider finished product
specifications and quality of active ingredient, product
stability, therapeutic equivalence.
Product specifications must be clear and detailed
in the ITB

23. 23
Example of contents of product
specification
 Name (INN)
 Dosage form
 Strength per dosage unit
 Route of administration
 Number of units/volume/weight per container
 Type of container, in certain cases specification
 Acceptable pharmacopoeias references/ standards
Request the following information
 Finished product specification
 Active pharmaceutical ingredient specification (DMF/CEP)
 Stability: what testing has the product been subject to?
 Label and insert information
 Therapeutic equivalence

24. 24
Procurement Cycle
Collect
Consumption
Data
Determine
Quantities
Needed
Review
Drug
Selection Reconcile
Needs and
Funds
Choose
Procurement
Method
Locate and
Select
Suppliers
Specify
Contract
TermsMonitor
Order
Status
Receive
and
Check drugs
Make
Payment
Distribute
Drugs

25. 25
Procurement Methods
 Open tender
 Restricted tender
 Competitive negotiation
 Direct procurement

26. 26
Special procurement types
 Direct Ordering
 “Contract set up by SD allowing Country Offices to
buy internationally”
 Long Term Agreement
 “Not binding frame agreement setting the terms and
limits for contracts”
 Typically 24 month agreements +

27. 27
Organization of the national
procurement process
Who will prepare invitation to bid
(ITB) and handle the commercial
aspectsWho decide on standards
for product and
production, quantities
etc.
Who will adjudicate the bid
and take care of quality
assurance
Who will take care of delivery
and distribution and monitor
supplier performance

28. 28
Organization of the national
procurement process, cont.
 Clear definition (and division) of responsibilities,
authorities, procedures for
 procuring
 selection of drugs
 pre-selection of suppliers
 quantification of needs
 standard-setting
 technical adjudication
 quality assurance
 distribution
to ensure transparent process

29. 29
Supply Division
Organisation
Bidding
RFQ/RFP
Contracts
- DO/LTA
Sourcing
Technical
specifications
Web catalogue
Supplier registration
Supplier evaluation
Inspections

30. 30
Depending on the circumstances,
qualified suppliers are either invited
to bid or to submit a quotation.
Bid Opening. Bids are opened
publicly and suppliers are welcome
to attend.
INVITATION TO BID
 Product - quality
 Technical
compliance
 Cost of product
 Cost of freight and
delivery
 Timeliness of
delivery
VALUE FOR MONEY
Bids or Requests for Proposals are
adjudicated based on total cost,
which includes:
Successful bidders are then notified.
Quality assessment of supplier’s
capability takes place before final
award.

31. 31
Monitor and maintain quality
 Pre- and post shipment inspection
 Analytical drug testing
 Appropriate storage, distribution, dispensing
 Reporting system for complaints

32. 32
Supply
Drug supply systems need to achieve three
main objectives:
 a high level of service, as measured by low
rates of shortages and stockouts;
 efficiency, as measured by having low total
costs for a given level of service;
 quality, in terms of delivering drugs of
satisfactory quality.

33. 33
Market mechanisms in public drug
supply
 Can market mechanisms help to ensure access to
essential drugs in the public sector? Market
mechanisms have been used to strengthen public
drug supply systems. These mechanisms include:
 autonomous drug supply agencies;
 direct delivery contracts;
 primary distributor systems.

34. 34
Organization of the supply system
 At least five different methods exist for supplying
drugs to governmental and nongovernmental
health services:
 Central medical stores (CMS): This is a
conventional drug supply system, in which drugs
are procured and distributed by a centralized
government unit. It is possible to decentralize
this system by having medical stores at
provincial or state level.
 Autonomous supply agency: This is an
alternative to the CMS system in that drug
supply is managed by an autonomous or semi-
autonomous drug supply agency.

35. 35
Organization of the supply system
(cont’d)
 Direct delivery system: This is a decentralized, non-CMS
approach in which drugs are delivered directly by suppliers to
districts and major facilities. The government drug
procurement office tenders to establish the supplier and price
for each item, but the government does not store or distribute
the drugs.
 Primary distributor (“prime vendor”) system: Another non-
CMS system, in which the government drug procurement
office establishes a contract with a single primary distributor
("prime vendor"), as well as separate contracts with drug
suppliers. The prime vendor is contracted to manage drug
distribution by receiving from suppliers, storing and
distributing all drugs to districts and major facilities.

36. 36
Organization of the supply system
(cont’d)
 Fully private supply: In some countries, drugs are
provided by private pharmacies in or near
government health facilities.

37. 37
Different supply systems
Contracting
suppliers
Storage +
delivery
Monitoring drug
quality
Central medical
store
X X X
Autonomous
supply agency
X X X and
Government
body
Direct delivery
system
Government
body
Suppliers Government
body
Prime vendor
system
Government
body
X X and
Government
body
Fully private
supply
X X Government
body

38. 38
The UNICEF Supply Chain can be
as short as one month, as long as one year
(excluding emergency responses)
Where do the Potential Bottlenecks occur
along the Supply Chain?
RECEIVED
BY FINAL
BENEFICIARY
PPO/PPA SRQ PO/DEL SUPPLIER
SHIPPING
CLEARING
RECEIVING
WAREHOUSING
DISTRIBUTING
What does the
programme want?
Incomplete specifications
Rushed orders
Unrealistic TADs
Long order processing
time
Order changes
Missed consolidations
Synchronising the arrival
of components
Shipping status
Shipping docs
-Early clearance process
-Control
Lack of Distribution Plan
Appropriate structure
Clear responsibility & procedures
Inventory system & reporting
Supply evaluation
Inventory/History

39. 39
Distribution Cycle
Port
Clearing
Drug
Procurement
Receipt
and
Inspection
Inventory
Control
Storage
Requisition
of
SuppliesDelivery
Dispensing
to
Patients
Consumption
Reporting

40. 40
Distribution systems
 Public distribution includes wholesale
distribution and retail dispensing by
government-managed drug supply and health
services as well as distribution through state-
owned enterprises (state corporations).
 Private distribution includes private for-profit
wholesalers and retailers, and not-for-profit
essential drugs supply services.

41. 41
Distribution
 Dispensing clinicians
 Doctors, clinical officers and nurses in private practice both
prescribe and dispense drugs to their patients in many parts
of the world
 Clinicians dispense to their patients partly as a service, but
also because they have learned that patients are often much
more willing to pay for drugs than simply for consultation
 In some countries, general practitioners derive 60% of their
income from the drugs they dispense. This creates an
obvious and measurable incentive to overprescribe

42. Warehouse & Logistics Center
UNICEF
Supply Division
Inventory
Management
/
Purchasing
Receiving
Packing
Production Shipping
Delivery
Processing
Systems/
Process
Support
40 Staff Members

43. 43
Warehouse
& Logistics
Center
Sales Orders/Deliveries
Customer Service Center
Picking/Packing/Shipping
Technical Center
Material Master
Maintenance
Contracting Center
Purchase Orders
Issue of Purchase Req.
Goods Receipts /
Stock Placement into WH
Quality Assurance Center
Finance
Cycle Counting
Settlement of Kits Production
All Centers
Goods receipt
Goods Issue of stock
Inspection of shipments
Procedures Management

44. Warehouse Processing
UNICEF
Supply Division
Delivery Creation Warehouse
PickingSales Order Creation
Packing
Booking of
Transportation
Printing & sending
shipping docs
Issuing goods
Order processing time: 65 days
2001 target: 45 days
Purchase
order
-----------------MRP
G/R

45. 45
UNICEF Warehouse
GR area
GI area
Locked
Area
Bulk Area
Non-
Medical
Area
Medical
Area
Haz.Mat.
Area
Productio
n

46. 46
Consignment Stock (UNHCR / IFRC)
UNICEF
Plant 1100
UNHCR
IFRC
UNHCR
IFRC
WHO Storage of technical files and documents

47. 47
Group discussion
You receive a request from the Ministry of Health for purchase of
drugs for the national malaria and HIV/AIDS control
programmes. You are given a list of 100 drugs requested.
 What do you do with this list?
 How do you decide what to purchase and where?
 How do you ensure that the drugs will imported and distributed
smoothly?