Thank you Dr Robert Steinglass for directing our attention here. This contribution has been cross-posted from the International Association of Public Health Logisticians (IAPHL) with thanks. Those of you interested in subscribing to the discussions on this forum, please click here: http://knowledge-gateway.org/iaphl
Robert Steinglass posed the following question: People often suggest that vaccine supply chains operating in the public sector should learn from the private sector and specifically mention Coca Cola. What do you think?
Highlights from the responses are summarized below:
Several participants provided examples of the similarities and differences between public sector vaccine supply chains and private sector supply chains such as Coca-Cola. Taylor Wilkerson points out that it is important to note the similarities among supply chains, as well as the differences. Similarities highlighted by several participants include the need to protect against counterfeits, the goal to reach as many “customers” as possible often in remote locations, meeting surge requirements during holidays or campaigns, and having different levels of distribution (international and local distribution).
One theme which ran through the responses was that of organizational incentives: vaccine supply chains are mission-driven, while Coca-Cola’s supply chain is profit-driven. Nita Correa points out that delivering low value, highly perishable goods to remote areas requires intensive resources, and that private sector actors often can invest in establishing the necessary distribution networks when there will likely be a significant return on those investments.
Differences highlighted by Mr. Wilkerson included the very important point that the consequences of Coca-Cola stockouts include lost revenue and disappointed customers. In contrast, the cost of vaccine stockouts can have serious human health consequences, including morbidity and mortality from vaccine preventable diseases (which also have social and economic impacts).
Many respondents pointed out that cold chain must be maintained throughout the supply chain to ensure the safety and efficacy of most vaccines, while there is no cold chain requirement for Coca-Cola (although as Chris Wright observed, it is nice to have a cold Coke!).
The basic nature of each product is rather different as well (pharmaceuticals v. commercial beverage), requiring differences in regulatory frameworks and security. Omololu Fagunwa makes the important point that health supply chains are heavily regulated – sales are expected to be handled by trained, licensed professionals. On the other hand, anyone can handle the sales of Coca-Cola.
International production and distribution requirements for pharmaceuticals, without existing local production capabilities, create challenges to availability, which a product like Coca-Cola does not face. [email protected] shared the following thought: “The complexity of procurement and distribution of vaccines, drugs and other medical supplies is a remarkable difference between the two logistics professions. Especially in Africa, there is no pharmaceutical company on the continent, making the supply more stressful… Each African country has a production company for Coca-Cola (SOBEBRA in Benin), this facilitates the supply.”
Coca-Cola’s ability to reach the most remote locations can provide inspiration to public sector planners. David Sarley points out that the public sector can learn from some of the overarching management principles which drive Coke’s business model: “their client focus, how they maintain retail fridges, how they use marketing to tailor service delivery to reach clients and their network of contracted transport providers”. Chris Wright adds that public sector supply chains can apply lessons from Coca-Cola, including how to measure supply chain performance, how to effectively manage and motivate employees, how to analyse and optimize distribution networks and resources, and how to proactively manage suppliers.
Several respondents noted that the costs of distribution and marketing throughout the supply chain, and the importance of ensuring funding for distribution to the “last mile”, are critical elements to understand as we seek to strengthen public health supply chains. Keith Neurotsos of PATH observes that “Coca Cola is sold and resold in its movement through the supply chain. The manufactured bottle of Coke costs a few pennies to produce and much of the revenue received along the supply chain out to the village is used to cover the costs of marketing and distribution at different levels. There are money making opportunities at each step along the distribution network… The supply chain functions due to the mark-ups that cover distribution costs…. Public sector channels for health commodities sometimes fail to consider the full cost of distribution of specific products along the lower tiers of the distribution system and can struggle to keep pipelines full of products because of this.”
In addition to these cost considerations, the design and planning phases of public health supply chains received attention in the discussion as well: Rosemary Osikoya notes the importance of involving local stakeholders in project planning in order to ensure programme success.
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Best regards,
Vanessa Richart
John Snow, Inc.
Over the years there have, on several occasions, been suggestions that the private sector could "do it better" than public sector. However when push comes to shove it has been found that the private sector has little appetite for the task at the price the public sector can afford. There are a number of reasons for this, many well described already. In addition here are a couple more.
The vaccine distribution systems are essentially "small beer". Coca Cola sell 1.7 billion cans of Coke a day! UNICEF and PAHO (about 40% of world supply) between them in 2011 purchased at the rate of 1,263,013 doses a day of all vaccines.
As vaccines become more expensive there will be increased opportunities for leakage. For example PCV in Pakistan cost about $40 per dose in a pharmacy this is more than five time the cost paid for UNICEF supplied PCV.
It is certainly useful to study the private sector to see how it does things and to see how those techniques might be adapted to fit the public sector. It remains to be seen if Coca Cola or any other big private sector distributor will really want the hassle for such a small market.
Anthony
A few additional points:
• Investment in branding and name recognition that Coca cola does, is something we cannot do in the case of vaccines.
• For Coca cola, the objective is to get the product out to paying consumers of any type. For vaccines, the objective is to get it into the hands of skilled, trained vaccinators–a very specific target group.
• Related to this: for vaccines, there is need to track AEFI and therefore a chain of distribution that can be tracked on a vial-by-vial basis. Again, this requires that the product wind up in the hands of skilled personnel–not the case with a retail consumer product like Coca cola.
• With Coca cola, the only impact of "leakage" is that someone other than the intended consumers winds up paying for it, or pays somewhat less than the anticipated price. If vaccines were to "leak" out of the supply chain, it could result in disease and death.
• One of the under- or un-recognized BENEFITS of having to keep vaccines in the cold chain, and the entire paradigm of the cold chain (whether warranted or not) is that we do not see the type of "leakage" that commonly plagues the distribution system of other essential drugs. We in immunization fail to appreciate that vaccines disappear only infrequently. Common essential drugs go missing all the time with people skimming off the top.
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