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Thursday, October 30, 2014

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Simalarities and differences between consumer beverages and medicine supply chains

There is increased interest in the similarities and differences between consumer beverages (e.g. Coca-Cola) and medicine supply chains. There are are number of initiatives under way, specifically from a Public Private Partnership perspective.

There is a lot to learn from the Coca-Cola system. However,  it is also important to take into consideration some of the challenges and differences. Here are a few points to consider:

Material handing – The Coca-Cola System (TCCS) generally use standardized containers and pallet size in their local operations. This simplifies material handling and improves distribution speed.  In Africa, most sales come from returnable glass bottles and crates and material handling is mainly manual labour, handled with less care than what you would require for medicine.

Stock Keeping Unit (SKU) complexity – TCCS in emerging markets manages a limited number of SKUs (20-60), dominated by a handful of SKUs.  For example, in some markets, Coca-Cola 300ml contributes a large percentage of their sales. The situation is far more complex for medicine.

Reverse logistics – TCCS’s reverse logistics in emerging markets mainly focuses on returning glass bottles and limited expired products. For medicines, expired products are a far bigger risk and there are normally detailed processes (or there should be) in place to deal with the reverse logistics and destroying of expired products.

Product flow – For medicine supply chain, service points (e.g. heath clinics, hospitals) are well defined and there is limited growth, with clear product flow. The TCCS outlet base is constantly changing with new shops opening and closing. Seasonality also plays an important part, especially in the sub continent (e.g. Bangladesh) where a large number of outlets close during the rainy season.  In many cases TCCS has limited control (and even knowledge) of products flow from distributors, sub-distributors, wholesalers and other stock points to retailers and eventually consumers, especially in peri-urban and rural areas. The product flow is driven by the brand, margins and incentives.

Here are some additional links, including our own articles on this topic:

Johns Hopkins Bloomberg School of Public Health. Improving Access to Essential Medicines Through Public-Private Partnerships. By Kyla Hayford, Lois Privor-Dumm and Orin Levinev.

The Coca-Cola Company. Facing up to an epidemic. Coca-Cola is using it’s distribution expertise to help the Medical Stores Department (MSD) of Tanzania, which coordinates the cross-country delivery of key medicines and HIV anti-retroviral drugs.

INSEAD. Always Cola, Rarely Essential Medicines: Comparing Medicine and Consumer Product Supply Chains in the Developing World. A working paper by Prashant Yadav, Orla Stapleton and Luk N. Van Wassenhove.

The Supply Chain Lab. The last Mile of Logistics for medicine supply chains.

The Supply Chain Lab.  Public-private partnerships- Where can companies contribute?

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