This year South Africa has run short of many essential medicines. The problem that the Department of Health has identified is that orders are placed to the suppliers, but suppliers only deliver a part of these orders or nothing at all.
In this case, the main causes of this problem are unpaid supplier accounts, poor forecasting and the abandonment of research, development and production of some drugs that are not profitable enough for the pharmaceutical companies.
In response, the Department of Health and the Clinton Health Access Initiative have designed a system in which drug suppliers are required to constantly provide reports about production pipelines through an online risk analysis tool. For example, if a suppliers’ stock on hand is not sufficient to fulfill the monthly projected demand, the system automatically offers some alternatives as requesting additional stock from other suppliers or procuring substitutive drugs of the ones demanded.
I have found this article really interesting since we experienced a similar situation doing the Beer Game in the seminar classes. In order to have efficient supply chains and logistics systems cooperation between all the agents involved is fundamental, but when this cooperation fails another measures must be taken. The drug stock out warning system launched in South Africa is an example of this.
By: Anabel Ruzafa