• Editors' Summary
• Credits

1. A New Look at Logistics
2. Clients Come First
3. People and Performance
4. The Role of Information
5. Forecasting and Procurement
• Forecasting
• Validating the Forecast
• Estimating Requirements
• Procurement
• Monitoring the Forecast and Distribution Cycle
6. Distribution
7. Toward Contraceptive Security

• Figures
• Tables
• Side-bars
• Bibliography

• Programs face funding crisis
• Benefits of better logistics
• Improving staff performance
• Tips on building policy support
• Checklist: Assessing the supply chain
• How to make accurate forecasts
• Push or pull distribution
• The commercial sector can help

• POPLINE
• Media/Materials Clearinghouse
• Other issues
• To order copies
• CCP Home Page

This issue of Population Reports was prepared in collaboration with the DELIVER Project of John Snow, Inc.

Published by the Population Information Program, Center for Communication Programs, The Johns Hopkins University Bloomberg School of Public Health, 111 Market Place, Suite 310, Baltimore, Maryland 21202, USA

As well as receiving donated contraceptives, in which case the donating agency does the procurement, many family planning organizations acquire contraceptives on their own. They do so in a variety of ways—directly from manufacturers, through procurement agents, or through social marketing programs (139). They may procure contraceptives with their own funds or with credit from the World Bank. Program managers decide which option is most ap-propriate for their situation. Each option has its own set of complex regulations (154). Regardless of how managers procure commodities, the goal should be to make the procure-ment process as effective and efficient as possible (110).

Centralized versus decentralized procurement. Procure-ment that is centralized at the national level is often best for contraceptives. There are several reasons: International bidding is complex; central procurement can greatly reduce costs through economies of scale and volume discounts; centralized payment often increases suppliers’ confidence and encourages more bidders; and centralized procurement facilitates quality control of goods entering the pipeline (7, 99, 148).

Many public health systems are decentralizing their management (1, 66) (see Decentralization). Even if countries decentralize health care, the overwhelming advantages in cost, quality-control, effectiveness, and efficiency argue for keeping procurement centralized (148).

Competitive procurement. Programs often use competitive procurement to buy contraceptives on international markets. Competitive procurement involves soliciting sealed bids from all or a selected group of suppliers based on clear written product specifications, specified quantities, and established procedures (110). Competitive procurement usually lowers unit costs but requires substantial procurement expertise and at least 9 to 18 months to complete the procurement cycle (139).

Procurement agents. In some cases, programs use the services of a reputable procurement agent to make the purchases on their behalf. Sometimes programs may not have the experience to acquire contraceptives through competitive procurement, or sometimes manufacturers are unwilling to bid on the quantities required by a small program.

Two well-known organizations that serve as fee-based contraceptive procurement agents are UNFPA www.unfpa.org and Crown Agents www.crownagents.com. They can offer volume discounts, arrange pre-shipment quality testing, and obtain preferential freight and insurance rates.

Steps in contraceptive procurement. Because the procurement process takes a long time, programs must know the lead time required and take each of the steps early enough to ensure that deliveries follow the plan. The United States Agency for International Development (USAID), for example, begins procurement planning three years before it needs contraceptive supplies.

Contraceptive procurement usually follows eight steps (49):

Step 1 — Prepare procurement plan. Develop product specifications, specify timing of procurement activities, and estimate quantities needed.

Step 2 — Reconcile needs with funds. Available funds may not cover amounts needed, so program managers should have contingency plans that set priorities (145).

Step 3 — Select procurement method. Some programs require competitive international bidding, while others must or prefer to buy locally. Some programs have procurement units, while others prefer to use a procurement agent (139). Procuring contraceptives requires specialized knowledge and expertise, often related to the characteristics of the contraceptive method (see Table 1).

Step 4 — Select suppliers. Of course, contraceptives should be purchased only from reputable suppliers. Managers can obtain supplier references from respected agencies accustomed to procuring contraceptives—for example, UNFPA, the International Planned Parenthood Federation, and USAID.

Step 5 — Specify terms and place the order. Planning and scheduling contraceptive shipments require careful attention. For security, convenience, and cost-effectiveness, when quantities ordered permit, programs should order shipments so that shipping containers are full. Contra-ceptives should not be mixed during shipment with toxic or flammable goods. Huge shipments that overwhelm a country’s customs clearance, receipt testing, and warehouse capacity should be avoided. The frequency of shipments also depends upon such factors as the reliability of shipping services, and weather conditions. Programs often prefer to have excess stock on hand rather than face the risk that shipment failure might cause stockouts and require emergency shipments (145). Purchasing insurance for commodities ordered can save a program substantial amounts of money in lost or damaged supplies, as well as procurement time (14).

Step 6 — Monitor order status. Monitoring includes tracking the supplier’s receipt of the order, order fulfillment, and shipping and receiving dates.

Step 7 — Receive and check goods. Besides adhering to local customs regulations, logistics managers should develop good working relationships to ensure that customs officials notify them immediately of any problems and can help resolve the problems quickly (145). Typically, the program checks the quality of contraceptives at the entry point into the country or at the central warehouse (112).

Step 8 — Make payment to suppliers. Programs must make payments to suppliers at the contracted time. Late payments, like nonpayments, jeopardize relationships with suppliers that can cause disruption throughout the supply chain.

The job of the forecaster does not end with placing an order for contraceptives. Particularly because procurement lead times are so long, continuous monitoring of key data will help program managers avoid over-supply or under-supply. Monitoring can indicate the need for adjustments to orders or delivery schedules. Quantities are monitored at all key points in the pipeline, including quantities:

• Needed, as calculated by the requirements estimate,
• Purchased by the program or promised by donors,
• Planned to be shipped by commercial suppliers or donors,
• Shipped by commercial suppliers or donors,
• Received by the program,
• Dispensed to clients, lost, or damaged (47).

After an order has been placed, programs may want to either increase or decrease the amount ordered. This option, while desirable, often may not be available or reasonable. Contracts may not allow changes to shipments, or such changes may be too expensive. Speeding up or delaying certain shipments may be more realistic than changing the amount of the order. Long lead times, however, may make shipment adjustments difficult to foresee, and they may cost extra (47).

The future is always uncertain. Forecasted contraceptive consumption rates will differ from actual consumption rates. While such differences cannot be eliminated, program managers can prepare for variability, for example, by negotiating flexible contracts with suppliers to help ensure a steady supply for clients.