• 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
6. Distribution
• Streamlining Distribution
• Improving Storage
• Managing Inventory Better
• Managing Transportation
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

Family planning programs often can reduce the costs of holding and handling inventory. Supply chains should hold contraceptives as inventory for only one or more of the following four reasons (49):

• Transportation efficiency. Contraceptive supplies can be held in inventory until they can be grouped into batches for efficient delivery.
• Safety stocks. Some supplies should be held in inventory as a buffer against uncertainty, so that facilities do not run out of products when demand rises unexpectedly or if deliveries from suppliers are late—for example, if transport vehicles break down or roads wash out.
• Limited storage capacity. Often, the service delivery points closest to clients are small, with limited storage space. Thus products can be held as inventory at the next level of the supply chain, from which clinics and other service delivery points can be replenished frequently.
• Anticipation of demand. If programs expect more clients, the logistics system can store contraceptives and other supplies as inventory in anticipation. Without the extra inventory, the lag between ordering new supplies and receiving them could lead to stockouts.

FEFO. The fundamental principle of inventory management for health supplies such as contraceptives is “First-to-Expire/First-Out,” usually known as FEFO. The FEFO inventory system, which tracks the labeled expiration date of the product, ensures that older stock are distributed first to avoid expiration. To implement a successful FEFO system, expiry dates of products must be known, workers must organize products so expiry dates are clearly visible, and staff must be properly trained (15, 48).

Max/min inventory method. Running out of contraceptives is the most serious problem, but having too many also is a problem. Programs that have more supplies than necessary waste storage space, contraceptives, and money. A common system to keep the appropriate amount of supplies on hand is the maximum/minimum (max/min) inventory management method. This method requires that each storage facility (or each level of the distribution system) set maximum and minimum desired stock levels for each contraceptive (or for every product), expressed in terms of a certain number of months of supply (5, 14, 25, 48).

Maximum stock levels are set high enough to guarantee an adequate supply at all times during the ordering cycle, but low enough to prevent overstock and waste. Minimum stock levels are set as low as possible but include a safety margin to prevent stockouts. For example, in Kenya, where the Division of Family Health uses the max/min system at all levels, central stores and depots have a 6 to 12-month supply of contraceptives; district stores maintain a 3 to 6-month supply; and service delivery points, a 2 to 5-month supply. Thus the total in-country stock ranges from a minimum of 11 months’ supply to a maximum of 23 months’ supply (152). This system works well for contraceptives that have a five-year shelf life. It would not work for products with shorter shelf lives.

A program’s transportation system links the facilities in the supply chain, from port of entry into the country through central and regional warehouses to local service delivery points and their clients (see Figure 5). The keys to effective transportation management are to:

• Minimize the number of links in the distribution network,
• Use the appropriate type of transportation,
• Use each transport’s capacity as fully as possible,
• Plan delivery routes efficiently to provide regular, complete coverage of all facilities,
• Keep vehicles in good repair through preventive maintenance programs and driver supervision, and
• Minimize emergency orders by routinely delivering adequate quantities of ordered contraceptives to all facilities in the network.

A family planning program itself can transport contraceptives, use commercial companies, or combine these two ap-proaches (152). Many family planning programs use private distribution companies, as in Peru, where the Ministry of Health contracts out the transport of contraceptives from central-level warehouses to regional facilities (60).

When programs themselves manage transportation, they achieve greater flexibility in delivering shipments but face the burdens of buying and maintaining vehicles. Commercial transport is more likely to be feasible in countries with a well-developed transportation infrastructure and enough transportation companies to ensure competitive bidding for contracts. Commercial carriers are usually the most competitive on high-traffic routes. Logistics managers often contract for delivery from central to regional levels, which use major routes, and use program vehicles for delivery to district levels and locally (49).

The starting point for policy discussions about the best way to distribute contraceptives is an accurate cost comparison between an in-house distribution system and a contract system (44). While cost may determine when a distribution function should be contracted out, program managers should also consider the contractor’s reputation, reliability, and accountability. The bidding and selection process for setting up a new contract can be lengthy and requires skills that many public sector programs lack. Programs also must be able to monitor the performance of private contractors. If programs fail to pay a contractor on time, the company may not deliver contraceptives on schedule or may hold them until payment is made.