Introduction
Practical organizational functioning is impossible without competent management concerning procurement and supply chains. WHO was chosen for analyzing the role of supply chain management due to the availability and openness of information about the company’s policy. Moreover, WHO’s ethical mission is to lead the supply chain to improve healthcare in developing countries. The paper selected for analysis is Interventions to Improve Access to Medicine in Developing Countries: Mapping WHO’s Building Blocks and Supply Chain Functions by Steele, Subramanian, and Tolani. This study was chosen because of the authors’ analysis of existing problems in WHO and the search for their solutions, which is essential both for understanding the functioning of supply chains and awareness of developing countries’ health problems.
Summary of the Research
The article’s authors examine the healthcare supply chains since the importance of the study lies in ensuring equal access to medical services. The availability of medical services depends on many factors, including the complexity of the supply chains. The study proposes a number of measures aimed at improving the accessibility of medical care by focusing on the quality of the medicines offered (Steele, Subramanian, and Tolani, 2019). These solution methods suggest a correlation between WHO policy and improvement in the performance of a given healthcare organization. Most low- and middle-income countries lag in providing health care for their populations. Improving access to medicines depends on many factors and the participation of various actors. To ensure uninterrupted access to medicines, an efficient supply chain and clear relationships with suppliers are essential (Steele, Subramanian, and Tolani, 2019). A well-established supply chain will make a huge difference and provide medicines that poor people cannot afford while reducing out-of-pocket costs.
The Strategic Contribution of Procurement and Supply to Organizational Success
Supply Chain Management
The importance of supply chain management stems from the need to improve customer service. Goods required by customers must be received at the promised scheduled time, especially for life-saving drugs. Good supply chain management involves reducing the cost of procurement. Retailers depend on supply chains to distribute high-value items quickly, so they do not sit on high-value inventory. Management reduces production costs since any delay costs the company profits and, in the case of healthcare, people’s lives (Akkucuk, 2020). The reduction in the overall cost of the supply chain is also a positive outcome. Wholesalers and retailers depend on skilled supply chain management to develop a network that meets customer service goals. Supply chain managers reduce the use of significant fixed assets such as factories, warehouses, and vehicles, reducing costs.
Procurement Management
Purchasing is seen as a strategic function aimed at increasing the organization’s profitability or achieving its specific goals. Purchasing helps optimize processes, reduce raw material prices and costs, and identify the best sources of supply (Akkucuk, 2020). At higher spending levels, this need for openness, transparency, and non-discriminatory action is required by law. Procurement is about managing a significant share of non-refundable costs and providing the best value for money when making these costs. Non-refundable expenses include the day-to-day operating expenses of the institution and its capital costs (Akkucuk, 2020). The procurement function is concerned with obtaining the necessary goods and services from the appropriate suppliers so that the institution can achieve its strategic objectives in a cost-effective manner. Purchasing strategy in an organization like the WHO is a direct part of making medicines available to the public.
Supply and Procurement Management in WHO
WHO’s building blocks correspond to supply chain management and procurement functions. Mapping helps stakeholders gain a broader picture and present policies that will promote integrated solutions to improve the public health of the supply chain in developing countries. A rational approach and taking into account the existing limitations and complexities will help developing countries organize reliable public health systems and ensure the supply chains for their needs. The WHO information and research block correspond to drug selection, quantification, procurement, and inventory management (WHO, 2022). The leadership and governance block is in line with the goals of transparency, change management, and stakeholders. The funding block is related to government and volunteer funding, drug-revolving fund, and investments. The healthcare block is associated with staff skills, labor productivity, and motivation. The service availability block is related to warehousing, distribution tools, transport, and technology.
Purchasing Policy Evaluation
Making healthcare procurement more strategic is critical to moving countries towards universal health coverage. Procurement in the medical field is associated with the distribution of existing common funds among service providers for the availability of services to the entire population or certain groups. Procurement is considered strategic when these allocations are linked, at least in part, to information about the performance of service providers and the health needs of the population they serve to improve efficiency, more equitably allocate resources, and manage cost increases.
The strategic purchasing policy determines what services can meet the needs of the target group and how these needs will be identified. In addition, it is necessary to understand which providers, public or private, will be able to provide these services effectively. It is essential to understand how and to what extent payments to suppliers are made, under what conditions contracts are concluded, and who is responsible for monitoring compliance with them. Procurement reform may be gradual, but changes in health systems will be significant. WHO provides direct support to countries in their reform efforts by providing assessment tools, providing policy advice, and offering opportunities for capacity building.
As an organization whose primary purpose is to promote developing countries’ health, WHO is responsive to emerging needs. WHO purchases approximately $700 million worth of goods and services each year to support the interests of the local population (WHO, 2022). The needs of the population may vary, but 2/3 of the demand is for medical services. (WHO, 2022). The most commonly procured services include transportation, rental of premises, medical services, and assistance from international or local consultants. The most commonly purchased items include pharmaceuticals, diagnostic tests, vaccines, laboratory equipment, and safety devices.
Legal Aspects
One of the primary laws in the area of supply chain regulation and drug safety is the Drug Supply Chain Security Act (DSCSA). This law describes the necessary measures for the available electronic traceability of medicines at the packaging level. In this way, the government can track and control the quality of drugs (FDA, 2022). The law expands the ability of the state to protect the end consumer from counterfeit and low-quality medicines. In addition, the DSCSA mandates the establishment of national licensing standards for wholesale distributors and third-party logistics providers and requires these organizations to report licensing and other information annually (FDA, 2022). For WHO, this law is important because it simplifies the control and traceability of medicines in the supply chain.
Theoretical Concepts
Supply chain management includes several critical activities and processes that must be completed efficiently and promptly. The ability to meet customer requirements is based on the supply chain’s expectations. World-class companies in the supply chain are guided by the Seven Rights of Fulfillment in their quest to deliver quality service and customer satisfaction (Akkucuk, 2020). Efficient flows of products from the point of origin to the point of consumption are needed. Acting as suppliers, companies are interested in financial flows. Suppliers always want to be paid for their services in a timely manner and with minimal waste. Sometimes the supply chain needs to be reversed to recycle or dispose of a product. Due to all the processes that need to occur in the different types of companies involved, every company needs supply chain managers to help improve their supply chains.
The principle of segmentation is dividing customers into categories; the basis for segmentation should be the needs of consumers. The supply chain must then be tailored to serve these customer segments in a mutually beneficial way. The logistics network must operate in a manner that is maximizing cost-effectiveness and meeting customer requirements. Managers must be able to plan the dispute along the entire chain for the competent allocation of resources at minimal cost (Akkucuk, 2020). The product must be differentiated closer to the customer and speed up communication throughout the supply chain. Strategic management must be committed to the sources of supply to reduce the total cost of ownership of materials and services. A clear strategy for the entire supply chain supports multiple levels of decision-making and provides a clear picture of the flow of products, services, and information needed. Performance metrics covering all channels to measure collective success in reaching the end-user efficiently and effectively should be applied. The principles are focused on the need to pay maximum attention to the needs of customers. The coordination of all actions is also important: the initial planning of consumer demand, the search for conscientious suppliers, the assembly, and the delivery process itself.
Supply chain management is associated with several theoretical concepts relevant to different companies to varying degrees. The resource-based view states that supply chain management should remain within the resources available to the company (Akkucuk, 2020). Strategic choice theory is based on strategic concepts that are adopted by management to ensure that the right decisions are made in the supply chain (Akkucuk, 2020). The agency theory explains the relationship between principals and agents and guarantees the adoption of policies that minimize costs. All of the above concepts are relevant to WHO: the organization operates with limited resources, has strategic planning to address problems, and seeks to minimize costs to ensure greater availability.
Relationships with Suppliers
WHO suppliers are subject to strict requirements and must all comply with the UN Supplier Code of Conduct. All suppliers must be suitably qualified and have a proven track record of working with the UN (UN, 2022). WHO suppliers’ material and financial resources must be sufficient to meet contractual obligations. The ability to provide open financial statements upon request is also important. The supplier must have the proper skills, knowledge of standards, and product control programs.
WHO does not work with vendors on UN Security Council sanctions lists. Since procurement is a critical function, to fulfill its mission, the WHO must have enough goods and resources. WHO is an organization entrusted with donor funds, and given the goal of supporting the economies and health of developing countries, the goal of WHO’s procurement activities is to adhere to strict principles of dealing with suppliers (UN, 2022). WHO seeks to find the best balance of price and quality, effective competition, and security of environmental issues. To ensure transparency in the procurement process and accountability, WHO expects its suppliers to adhere to the principles set out in the UN Supplier Code of Conduct.
Recommendations
Challenges and Barriers
In order to develop recommendations regarding the supply chain policy of a company such as WHO, it is necessary to understand the difficulties that the organization faces during the implementation of its mission. One of the main problems is the inaccessibility of medical services and medicines to the population of developing countries due to insufficient human potential and outdated technologies. Counterfeit medicines overwhelm public health systems due to the wrong choice of providers. The supply chain uses various trade routes where police, customs, and drug enforcement agencies are not integrated. Also, WHO may face inadequate stockpile management practices, a lack of proper infrastructure, and poor security. Possible delivery failures play an essential role due to transport restrictions and the inaccessibility of regions.
Improving Accessibility
At the moment, the situation in the world community is developing in such a way that only high-income countries can afford quality medicine. Low-income countries cannot afford quality medicine due to a lack of incentives to develop ways to provide drug commodities and health services. Since pharmaceutical companies depend on profit, it is unprofitable for them to work in conditions of low solvency. Lack of funds results in high out-of-pocket spending, which is an equally high proportion of household income. The problem is exacerbated by a lack of health insurance and disparities in medical research. One of the effective measures to increase the accessibility of medicine is research grants that help cover the initial costs and increase motivation (Steele, Subramanian, and Tolani, 2019). Advance market commitments create a pre-development agreement to purchase guaranteed amounts that meet the criteria. Priority review vouchers can increase the motivation for conducting research by shortening the review process.
Improving Affordability
Access to medicine is an opportunity for the population to pay for medicines without compromising other essentials. The cost of medicines is usually determined by production, supply, and research costs. Attempts to make medicine more affordable in developed countries have faced the problem of lack of funds. One solution to this problem could be differentiated pricing, allowing countries to pay for health services based on household per capita income (Steele, Subramanian, and Tolani, 2019). Organization of monopsony, market structures in which the buyer has control power can also reduce the cost of drugs. When the state is responsible for procurement, it is able to negotiate with suppliers and reduce prices. However, this model of government regulation can be complicated by a lack of transparency because contracts are confidential information. Increasing transparency between the pharmaceutical sector and the country’s government to understand the contextualized needs and challenges can be effective. Healthcare providers can work with governments and partners to establish and expand donation programs.
Improving Quality
The population of developing countries also suffers from the poor quality of the medical services provided. Substandard medicines and counterfeit products have a negative impact on the healthcare systems of any country. These problems can lead to treatment failure, long-term illness, adverse reactions, disability, and death. The detection of low-quality products is difficult due to the distribution of the supply chain in different countries and continents; they are not combined into a single system. Educating patients and healthcare professionals on accurate identification can help solve this problem (Steele, Subramanian, and Tolani, 2019). The most beneficial result will bring the creation of unified international drug labeling systems to simplify registration when importing drugs to other countries. This solution will save supply chain costs and lead times. An international code of practice is also needed to help coordinate regulatory, customs, and law enforcement agencies to facilitate supply chains.
Conclusion
Ensuring access to medicine requires efficient supply chains, where each component of the cycle matches the performance of the other. Despite good existing management, transparent leadership, and requirements for suppliers, WHO faces barriers. The main barriers are related to the lack of explicit coordination and the inability to control supplies in remote regions. Establishing clear and unified rules for customs and law enforcement agencies can simplify the situation. In addition, the spread of counterfeit drugs is a concern, which is also difficult to control. One of the options for solving this problem could be creating a single label for the entire world community. WHO’s purchasing and supply policy aims to achieve the mission of providing affordable medicine for all countries. Thus, effective achievement of organizational goals is impossible without strategic planning in relation to supply chains, supplier relationships, and purchasing policies.
Reference List
Akkucuk, U. (ed.) (2020). Handbook of Research on sustainable supply chain management for the global economy. United States: IGI Global.
FDA. (2022). Drug Supply Chain Security Act. Drug Supply Chain Security Act (DSCSA) | FDA
Steele, P., Subramanian, L. and Tolani, F (2019). Interventions to improve access to medicine
in developing countries: Mapping WHO’s building blocks and supply chain functions. Acta Sci. Pharm. Sci, 3(7), pp.111-120. ASPS-03-0323.pdf (pamsteele.org)
UN. Global Marketplace. (2022). World Health Organization. United Nations. Web.
WHO (2022). Promoting strategic purchasing. Promoting strategic purchasing (who.int)