DFID delivers health and nutrition programmes around the world ©Getty Images
DFID delivers health and nutrition programmes around the world ©Getty Images

Case study: DFID's complex supply chain integration

6 October 2017

A commercial health project is helping the Department for International Development (DFID) create savings across its many partners

DFID won best contribution to the reputation of the profession at the CIPS Supply Management Awards 2017.

Take category management and really spin it. So says Fiona Ross, head of strategic sourcing at DFID. She should know – it’s a large part of the Commercial Health Strategy that is being applied across a complex sector with many different stakeholders.

DFID spends around £2bn a year delivering frontline health and nutrition programmes around the world, working with governments, NGOs and private sector suppliers. Its work covers major implementation projects, such as setting up the Maternal New Born Child Care project across six of Nigeria’s states. DFID also provides frontline goods and equipment, such as family planning supplies, usually working with multilateral organisations.

The strategy’s aim is to improve value for money, using DFID’s reach to collaborate with and influence partners and donors to cut the price of medicines and vaccines long term. This involves looking at areas where it can improve integration across its supply chain operations.

“There is so much going on in health and it can be hard to understand,” says Ross. “But we were prepared to understand, and to change.”

The project was broken into three objectives: to better understand delivery partners and their supply chains; to improve delivery options and encourage competition in certain markets; and to grow collaboration and drive value for money.

The team undertook comprehensive analysis for a year, looking at the global funding market, analysing health spend, transparency and health priority issues, and researching future spending requirements. “We took on something pretty massive. It is 20% of our spend,” Ross says.

Workshops were set up with stakeholders and country offices to find savings. Following the Grand Bargain agreement signed at the World Humanitarian Summit in May 2016, DFID set up a round table for multilateral agencies to discuss procurement reform, share requirements and speed up collaboration of purchasing and supply.

The DFID team introduced supply chain integration, setting out future opportunities – and has achieved multi-agency pledges to collaborate. “It’s finding out what organisations are doing and bringing it together to see it in one place,” says Ross. “It is all about relationships and coordination so you don’t spend a load of money in one area and find another has covered that off.”

Tools like data visualisation software are being rolled out to improve analysis and compliance between the partners. “We have to work through lots of messy data,” Ross says, but it will help identify savings.

DFID has already identified savings of £7.5m on anti-retroviral therapy with a market-shaping programme to support product innovation.

She would now like to apply the strategy across humanitarian spend. “When you respond to earthquakes or ebola, there are a raft of actors who buy in emergency without much thought. They then get locked into arrangements. It’s ripe for opportunities.”

Researching neglected tropical diseases

By grouping together and mapping out needs – malaria is seasonal – DFID and its partners are creating a more structured and stable demand that is large enough to support and encourage drug companies to research drugs, such as for neglected tropical diseases – “if you saw the pictures you wouldn’t want to know”, says Fiona Ross – that are affecting small countries. With no potential to pay for medicines, pharmaceuticals don’t research them. Bring in scale, and provide volume guarantees, and pharma companies can start to research and agree to sell at a particular price. The Bill & Melinda Gates Foundation has similarly provided a back-stop for, say, 1m doses of a drug, so research can start. The back-stop needs to be there, even though, as Ross says, the foundation has never yet had to pay up under these arrangements.

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