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  • estebanlizarazo

Inventory Management of vaccines, the big challenge is not the sourcing...


Reproduced from (Poulin, 2003)


The increase on the number of pharmaceutical companies that thankfully have reinforced the NHS portfolio worldwide, and the number of local, regional warehouses for stocking the vaccines are creating a true challenge. I just pretend to illustrate with the Square Root Law (SRL) some considerations that should be taken into account for government and logisticians involved. In the Supply Chain discipline, it is known that an Inventory System with multiple vendors or warehouses (multiple supply options) for attending a specific demand could decrease the Supply Chain performance. The SRL approximates the impact on a portfolio aggregation or disaggregation caused by the number of SKU or the number of locations for a specific demand (Zinn, Levy and Donald, 1989) and is defined as:


The SRL can be used to demonstrate simply the impact of portfolio disaggregation. Assume two SKU (e.g. Pfizer and J&J vaccines) that are used in two different Colombian regions (Medellin and Cali). In this case it can be assumed that the demand is independent (for simplification) and therefore applying the SRL formula, the inventory is increased 41% (1.41) for each of the variables (SKUs and Region). This has huge implications, I think that some governments haven't done this kind of calculations and apply a very straight forward formula: Number of vaccines (Inventory to buy) = Number of Population * Number of doses. I think that many think that Vaccination is a "Just in Time" process where the true is that due to lack of logistics knowledge, geographical traits of developing countries, politicians involved in decisions, etc, instead it will be run in a "Just in Case" environment. It is not late but special knowledge needs to be included and civil servants should be humble to recognize it and ask for help. In the UK, the retail industry has been involved.



Sources:

1. Poulin, É. (2003) ‘Benchmarking the hospital logistics process.’, CMA Management, 77(1) CPA Canada, p. 20.

2. Zinn, W., Levy, M. and Donald, J.B. (1989) ‘Mesuring the effect of inventory centeralization/decenteralization on aggregate safety stock: the “square root law” revisited’, Business Logistics, 10(1), pp. 1–14.



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