Inventory Management of vaccines, the big challenge is not the sourcing...
Updated: Aug 28, 2022
Reproduced from (Poulin, 2003)
The increase in 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 considered by the 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 to 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 SKUs (e.g. Pfizer and J&J vaccines) 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 by 41% (1.41) for each of the variables (SKUs and Region). This has enormous implications, and I think some governments haven't done this kind of calculation and applied a very straightforward formula: Number of vaccines (Inventory to buy) = Number of Population * Number of doses. Many think that Vaccination is a "Just in Time" process. Still, the truth is that due to lack of logistics knowledge, geographical traits of developing countries, politicians involved in decisions, etc., 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.
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) ‘Measuring the effect of inventory centralization/decentralization on aggregate safety stock: the “square root law” revisited’, Business Logistics, 10(1), pp. 1–14.