Improving Demand Management through Visibility, Analytics, Collaboration and Performance Management

Demand management is a planning methodology used to forecast, plan for and satisfy the demand for products and services. It balances user requirements with the capabilities of suppliers. Traditionally public healthcare operations adopted an uninformed push approach to managing demand, whereby stock was pushed out to health facilities based on assumptions and rough calculations. Due to low forecast accuracy, high demand variability and increasing complexity of requirements, this led to either stockouts (resulting in poor user satisfaction), or high safety stocks and expediting medicines from one location to another (thus impacting on operational efficiency).

In order to achieve a better balance between user satisfaction and operational efficiency, an informed pull approach has been adopted, which is driven by actual demand and supply. This is where trained and informed planners have total visibility of consumption patterns and inventory levels of health facilities and recommend orders based on this data. Advanced approaches utilise automated systems that recommend orders to demanders who then authorise spending. The key principle behind this approach is the timely, relevant and continuous flow of demand information from end-users to suppliers.

VISIBILITY AND ANALYTICS

The National Department of Health (NDoH) in South Africa developed a Visibility and Analytics Network (VAN) based on the informed pull approach to managing demand. The VAN model facilitates data-driven decision-making and aims to improve planning processes, improve efficiencies, reduce cost and wastage, and improve medicine availability.[1] The name VAN is based on the following key features of the model:

VAN is guided by four factors: policy, process, technology, and people, as indicated in the diagram below. These factors are interdependent and cannot exist in isolation from one another. Visibility and collaboration underpin the whole approach and an effective distribution system is also essential. Finally, robust performance management in the form of KPIs should be present.

COLLABORATION

During the Covid-19 pandemic, the existence of the VAN model proved to be an excellent baseline for demand management, but additional collaborative interventions were required by the government to determine the additional types and volumes of medicines required to treat patients.[2]

To prevent medicine shortages during the pandemic, the Affordable Medicines Directorate (AMD) undertook several important steps. First, AMD set up a team of experts to advise on medicine selection, rational medicine use, demand forecasting, procurement, and logistics. These experts engaged with a broad group of stakeholders including critical care specialists to determine the challenges on the ground. Then, the AMD established an engagement platform to share information and enhance communication, with regular meetings to ensure all stakeholders were aligned. The AMD received constant updates with new data, insights, and feedback from the field to make planning more accurate. Through these efforts Covid-19 priority medicines were selected and demand forecasts developed.

The second component of the demand planning process was a patient-level forecast. A consortium of statisticians, epidemiologists, virologists, and other experts was established by the NDoH to produce this forecast. They generated a model considering elements such as transmissibility, infection severity, treatment pathways, and public compliance to lockdown measures, which resulted in the mapping of multiple scenarios of patient numbers that would require treatment in primary healthcare clinics and hospitals, including intensive care units.

With input from the priority list and the patient-level forecast, the estimated additional items required to treat Covid-19 patients were added to the baseline forecasts to establish a Covid-19 forecast. Provincial and national role players would add input to adjust the forecast which was broken down per province in volume and value terms. This information was shared with the provincial pharmaceutical services teams, finance teams, and other key role players to help make sure that medicines were available where needed. Suppliers used these forecasts to drive increases in their stock availability and provinces made sure they ordered enough stock.

PERFORMANCE MANAGEMENT

A VAN project in Nigeria shows how the concept can improve the demand management of immunisation vaccines. Before the project supply managers were unable to effectively monitor the performance of vaccine supply, resulting in poor availability at service delivery points. VAN principles were introduced to enable end-to-end visibility and make more accurate data available to supply managers. This enhanced visibility has promoted a culture of accountability and data-driven decision-making, which was previously unattainable.[3]

To ensure accountability, a systematic performance management system was developed. The framework focused on key performance indicators that cover optimal functionality, thus allowing for improvement interventions to be made:

[1] https://chhs.gatech.edu/conference/2018

[2] https://www.ghsupplychain.org/news/forecasting-crisis-using-demand-planning-prevent-medicine-stock-outs-south-africas-public

[3] https://www.researchgate.net/publication/330324697