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Parallel supply chain

Kathleen McDonald asks for my views on INGOs who set up their own (parallel) supply lines for medical supplies, as opposed to using the country’s normal supply lines.

Let me start with a truism: horses for courses. When deciding to use the local supply chain or set up your own, you will need to take into account your programme needs as well as your environment; and that means that it is impossible to make any sweeping statements about which way to go is better.

Reasons to set up a parallel supply chain

Some of the reasons that INGOs give for setting up a parallel supply chain:

  • Specific supplies are not locally available. Some programmes are so far ahead of what happens locally, that they use supplies that cannot be gotten through the national supply chain. This happened quite a lot in the early years of the international HIV response, when it was hardly ever possible to source antiretrovirals locally. It is still a consideration in some programmes.
  • Local supplies are of unproven quality. An INGO that takes its duty of care towards its patients seriously, will want to ensure that medications and other medical supplies qualitatively sufficient. This is not always easy: local producers and distributors are not always open to audits by customers, especially not if they cannot be guaranteed a certain minimum amount of custom. National regulatory agencies in ‘weak’ nations often lack the means to adequately ensure quality.
  • Local suppliers cannot scale up sufficiently. This can be a consideration in very large programmes or responses, especially in case of outbreaks/epidemics.
  • Local supply chains have broken down (temporarily). This will often be the case after large disasters or areas that are prone to violent conflict.
  • Local supplies are (much) more expensive than imported ones. It might be surprising, but in quite a number of cases imported supplies – even factoring in transport, taxes and import duties, clearing costs, and other incidental costs – can be cheaper than locally bought ones, sometimes by a large margin. This usually happens when only a small number of suppliers have a stranglehold on the market. So why not to set up a parallel supply chain? And what is best in the end? Click to read on…

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