Frequent assessments of stock status are the best way to ensure that you are aware of the potential for stockouts. Simply looking up at a shelf and making a decision not based on consumption data could lead to stock-outs and, consequently, the inability of service providers to provide good customer service.
3.5 Stock Status Assessment at a Higher
3.5.1 Why You Might Want to Assess Stock Status at Any Level of the System
Assessing supply status at any level or even all levels can give you more than just a glimpse of stock status in your own warehouse. You could also know whether—
• The levels you supervise are overstocked.
• The levels you supervise are understocked, and additional shipments are needed.
• Any products will expire in storage before they reach the user.
• Some facilities have too much stock and others not enough.
• Supplies are reaching customers instead of sitting in warehouses.
Knowing the supply status at various levels of your pipeline can prevent such problems.
You should assess stock status at different levels as often as you receive reports on dispensed to user data. Typically, all reports do not come in at once. A district level may report monthly, whereas the central level may only have new data quarterly.
3.5.2 Gathering Consumption Data
When you assess stock status from higher levels, you should base average monthly consumption on actual dispensed-to-user data from the dispensing level (consump-tion data). These data can only come from SDPs. When complete dispensed-to-user data are not available, use one of the fol-lowing techniques:
• Take dispensed-to-user data from previous reports.
• Adjust incomplete data to estimate Substituting Issues Data for
Consumption Data
You can substitute issues data for dispensed-to-user data when you assess stock status at higher levels, but that can be problematic. In a pull system, issues data should closely match dispensed-to-user data if the facilities are stocked properly (not too much or too little—see chapter 4 for more discussion of inven-tory control). Otherwise, issues data might reflect such practices as hoarding or rationing. Issues data in a push system
Adjusting Consumption Data for Incomplete Reporting
At higher levels, getting complete (i.e., 100 percent) reports of consumption from SDPs may be challenging. Although many systems do collect all reports, it is unusual to have all SDPs re-porting on time. When this is the case and you want to assess stock status, you can use the consumption data that are avail-able and adjust it to account for the missing data.
To adjust the data, use the following formula—
Sum of all consumption reported ÷ percent of reports received = estimated total consumption
For example, if you receive 8 of 10 reports, you have 80 percent of the expected reports. If the sum of the consump-tion from those reports equals 100, the estimated total con-sumption would be—
100 ÷ 0.80 = 125
As in any stock status assessment, divide the estimated total consumption by the number of months of data used (follow-ing the guidelines discussed in section 3.3). This will give you an estimated AMC to use in the general formula for assessing stock status.
If you use this technique to estimate consumption, remember the following:
< Document how you made your adjustment.
< If reporting is very low, (for example, below 70 per-cent), substitute issues data for consumption data (as described in the box in section 3.5.1).
< Not all clinics are equal. This basic technique assumes that consumption rates for the missing clinic is about
3.5.3 Gathering Stock on Hand Data
When assessing stock on hand at the level above the SDP—for example, at the district level—you can use stock on hand data from one or more of the following three sources:
• District warehouse stock on hand
• Aggregate (sum) of the stock on hand at all SDPs reporting to the district
• Aggregate of the stock on hand for the district warehouse plus the SDPs reporting to the district.
The source you use depends on the question you want to answer.
If you use the stock on hand for the district warehouse only, you will assess only the supply status of the district warehouse. This tells you nothing about the SDP level, but does indicate how long the district warehouse stock will last.
If you use the SDP data only, you will know how long stocks will last at the service delivery level as a whole, but you will know nothing about the district warehouse, or about individual SDP stock levels.
If you aggregate the stock on hand of both SDPs and the district warehouse, you will assess the stock status of the entire district, but will not be able to distinguish between stock in the district warehouse and stock in SDPs.
Whenever possible, you should try to use all three methods so you can review all three of the results—the district as a whole, the SDP level as a whole and separately, and the district warehouse itself. Some countries undertake special studies to assess stock status for every facility in the system at approximately the same time. Such a study produces a “snapshot”
of stock status that can inform decision makers of changes that may need to be planned for the upcoming year.
Regardless of how often you assess stock status or what data sources you use, be sure to document how you calculated the months of supply. This may prove important when you review your decisions.
Using Stock on Hand Data to Assess Stock at Higher Levels
The following example demonstrates four methods for assess-ing stock status at higher levels. Imagine you are the warehouse manager for a district with two clinics reporting to you. At the end of the month, you conduct a physical inventory of your warehouse and receive reports from both clinics. You find—
Method 1: District Warehouse Only
Because the district has dispensed-to-user data, it can assess its stock status best by using the AMC data from both clinics. The calculation would be—
If the regional supervisor assesses stock status using only these data, the potential stockout at the clinic level would be missed.
The region would feel safe knowing that the district warehouse had enough stock to supply its clinics for another six months.
Method 2: Aggregate of Clinics Only
If the district reports only the aggregated clinic stock on hand to the region, the calculation would be—
If the regional supervisor assesses stock status using only these Facility Stock on Hand AMC Months of Supply
Clinic 1 100 200 0.5
Clinic 2 600 300 2.0
District 3,000 700 (issued) 4.3 (based on issues)
Facility Stock on Hand AMC Months of Supply
District 3,000 500 6.0
Facility Stock on Hand AMC Months of Supply
All Clinics 700 500 1.4
3.5.4 Understanding Your Assessment of Stock Status at Higher Levels
Figure 3.2 illustrates the reason for assessing stock status at higher lev-els. Stock on hand nationwide (the months of supply at all levels) appears relatively steady and high. However, if you assess the supply status of the central warehouse only, you might believe the stocks are depleting rap-idly and more stock is urgently needed. The graph shows that this is not true; rather, stock is gradually being redistributed to lower levels in the pipeline. Understanding stock status at all levels, therefore, is important to managing a logistics pipeline.
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Method 3: Aggregate of the District and Clinic If the district reports all data aggregated, the calculation would be—
If the regional supervisor assesses stock status using only this data, the potential stockout at the clinic would be missed.
The region would know that sufficient supplies existed in the entire district, but could not tell how they were distributed between the district and clinic levels.
Method 4: Disaggregated Data
In an ideal setting, the regional supervisor would receive all of the data for all facilities. This information could be used to pinpoint problems at all facilities at all levels. It may, however, be difficult to process the numerous monthly reports needed for so many facilities. Managers must understand what each method tells them and the strengths and weaknesses of each, and choose the method most appropriate to their program.
Facility Stock on Hand AMC Months of Supply
All 3,700 500 7.4