The USAID | DELIVER PROJECT has applied supply chain optimization analysis in various countries to answer design and improvement questions. Supply chain optimization is a commercial-sector approach to designing, planning, and continuous improvement in supply chain operations. It can be used to design new supply chains or to redesign existing ones, helping to address common policy questions such as the impact of introducing a new vaccine, unifying multiple distribution systems, and determining the number of warehouses and their locations.
The optimization process involves three main approaches: supply chain design, networking optimization, and transport optimization. Supply chain design is a quantitative analysis that builds working abstractions for a real-world supply chain, typically used to support strategic and tactical decision-making. Networking optimization seeks to identify the lowest-cost network that meets stakeholders’ performance objectives, comparing potential networks and running scenarios through a simulation exercise. Transport optimization focuses on operational transportation questions, identifying optimal routing and the number and type of vehicles to serve expected demand.
Data for supply chain design and optimization depend on the objective of the exercise and fall into three basic categories: product data, site data, and demand data. Product data includes product name, value, pack size, unit volume, and unit weight, while site data includes facility type, GPS coordinates, business hours, storage capacity, and costs. Demand data includes site-specific quantities, by product, requested over time. Other data that can be collected includes road network datasets, available vehicle assets, standard operating procedures, and policies related to delivery strategy, inventory control, and supply sourcing.
The optimization process involves several steps, including determining what questions need to be answered, organizing and analyzing data, presenting multiple possible scenarios to stakeholders, and adopting and implementing the optimized supply chain design. The process can be used for continuous improvement, with data collected and fed back into the existing software model to validate original predictions and make adjustments as needed.
Country case studies demonstrate the application of supply chain design and optimization in public health supply chain operations. In Zanzibar, the Central Medical Stores (ZCMS) used network and transportation optimization analysis to identify network and distribution strategies for cost savings, examining the relative efficiency of proposed routes versus optimized routes. The analysis helped ZCMS transition all facilities to the Zanzibar Integrated Logistics System (ZILS) and select the best routes to serve the region from its main store on Unguja and hub on Pemba.
Optimization modeling brings together various pieces of data to generate maps and other decision-making tools, enabling stakeholders to set parameters for each scenario and identify redundancies and gaps that can be eliminated or filled. The final step is to adopt and implement the optimized supply chain design, based on the results of the modeling exercise, and to use the process for continuous improvement as the system operates.