Transforming health procurement & supply chains
A
Transforming health procurement & supply chains
vision for integrated, sustainable health supply networks
September 2025
Reader note
This paper is written for country health supply chain leaders and policymakers who are responsible for designing, financing, and governing national health supply networks. It also provides guidance for external partners such as global health institutions (GHIs) and (development) financing institutions on how to align their roles and resources with national priorities.
It presents a strategic framework: setting out a vision, defining the key capabilities needed to drive performance and cost-efficiency, and outlining practical actions and implications for key stakeholders. Readers should use this paper as the starting point for planning their transformation journey toward integrated, sustainable health supply networks.
Authors
This position paper was developed by the Supply Chain Funders’ Forum: a group of supply chain representatives from GHIs and financing institutions committed to advancing procurement and supply chain collaboration across organizations and health programs, with the aim of building integrated, sustainable health supply networks that ensure quality product access, equity, and resilience.
Ann Allen
Clément Jaidzeka
Karan Sagar
Marasi Mwencha
Thomas Edward Llewellyn
Lead writer: Lantos Pin
Gates Foundation World Bank
Gavi, the Vaccine Alliance
The Global Fund to fight AIDS, Tuberculosis and Malaria
Global Financing Facility
Pin Consulting
Special thanks for their guidance and thought partnership to Anita Deshpande, Jennifer Chavez, Francis Aboagye-Nyame, Maureen O'Shea, Megan Toon, René Berger, Scott Dubin, Sidharth Rupani, Stanley Chindove, and others who have contributed their time and expertise to this paper.
Table of contents
Executive summary
Introduction
Current state of procurement & supply chain systems
Need for transformative change
Future vision
Sustainable health supply networks
Five defining characteristics of health supply networks
Four functional domains that drive network performance
From vision to action: what to do next?
Country transformation planning
Functional domain improvement opportunities
Reimagining health supply network operating models
Actions for key stakeholders
Additional work to guide the transformation journey
Call to action
Executive summary
Health procurement and supply chain systems play a crucial role in ensuring equitable access to medicines, vaccines, diagnostics, insecticide-treated nets (ITNs), and other health products. Many LMICs have made significant progress in delivering health products to the last mile. Over the past two decades, diseasespecific health programs and associated funding models (e.g., HIV, malaria, tuberculosis, immunization) have delivered transformative progress in lowering disease burdens. While external support has been vital in this achievement, reliance on external assistance has left countries vulnerable to resource gaps and funding uncertainties. Strengthening domestic financing and governance for supply chains is increasingly essential to ensure long-term sustainability and resilience.
Across LMICs, health procurement and supply chain systems reflect diverse histories and trajectories. Many countries have strengthened integration, improved product availability, and matured logistics operations. Yet, persistent challenges constrain performance and long-term sustainability. Countries face structural and systemic challenges: siloed health programs, limited interoperability, unreliable and fragmented financing, and insufficient oversight. Public and private (for profit and not-for-profit) sectors often operate in parallel rather than as part of a coordinated, whole-of-market approach that leverages their respective strengths. This leads to inefficiencies, duplicative infrastructure, and missed opportunities to consistently meet population health needs.
Without bold change, health procurement and supply chain systems will not fulfill their full potential (and obligation) to ensure reliable access to quality health products.
The need for transformation
Meeting future health needs requires a different approach. Embedding a whole-of-market approach means aligning governments, Global Health Institutions (GHIs), financing institutions, public and private providers, and other stakeholders behind a shared, forward-looking vision. Health supply networks must de designed to reflect how and where people seek care, leveraging diverse capabilities to ensure reliable access to quality health products for all.
With urgency comes opportunity. In the face of declining external assistance, countries and their partners must build better: daring to step beyond legacy approaches and investing today in the solutions, partnerships, and technologies needed in the future.
Sustainable health supply networks
At the heart of this transformation lies sustainability, driven by integrated thinking. Not just in how networks are financed and operated, but in their ability to consistently deliver results, adapt to change, innovate, and remain resilient over time.
Sustainability is defined across six interconnected objectives:
A
new era of health supply networks is emerging: integrated, intelligent, and centered on clients and healthcare service delivery
Stewardship & orchestration
Government leadership, regulation, and oversight, paired with autonomous orchestration of operations – aligning stakeholders, resources, and activities across sectors for seamless product delivery
Five defining characteristics of health supply networks
Client-centric network design
Strategic network design and distribution channels tailored to where and how healthcare services are delivered –designed around actual demand to ensure equitable access to quality health products, wherever and however people seek them
Holistic, data-driven decision-making to balance trade-offs and continuously improve cost-efficiency – ensuring optimal resource allocation and best value for money
Full transparency, traceability, and product verification across organizations and processes – enabling performance insights and driving smarter, faster decisions
Network agility
Responsive mechanisms to anticipate and manage risks, instantly adapt to shifting demand, funding changes, or disruptions –maintaining continuity and reliable supply
Four functional domains that drive network performance
From vision to action: enabling country transformations
This paper outlines a longer-term vision and introduces five defining characteristics and four functional domains that must evolve. It presents key levers, actionable improvement opportunities, best practice examples, and proposes areas for additional guidance. What comes next depends on our collective resolve.
It's important to recognize that there is no one-size-fits-all solution or approach that defines the path forward. Ultimately, it will be driven by, and tailored to, each individual country’s context. But there is a shared commitment and urgency to act. Transformation is not about starting over, it’s about building on what exists, works well, and reimagining what’s possible.
For each functional domain – planning, procurement, deliver, and return – and the network as a whole, countries must determine the most effective operating model: whether fully in-house, fully outsourced, or hybrid. Governments don’t need to do everything, but they must lead, and the National Pharmaceutical Services Units (NPSUs) must design, regulate and orchestrate the national health supply network.
We are calling on all stakeholders to act; not tomorrow, but today! Transformation requires coordinated action, aligned investments, and shared accountability. We encourage:
Drive the change: define ambitions, reimagine financing modalities, and modernize regulations
Design the future: determine the network design, define the operating model, and chart the transformation roadmap
Reimagine your role: support country transformations, and leverage your portfolio approach to guide and accelerate country transformations
Financing institutions
Service providers
Fuel what matters: invest in building integrated, sustainable and resilient networks, and empower country ownership and accountability
Deliver more than services: build trust, drive efficiencies, innovate, and show us the way forward
There will never be a perfect time for transformation. But there are smart places to start. By aligning ambition with pragmatism – thinking big, starting where it matters most, and scaling what works – countries and their partners can make positive, measurable progress.
Will you step up and drive the change, to build better together?
Introduction
Health procurement and supply chain systems play a crucial role in ensuring equitable access to medicines, vaccines, diagnostics, insecticide-treated nets (ITNs), and other health products. Many LMICs have made significant progress in delivering health products to the last mile. While external support has been vital in expanding product access, reliance on external assistance for procurement, logistics, and healthcare service delivery has left countries vulnerable to resource gaps and funding uncertainties. Strengthening domestic financing and governance for supply chains is increasingly essential to ensure long-term sustainability and resilience.
Over the past two decades, disease-specific health programs and associated funding models (e.g., HIV, malaria, tuberculosis, immunization) have delivered transformative progress; from scaling up antiretroviral therapy (ART) for HIV to expanding access to early diagnosis and treatment for malaria, and strengthening tuberculosis surveillance, diagnosis and treatment. Yet, these vertical approaches have also created parallel procurement and supply chains that remain fragmented across programs and geographies. While integration has improved compared to 10-15 years ago, persistent inefficiencies limit the ability of current systems to meet today’s growing and evolving demands, such as client preferences for health services, demographic changes, economic changes, rising non-communicable disease burdens, and climate-induced disasters (Ensuring Future Fit: Global Health Procurement and Supply Chains by 2040).
As global fiscal dynamics shift – with official development assistance (ODA) and development assistance for health (DAH) under pressure, as well as trade disruptions, conflicts, and debt distress – domestic resource mobilization and the evolving role of GHIs and financing institutions are critical. GHIs have played a central role in financing and shaping health supply chains; going forward, they will be equally important in aligning them to national priorities, supporting integration, and helping countries build sustainable, national networks. The need for transformation is therefore not about starting over, but about building on diverse experiences, learning from what has worked, and reimagining what is possible.
Current state of procurement & supply chain systems
Across LMICs, health procurement and supply chain systems reflect diverse histories and trajectories. Many countries have strengthened integration, improved product availability, and matured logistics operations. Yet, persistent challenges constrain performance and long-term sustainability. Public and private (for profit and notfor-profit) sectors often operate in parallel rather than as part of a coordinated, whole-of-market approach that leverages their respective strengths. This leads to inefficiencies, duplicative infrastructure, and missed opportunities to consistently meet population health needs.
Public sector challenges: Public health supply chains face multiple structural and operational issues, including siloed programs, outdated systems and tools, unreliable data, limited infrastructure, and overstretched personnel. Inconsistent performance management and oversight undermine reliability. Critically, financing determines whether supply chains are reliable, responsive, cost-effective, and agile; yet many governments (and some donors) struggle to consistently pay suppliers and providers on time, impacting performance and eroding trust. At the same time, reforms in several countries – such as establishing dedicated national supply chain units and modernizing logistics operations – demonstrate that targeted investment and governance improvements can deliver meaningful results.
Private sector challenges: While often more agile, private actors face challenges in scaling to meet broader public health needs. Limited access to affordable capital and delayed public payments hinder operational efficiency and expansion, while high distribution costs discourage rural outreach. Data gaps and regulatory weaknesses also allow substandard products to circulate. Yet, where engaged effectively, private providers, distributors, and pharmacies are extending reach and introducing efficiencies that complement public sector capabilities.
Underlying, systemic challenges: Weak governance and limited enabling policy environments continue to impede effective collaboration across sectors. Health programs often operate in silos, duplicating efforts, and straining already limited resources. Fragmented planning, procurement and financing mechanisms for supply chains and healthcare services create inefficiencies and reduce transparency into actual operating costs. However, efforts to align health financing, public financial management with supply chain financing are gaining traction, offering a pathway toward greater sustainability and accountability.
Moving toward a whole-of-market approach – built on aligned goals, shared data, and mutual trust – is essential to ensuring high-performing health supply chains that consistently deliver the right products, to the right place, at the right time.
Need for transformative change
With the right investments, governance, partnerships and systems, high-performing health supply networks can become a reality. This transformation is not about reinventing the wheel. It is about building on diverse experiences, scaling what works, and adopting proven practices from others sectors, such as the fast-moving consumer goods (FMCG) industry, which successfully manages complex, multi-channel distribution networks.
Public health supply chains face growing pressure from inefficiencies, substandard infrastructure, and increasingly constrained resources. Recent funding disruptions have placed additional strain on already fragile health (financing) systems and public health supply chains. Without transformation, countries risk continued dependence on external funding and expertise, inequitable access to health products, and systems unable to withstand shocks such as pandemics, conflicts, or climate-induced disasters.
With urgency comes opportunity. Countries can reimagine how health supply networks are designed, organized and financed, while GHIs and financing institutions align their support with national strategies. Embedding a whole-of-market approach requires all stakeholders to unite around a shared, forward-looking vision. By leveraging complementary strengths, we can build integrated and sustainable health supply networks; designed with multi-channels aligned to how and where healthcare is delivered, and capable of meeting the health needs of a country’s entire population, now and into the future.
Future vision
To bring the whole-of-market approach to life, countries must reimagine how their health supply chains are designed, financed, operated, governed, and staffed. This means shifting from siloed health programs and paralleloperated supply chains toward coordinated national networks that align actors across the public, private, and notfor-profit sectors. Establishing symbiotic relationships between network actors and other stakeholders, guided by a shared vision, clear governance and accountabilities, can significantly enhance quality product access, improve product availability, and build long-term health system and network resilience.
A new era of health supply networks is emerging: networks that are integrated, intelligent, and centered on clients, healthcare service delivery, and inclusive social contexts. These systems will be efficiently operated, transparently governed, and powered by real-time data; enabling proactive decision-making, rapid response, and greater resilience to shocks. With a multi-channel strategy tailored to actual demand and healthcare service delivery, these networks are sustainable and equitable, ensuring that clients – individuals or population-wide interventions – have reliable access to quality health products, wherever they are.
Integration is central to this vision. By aligning efforts across health programs, services, and geographies, integration will enable the coordinated delivery of multiple products, reduce duplicate efforts, and ensure frontline workers and clients have what they need, when they need it; whether it’s a nurse managing stock in a remote clinic or a mother seeking care for her child. The result is a supply network that is not only more efficient, but also more responsive and sustainable – built to provide consistent, reliable access to quality health products.
The following sections outline six sustainability objectives in the context of health supply networks, five defining characteristics that drive network impact, and four functional domains that drive network performance. Examples and suggestions illustrate how the characteristics can create value.
Sustainable health supply networks
As traditional public donor funding declines and demand for health products continues to rise, we must build better. Moving beyond legacy approaches and short-term fixes to create health supply networks that are built to last. At the heart of this transformation lies sustainability: not just in finance or operations, but in the ability of health supply networks to consistently deliver results, adapt to evolving needs, and remain viable over time.
Sustainability is defined across six interconnected objectives:
Sustainability is defined across six interconnected objectives:
Health: aligning network strategy and design with actual disease etiology, epidemiological patterns, healthcare service delivery, and public health priorities to ensure continuous product availability across multiple health programs;
Social: ensuring acceptability, accessibility, availability, and affordability for all population segments – especially marginalized or vulnerable groups – while embedding client-centered principles and inclusive accountability mechanisms;
Financial: securing predictable funding within domestic health budgets for both product and services procurement and supply chain operations to coordinate and oversee networks, sustain operations, invest in (infrastructure) improvements, and finance the transformation;
Political: ensuring strong government leadership and stewardship through aligned policies, regulations, and oversight mechanisms that enable stakeholder coordination, accountability, and long-term ownership;
Institutional: developing well-governed and resourced entities – across public, private and civil society – to lead, monitor, and manage the network, and support integrated planning, optimization, and innovation across the network;
Environmental: embedding climate-conscious practices such as health waste management, route optimization and greenhouse gas (GHG) emission reduction to protect the people across the network and the environment.
Sustainable health supply networks have embedded five defining characteristics into their structure, design and operations; ensuring they are client-centered, integrated, efficient and data-driven, and contribute to long-term health impact and resilience. To function effectively, these networks depend on four functional domains that work together to drive consistent, high performance.
A new era of health supply networks is emerging: integrated, intelligent, and centered on clients and healthcare service delivery
Stewardship & orchestration
Government leadership, regulation, and oversight, paired with autonomous orchestration of operations – aligning stakeholders, resources, and activities across sectors for seamless product delivery
Resource optimization
Holistic, data-driven decision-making to balance trade-offs and continuously improve cost-efficiency – ensuring optimal resource allocation and best value for money
Five defining characteristics of health supply networks
Client-centric network design
Strategic network design and distribution channels tailored to where and how healthcare services are delivered –designed around actual demand to ensure equitable access to quality health products, wherever and however people seek them
Full transparency, traceability, and product verification across organizations and processes – enabling performance insights and driving smarter, faster decisions
Network agility
Responsive mechanisms to anticipate and manage risks, instantly adapt to shifting demand, funding changes, or disruptions –maintaining continuity and reliable supply
Four functional domains that drive network performance
Management of product returns, redistributions, recalls, and waste to enhance control, safety, and responsible handling of unused, expired, or recalled products
Five defining characteristics of health supply networks
Five defining characteristics will need to be embedded in a health supply network’s design and operations; ensuring efficiency, equity, integration, and sustainability.
Stewardship & orchestration
Health supply networks require strong stewardship to answer three critical questions: What needs to be done? When should it be done? Who should do it? For any effective and sustainable transformation, governments typically have and must define a forward-looking health supply network strategy. This strategy should align with national strategies and public health goals, reflect how healthcare service delivery can be best organized, and embed a client-centric approach. Doing so ensures that health supply networks can be designed, configured and structured to fit local contexts and are able to deliver quality health products cost-effectively.
Good governance with inclusive and participatory stakeholder collaboration mechanisms, supported by transparent policies, accountability frameworks, and performance oversight will help to build trust across stakeholders and sectors. Governments must also proactively utilize their legal, regulatory, and policy instruments to set quality standards, harmonize implementation, enforce compliance, and incentivize private sector participation. This includes clarifying stakeholder roles and mandates, aligning financial and procurement cycles, and improving regulatory coherence between regulatory authorities and pharmacy councils. Intersectoral collaboration is also essential; ensuring that non-health sectors (e.g., finance, infrastructure, transportation) support the development of stronger health supply networks.
A critical enabler of stewardship is demand and market intelligence generation. Governments need to systematically compile, analyze, and apply data insights to drive decision-making, refine policies, allocate resource efficiently, and anticipate future demand and needs.
Example: Nigeria Supply Chain Integration Project (NSCIP)
NSCIP, established under the Federal Ministry of Health and Social Welfare, supports national stewardship by developing and promoting a national vision for Nigeria’s public health supply chain and developing the standards, processes, and tools that guide operations across health programs and levels of government. It plays a critical role in advancing supply chain maturity by coordinating federal and state actors, donors and other stakeholders; providing resources and building capacity; and ensuring alignment with national health priorities. Through strategic work areas such as warehousing and distribution, information systems (e.g., LMIS), and logistics management coordination units, NSCIP has strengthened management and oversight, and enabled more consistent, efficient delivery of health products across Nigeria.
Governments and NPSUs play a central role in defining policies, enforcing regulations, setting quality standards, and ensuring compliance. Where stewardship sets the direction, orchestration ensures execution across the network. Orchestration refers to the professional management of health supply networks; coordinating stakeholders, aligning resources, designing and optimizing the network, integrated planning, overseeing procurement, and coordinating logistics operations across service delivery partners and outsourced service providers to ensure integrated and seamless product, information and financial flows. The Global Health Maturity Model, supported by the Global Fund, allows a holistic evaluation of processes and improving stewardship and orchestration capacities, including governance of key functions, use of industrystandard metrics, integration across stakeholders, and proactive workforce development.
While 1PL and 2PL service providers focus on delivering discrete logistics services such as transport and warehousing, and 3PL service providers add value through bundled services like order fulfillment, warehousing and inventory management, these models are insufficient to manage national-scale, multi-program, multichannel health supply networks. It requires the sophistication and capabilities of autonomous, professional 4PL service providers to effectively orchestrate the network. NPSUs must essentially act as 4PL service providers or manage a contracted 4PL service provider: logistics integrators capable of orchestrating an entire network, and manage multiple service providers.
An orchestrating entity is essential for turning national strategy into a network design with a channel configuration for optimal operational efficiency. They manage resource optimization and key trade-offs across cost, performance, and quality; ensuring that the network remains client-centric and agile, even during shocks.
Logistics models commonly used in the life sciences industry
1PL
Organizations that handle their logistics in-house, using their own resources and assets
2PL
An external service provider that uses its own assets to handle specific logistics services, such as transportation
3PL
An external service provider that manages warehousing, transportation, order fulfilment, and value-added services; using owned or subcontracted assets
4PL
Logistics integrators that design and orchestrate the entire supply chain, managing multiple 2PL and 3PL providers
Vendor-Managed Inventory (VMI): a replenishment model where suppliers, wholesalers or distributors are responsible for managing and replenishing a client’s inventory - typically operated through a 3PL or 4PL provider
Governments must define the orchestration model that best suits their context and ensure the right capabilities are in place; whether through an empowered internal coordination unit or by contracting an experienced logistics partner. Core capabilities needed include stakeholder coordination, integrated network planning, procurement oversight, provider selection, contract and performance management, data analytics, real-time network monitoring, and proactive risk management. The orchestrating entity must be autonomous, professional, and adequately resourced to lead the transformation and ensure accountability.
This is how countries can move from parallel procurement and supply chains to an integrated health supply network. Built not around individual programs or funding streams, but around actual health needs and the performance of the network as a whole.
Client-centric network design
Health supply networks will be designed around the actual needs of their clients, and not just what is made available from a supply-side. Network designs have long focused on a subset of people who seek services within public facilities. As people adopt a consumer mindset, when approaching their health, they will demand services from public and private healthcare service providers, increasingly through digital channels, community-based care, and outreach services across the spectrum of prevention and care. Their preferences must be clearly understood and used to continuously optimize health supply networks. During the 2024 Supply Chain Leaders Forum, 17 of the 30 LMIC delegations identified client centricity as a primary solution that also addresses current network design and operational inefficiencies.
About the Supply Chain Leaders Forum (SCLF)
The SCLF is a country-led community of supply chain leaders in the global health sector, acting as agents of change for sustainable and equitable supply chain systems. Comprised of delegates from 30 LMICs in Africa and Asia, they represent the countries where GHIs have a strong engagement history. The forum promotes cross-country knowledge exchange, fosters alignment between countries and GHIs, and elevates the importance of high-performing supply networks as a crucial element to advance public health goals.
A client-centric network prioritizes clients’ needs – focusing on the principles of accessibility, acceptability, availability and affordability – at every stage of its design and decision-making, while actively balancing service levels with cost-efficiency. Effective networks are designed in close coordination with health financing, healthcare service delivery, and public financial management (PFM) disciplines, ensuring that distribution channels reflect real demand, service requirements, and equity goals across all sectors. Financial insights into actual operating costs, including cost-to-serve and total landed cost, should inform network design and channel selection to ensure resources are directed where they create the greatest value. Digital tools are leveraged to understand, engage, and meet clients’ needs, as well as for designing and optimizing the network; allowing for distribution channels to deliver the right products and services, at the right time, to the right place.
It’s important to acknowledge that client-centricity doesn’t aim to replicate every service at every site. Instead, it prioritizes access, integration, and utilization, while avoiding duplication and unused capacity (e.g., placing shared lab platforms like GeneXpert strategically rather than by health program).
One network, many distribution channels; tailored to deliver what’s needed, where it’s needed
Note: effective networks are designed in close coordination with health financing, healthcare service delivery, PFM disciplines; ensuring that distribution channels reflect real demand, service needs, and equity goals across all sectors
Public hospitals, health facilities, and uniformed services facilities
Healthcare Service Delivery
Community-based health programs
School-based health programs
Health Supply Network
Public Sector
Manufacturers:
Diagnostics Medical consumables & health supplies Medical equipment Pharmaceuticals
Private for-profit sector
Private not-for-profit sector
Emergency response program
Private hospitals and clinics
Retail pharmacies and drugstores
Direct-to-patient delivery services
Employer and occupational health programs
Mission hospitals and clinics
Mobile medical missions
Community faith-based programs
NGO-run clinics and programs
A client-centric approach not only supports better health supply network design. It is an opportunity to align how healthcare service delivery should be organized and how the network must be configured; reflecting actual demand as determined by epidemiology and service delivery. The design is informed, and continuously refined, by the analysis of four key inputs:
Population and service characteristics: understanding population health needs, preferences, and product demand across the country, its geographic differences and variability, and any access and equity barriers such as affordability, social stigma, gender and cultural restrictions; Client data: understanding client sentiments (‘what clients say they need’), preferences, ability and willingness to pay (‘what clients actually do’), and feedback (‘how clients react and review your services’) Product and service attributes: understanding product and service attributes (e.g., shelf life, storage and handling instructions, logistics needs, and equipment maintenance) to group health products, lab samples, medical equipment, and other critical supplies (referred to as ‘products & services’) into products and services baskets and assign them to or segment into appropriate distribution channels; Cost and performance: using service levels, lead times, stock levels and their turnover, and cost-to-serve data to optimize performance and adjust channel configuration over time.
This multi-dimensional design process ensures that networks and healthcare service delivery are not only client-centric, based on the best product and channel mix (regardless of sector), but also adaptable, efficient and scalable. Supply Chain Leaders from across LMICs see an increasing role of the private sector (e.g., retail pharmacies and drugstores) as necessary channels to increase product access and clientcentricity.
Example: Kasha’s HIV Product Delivery Service in Kenya
Kasha is a digital health and household goods platform operating across nine African countries. It exemplifies a client-centric approach by delivering health products not only to health facilities but also directly to community pickup points and people’s homes. In the town of Kajiado, Kasha delivers HIV-related products (e.g., ARVs, PrEP, rapid self-test kits) along with other medications and health products (for e.g., diabetes, hypertension and contraceptives), for non-HIV patients. By adapting delivery to clients’ preferences, Kasha ensures greater convenience, privacy, and continuity of care in Kenya.
The impact of a client-centric approach goes beyond on-shelf product availability and timely deliveries. True performance must be measured by how well the supply network enables healthcare service delivery and supports better health outcomes. This includes reducing waste, improving treatment adherence, ensuring appropriate product use, and expanding access to quality products.
Client-centric networks require more than just new tools; they demand changes to governance mechanisms, structures, cross-sector coordination, and flexibility in design. Networks must be built to dynamically adjust channels when healthcare needs or demands shift, supply chain disruptions occur, or healthcare service delivery models evolve.
Suggestion: Integration opportunity
Governments and GHIs can apply a client-centric approach to design distribution channels that align with a country’s healthcare service delivery setup, routing products and financing through the most appropriate sector (public, private, or not-for-profit) and distribution channel. By breaking down operational silos, integrating (digital) infrastructure and waste management systems, and rationalizing supporting governance structures such as logistics working groups, they can better define how and where products move through the network. This type of integration can unlock greater efficiency, improve service performance, reduce costs, and build more responsive health supply networks; without compromising program-specific accountability or product quality.
A smarter, integrated network starts by clearly identifying where programs, partners, and systems can connect, and how financing and operations can be better aligned. A taskforce, established by the Interagency Supply Chain Group (ISG), composed of public, private, and NGO leaders is working to define short-term, impactful integration opportunities. This must include not only infrastructure and technology integration, but also community engagement as a proven strategy to strengthen last-mile delivery and ensure availability where formal systems struggle to reach.
Early areas of focus include:
Health and nutritional supplement hubs: Integrating procurement and distribution of nutritional products with existing distribution channels to improve reach and efficiency; Supply chain planning: Consolidating planning across programs to enable joint demand forecasting, procurement, and resource optimization; Immunization supply chains: Embedding EPI distribution within the network’s distribution channels to reduce duplication and improve cold chain utilization; Warehousing design and management: Harmonizing warehousing infrastructure and processes to support multi-product, multi-program storage and warehouse operations; Last-mile delivery innovations: Leveraging shared transportation to achieve economies of scale and deploy innovative solutions such as drones to extend reliable delivery to remote and underserved areas;
Integrated waste management: Coordinating disposal and reverse logistics across health programs to ensure safe, cost-effective handling of health product waste; Digital system harmonization: Linking and aligning digital platforms like eLMIS to support unified data collection, visibility, and decision-making.
These are not just operational fixes. They are steppingstones toward a whole-of-market approach; enabling more responsive, resilient, and equitable networks that put clients first and make smarter use of shared resources.
Resource optimization
Health supply networks continuously optimize how financial, human, and logistical resources are allocated to maximize efficiency, make best use of available capacity and minimize waste. This is done for the entire network as well as within individual distribution channels. Optimizing resources is essential to ensure best value for money; especially within a constrained fiscal space.
Achieving value requires network actors to find the right equilibrium across the three core dimensions of operational performance:
Service: ensuring health products are reliably available, delivered where they’re needed, where they’re needed, and in the quantities required; Quality: ensuring product integrity, safety, and client trust;
Cost: managing and reducing operational expenses wherever possible
These dimensions are interdependent. Improving one often affects the others, e.g., faster deliveries may raise costs, while reducing costs excessively may harm service or quality.
Service
Costs Quality
Making budget formulation and resource allocation actionable depends on creating visibility into actual operating costs. This requires the ability to understand and manage the cost-to-serve: the actual cost of delivering health products or services across the network or through specific channels. Despite its importance, it is not a common approach, often limiting network actor’s ability to make informed trade-offs or financial plans.
Creating transparency around cost-to-serve, including direct, indirect and underlying cost drivers, enables alignment with health financing and public financial management (PFM) processes, from budget formulation and prioritization to execution and monitoring. This allows governments (including publicly financed health coverage or insurance schemes that purchase health services and goods on behalf of the population), GHIs and network actors to prioritize, plan, and allocate resources more effectively.
Equally important, insights should extend to the total landed cost: the full cost of procuring and delivering a health product to the point of care, including purchase price, shipping, customs duties, taxes, insurance, and other fees. Embedding these insights into planning and procurement ensures decisions are not driven by product price alone, but by the end-to-end cost of delivering health products.
Together, cost-to-serve and total landed cost create financial insights that guides continuous efforts to improve cost-efficiency to reduce expenditure and improve overall value for money. Regardless of whether costs are covered by governments, GHIs, or individuals.
Understanding cost-to-serve
Cost-to-serve is the ability to model and calculate the true cost of delivering health products to a point-of-care, capturing both visible and hidden costs. While visible costs like warehousing and transport can be easily tracked, hidden costs such as emergency shipments, underutilized vehicles, poor supply balancing, manual processes, staffing or per diems, are frequently overlooked, leading to inefficiencies and missed savings opportunities.
In the private sector, cost-to-serve is commonly used to guide decisions that improve profitability and operational efficiency. While cost-to-serve includes a variety of cost, the cost-to-deliver is where logistics impacts cost-to-serve – see figure below. These can then be allocated to specific products, clients, channels, or service levels to inform strategic trade-offs between cost, service levels, and channel configuration. In health supply networks, applying cost-to-serve, or even a more basic analysis of the cost-to-deliver, can help identify cost drivers and savings opportunities, and inform the need to make trade-offs.
Calculating cost-to-serve
Cost-to-deliver (CTD)
Warehousing and storage
Transportation
Cold chain
Value-added services (e.g., serialization)
Insurance
Import duties & taxes
Maintenance, repair & overhaul
Sales, general & administrative (SG&A)
Planning
Procurement
Order management
Customer support
Sales & marketing
General & administrative expenses
With detailed insights on the network’s performance in terms of service, costs, and quality, network actors, governments, and GHIs can assess and manage key trade-offs such as:
Service levels vs. cost: while ensuring high service levels benefit clients, going fully client-centric –prioritizing availability, speed, and convenience – can drive costs to unsustainable levels. Balancing this trade-off ensures that distribution channels remain financially viable while meeting client needs.
Cost vs. access: distributing products through multiple channels improves access but increases complexity and costs. Centralized delivery reduces cost but may limit equitable access; a balance must be struck.
Service levels vs. quality: expedited deliveries or alternative transportation methods must not compromise regulatory compliance or product safety.
In-house vs. outsourced services: managing and executing operations internally offers greater control but may lack efficiency. Outsourcing to private sector service providers can reduce costs and improve performance but requires effective procurement and oversight.
Branded vs. generic products: while product quality is non-negotiable, decisions can be made around which health products (branded vs. generic) to include on the essential medicines list; ensuring affordability without compromising product safety and efficacy.
Cost vs. price: driving prices too low can create fragile markets, compromise product or service quality, and deter supplier participation. Sustainable pricing ensures continuity, innovation, and a healthy supplier ecosystem.
Example: Causal Foundry’s support to Rwanda’s Social Security Board (RSSB)
In Rwanda, the RSSB is partnering with Causal Foundry to launch a project aiming to design and rollout a health financing reform across 1,000+ points-of-care – supported by the Gates Foundation. They aim to integrate health, logistics, and financial data to create a unified analytics platform that links reimbursement to performance, product availability, and service quality. This can help the RSSB uncover inefficiencies, reduce waste, and optimize procurement, distribution, and healthcare provision. The platform aims to support data-driven resource allocation decisions, ensuring that supply chain spending aligns with actual needs and delivers greater value for money across the health system.
Rather than focusing solely on cost reduction, resource optimization is about making strategic allocation decisions to ensure the network remains agile, high-performing, and capable of upholding quality, compliance, and long-term sustainability. When paired with sound public financial management and service coverage or reimbursement arrangements, a clear understanding of cost-to-serve and the ability to holistically manage resources, empowers governments to build and sustain efficient, health supply networks that deliver the best value for money.
End-to-end visibility & decision intelligence
Achieving end-to-end visibility requires connecting the digital backbones across network actors and all levels of the network, often referred to as interoperability. Platforms (e.g., eLMIS, OMS, WMS, TMS) manage point-of-care, inventory, warehousing, and transportation activities, while hardware such as barcode and RFID scanners track product movement, and Internet of Things (IoT) sensors monitor conditions such as temperature and storage compliance. These technologies continuously generate real-time data across the network.
Example: Field Intelligence
Field Intelligence, based in Nigeria, Kenya and Germany, is a supply chain management company that delivers both technology and services to help health providers and governments simplify operations. In Nigeria and Kenya, Field supports over 1,000 pharmacies, clinics, and hospitals in managing inventory, procurement, and financing through their digital platform. This service model enables faster adoption and reduces the risks of procuring and maintaining standalone technology. Field’s platform has helped reduce stockouts, minimize expiries, and increase product availability at the point-of-care.
When data is connected across all levels of the health supply network, and triangulated with health management information system (HMIS) data, it forms a reliable representation of the reality on the ground that unlocks multiple benefits, including:
Interoperability improves data availability and accuracy: seamless data exchange between technologies and actors across the network enables a whole-of-market view by aggregating transactions. This supports more effective demand forecasting, cost-to-serve analytics, and better (investment) decisionmaking.
End-to-end visibility improves service delivery: real-time tracking of product locations, movement, and status eliminates blind spots in planning, procurement, inventory management, and logistics. This enhances transparency across actors and helps reduce stockouts, product losses, and delays.
Traceability strengthens regulatory oversight and quality assurance: monitoring product movements and batch-level data across the network enables early detection of quality issues, supports compliance with Good Storage and Distribution Practices (GSDP), and enhances regulatory control. It also facilitates timely recalls and redistributions, and builds client and end-user trust through consistent verification of product authenticity, condition, and integrity.
Example: Veratrak’s pharma supply chain platform
Veratrak, a UK-based tech company, offers a single, unified supply chain management platform, and is active in high-income countries. A cloud-based solution, it connects ERP systems across pharmaceutical, logistics and contract manufacturing organizations; offering a single source of truth for logistics services. It establishes end-to-end visibility, and helps facilitate collaboration, enhance agility, and capture operational cost-savings opportunities.
Analytics is essential to realizing the full potential of digital technologies by processing the data into actionable insights. As health supply networks mature, they move from reactive problem-solving (‘what happened?’) to prescriptive (‘what should we do about it?’) or even cognitive analytics (‘what don’t I know?’). These capabilities enable networks to continuously optimize performance, run dynamic forecasts, simulate scenarios, and make real-time adjustments based on anticipated risks or disruptions.
Data analytics maturity
Descriptive What happened?
Diagnostic
Predictive
This level of decision intelligence will unlock significant network benefits, including:
Improved client services
Increased product availability
Efficient and reliable order fulfillment
Early identification and timely response to disruptions
Reduction of waste and inefficiencies
Process automation to minimize errors and accelerate process execution
Use of generative AI to e.g., identify demand patterns, automate processes, perform root cause analysis, and enhance predictive decision-making
While it may not eliminate every instance of missed shipments or expired products – particularly for lowturnover strategic stockpiles – end-to-end visibility can significantly reduce their occurrence.
Digital innovation will make health supply networks more transparent, agile, and collaborative. It enables faster, smarter decisions; helping network actors and others to identify root causes of non-performance, drive alignment on joint improvement efforts, and optimize resources to secure best value for money.
Agility is the strategic ability that enables health supply networks to proactively adjust operations, policies, and strategies in response to shifts in demand, funding levels and flows, or external shocks, ensuring network continuity without significant cost increases. Agility strengthens resilience, as networks that can pivot and respond swiftly are inherently better equipped to adapt and withstand disruptions.
Agility enables networks to rapidly realign processes, resources, and governance structures. There are four key elements to create network agility:
End-to-end, real-time visibility: Digitally enabled networks enhance coordination and real-time decisionmaking across the network. Digital capabilities improve demand tracking, inventory visibility, order fulfillment, and risk monitoring, enabling early identification of potential disruptions and rapid corrective actions; Integrated network planning: Forecasting demand is essential for ensuring that the network can consistently meet product demand and optimize the product-channel mix. Accurate forecasting relies on continuous analysis of demand patterns, seasonality (e.g., climate drivers such as rainfall and temperature that increase malaria transmission), and potential service disruptions. Integrated network planning (cross-health program) aligns forecasted demand with available health funding, informs optimal inventory deployment, and ensures proper utilization of storage and distribution capacities. By leveraging predictive analytics, networks can assess and anticipate network risks, and adjust operations as needed, e.g., by changing procurement schedules and rebalancing inventory levels based on real-time demand shifts;
Strategic inventory positioning: Maintaining optimized safety stocks and deploying inventory based on dynamic demand patterns. Deploying the right inventory at the right network nodes, such as regional warehouses, ensures fast service delivery, minimizes waste, and reduces costs. Pre-positioning critical health products strengthens preparedness and the ability to quickly respond to disruptions or absorb shocks from manufacturing delays or (international) transport disruptions. Increasingly, VMI models can offer more flexible, data-driven allocation and reduce operational burden on public distribution channels; Supplier diversification: Preventing over-reliance on single suppliers, providers or distribution channels by embedding ‘fail safes’ into the network. Strategies include contracting multiple manufacturers, precontracting contingency suppliers and logistics service providers, and integrating them into daily operations to ensure they can scale up or step in seamlessly during disruptions; without the extra work needed to onboard them.
Network agility
Example: Health emergency and disaster preparedness
Emergency preparedness is a fundamental reason to build agility into health supply networks. Networks must be able to detect, anticipate, and rapidly respond to shocks; from disease outbreaks and natural disasters to geopolitical crises or funding disruptions. According to the WHO, preparedness involves developing the capacities needed to effectively manage emergencies, such as supply chain risk analysis, institutional coordination, and logistics readiness. Simulation exercises and contingency planning across the network actors and partners are equally important; ensuring networks can respond rapidly while minimizing disruption to service delivery. Preparedness mechanisms strengthen the ability to pivot in real-time and recover quickly, keeping health product delivery uninterrupted, even in crisis situations.
Ultimately, agility is the network’s capacity to realign structures, stakeholders and operations to absorb shocks, remain client-centric, and ensure delivery continuity during shocks. Agility alone is not enough. It must be balanced with resilience: the ability to withstand and recover from disruptions. This is achieved through robust monitoring and control mechanisms, ensuring that established processes are followed diligently to safeguard the integrity of the network as a whole. Scenario planning is a critical element, involving the development of contingency plans for various potential risks and disruptions, such as natural disasters, supplier failures, regulatory changes, or funding shifts, ensuring preparedness and rapid response capabilities.
By integrating agility and resilience, health supply networks can adapt to changing circumstances, maintaining resources without incurring substantial additional costs, ensuring continued health product delivery. Network agility is crucial for maintaining service levels, even in the face of unforeseen challenges.
Four functional domains that drive network performance
While this paper emphasizes five defining characteristics that ensure health supply networks are sustainable, integrated, intelligent, and centered on client and healthcare service delivery, the foundation of any high-performing network lies in its operations. These are the four functional domains that carry out day-to-day operations: procurement, supply chain planning, logistics, and reverse logistics. These are operated by what was referenced and described as “network actors”: the organizations with people, assets and technologies they deploy. In a high-performing network, the actors are interconnected across sectors –with seamless product, data and financial flows – all focused on delivering performance.
This paper does not address the role of manufacturing; though it plays a critical role in ensuring timely, quality-assured products. While international manufacturers dominate today, the dynamic is shifting to a more diversified base of manufacturers. Efforts such as the African Vaccine Manufacturing Accelerator (AVMA) demonstrate how regional manufacturing capacity can help ensure long-term sustainability and supply security. New models, particularly for medical equipment, are also gaining traction, in which manufacturers handle not only production but also resupply and maintenance during its operational lifecycle, and end-of-life management; unlocking new opportunities for integration, efficiency and innovation.
Planning
Demand planning
Anticipating and shaping demand using data-driven insights from historical trends, customer behavior, and external factors
Inventory & supply planning
Planning inventory levels, inbound shipments, and future supply flows to balance service levels, client satisfaction, capacity, and working capital
Transport planning
Planning and scheduling transport capacity, routes, and resources across linehaul and last-mile delivery to ensure cost-efficient movement of products
Integrated network planning
Aligning financial objectives with short- and long-term operational plans to manage constrained resources, balance program-specific and strategic health goals, and inform budget formulation
Network design
Defining the optimal service delivery footprint and supply network to balance access, availability, and cost-to-serve
Procurement
Strategic sourcing
Sourcing products and services based on client needs and health priorities, ensuring best value for money through supplier selection based on total landed cost and contract management
Procurement
Procuring products and services, executing procureto-pay operations, and process transactions in line with funding flows and compliance requirements
Supplier management
Managing supplier and provider relationships, with proactive performance and risk management to protect value for money and financial sustainability
SC cost management
Monitoring and managing endto-end supply chain costs, using spend analytics and market insights to inform planning, sourcing, and network optimization
Deliver
Order fulfillment
Executing the order-todelivery process by confirming, aggregating, and fulfilling orders to ensure timely, cost-efficient deliveries, and high service levels
Warehousing
Receiving, storing, picking, and packing products for distribution by balancing people, technology, and physical assets to improve accuracy, expedite order processing, and reduce costs
Transportation
Managing and executing transportation, using advanced technologies to secure chain of custody and product integrity, improve costefficiency, and reduce delivery times
Return
Returns processing
Removing expired, damaged, and recalled products from service points or warehouses and moving them safely through the network
Redistribution
Reallocating short-dated or surplus stock to other service points or warehouses in need, reducing product loss and improve availability at minimal cost
Waste management
Safely disposing of unusable or expired products through secure processes that protect people, communities, and the environment
While all domains are essential, funding and support have not been evenly distributed across them. Countries, GHIs and financing institutions have traditionally concentrated resources on building public capabilities in the Deliver domain to ensure product delivery. Less attention and investment have gone into the other domains, particularly capabilities like integrated network planning, SC cost management, and supplier management. These functions are critical to efficiency, accountability, and sustainability, yet often remain underdeveloped because they sit outside the traditional remit of procurement or donor-funded distribution.
This imbalance in funding priorities has created systems that move products but lack the visibility, financial insight, and coordination to do so reliably and efficiently. Addressing these gaps requires shifting investment toward the “intelligence and integration” capabilities that make networks high-performing and sustainable.
Together, these domains and capabilities define the operational backbone of future health supply networks. The next chapter sets out the concrete steps that countries, GHIs, and others can take to turn this vision into action.
Enablers: financing, policy & regulations, governance, processes, technology & talent
From vision to action: what to do next?
The vision for sustainable health supply networks can only be achieved by bold transformative action. Transformation cannot wait. Funding is uncertain, demand is rising, innovations such as Lenacapvir require carefully planned introductions, and current health procurement and supply chains are under growing strain. This chapter is not just about infrastructure, digital platforms, or capacity-building programs. It’s about reimagining how networks are designed, financed, regulated and operated.
Each government must begin with a clear-eyed assessment of its unique context, including its ambitions, public sector capabilities, institutional and supply chain maturity, current cost and performance, and the resources available. There is no one-size-fits-all solution that defines the path forward. But there is a shared urgency to act. We must build smarter; delivering more value with fewer resources while staying focused on the future we seek to create.
It's important to recognize that transformation is not about starting from scratch; it’s about reimagining what’s possible. By thinking big, countries and their partners can set a clear transformation roadmap; identifying which gaps to address first through targeted early actions, which changes require structural reform, and where early investments will deliver the greatest impact. Transformation is not a distant aspiration. It is an urgent, practical imperative, and with a shared vision and commitment, it is within reach.
Country transformation planning
Turning vision into action starts with transformational planning: a strategic approach to achieve large-scale change in how health supply networks are designed, financed, regulated, and operated. A credible transformation plan sets out clear objectives, describes the desired future network, identifies priority actions across the four functional domains and enablers, and specifies resourcing needs with milestones sequenced in a way that they can be domestically and/or externally funded. These plans set clear accountability through defined roles, transparent progress reporting, and continuous stakeholder engagement.
Transformation plans should be an integral part of countries’ external funding requests. They help GHIs, financing institutions, and partners align their funding and assistance with national priorities, support underresourced capabilities, and incentivize greater domestic resource allocation. GHIs and financing institutions can also leverage their portfolio approach to standardize transformational practices across countries, accelerate cross-country learning, scale proven solutions, and strengthen global public goods that support countries in their transformation journey.
Executing transformation plans requires discipline: establishing clear communication and decision-making forums, diligently tracking financial and non-financial indicators, regularly reviewing progress against milestones, and fostering a culture of learning and change.
The next section provides an overview of improvement opportunities across functional domains and capabilities, offering a practical starting point for countries and their partners to shape their transformation plan and journey.
Functional domain improvement opportunities
Planning
Integrated supply chain planning across strategic, tactical, and operational levels by aligning stakeholders to ensure the right products and services reach clients efficiently.
Demand planning
Anticipating and shaping demand using data-driven insights from historical trends, customer behavior, and external factors
Inventory & supply planning
Planning inventory levels, inbound shipments, and future supply flows to balance service levels, client satisfaction, capacity, and working capital
Capture point-of-sale data to get an accurate view of actual demand Triangulate LMIS (consumption) and HMIS (service delivery) data to improve forecast accuracy, reduce error, and align supply with actual utilization Institutionalize multi-stakeholder forecasting reviews across programs Use digital technologies to improve forecasting techniques, allows demand segmentation, provides visualization for consensus building
Explore use of demand sensing to use real-time data to provide a nearimmediate view of market demand Explore use of AI to improve demand forecasting
Use demand and cost-to-serve data to define tailored, client-centric inventory policies by product (category) or distribution channel Implement demand-driven replenishment algorithms to optimize inventory levels across the network, considering investments and operating cost across warehousing and transportation assets Set expectations for 'velocity' of inventory through the supply chain to minimize holding costs and a basis for supply planning and procurement
Improve alignment between procurement and inbound supply schedules (cross-program)
Establish material and capacity (handling and storage) planning to determine optimal overall supply plan
Transport planning
Planning and scheduling transport capacity, routes, and resources across linehaul and last-mile delivery to ensure cost-efficient movement of products
Integrated network planning
Aligning financial objectives with short and long term operational plans to manage constrained resources, balance program specific and strategic health goals, and inform budget formulation
Organize and optimize transport operations in line with demand, inventory and supply plans and distribution channel requirements Identify consolidation opportunities such as optimal shipment frequency or less-than-truckload (LTL) to full truckload (FTL) consolidation
Use suitable transport management system (TMS) for route planning and optimization, manage freight costs and tracking
Establish an advanced, integrated planning function to facilitate strategic planning, prioritization and (financial) decision-making with relevant ministries, publicly financed coverage schemes, GHIs, and network actors (cross-program), ensuring coherence with financing arrangements for health service delivery
Use planning data to inform network design, distribution channel configuration, strategic sourcing, and resource optimization Invest in technologies to digitize transactions along the network to provide a whole-of-market view and as a basis for management and control Explore use of advanced digital technologies and generative AI for prescriptive or cognitive analytics to improve performance
Network design
Defining the optimal service delivery footprint and supply network to balance access, availability, and costto-serve
D efine optimal healthcare service delivery footprint aligned to demand and health financing flows, and align supply network design to it
Rationalize number, size and locations of warehouses across the network
Incorporate cost-to-serve and total landed cost into network design choices and when segmenting distribution channels
Align network design decisions with healthcare service delivery expansion or rationalization plans
To contribute to long-term sustainability, supply chain planning must evolve into an integrated, data-driven, and anticipatory function. It is the brain of the network. By embedding planning insights across the network’s strategic (typically looking 18+ months ahead), tactical (up to 18 months), and operational (realtime) levels and governance structures, countries can make continuous decisions to optimize network performance and resource allocation within prevailing fiscal constraints. Institutionalizing cross-program, integrated network planning [also referred to as sales & operations planning (S&OP) and integrated business planning (IBP)] and investing in digital platforms will unlock end-to-end visibility and facilitate intelligent decision-making. As planning capabilities mature, they enable proactive scenario modeling, anticipatory risk management, and dynamic resource optimization. In doing so, supply chain planning becomes the network’s orchestration engine; enhancing transparency, collaboration, efficiency, and resilience across the entire health supply network.
Procurement
Strategic sourcing and procurement of quality health products and services to ensure best price, volume, and contractual terms.
Strategic sourcing
Sourcing products and services based on client needs and health priorities, ensuring best value for money through supplier selection based on total landed cost and contract management
Procurement
Procuring products and services, executing procure-to-pay operations, and process transactions in line with funding flows and compliance requirements
Establish category sourcing strategies, informed by demand and integrated network planning insights, and health financing considerations Use or expand use of (pooled) procurement marketplaces to achieve better and more transparent contracts, accessible to multiple actors and sectors
Establish long-term framework contracts Explore digital technologies for predictive sourcing to anticipate supply availability, pricing, and risk
Integrate procurement and PFM systems to enable transparent allocation of resources by commodity category and ensure liquidity for procurement
Streamline requisitioning based on real-time supply chain planning data
Improve availability of working capital for timely and efficient ordering Explore mechanisms where GHIs underwrite supplier risks or engage in risk co-sharing agreements
Use digital technologies and AI for process automation and ensure financial compliance
Supplier management
Managing supplier and provider relationships, with proactive performance and risk management to protect value for money and financial sustainability
SC cost management
Monitoring and managing end-toend supply chain costs, using spend analytics and market insights to inform planning, sourcing, and network optimization
Establish value-based, performance-driven contracts Explore digital technologies that combine internal and external data to better manage supplier relations, monitor performance, and proactively mitigate potential risks or disruptions
Enhance spend visibility and analytics for supplier and budget monitoring
Model and manage end-to-end supply chain costs Use total landed cost and cost-to-serve insights to inform decisions related to e.g., network design, distribution channel configuration, strategic sourcing, and resource optimization Link cost insights to health financings strategies
To contribute to long-term sustainability, procurement must evolve to become more strategic. By integrating planning insights into procurement decision-making, adopting long-term, performance-driven framework contracts, and leveraging digital technologies, procurement organizations and teams can shift their focus from routine processing to proactive value creation. This shift can accelerate products introduction [as demonstrated by the Global Fund, through its pooled procurement mechanism (PPM), in fast-tracking Dual AI insecticide-treated nets], improve product delivery, enable new service delivery models, and unlock innovation. In doing so, procurement becomes a lever for great network resilience, equity, and value for money.
Deliver
Management of product flows, including warehousing, transportation, and order fulfillment, to ensure reliable, timely, and secure product delivery.
Order fulfillment
Executing the order-to-delivery process by confirming, aggregating, and fulfilling orders to ensure timely, cost-efficient deliveries, and high service levels
Prioritize fulfillment based on distribution channel configuration, urgency and inventory availability Digitize order intake, receipt and processing with an order management system (OMS) or LMIS Track delivery performance metrics to improve service levels, costs and quality
Warehousing
Receiving, storing, picking, and packing products for distribution by balancing people, technology, and physical assets to improve accuracy, expedite order processing, and reduce costs
Determine network design and the optimal warehouse footprint and capacity required to accommodate future demand and service levels Establish visibility into actual warehousing costs Ensure pharma-grade warehousing; decide to refurbish existing, build new or outsource warehousing based on in-house capabilities and best value for money; use the global public good www.warehousing.health for detailed guidance Ensure integrated storage across products and requirements (e.g., cold chain)
Use warehouse management systems (WMS) and barcode/RFID scanners to digitize and automate tasks, operations and capacity optimization
Transportation
Managing and executing transportation, using advanced technologies to secure chain of custody and product integrity, improve cost-efficiency, and reduce delivery times
Use suitable transport management system (TMS) for route planning and optimization, manage freight costs and tracking Use electronic proofs of delivery (ePOD) for visibility and compliance Ensure pharma and regulatory compliant transportation Decide to upgrade, acquire or outsource transportation based on inhouse capabilities and best value for money; use the global public goods www.logisticsoutsourcing.health for detailed outsourcing guidance and www.logisticsmarketplace.health to discover private sector logistics service providers
To contribute to long-term sustainability, logistics must evolve into a dynamic, data-driven operation that ensures client-centricity through continuous optimization of order fulfillment. This means leveraging inventory visibility, service performance insights, and flexible costing logic to balance speed, reliability, and cost-efficiency. Logistics operations must be integrated – regardless of which products are being stored or shipped – and aligned with the overall network design and distribution channel configuration. Governments do not need to own and operate every warehouse or transport route, but they must ensure that logistics meet the required contractual standards and performance levels. By making logistics performance and actual costs visible, and by designing networks that can meet future demand and service expectations, governments can make strategic decisions about how to best operate the network; whether it is via public service providers (using e.g., central medical stores) and/or private service providers (using e.g., wholesalers, distributors and logistics service providers). When managed well, logistics becomes a powerful lever for network transformation, and delivering high client satisfaction, cost-efficient distribution, and climate-conscious operations.
Return
Management of product returns, redistributions, recalls, and waste management to enhance control, safety, and responsible handling of unused, expired, or recalled products.
Returns processing
Removing expired, damaged, and recalled products from service points or warehouses and moving them safely through the network
Standardize return protocols and forms across sectors Use reverse logistics modules within eLMIS or warehouse systems to manage returns tracking Ensure returns logistics is incorporated in the network design by determining e.g., return centers for consolidated handling Coordinate recalls using digital traceability tools for faster response
Product redistributions
Reallocating short-dated or surplus stock to other service points or warehouses in need, reducing product loss and improve availability at minimal cost
Implement redistribution policies that define thresholds for redistribution and expiration Use real-time inventory data and supply planning tools to enable proactive inventory rebalancing
Waste management
Safely disposing of unusable or expired products through secure processes that protect people, communities, and the environment
Establish clear protocols and funding for environmentally responsible disposal (e.g., incineration, reverse supply chain to manufacturer) Collaborate with environmental and waste authorities for joint management to achieve economies of scale Use digital tools to log, authorize and track disposal process
To contribute to long-term sustainability, reverse logistics must be embedded as a core function. Ensuring lab samples can be effectively transported, and products can be safely returned, redistributed, recalled, or disposed of protects clients, improves accountability, and minimizes waste. It also reduces unnecessary procurement, improves inventory turnover and strengthens trust in the overall health system. By defining clear roles, financial policies, and using digital solutions to manage and monitor reverse flows, countries close the loop; creating a safer, more efficient, and climate-conscious health supply network.
Reimagining health supply network operating models
Delivering on the promise of sustainable health supply networks requires more than infrastructure, digital platforms, or capacity-building programs. It demands a shift in how these networks are designed, financed, regulated, operated and staffed. There is no one-size-fits-all solution to guide this transformation. Instead, each country must begin with a clear-eyed assessment of a country’s unique context, including its’ national health strategy, ambition, public sector capabilities, institutional and supply chain maturity, and the availability of infrastructure, technology, funding, and talent.
The centralization or de-centralization of funding and decision-making are core components of a health supply network strategy. Decisions may be optimized differently to other healthcare service delivery activities. For example, there are economies of scale to centralized procurement of certain products even where the healthcare service delivery approach may be subject to de-centralized decision-making.
For each functional domain – planning, procurement, deliver, and return – and its overarching management, orchestration and regulation units, governments must determine the most effective operating model: whether to manage operations fully in-house, outsource to private sector service providers, adopt a hybrid model, or decide to privatize. These decisions should be informed not only by today’s capacity, but by where a government wants to go tomorrow.
Operating the health supply network
In-house
All capabilities executed internally using public infastructure, assets, technology and workforce
+ High control
+ Internal capacity
+ Easier to align with PFM procedures
- Often underfunded and less efficient
- Hard to scale or modernize
- Vulnerable to budget execution delays
Hybrid
Shared responsibility: some capabilities executed internally, others outsourced to service providers
+ Mix of control and expertise
+ Flexible and adaptable by domain
- Requires strong coordination
- Risk of fragmentation
- Complex coordination funding flows
Outsourced
Most capabilities executed by one or more service providers, under government oversight
+ Access to specialized providers + Scales quickly, flexible capacity
- Less direct control, lock-in effect
- Requires oversight and coordination
- Doesn’t align to cost recovery models
Privatized
Market-driven model: wholesalers and distributors purchase and deliver health products
+ Market-driven innovation and efficiency
+ Reduced public sector burden
+ Integrates with public health insurance or subsidy schemes
- Regulatory and oversight requirements
- Potential access and equity gaps
The four functional domains form the operational backbone of a health supply network. When managed, orchestrated and regulated effectively and combined with the five defining characteristics outlined in this paper – stewardship & orchestration, client-centric network design, resource optimization, end-to-end visibility & decision intelligence, and network agility – they become powerful levers for transformation.
Together, these domains and characteristics enable the transformation from fragmented health procurement and supply chains to sustainable health supply networks; centered on clients and healthcare service delivery, and capable of delivering quality health products, wherever and however they need to be shipped.
Actions for key stakeholders
Transformation hinges on bold decisions and new approaches from all stakeholders involved in the health supply network. The functional domains come with concrete improvement opportunities that different actors must help deliver. These improvement areas come with specific implications for each stakeholder group; identifying practical steps they can begin taking now to drive progress.
Governments1
National Pharmaceutical Services Units NPSUs
Conduct a clear-eyed (maturity) assessment to determine ambitions Reimagine how health supply networks are financed, designed, regulated, operated, and staffed
Mobilize domestic resources (e.g., out-of-pocket payments, pre-paid insurance schemes, and government budgets) Enable multisectoral collaboration, especially with Ministries of Finance Define needed regulatory reforms and strengthen oversight mechanisms
Expand mandates to include four core functions: pharmaceutical policy and governance, medicine regulation, pharmacy practice regulation and procurement and supply chain management
Integrate governance of programs and sectors Develop health supply network strategy and design based on a 10+ year horizon Define optimal operating model(s) for the functional domains planning, procurement, logistics and reverse logistics Create national ‘orchestration’ capabilities, such as integrated network planning, network design and SC cost management, with time-bound performance targets Expand partnerships, leveraging 3PL and 4PL service providers, pharmaceutical wholesalers and distributors, and other innovators
Define resource needs to sustainably fund the NPSU and network to inform decision-making; nationally and with external partners
Rethink how GHIs can fund and finance health supply networks and distribution channels in an integrated manner, with a clear pathway for transitioning countries out of external support
Ensure coordinated, coherent support to health supply networks and health financing initiatives and support countries bringing them together Explore joint-funding and -financing opportunities with financing institutions to leverage complementary strengths of each organization and the financing instruments at their disposal
Support creating national ‘orchestration’ capabilities, such as integrated network planning, network design and SC cost management, with time-bound performance targets
Adopt performance-driven contracts, tied to clear outcomes (such as country integrated planning cycles) and service-level agreements, and require country transparency for in-country logistics performance and cost
Explore allowing eligible private healthcare service providers to access pooled procurement mechanisms to drive product uptake in whole-of-market Guide pooled procurement decision-making based on total landed cost to maximize value for money
Harmonize and deploy technical assistance (TA) from service providers that can support governments adopt private sector best practices, using performance-driven contracts
Global Health Institutions
GHIs
Financing institutions
Service providers (private and public sector)
Strengthen supply chain financing mechanisms, such as revolving funds, working capital financing, supplier credit, and risk-sharing instruments
Establish joint-funding and -financing opportunities with GHIs to leverage complementary strengths of each organization and the financing instruments at the disposal
Support domestic resource mobilization strategies earmarked for procurement and supply chain
Provide monthly or quarterly transparency into logistics performance and cost at e.g., lane, warehouse, channel level to inform decision-making Work with governments and GHIs to co-develop longer-term marketbased solutions, including risk sharing models that reduce donor funding dependency
Offer educational resources to help governments and GHIs better understand business models and added value
Define resource needs to sustainably fund operations to inform decisionmaking
Additional work to guide the transformation journey
This paper does not claim to answer every question, nor should it. It outlines a future vision and presents a starting point for transformational change. Additional work is needed to help guide the transformation journey. Proposed ares for further exploration include:
Integration opportunities: providing actionable opportunities to align GHIs, health programs, and product distribution to increase cost-efficiency;
Strategic transformation pathways: providing pragmatic pathways – rounded in country case studies and best practice examples – to guide how countries can assess their context, sequence reforms, and implement long-term transformation;
Sustainable SC financing: identifying innovative approaches that ensure coherence between health financing, PFM, and supply chain financing mechanisms, while achieving sustainable access to quality health products, including affordability, accessibility and equity considerations; Evolving global health: explores how GHIs and financing institutions can evolve their roles, instruments, and funding approaches to enable sustainable, country-led transformation.
Together, these papers will provide governments, GHIs, and others with actionable strategies to drive progress, coordinate investments, and deliver long-term results. These papers will form pragmatic guidance to build sustainable health supply networks.
Call to action
The path toward sustainable, integrated, and intelligent health supply networks is clear. The time to act is now. Across this paper, we’ve outlined the future vision, the defining characteristics of high-performing networks, and the operational domains that must be transformed. We’ve described the key levers, actors, and opportunities. What comes next depends on our collective resolve.
We are calling on all stakeholders to act; not tomorrow, but today! Transformation requires coordinated action, aligned investments, and shared accountability. We encourage:
Drive the change: define ambitions, reimagine financing modalities, and modernize regulations
Design the future: determine the network design, define the operating model, and chart the transformation roadmap
Reimagine your role: support country transformations, and leverage your portfolio approach to guide and accelerate country transformations
Financing
Service
Fuel what matters: invest in building integrated, sustainable and resilient networks, and empower country ownership and accountability
Deliver more than services: build trust, drive efficiencies, innovate, and show us the way forward
We also invite civil society organizations, innovators, academic institutions, and regional platforms to join us in shaping this transformation; ensuring it is inclusive, evidence-informed, and grounded in local contexts.
There will never be a perfect time for the transformation. But there are smart places to start. By aligning ambition with pragmatism – thinking big, starting where it matters most, and scaling what works – countries and their partners can make measurable progress.
Will you step up and drive the change, to build better together?
1PL
2PL
3PL
4PL
Acronyms and abbreviations
First-Party Logistics provider
Second-Party Logistics provider
Third-Party Logistics provider
Fourth-Party Logistics provider
Artificial Intelligence
Antiretroviral Therapy
Antiretroviral
African Vaccine Manufacturing Accelator
Central Medical Store
Civil Society Organization
Development Assistance for Health Development Finance Institution
Electronic Proof of Delivery Enterprise Resource Planning
FMCG
Gavi
GSDP
GFATM
GFF
GHG
GHI
IBP
ITN
IoT
LMIC
Fast-Moving Consumer Goods industry Gavi, the Vaccine Alliance Good Storage and Distribution Practices
The Global Fund to fight AIDS, Tuberculosis and Malaria Global Financing Facility Greenhouse gas Global Health Institution Integrated Business Planning Insecticide-Treated Nets Internet of Things Low- and Middle-Income Country
Electronic Logistics Management Information System Non-communicable diseases National Pharmaceutical Services Units National Regulatory Authority Nigeria Supply Chain Integration Project Neglected Tropical Diseases Official Development Assistance Order Management System Out of pocket Over the counter Public financial management Personal Protective Equipment Post-Exposure Prophylaxis Pre-Exposure Prophylaxis Radio-Frequency Identification Rwanda Social Security Board Sales and Operations Planning Supply Chain Leaders Forum Service Level Agreement Technical Assistance Transportation Management System Vendor-Managed Inventory World Bank Group World Health Organization Warehouse Management System