Transforming health procurement & supply chains
Transforming health procurement & supply chains
A vision for integrated, sustainable health supply networks
July 2025
Authors
This position paper was developed by the Supply Chain Funders’ Forum: a group of key supply chain representatives from Global Health Institutions (GHIs) committed to driving health supply chain collaboration and alignment across organizations and health programs.
Ann Allen
Clément Jaidzeka
Karan Sagar
Marasi Mwencha
Thomas Edward Llewellyn
Lead writer: Lantos Pin
Gates Foundation
World Bank Group
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
Core functional domains that drive network performance
From vision to action: enabling transformation Implications for key stakeholders
Guiding 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, and other health products (from here on referred to as ‘health products’ or ‘products’). Many low- and middle-income countries (LMICs) have made meaningful progress in delivering health products to the last mile, yet opportunities remain to reduce fragmentation, improve efficiency, and strengthen resilience through better coordination and integration. Many LMICs are reliant on donor funding for product procurement, logistics, and healthcare service delivery. This reliance has created vulnerabilities in service continuity, accountability, and long-term sustainability.
Moreover, current systems were not designed nor built for today’s complexity, let alone tomorrow’s demands. Demographic shifts, rising burdens of non-communicable diseases, economic and climate shocks, and geopolitical instability are exposing the limitations of current health procurement and supply chain systems. Countries face structural and systemic challenges: siloed health programs, limited interoperability, unreliable and fragmented financing, and insufficient oversight. Public, private and not-forprofit sectors operate largely in parallel, rather than in a coordinated, whole-of-market approach that leverages their respective strengths. This leads to inefficiencies, duplicative infrastructure, and missed opportunities to meet population health needs effectively and equitably.
Without bold change, health systems will not fulfill their full potential (and obligation) to ensure equitable and reliable access to quality health products, and, in turn, clould place millions of people at risk.
The need for transformation
From where we stand today, a fundamentally different approach is required. Embedding a whole-of-market approach means aligning all actors – governments, Global Health Institutions (GHIs), financing institutions, public and private providers, and others – behind a shared vision. It means designing health supply networks which reflect how and where care is delivered to and sought by clients within the health system, leveraging diverse capabilities to ensure reliable access to quality health products for all.
With urgency comes opportunity. In the face of declining development assistance, we 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 funded and operated, but in their ability to consistently deliver results, adapt to change, 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
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
End-to-end visibility & decision intelligence
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
Logistics
Four functional domains driving sustainable network performance
Reverse logistics Management of
Management of product
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 further exploration. 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 – procurement, planning, logistics, and reverse logistics – 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:
Governments
NPSUs
GHIs
Financing institutions
Service providers
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: finance smarter, fund for efficiency, integration and sustainability, and support country stewardship
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 supply chains play a crucial role in ensuring equitable access to medicines, vaccines, diagnostics, and other health products. Many LMICs have made significant progress in delivering health products to the last mile, but opportunities remain to reduce fragmentation, improve efficiency, and strengthen resilience through better coordination and integration. As many LMICs are reliant on donor funding for health product procurement, logistics, and healthcare service delivery, this reliance has created vulnerabilities in service continuity, accountability, and long-term sustainability.
While donor-funded, public health supply chains have become more integrated than they were 10 to 15 years ago, fragmentation still persists across public programs, certain tiers in the supply chain, and geographies. Over the past few decades, disease-specific health programs and associated funding models (e.g., HIV, malaria, tuberculosis, immunization) have created procurement and supply chain systems that operate in parallel, both within and across countries, rather than as integrated networks which can serve all health programs (a product agnostic approach). While these approaches have helped achieve remarkable progress, such as scaling up antiretroviral therapy (ART) for HIV, expanding malaria test-and-treat programs, or tuberculosis surveillance, diagnosis and treatment, they face structural limitations and persistent inefficiencies. They are ill-suited 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). Moreover, as global fiscal dynamics shift and funding constraints grow – due to official development assistance (ODA) and development assistance for health (DAH) decreases by key donor countries such as the U.S., UK, Sweden and the Netherlands, as well as trade disruptions, conflicts, and debt distress – existing systems face immediate disruptions. The need to transform current systems is imperative to ensuring that governments can lead, finance, and sustain effective health supply chains and healthcare service delivery.
Current state of procurement & supply chain systems
In many LMICs, procurement and supply chain systems remain fragmented. Public, private and not-for-profit sectors operate largely in parallel, rather than in a coordinated, whole-of-market approach which leverages their respective strengths. This leads to inefficiencies, duplicative infrastructure, and missed opportunities to meet population health needs effectively and equitably.
Key challenges can be observed across different sectors, as well as underlying, broader health system issues, including and not limited to
Pu lic sector challenges: Public health supply chains face multiple structural and operational issues siloed programs causing fragmentation outdated and inefficient systems and tools unavailable or unreliable data substandard infrastructure and overstretched personnel. Inconsistent performance management and structured oversight mechanisms undermine reliability and responsiveness. A core weakness is the absence of effective governance structures with the skills, authority, and resources to manage the end-to-end supply chain. Critically, the public sector is underfunded, and many governments (and some donors) consistently struggle to pay suppliers on time, further destabilizing performance and eroding trust Private sector challenges: While generally more agile, private actors face challenges scaling to meet broader public health needs. Limited access to affordable capital – often coupled with delayed payments from the public sector – hinders operational efficiency, innovation and expansion. High distribution costs discourage rural outreach. Coordination is hampered by data gaps, and regulatory weaknesses allow substandard or counterfeit products to circulate
Underlying, systemic challenges: Weak governance, limited oversight, and insufficient enabling policy environments prevent effective collaboration across sectors. Health programs often operate in silos, duplicating efforts, and straining already limited resources. There is chronic underfunding and a lack of coherence between supply chain financing mechanisms as well as the planning and financing for health services. The absence and use of cost-to-serve models to results in low financial transparency into actual operating costs, and weak performance management limit long-term sustainability. Essentially, trust issues and fundamentally different ways of operating between the public and private sectors, block meaningful collaboration and shared accountability.
Moving toward a whole-of-market approach – built on aligned goals, shared data, and mutual trust – is essential to building high-performing health supply chains that can consistently deliver the right products, to the right place, at the right time.
Need for transformative change
With the right investments, governance, structures, partnerships and systems, high-performing health supply networks can become a reality. This transformation is not about reinventing the wheel. It is about reflecting progress, such as already proven in the fast-moving consumer goods (FMCG) sector, which successfully manages complex, multi-channel distribution networks. These networks are well-coordinated, responsive to demand, powered by data, and optimized for reach. They offer proven practices that the public health sector can learn from, adapt and scale.
Public health supply chains face growing pressure from inefficiencies, substandard infrastructure, and increasingly constrained resources. ecent funding disruptions are placing additional strain on already fragile health (financing) systems and public health supply chains.
Without transformation:
Countries will remain dependent on external funding and supply chain expertise, thus limiting local autonomy and delaying long-term sustainability
Millions will continue to face barriers to accessing quality health products, deepening healthcare inequities; Supply chains will remain fragmented, fragile and inflexible, unable to withstand shocks such as pandemics, conflicts, or climate-induced disasters.
Failure to act will erode hard-won progress, deepen health inequities, and increase reliance on emergency, humanitarian responses.
This demands a fundamentally different approach. Embedding a whole-of-market approach requires a transformational shift that unites governments, network actors (the organizations in the public, private and notfor-profit sectors that operate in the supply chain), GHIs and other stakeholders under a shared, forward-looking vision. We must leverage our complementary strengths to build sustainable, coordinated procurement and supply chain systems, 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.
With urgency comes opportunity! In the face of declining ODA and DAH funding, we must build better; daring to step beyond legacy approaches and investing today in the solutions, partnerships, and technologies that are needed in the future.
Future vision
To bring the whole-of-market approach to life, countries must reimagine how their health supply chains are structured, financed, operated, governed, and staffed. This means shifting from siloed health programs and parallel-operated supply chains toward coordinated national networks that align actors across the public, private, and not-for-profit sectors. Establishing symbiotic relationships between the 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 every client – whether a point-of-care, individual or the general public – has 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 core functional domains that drive network performance. Examples and suggestions illustrate how the characteristics can create value.
Sustainable health supply networks
As traditional 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 networ s 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 networ s 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
He lth: aligning networ 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;
Soci l: ensuring acceptability, accessibility, availability, and affordability for all population segments – especially marginalized or vulnerable groups – while embedding client-centered principles and inclusive accountability mechanisms;
Fin nci l: securing predictable funding within domestic health budgets for both product and services procurement and supply chain operations to coordinate and oversee networ s, sustain operations, invest in (infrastructure) improvements, and finance the transformation;
Politic l: ensuring strong government leadership and stewardship through aligned policies, regulations, and oversight mechanisms that enable sta eholder coordination, accountability, and long-term ownership; Institution l: developing well-governed and resourced entities – across public, private and civil society – to lead, monitor, and manage the networ , and support integrated planning, optimization, and innovation across the networ ;
Environment l: embedding climate-conscious practices such as health waste management, route optimization and greenhouse gas (GHG) emission reduction to protect the people across the networ and the environment.
Sustainable health supply networ s 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 networ s depend on four functional domains that wor 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
End-to-end visibility & decision intelligence
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
Strategic sourcing & procurement of
Supply chain planning
Integrated supply chain planning across strategic, tactical and operational levels by aligning stakeholders to ensure the right products and services reach clients efficiently
Logistics
Management of product flows, including warehousing, transportation, and order fulfillment, to ensure reliable, timely, and secure product delivery
Four functional domains driving networksustainableperformance
Reverse logistics
Management of product returns, redistributions, recalls, and waste to enhance control, safety, and responsible handling of unused, expired, or recalled products
Enablers: financing, policy & regulations, governance, processes, technology & talent
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.
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.
Stewardship & orchestration
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 industry-standard 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
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 a professional 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 and across the spectrum of their 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. Digital tools are leveraged to understand, engage, and meet clients’ needs; 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: effec ive e work are de ig ed i c o e coordi a io wi h hea hcare ervice de ivery; e uri g ha di ribu io cha e ref ec rea dema d, ervice eed , a d equi y goa acro a ec or
Pub ic ho pi a , hea h faci i ie , a d u iformed ervice faci i ie
Commu i y-ba ed hea h program
Health Service Delivery
Health Supply Network
Pub ic Sec or
Ma ufac urer
Diag o ic
Medica co umab e & hea h upp ie
Medica equipme
Pharmaceu ica
Priva e for-profi ec or
Priva e o -for-profi ec or
Schoo -ba ed hea h program
Emerge cy re po e program
Priva e ho pi a a d c i ic
Re ai pharmacie a d drug ore
Direc - o-pa ie de ivery ervice
Emp oyer a d occupa io a hea h program
Mi io ho pi a a d c i ic
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NGO-ru c i ic a d program
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 an 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 ata: 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’)
Pro uct an 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 an perfor ance: 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 GO leaders is working to define short-term, impactful integration opportunities. 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.
Making resource allocation actionable depends on 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 both direct and indirect cost and the cost drivers, 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. Most importantly, it should guide continuous efforts to improve cost-efficiency to reduce public 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
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 professional 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. Cos
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 (PFM) 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 o the health supply network, it orms a single source o truth that inlocks multiple bene its, including
Interoper bility improves d t v il bility nd ccur cy: seamless data exchange between technologies and actors across the network enables a whole-o -market view by aggregating transactions. This supports more e ective demand orecasting, cost-to-serve analytics, and better (investment) decisionmaking.
End-to-end visibility improves service delivery: real-time tracking o 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.
Tr ce bility strengthens regul tory oversight nd qu lity ssur nce: monitoring product movements and batch-level data across the network enables early detection o quality issues, supports compliance with Good Storage and Distribution Practices (GSDP), and enhances regulatory control. It also acilitates timely recalls and redistributions, and builds client and end-user trust through consistent veri ication o product authenticity, condition, and integrity.
Example: Veratrak’s pharma supply chain platform
Veratrak, a UK-based tech company, o ers a single, uni ied supply chain management plat orm, and is active in high-income countries. A cloud-based solution, it connects ERP systems across pharmaceutical, logistics and contract manu acturing organizations; o ering a single source o truth or logistics services. It establishes end-to-end visibility, and helps acilitate collaboration, enhance agility, and capture operational cost-savings opportunities.
Analytics is essential to realizing the ull potential o digital technologies by processing the data into actionable insights. As health supply networks mature, they move rom 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 per ormance, run dynamic orecasts, simulate scenarios, and make real-time adjustments based on anticipated risks or disruptions.
Data analytics maturity
Descriptive What happened?
Diagnostic Why did it happen?
Predictive What will happen?
This eve of decision inte igence wi un ock significant network benefits, inc uding
Improved c ient services
Increased product avai abi ity
Efficient and re iab e order fu fi ment
Ear y identification and time y response to disruptions
Reduction of waste and inefficiencies
Process automation to minimize errors and acce erate process execution
Use of generative AI to e.g., identify demand patterns, automate processes, perform root cause ana ysis, and enhance predictive decision-making
Whi e it may not e iminate every instance of missed shipments or expired products – particu ar y for owturnover strategic stockpi es – end-to-end visibi ity can significant y reduce their occurrence.
Digita innovation wi make hea th supp y networks more transparent, agi e, and co aborative. It enab es faster, smarter decisions; he ping network actors and others to identify root causes of non-performance, drive a ignment on oint improvement efforts, and optimize resources to secure best va ue for money.
Agi ity is the strategic abi ity that enab es hea th supp y networks to proactive y ad ust operations, po icies, and strategies in response to shifts in demand, funding eve s and f ows, or externa shocks, ensuring network continuity without significant cost increases. Agi ity strengthens resi ience, as networks that can pivot and respond swift y are inherent y better equipped to adapt and withstand disruptions.
Agi ity enab es networks to rapid y rea ign processes, resources, and governance structures. There are four key e ements to create network agi ity
End-to-end, real-time visibilit : Di itally enabled networks enhance coordination and real-time decisionmakin across the network. Di ital capabilities improve demand trackin , inventory visibility, order fulfillment, and risk monitorin , enablin early identification of potential disruptions and rapid corrective actions Integrated network planning: Forecasting demand is essentia for ensuring that the network can consistent y meet product demand and optimize the product-channe mix. Accurate forecasting re ies on continuous ana ysis of demand patterns, seasona ity (e.g., c imate drivers such as rainfa and temperature that increase ma aria transmission), and potentia service disruptions. Integrated network p anning (cross-hea th program) a igns forecasted demand with avai ab e hea th funding, informs optima inventory dep oyment, and ensures proper uti ization of storage and distribution capacities. By everaging predictive ana ytics, networks can assess and anticipate network risks, and ad ust operations as needed, e.g., by changing procurement schedu es and reba ancing inventory eve s based on rea -time demand shifts
Strategic inventor positioning: Maintaining optimized safety stocks and dep oying inventory based on dynamic demand patterns. Dep oying the right inventory at the right network nodes, such as regiona warehouses, ensures fast service de ivery, minimizes waste, and reduces costs. Pre-positioning critica hea th products strengthens preparedness and the abi ity to quick y respond to disruptions or absorb shocks from manufacturing de ays or (internationa ) transport disruptions. Increasing y, VMI mode s can offer more f exib e, data-driven a ocation and reduce operationa burden on pub ic distribution channe s Supplier diversification: Preventing over-re iance on sing e supp iers, providers or distribution channe s by embedding ‘fai safes’ into the network. Strategies inc ude contracting mu tip e manufacturers, precontracting contingency supp iers and ogistics service providers, and integrating them into dai y operations to ensure they can sca e up or step in seam ess y 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.
Core 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.
Procurement
Strategic sourcing and procurement of quality health products and services to ensure best price, volume, and contractual terms.
Strategic sourcing of products and services based on client needs, supplier selection, and contract management to secure best value for money
Establish sourcing strategies, informed by supply chain planning insights
Use or expand use of (pooled) procurement marketplaces to achieve better and more transparent contracts, accessible to multiple actors and sector
Establish long-term framework contract
Explore digital technologies for predictive sourcing to anticipate supply availability, pricing, and risk
Procurement or requisitioning of products and services and execute procure-to-pay operations and transaction processing
Supplier relationship management to improve supplier performance and mitigate potential risks
Integrate procurement and PFM systems to enable transparent allocation of resources by commodity category and ensure liquidity for procuremen
Streamline requisitioning based on real-time supply chain planning dat
Improve availability of working capital for timely and efficient orderin
Explore mechanisms where GHIs underwrite supplier risks or engage in risk co-sharing agreement
Use digital technologies and AI for process automation and ensure financial compliance
Establish value-based, performance-driven contract
Enhance spend visibility and analytics for budget monitorin
Explore digital technologies to proactively track supplier performance and flag risks
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 ITNs], 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.
Supply chain planning
Integrated su y chain anning across strategic, tactica , and o erationa eve s by a igning stakeho ders to ensure the right roducts and services reach c ients efficient y.
Demand forecasting (“quantification”) to consolidate demand data and incorporate external intelligence such as historical demand, consumption patterns, and seasonality to generate accurate forecasts
Ca ture oint-of-sa e data to get an accurate vie of actua deman
Institutiona i e mu ti-stakeho der forecasting revie s across rogram
Use digita techno ogies to im rove forecasting techniques, a o s demand segmentation, rovides visua i ation for consensus bui din
Ex ore use of demand sensing to use rea -time data to rovide a nearimmediate vie of market deman
Ex ore use of AI to im rove demand forecasting
Inventory planning to set inventory levels across the network, order quantities, safety stock, and lead times to balance service levels, inventory, and working capital
Use cost-to-serve and demand data to define tai ored, c ient-centric inventory o icies by roduct or distribution channe
Im ement demand-driven re enishment a gorithms to o timi e inventory eve s across the net or an and o timi e inventory eve s across the net ork, and ba ance investments and o erating cost across storage ( arehouse) and distribution (trucks) assets
Set ex ectations for 've ocity' of inventory through the su y chain to minimi e ho ding costs and a basis for su y anning and rocurement
Supply planning to align procurement and inbound shipments and match incoming supply volume to available capacity
Im rove a ignment bet een rocurement and inbound de ivery schedu es (cross- rogram
Estab ish materia and ca acity (hand ing and storage) anning to determine o tima overa su y an
Integrated network planning as a cross program / function planning mechanism to balance supply, demand and available funding and financing
Estab ish an advanced, integrated anning function to faci itate strategic net ork anning and (financia ) decision-making ith re evant ministries (and ub ic y financed coverage schemes), GHIs, and net ork actors (cross- rogram), inc uding to ensure coherence ith financing arrangements for hea th service de iver
Use anning data to inform net ork design, distribution channe configuration, strategic sourcing, and ogistics decision
Ex ore o ortunities to use existing digita so utions such as B ueYonder, Kinaxis or o9 So utions
End-to-end visibility to connect relevant data sources and use visualization and analytics to monitor performance and disruptions real-time
Invest in technology to digitize transactions along the supply chain, e.g. ERPs and POS tools, as a basis for management and control. Integrate across public and private channels to provide a whole-of-market market vie
Explore opportunities to use existing digital solutions such as Area Technology, BlueYonder, E2Open, or Kinaxis for supply chain analytics, facilitating network collaboration and optimizatio
Explore use of generative AI for prescriptive or cognitive analytics to continuously improve performance and optimize resources
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.
Logistics
Management of product flows, including warehousing, transportation, and order fulfillment, to ensure reliable, timely, and secure product delivery.
Third-party management of professional service providers
Make strategic, well-informed logistics outsourcing decisions depending on your current network, needs, services and requirements use the global good www.l gistics uts urcing. ealt for detailed guidanc
Address the variety of challenges facing effective outsourcing, as outlined in the position paper available on www.l gistics uts urcing. ealt
Use digital technologies to easily access, assess, and outsource services to professional logistics providers using the global good www.l gisticsmarketplace. ealt
Order fulfillment to execute the order-to-delivery process, from order receival to ensuring timely deliveries
Prioritize fulfillment based on distribution channel configuration, urgency and inventory availabilit
Digitize order intake, receipt and processing with an order management system (OMS) or LMI
Track delivery performance metrics to improve service levels, costs and quality
Warehousing to receive, store, pick, and pack product for distribution
Determine network design and the optimal warehouse footprint and capacity required to accommodate future demand and service level
Establish visibility into actual warehousing cost
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 good www.ware ousing. ealt for detailed guidanc
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 to execute transportation, managing delivery routes and ensuring timely delivery
Establish visibility into actual transportation cost
Ensure pharma and regulatory compliant transportation – decide to upgrade, acquire or outsource transportation based on in-house capabilities and best value for mone
Organize and optimize transport operations in line with distribution channel requirement
Use transport management system (TMS) for route planning, manage freight costs and tracking
Use electronic proofs of delivery (ePOD) for visibility and compliance
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.
Reverse logistics
Management of product returns, redistributions, recalls, and waste management to enhance control, safety, and responsible handling of unused, expired, or recalled products.
Returns processing to remove expired, damaged, or unused stock from points- of-care and ship them safely through the network
Standardize return rotoco and form acro ector
U e rever e ogi tic modu e within eLMIS or warehou e y tem to manage return trackin
En ure return ogi tic i incor orated in the network de ign by determining e.g., return center for con o idated hand ing
Product redistributions to reallocate short-dated or surplus stock to other pointsof-care or warehouses in need
Im ement redi tribution o icie that define thre ho d for redi tribution and ex iratio
U e rea -time inventory data and u y anning too to enab e roactive inventory reba ancing
Product recalls to rapidly remove non-compliant, counterfeit, or defective health products from the network or points-of-care
Provide the NPSU regu atory function or other over ight entitie with acce to digita batch trackin
Coordinate reca u ing digita traceabi ity too for fa ter re on e
Waste management to safely dispose of unusable or expired health products
E tab i h c ear rotoco and funding for environmenta y re on ib e di o a (e.g., incineration, rever e u y chain to manufacturer Co aborate with environmenta and wa te authoritie for joint management to achieve economie of ca U e digita too to og, authorize and track di o a roce
To contribute to ong-term u tainabi ity, rever e ogi tic mu t be embedded a a core function. En uring ab am e can be effective y tran orted, and roduct can be afe y returned, redi tributed, reca ed, or di o ed of rotect c ient , im rove accountabi ity, and minimize wa te. It a o reduce unnece ary rocurement, im rove inventory turnover and trengthen tru t in the overa hea th y tem. By defining c ear ro e , financia o icie , and u ing digita o ution to manage and monitor rever e f ow , countrie c o e the oo ; creating a afer, more efficient, and c imate-con ciou hea th u y network.
Reimagining the health supply network’s operating model
Delivering on the promise of sustainable health supply networks requires more than infrastructure, digital platforms, or capacity-building programs. It demands a fundamental 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 and its overarching management, orchestration and regulation units, governments should determine the most effective operating model along a spectrum: from in-house execution to outsourced services. These decisions should be informed not only by today’s capacity, but by where a government wants to go tomorrow.
Operating functional domains
In-house
Fully executed internally using own infastructure, assets, technology and resources
+ High control
+ Internal capacity
- Often less efficient
- Hard to scale or modernize
Hybrid
Shared responsibility: some capabilities executed internally, others by specialized service providers
+ Mix of control and expertise
+ Flexible and adaptable by domain
- Requires strong coordination
- Risk of fragmentation
Outsourced
Execution fully delegated to one or more contracted service providers
+ Access to specialized providers
+ Scales quickly, flexible capacity
- Less direct control, lock-in effect
- Requires oversight and coordination
The four functional domains – procurement, planning, logistics, and reverse logistics – 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, clientcentric 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.
From vision to action: enabling transformation
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 fundamentally reimagining how networks are designed, financed, regulated and operated.
Each governments must begin with a clear-eyed assessment of its unique context, including its ambitions, public sector capabilities, institutional and supply chain maturity, 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 aim to create.
It's important to recognize that transformation is not about starting from scratch; it’s about reimagining what’s possible. For each of the four functional domains – procurement, planning, logistics, and reverse logistics – and the network as a whole, governments must define the most effective operating model: whether to manage operations fully in-house, outsource to professional service providers, or adopt a hybrid model. These decisions should reflect both the current starting point and the desired long-term role governments want to play in designing, financing, regulating and operating their health supply networks.
By thinking big, governments and their global 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.
Implications 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
Reimagine how hea th supp y networks are financed, designed, regu ayed, operated, and staffed
Mobi i e domestic resource
Conduct a c ear-eyed (maturity) assessment to determine ambition nab e mu tisectora co aboration, especia y with Ministries of Financ Define needed regu atory reforms and strengthen oversight mechanisms
National Pharmaceutical Services Units NPSUs
xpand mandates to inc ude four core functions: pharmaceutica po icy and governance, medicine regu ation, pharmacy practice regu ation and procurement and supp y chain managemen
Integrate governance of programs and sector
Deve op hea th supp y network strategy based on a 10+ year hori o Define optima operating mode s for procurement, p anning, ogistics and reverse ogistics: in-house, outsourced, or hybri
xpand partnerships, everaging 3PL and 4PL service providers, pharmaceutica who esa ers and distributors, and other innovator
Define resource needs to sustainab y fund the NPSU and network to inform decision-making
Global Health Institutions GHIs
Rethink how GHIs can fund and finance supp y networks and distribution channe s in an integrated manner
nsure coordinated, coherent support to hea th supp y networks and hea th financing initiatives and support countries bringing them togethe stab ish joint-funding and -financing opportunities with financing institutions to everage comp ementary strengths of each organi ation and the financing instruments at their disposa
Adopt performance-driven contracts with c ear service- eve agreements vo ve poo ed procurement mechanisms to increase service eve s and inc ude private sector actors
Harmoni e and dep oy technica assistance (TA) from service providers that can support governments adopt private sector best practices, using performance-driven contracts
Financing institutions
Strengthen supp y chain financing mechanisms, such as revo ving funds, working capita financing, supp ier credit, and risk-sharing instrument
stab ish joint-funding and -financing opportunities with GHIs to everage comp ementary strengths of each organi ation and the financing instruments at the disposa
Service providers (private and public sector)
Provide transparency into performance and cost-to-serve to inform decision-makin
Work with governments and GHIs to co-deve op onger-term marketbased so utions, inc uding risk sharing mode s that reduce donor funding dependenc
Offer educationa resources to he p governments and GHIs better understand business mode s and added va u
Define resource needs to sustainab y fund operations to inform decision-making
Guiding the transformation journey
This pape does not claim to answe eve y question, no should it. It outlines a futu e vision and p esents a p actical f amewo k fo change, while ecognizing that t ansfo mation is a jou ney. Additional wo k is needed to t anslate this futu e vision into count y-level action.
oposed p io ity a eas fo fu the explo ation include:
Integration opportunities: p oviding actionable oppo tunities to align GHIs, health p og ams, and p oduct dist ibution to inc ease cost-efficiency
Strategic transformation pathways: p oviding p agmatic pathways – ounded in count y case studies –to guide how count ies can assess thei context, sequence efo ms, and implement long-te m t ansfo mation;
Financing transformation: explo es innovative financing app oaches to fund national t ansfo mation jou neys, ensu e cohe ence between supply chain financing mechanisms and the planning and financing fo health se vices, and sustain health supply netwo ks;
Evolving global health: explo es how GHIs and financing institutions can evolve thei oles, inst uments, and funding app oaches to enable sustainable, count y-led t ansfo mation.
Togethe , these pape s will p ovide gove nments, GHIs, and othe pa tne s with actionable st ategies to d ive p og ess, coo dinate investments, and delive long-te m esults. These pape s will fo m p agmatic guidance to build sustainable health supply netwo ks.
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: finance smarter, fund for efficiency, integration and sustainability, and support country stewardship
Financing
Service
Fuel what matters: invest in what builds 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