Last-Mile Distribution in Kenya:
A Transformational Experience
In 2003, President Bush announced the launch of the President’s Emergency Plan for AIDS Relief (PEPFAR), a landmark initiative to scale up HIV treatment worldwide, with a goal to provide antiretroviral (ARV) treatment to millions of patients in low- and middle-income countries and to improve access to other commodities critical in the fight against HIV/AIDS. By 2005, the U.S. Government had become the largest single provider of ARV drugs in the world.
The Partnership for Supply Chain Management (PFSCM), a US-based nonprofit organization, was selected by the United States Agency for International Development (USAID) in 2005 to implement the Supply Chain Management System (SCMS). This ambitious program was tasked with managing the sourcing, procurement, quality assurance, and logistics for PEPFAR-funded commodities, and, where necessary, to strengthen the local systems needed to ensure effective last-mile distribution.
The typical SCMS model had PFSCM delivering commodities from three strategically located pharmaceutical-grade Regional Distribution Centers (RDCs) to each recipient country’s central medical store, usually a state-run warehouse in the capital. Downstream distribution to health facilities was then managed by the local government.
In 2009, however, due to capacity constraints, the Kenyan Ministry of Health requested PFSCM’s support in the delivery of laboratory commodities — HIV test kits, reagents, and equipment — to hospitals and clinics throughout the country.
Fourth-Party Logistics Approach in Kenya
To meet this critical need, PFSCM implemented a fourth-party logistics (4PL) approach. After assessing the private-sector’s capacity, we selected local transporters (third-party logistics providers, or 3PLs) through a competitive bidding process. In many cases, these private-sector carriers were available but lacked the personnel, standard operating procedures, and technical capabilities to operate efficiently.
To minimize waste and ensure reliable downstream distribution, PFSCM technical experts worked with the local transporters to build capacity around:
- optimization of routing and scheduling to improve lead times;
- normalization of chain of custody procedures to minimize loss to theft or mismanagement; and
- improvement of physical quality standards to promote proper handling of the commodities and to ensure product integrity through the last mile.
PFSCM also developed tools to track 3PL performance against key indicators, and established a formalized communications protocol to ensure a robust feedback loop. As a result, service lapses and procedural waste were identified early and corrected quickly.
PFSCM’s 4PL approach resulted in steady improvements in the performance of the transporters, reduced costs for the government, and increased access to health commodities in even the most hard-to-reach parts of the country. From 2009 to 2013, the program executed more than 80,000 deliveries to the community level in all provinces in Kenya, reaching more than 4,500 hospitals and clinics with laboratory commodities. On-time delivery peaked at 95%, with nearly 100% proof of delivery confirmation.
In addition to improving the flow of critical commodities, the program had a significant local economic benefit. The companies that partnered with PFSCM were able to leverage the skills and procedural efficiencies they developed working under SCMS toward sustained growth. These firms created jobs and executed strategic investments, with several reporting more than 80% growth in the decade since becoming part of the SCMS supply chain.
In 2013, PFSCM handed control of the high-performing 3PL network back over to the Ministry of Health.