Philippine

Department of
Health
National
Procurement and
Supply Chain
Management
Strategic Plan
January 2020
Contents
Acronyms ............................................................................................................................................... ii
Preface .................................................................................................................................................. iii
Acknowledgment ................................................................................................................................... iv
Executive Summary ............................................................................................................................... v
National Strategic Plan for PSCM......................................................................................................... vi
1. Introduction ...................................................................................................................................... 1
2. Situational Analysis .......................................................................................................................... 3
1.1 Context .................................................................................................................................... 3
1.2 Major PSCM Challenges Addressed By the NSP .................................................................. 4
3. Mission, Vision, Guiding Principles.................................................................................................. 7
4. Strategic Objectives and Key Interventions..................................................................................... 9
1.3 Stronger Stewardship and Functional Oversight of PSCM .................................................. 10
1.4 Expanded Leverage of Private Sector Capacity .................................................................. 11
1.5 More Competent, Professional, Accountable HR for PSCM ................................................ 13
1.6 More Streamlined, Unified, and Cost-Effective PSCM System............................................ 14
1.7 Unified Information System for PSCM at all Levels ............................................................. 15
5. Opportunities and Risks................................................................................................................. 17
1.8 Opportunities......................................................................................................................... 17
1.9 Risks and Mitigation.............................................................................................................. 17
6. Performance Management Framework ......................................................................................... 20
1.10 Performance Measurement/Management Systems ............................................................. 20
1.11 Performance Measurement Metrics ..................................................................................... 20
7. Stewardship of the Strategic Plan ................................................................................................. 22
Annex 1. Philippine National PSCM Strategic Plan - Implementation Plan ........................................ 25
Annex 2. Bibliography .......................................................................................................................... 26

i
Acronyms

3PL third-party logistics

AO administrative order
BIHC Bureau of International Health Cooperation
CHD Centers for Health Development
DBM Department of Budget Management
DILG Department of Interior and Local Government
DOH Department of Health
DPCB Disease Prevention and Control Bureau
DPCR Department Performance and Commitment Report
EXECOM Executive Committee
F1+ FOURmula 1+
FICT field implementation coordination team
FP family planning
GIDA geographically isolated and disadvantaged area
HR human resources
ICT information communication technology
IRR implementing rule and regulation
KMITS Knowledge Management and Information Technology Service
KPI key performance indicator
LGU local government unit
LMIS logistics management information system
M&E monitoring and evaluation
NOH national objectives for health
NSP National Strategic Plan
NTP National Tuberculosis Control Program
OPCR office performance and commitment review
PD Pharmaceutical Division
PHST public health services team
PIR performance improvement review
PPPI Philippine Pharmaceutical Procurement, Inc.
PS Procurement Service
PSCM procurement and supply chain management
PSCMT procurement and supply chain management team
RHU rural health unit
SC supply chain
SCMO Supply Chain Management Office
SO strategic objective
SOP standard operating procedure
TWG technical working group
UHC universal health care
UPSCM unified procurement and supply chain management
USAID US Agency for International Development

ii
Preface

The National Strategic Plan for Procurement and Supply Chain Management (NSP-PSCM) serves
as the national reference document to guide the Department of Health’s (DOH’s) mission to ensure
access to quality, affordable health services and commodities. The DOH strategically and
operationally underwrote this mission in 2018 by establishing the PSCM team (PSCMT) under the
direction of Undersecretary Ma. Carolina Vidal-Taiño (administrative order [AO] 2018-0302). The
PSCMT was established in recognition of the critical role that robust and resilient PSCM systems
play in ensuring quality, affordable health commodities to all Filipinos.

The strategies and interventions defined in the NSP-PSCM are grounded on in-depth evaluations of
existing PSCM systems across all levels of the health system in the Philippine and are positioned to
respond to the reforms and requirements of the 2019 Universal Health Care (UHC) Act and its
Implementing Rules and Regulations (IRRs). The NSP-PSCM aligns with the objectives and targets
of the Philippine FOURmula One Plus (F1+) for Health 2017-2022 and the National Objectives for
Health 2017-2022 (NOH) which serves as the medium-term roadmap of the Philippine towards
achieving universal healthcare (UHC). The NSP-PSCM is informed by various consultations with
government, private sector, and non-governmental organizations and focuses on applying an
integrated, harmonized, and coordinated approach to delivering essential health commodities to
health service delivery points.

Ultimately, the effectiveness of the PSCM strategies defined in this document will rely on the
engagement and support of multiple stakeholders across all levels of the health system. Through
this document, the DOH hopes to have a practical roadmap to guide all stakeholders through key
milestones to achieving a PSCM system that enables all Filipinos to have access to quality,
affordable health commodities.

iii
Acknowledgment

The DOH PSCMT developed the NSP-PSCM under the guidance and direction of the
undersecretary for PSCMT. All offices of the PSCMT collaborated closely to review, analyze, and
solicit feedback on technical documents and consultations with a wide range of stakeholders to
develop the NSP-PSCM. The US Agency for International Development (USAID) also provided
technical support through the Medicines, Technologies, and Pharmaceutical Services Program
implemented by Management Sciences for Health (under contract number 7200AA18C00074) in
conducting consultative meetings that facilitated a whole-system approach to strategy development.

The NSP benefited from the comments and inputs of the following stakeholders:

 DOH offices and its attached agencies: PSCMT, Supply Chain Management Office (SCMO),
Procurement Service (PS), Public Health Services Team (PHST) previous Disease Prevention
and Control Bureau (DPCB),Bureau of International Health Cooperation (BIHC), Field
Implementation Coordination Team (FICT) Luzon, Pharmaceutical Division (PD), PhilHealth, and
RITM
 Centers for Health Development (CHD) representatives: CHD 4A, CHD VII, CHD MM, and CHD
IX
 Local government unit (LGU) representatives: Association of Municipal Health Officers of the
Philippine from Cavite, Cebu, and Zamboanga; provincial health offices of Pangasinan and Cebu
 Private sector representatives: Philippine Association of Colleges of Pharmacy and
Pharmaceutical Healthcare Association of the Philippine
 Development partners: UNICEF, World Health Organization, Global Fund (thru Philippine
Business for Social Progress)

iv
Executive Summary

Health commodities are an integral part of the healthcare delivery system to achieve better health
outcomes. Therefore, strong PSCM, safety and financing systems, which ensure access to health
commodities, are indispensable to achieve successful implementation of UHC. DOH manages an
average annual procurement value of 20 billion Philippine pesos (~19% of the total health budget).
Larger proportion (83%) of this procurement value is allocated for health commodities and half of the
83% of procurement value is spent on vaccines. While the processes and procedures under the
Republic Act No. 9184 are strictly followed, PS is currently only able to procure only 80% of the
orders it receives, which is below its target of 95% procurement. In addition, recent inventory age
analysis (as of October 2018) at central warehouse shows almost 50% (in value) of health products
for Family Health, Degenerative Disease and Infectious Diseases stayed at the central warehouse
for more than 180 days without moving. Not only these products occupy limited storage spaces for
longer period of time but also close to 7% of the total inventory were having shelf-life below 6
months which prone to expiry before reaching to clients.

Guided by the DOH’s FOURmula 1+ (F1+) for Health 2017-2022, this NSP-PSCM lays out the
strategic objectives (SOs) and key interventions to improve the performance of PSCM systems and
achieve target health service delivery outcomes in the next three years. The NSP was developed
through a multi-disciplinary process of consultations and validation with key sector stakeholders, and
it reflects the strategic priorities and opportunities facing the sector in the near future.
The NSP is anchored on five SOs and related key interventions to ensure continuous availability of
quality-assured, essential health commodities at the point of care through an integrated, effective,
and sustainable PSCM system. The NSP expects to:

 Strengthen the stewardship and functional oversight of PSCM systems across all levels,
targeting key performance outcomes to ensure availability of health commodities
 Ensure that a competent, professional, and accountable human resources (HR) cadre is in place
to support PSCM functions at all levels
 Establish more streamlined processes and unified and cost-effective PSCM systems across
health program and levels, including better leveraging of the capacity of the private sector to
support PSCM functions
 Leverage a unified information system that increases visibility on health commodities and
processes at all levels

The NSP-PSCM will rely on the engagement of a broad array of stakeholders at all levels in its
implementation and execution of PSCM functions in the future.

v
National Strategic Plan for PSCM

Description
As the national reference strategy document, the NSP-PSCM serves as a guide for decision makers
and implementers to harmonize efforts to strengthen the national PSCM. This document supports
upholding a systems strengthening approach to enhance the whole supply chain (SC), not only for
DOH stakeholders, but for international and local implementing partners as well. This ensures that
the PSCM is enhanced as a whole by promoting collaboration, sustainability, and self-reliance,
rather than taking a piecemeal approach.

Organization of the NSP

The introduction section presents the FOURmula 1+ (F1+) for health 2017-2022 , the NOH, and the
overall vision and mission of DOH. The goal is to ensure that this document aligns with the direction
of DOH and, as a whole, improves the health of all Filipinos. The situational analysis section
describes the current experience with PSCM; the objective is that the strategy is grounded with
current realities and local context. This paves the way to presenting the mission, vision, and guiding
principles of the NSP-PSCM, which provides the paradigm being used for developing the approach
for the different objectives and interventions for the next three years.

Next are the five SOs that need to be accomplished to realize the identified mission and vision as
directed by the guiding principles. To support decision makers and implementers, each SO is
defined and has an expected result(s); metrics with associated possible baseline and targets for
2022; key interventions; and existing enablers. Furthermore, opportunities and risks are presented in
the next part of the document to ensure that implementers design their specific activities by
leveraging the local context and mitigating possible high-risk situations that could jeopardize the
successful implementation of the NSP.

Finally, a performance management framework that aligns with the overall performance
accountability framework of DOH is presented. This ensures that the DOH has the ability to measure
ongoing progress in accomplishing the NSP mission and vision, stewarded by the strategic plan’s
oversight mechanism to manage overall implementation of the strategy. Annex 1 contains the
implementation plan with high-level milestones, and annex 2 lists references for more specific
information on the strategy.

vi
1. Introduction

The DOH developed the NSP-PSCM in recognition of its importance to achieving the Philippine F1+
for health 2017-2022. F1+ for health was developed to provide better health services to people at all
stages of life, create functional service delivery networks, and expand health insurance to every
Filipino.1 In essence, F1+ relies on a responsive health system with a functioning network of health
facilities, characterized by the presence of medical equipment, medicines, and health professionals.
Such a system, founded on a robust and practical PSCM strategy, would eliminate frequent stock-
outs, high prices of health commodities, and ensure that a qualified, professional workforce is in
place to enable achievement of F1+ health goals.

Towards achieving the UHC, DOH developed the NOH which is a medium-term roadmap and
strategic plan for F1+ for health by identifying five key components that the DOH needs to
strengthen its organizational capacities, one of which is PSCM. In the NOH, objective four highlights
the need for improved processes for PSCM that ensure the availability and quality of health
commodities. In addition, coordination among all PSCM stakeholders, including service delivery
points, health facilities, provinces, cities, CHDs, and the central office, needs to be strengthened to
avoid rejection of and delays in deliveries, stock-outs and oversupply of commodities, and product
safety concerns.2 Recently, DOH evaluated the impact of weak PSCM systems on the National TB
Control Program‘s (NTP) five-year TB Elimination Strategic Plan to diagnose and treat 2.5 million
people by the end of 2022.3 In addition, the National Family Planning Program 2017–2022 strategy
seeks to increase modern contraceptive prevalence rates among all women from 24.9% in 2017 to
30% by 2022 and reduce the unmet need for modern family planning (FP) from 10.8% in 2017 to 8%
by 2022.The availability of a basket of essential medicines surveyed in public health facilities by the
DOH between 2011 and 2016 was always below 66%. Slight decreases in availability were recorded
(65.9% in 2013 to 65.4% in 2016).4 Similarly, the availability of essential maternal and child health
care supplies in public health facilities was less than 60% in surveyed rural health units (RHUs) and
health centers in 2016.5 The above goals and challenges highlight that strengthening PSCM systems
to ensure availability of adequate health commodities at service delivery points is critical.6

To address some of these challenges, DOH put in place a series of measures and reforms on
PSCM. For example, the establishment of the PSCMT as a reform measure to improve PSCM
functions, including last-mile health commodity delivery to service delivery point (mandated by
department orders 2018-0096 and 2018-0302), and the interim establishment of the SCMO to
operate alongside the existing PS under the PSCMT (mandated by department order no. 2018-
0302) are the major reforms undertaken.

In the elaboration of this NSP-PSCM, the DOH PSCMT undertook a holistic exercise to evaluate the
capability of the national PSCM system to respond to needs of the health sector’s agenda. The
exercise aimed to diagnose systemic challenges and bottlenecks affecting the performance of the
PSCM system. Evaluations were drawn from PSCM assessments; technical reports related to high-

1 Department of Health. 2018. F1+ for Health: Philippine Health Agenda 2017-2022
2 Department of Health. 2018. Philippine National Objectives for Health 2017-2022
3 Department of Health. 2017. Philippine Strategic TB Elimination Plan (2017–2022);

http://www.ntp.doh.gov.ph/downloads/ntp_data/ntp_vmg_and_org_and_tb_burden.pdf
4 Sarol JN Jr. 2016. Survey on Essential Drug Availability in Public Health Facilities in the Philippine;

https://pharmadiv.doh.gov.ph/images/publication/DASEssentialDrugs2016FinalReport.pdf
5 Sarol JN Jr. 2016. Survey on Availability of Essential Maternal and Child Health Care Supplies in the Public Health

Facilities in the Philippine

6 https://www.doh.gov.ph/family-planning

1
priority program areas as well as to the health sector more broadly; and interviews and consultations
with internal and external PSCM stakeholders and experts.

Grounded in the evaluation findings, the priority areas for action for the NSP-PSCM were formulated
through further consultative meetings with stakeholders and experts. Further details are described in
the situational analysis section; these priorities can be summarized as follows:

 Poor coordination among PSCM functions

 Weak institutional and individual capacity at the central, CHD, and LGU levels to manage PSCM
functions
 Inadequate SC information systems and poor data-use culture
 Unsynchronized demand and supply systems that contribute to sporadic stock-outs and
overstock of health commodities

Strategies and interventions to address PSCM priorities were guided by the DOH’s goal to achieve
best practices in PSCM that are adapted to the Philippine health sector context. Also, considering
the three-year timeframe set for this NSP to achieve meaningful impact on health commodity
availability as well as strengthened PSCM systems, the following principles guided PSCM change
strategies:

1. Leveraging existing strengths of the PSCM system, particularly the role of the private sector in
expanding and supporting the capacity of the public PSCM system at all levels

2. Targeting opportunities to reduce duplication and waste and to improve efficiencies in the PSCM
system

3. Capitalizing on systems and interventions that can promote stronger communication and
linkages between PSCM functions and between the levels of the national SC (such as between
procurement and distribution activities and between central and local government levels)

4. Proactively planning and managing the optimal design and organization of the national PSCM
system to respond to health sector reforms and other influences

5. Working through existing DOH coordination and implementation mechanisms as much as

possible to facilitate endorsement of strategies and alignment of actions under F1+, the NOH,
and the newly endorsed UHC Act

The three-year NSP-PSCM will be used to develop annual action plans with resources, designated
roles and responsibilities of key actors, and measurable milestones. Applying the NSP together with
its annualized Implementation and resource plans, DOH and SC stakeholders hope to roll out a
stronger and integrated PSCM system to ensure uninterrupted supply of affordable health
commodities in the near future.

2
2. Situational Analysis

1.1 Context

Figure 1. Philippine public health program commodity flow chart (adapted from Nfor 2017)

The Philippine PSCM system is a multi-tiered system involving stakeholders at the central, CHD,
LGU, and health-facility levels (figure 1). The DOH is responsible for national health policy
formulation and regulation and comprises various central bureaus and services in the central office,
CHDs, and DOH-retained hospitals. Although the Philippine Pharmaceutical Procurement, Inc.
(PPPI) is contracted to pool and procure health commodities on behalf of the recently revived DOH-
and LGU-supported Botika Ng Bayan (or community pharmacy program), the DOH’s PS under
PSCMT is responsible for procurement activities for most health program commodities and other
health program-related products. Meanwhile, procurement planning and commodities allocation to
health facilities are done separately by 19 health programs that make up the DPCB, with the health
program products managed by DPCB accounting for 83% of the value of health commodities
procured by the DOH. Separately, the PD manages products for medicine access programs, and the
Health Emergency Management Bureau manages health products for emergency response. The
estimated annual budget for health commodities managed by DOH is approximately PHP 20 billion,
not including procurement of health commodities conducted by LGUs on behalf of health facilities in
their jurisdictions.

The decentralized framework of the PSCM is complex and involves gaps and risks (described in the
next section) as key priority areas for action, and which should be addressed by the PSCM strategic
plan. Meanwhile, several events favor a health sector environment that is now conducive to
addressing policy and technical concerns that can strengthen PSCM systems in the near future.
These events include:

3
 The 2018 establishment of the PSCMT by DOH as a reform measure to improve PSCM
functions, including last-mile health commodity delivery to health facilities, mandated by
department orders 2018-0096 and 2018-0302
 The 2018 creation of the SCMO to operate alongside the existing PS under the PSCMT,
mandated by department order no. 2018-0302
 The February 2019 enactment of the UHC Act, which emphasizes that access to health services
and health commodities is imperative and frames institutional requirements and mandates

1.2 Major PSCM Challenges Addressed By the NSP

The NSP-PSCM identified priority areas for action through multi-disciplinary, consultative reviews of
the PSCM systems in the Philippine. The reviews uncovered important performance gaps, including
duplications in the procurement of essential health commodities from different sources and at
different levels, poor storage capacity and practices, and fragmented distribution/delivery of health
commodities to service delivery points. The reviews also evaluated the following areas as more root
cause bottlenecks to the performance and capability of PSCM systems:

 Lack of stewardship and governance of PSCM across all levels, including poor coordination and
lack of clarity on roles among PSCM stakeholders
 Inadequate HR and institutional capacity
 Fragmented PSCM functions and related processes
 Lack of end-to-end information systems and data visibility
 Weak management of third-party logistics (3PL) providers

Lack of Stewardship and Governance, including Poor Coordination, Lack of Clarity on Roles
among PSCM Stakeholders
The DOH is strongly committed to improving PSCM systems overall, which it has supported by
creating the Supply Chain Management Unit in March 2016, and most recently, the establishment of
the SCMO to operate alongside the existing PS under the PSCMT. However, a governance
framework for the PSCMT has yet to be developed that would define and clarify an organizational
structure, roles and responsibilities, and accountability mechanisms, as well as promote
collaborative decision making within the PSCMT. Such a framework would be based on clear,
written definitions of what stewardship is and what the scope of the stewardship roles of different
levels and stakeholders entails.

In the absence of a PSCMT governance framework, the technical and behavioral competencies
needed for stewardship roles are also not adequately defined. Such competencies are needed at the
central, CHD, and LGU levels to guide the contributions and performance of stewards at all levels.

While many stakeholders, including all the health programs, are involved in addressing the challenge
of health commodity availability, PSCM functions are executed by multiple offices in the DOH often
in siloes, without synchronization, and without the use of data generated from various PSCM
functions and levels in the supply system. The current PSCM system design does not allow linking
across functions and between levels, resulting in duplication of efforts and a regularly occurring
imbalance in demand and supply of program products.

Coordination between the CHD and central levels of the public health supply system is also
inadequate with few points of convergence, resulting in inadequate information sharing for PSCM
decision making at all levels. Illustrative areas where inadequate coordination poses risk of waste
and inefficiency are procurement planning and supply management coordination between central

4
level programs and between central and LGU levels. This PSCM function is characterized by
inadequate synchronization across the entire SC and inadequate coordination between programs,
the PS, 3PLs, and government units responsible for warehousing and distribution of commodities
between levels, down to health service units. The result is duplication of procurements, high
inventory and associated holding costs, and risks of expiry or waste.

Inadequate HR and Institutional Capacity

Strong PSCM hinges on cadres of skilled leaders, managers, and staff—people with up-to-date
knowledge, skills, and competencies to effectively implement planned PSCM system strengthening
interventions. Such systems also require institutions with strong capacity to lead, manage, and effect
positive change within the sector.

Although the DOH PSCMT has the mandate to play these key roles for the sector, it remains to
consolidate these functions and the needed HR levels to effectively execute the expected
responsibilities. Programs, such as the NTP, may currently have staff deployed to fulfill PSCM
functions, but these resources are not clearly or adequately linked to the PSCMT. In addition,
although PSCMT structures have been developed, the necessary levels of staffing need to be
secured to run a functional PSCM system, including capacity at local unit levels. Staffing of PSCM
also needs to be supported by systems and policies to manage HR effectively and to better attract,
retain, develop, and motivate talents for PSCM operations.

Fragmented PSCM Functions and Related Processes

Although processes guiding PSCM functions within the DOH are transparent overall and well-
documented in policies and standard operating procedures (SOPs), the fragmentation of services
across multiple programs and inadequate synchronization of processes hinders efficiency of the
PSCM system. Moreover, even though organizational structures exercise appropriate decision
making, these structures operate within the broader DOH administrative machinery with several
layers of processes and time-intensive, paper-based documentation and information management.
This arrangement negatively affects the efficiency of PSCM operations.

In addition, inventory policies do not exist, and therefore program-generated procurement plans do
not consider the entire SC pipeline and inventory volume. Furthermore, there is little to no chance of
revising demand and allocation requirements once procurement plans are submitted to PS. The
above challenges provide the case for a total system redesign to ensure harmonization of PSCM
systems and functions.

Lack of End-to-End Information Systems and Data Visibility

SC data is either not available or is not systematically used to inform PSCM decisions at the different
levels of the system. Such a challenge creates disruption in the PSCM system that cascades down
to lower levels. For example, allocation at the central level is mostly done without considering health
facility-level stock information, resulting in suboptimal distribution, characterized by rejection or
cancellation of orders, overstock and wastage, and stock-outs at the points of care. Information is
also not shared for forecasting, procurement planning, and allocating commodities by program,
between central and LGU levels.

The DOH’s offices, divisions, and health programs gather information and monitor program
implementation through checklists, paper-based forms, and disparate electronic tools. However,
information/data requirements, processes, and tools are many, ill defined, and often lack
interoperability, making the tracking, use, and exchange of information difficult. In addition, the DOH

5
has multiple electronic systems at different offices and PSCM functions, therefore, it lacks an
adequate and unified logistics management information system (LMIS) to collect, consolidate,
analyze, and present information to make PSCM decisions.

End-to-end information systems that facilitate data collection, consolidation, and analysis at various
points of the PSCM ecosystem are crucial to obtaining the necessary business intelligence to
optimize operations.

Insufficient Management of 3PL Providers

3PLs play a crucial role in the PSCM system. In addition to delivering health products to CHDs,
provinces, and health facilities, they are also contracted to physically store, repack, and bundle
health products before delivering them to CHDs, provinces, and health facilities. However, their
engagement and use are fragmented at different levels, thereby causing ineffective use of 3PLs. The
main constraint that created this situation is limited capacity to manage 3PLs at the different levels.
The resulting effect is that 3PLs are not adequately evaluated and/or effectively used to address
capacity gaps and linked performance challenges.

To ensure an efficient PSCM system, operational performance requirements must be defined and a
reliable system to monitor the performance of 3PL service providers implemented. This will ensure
and improve public sector PSCM system performance, especially given that key operations, such as
storage, loading, unloading and transportation/shipping, are performed by 3PLs. In addition to proper
management of the current 3PLs providing warehousing and distribution services, it is also important
to explore alternative models to better leverage private sector capacity, such as 4PLs that extend the
use of private sector services to manage the entire SC (e.g., from planning and procurement to
warehousing and distribution). More strategic, longer-term agreements with private sector service
providers (also known as framework agreements and/or contracts) can also be effective tools to
optimize the use of PSCM service providers in the public sector.

6
3. Mission, Vision, Guiding Principles

The ultimate purpose of the NSP-PSCM is to support the achievement of the DOH’s vision and
mission:1

The DOH will be guided by the two principal objectives defined in the recently enacted national UHC
Act, to:7

 Progressively realize UHC in the country through a systemic approach and clear delineation of
roles of key agencies and stakeholders geared toward better performance in the health system
 Ensure that all Filipinos are guaranteed equitable access to quality, affordable health care goods
and services and are protected against financial risk

In addition, the UHC Act defines two goals relevant to PSCM strategic planning: financing, which
addresses sustainable investments to improve health and the efficient and equitable use of
resources; and governance, which addresses strong leadership and management to ensure
functional, people-centered, and participatory health systems.

The NSP positions the DOH’s PSCM interventions to be effective in this political and sectoral context
and to achieve DOH’s specific PSCM mission and vision (figure 2) which are to:

•Ensure continuous availability of essential health commodities at

PSCM Vision the point of care through efficient and resilient procurement and
SC management systems

•Institutionalize an integrated, effective, and sustainable

PSCM Mission procurement and supply management system that ensures
timely access to quality-assured, essential health commodities

Figure 2. PSCM mission and vision

The DOH has also defined a set of 10 guiding principles for its strategic approach to achieve its
mission and vision:

7 Universal Health Care Act (Republic Act 11223)

7
1. Ensure that the PSCM strategy is compatible with the vision, goals, and objectives of the various health
programs.
2. Foster stewardship and provide vision, guidance, and oversight, not necessarily as operators of
procurement and supply chain systems.
3. Leverage the multiple procurement and SC actors and diverse options available to improve PSCM
and weave these champions and options into an efficient, coherent, sustainable, and integrated system,
thereby providing flexibility, reducing risk, and ensuring availability of essential public health goods.
4. Leverage scale and adopt best practices in other public health PSCM systems, including the private
sector.
5. Develop and adopt new skills in leadership, regulation, market research, sourcing, contract design,
oversight of outsourced providers, performance analysis, collaboration, data analytics, and sustainability
mechanisms to ensure efficiency and accountability.
6. Streamline and integrate the procurement and SC processes and systems to be more efficient,
sustainable, cohesive, transparent, quick, accurate, accountable, and responsive and to withstand public
scrutiny.
7. Use affordable, responsive, secure, and sustainable modern technology and information
communication technologies (ICTs) to promote efficiency and transparency.
8. Provide continuous capacity building and professionalization of procurement and SC officers to create
empowered and high-performing teams.
9. Institutionalize adherence and compliance to existing procurement and supply laws and rules and
regulations, but think outside the box.
10. Ensure data visibility and access for all stakeholders, including public support for efficient PSCM
operations.

8
4. Strategic Objectives and Key Interventions

The complexity and interdependency of national health SCs and their associated challenges mean
that the NSP-PSCM cannot rely on a single approach to bring about greater access to quality,
affordable health commodities to all citizens. Rather, the NSP needs to influence a multi-disciplinary
approach that is based on solid SC design and practices while addressing health systems
strengthening interventions that enable lasting and responsive systems. These interventions are
founded on strong governance and oversight mechanisms that support the PSCM system, as well as
pillars of mature SC systems. Fundamentally, responsive systems rely on:

1. Increasing trust and collaboration between SC actors

2. Greater use of data and information to influence SC design, operations, and performance
3. Staffing and operation of SC systems by professional or professionalized SC experts

These two system strengthening frameworks–health systems strengthening blended with SC

systems strengthening–form the basis for DOH’s strategic approach to improving the capability of
national PSCM in the three-year timeframe of the strategic plan. The DOH’s theory of change for
driving greater performance in national PSCM systems is supported by these frameworks and is
summarized in figure 3.

Stronger
stewardship and
functional oversight

More streamlined,
unified, and cost-
effective PSCM
More competent, system
Sustainable and
professional, responsive PSCM
accountable HR system to ensure
timely access to
quality health
Expanded leverage commodities
of private sector
capacity
Unified information
system for PSCM at
all levels

Figure 3. NSP-PSCM capability and performance improvement theory of change

As illustrated in the figure, DOH is targeting five SOs (green boxes) as part of its theory of change to
achieve its PSCM mission. The relationship and interconnectedness of components in this theory of
change are highlighted in the section below, and fundamentally address key priority action areas
described in section 3 of this NSP document. The SOs are:

1. Stronger stewardship and functional oversight of PSCM

9
2. Expanded leverage of private sector capacity
3. More competent, professional, accountable HR for PSCM
4. More streamlined, unified and cost-effective PSCM system
5. Unified information system for PSCM at all levels

Performance targets for each SO are presented below. Annual milestones to track progress and
achievement of these SOs are defined in the NSP implementation plan (annex 1). In addition, the
rationale for each SO strategy and key interventions and enablers to achieve each of them are
summarized.

1.3 Stronger Stewardship and Functional Oversight of PSCM

 Mandate: Under the Philippine’s devolved government and health system structure, the principal
mandate of the DOH is the creation of policy and standards that ensure the optimal design,
regulation, and implementation of PSCM functions nationally. DOH considers stewardship of
PSCM to be part of this mandate, and it involves reaching out to local-level units. This SO will
ensure that the DOH PSCMT executes its core mandate of effective stewardship and oversight
of all PSCM processes to ensure that health commodities reach Filipinos. In this stewardship
role, the DOH intends to support the planning and management of PSCM resources dedicated to
PSCM functions across DOH departments, different levels of the SC, and the various
organizations involved in PSCM functions. A core responsibility of the stewardship role will be
fostering multi-stakeholder communication and coordination and using data for strategic decision
making.
 Effectiveness: DOH recognizes that competent and professional staff must enable stewardship
mechanisms and apply a robust and credible performance management system. Contributions
can then be measured and PSCM actors can monitor and improve performance as they move
toward achieving goals. Hence, this SO is closely linked with SOs #2 and #4 to ensure its
effectiveness.
 Balancing with current responsibilities of the DOH PSCMT: Currently, DOH PSCMT’s role is
not limited to stewardship; it directly fulfills key PSCM operations related to procurement of key
program health commodities by interfacing with health programs and LGUs. This SO will allow
the DOH to determine the most effective way to carry out its stewardship role in light of the
demands on its staff in the short and medium terms.

Expected Standards for mature PSCM are defined and implemented at all levels; SOs are endorsed and
result monitored by all PSCM system stakeholders at national and local levels; transparency is
supported (e.g., meetings, evidence-based performance reviews, and gap resolutions)
Indicator: % of CHDs with functional and effective PSCM stewardship and oversight n/a 80%
baseline and mechanisms
2022 target and of LGUs with functional and effective PSCM oversight mechanisms n/a 65%
% of CHDs and LGUs with functioning PSCM organizational structure n/a 30%
(10% of LGUs with the functional PSCM substructures reporting to the Steering
Subcommittee (progressive every year; Y1 10%, Y2 20%, Y3 30%)
Existence of functional DOH Central Steering Committee n/a Yes
No. of PSCM issues discussed and decided at the DOH Central Steering n/a
Committee to measure the functionality of central level (numerator is resolved
issues; denominator is identified issues)
No. of joint circulars/issuances issued by DOH and LGUs related to PSCM n/a
No. of regular PSCM performance appraisals conducted (with analysis and n/a
feedback)
No. of reports on PSCM performance management published publicly n/a

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 Key 1. Establish and institutionalize a functional stewardship entity (for PSCM) that will ensure
interventions coordination and stakeholder participation and ensure that management and (a strategic
focus on) M&E mechanisms are in place; set up stewardship entity as a “PSCM network”
composed of representatives from various programs, health-system levels, and advisory
experts, with clarity on decision-making authority; guidelines for operation; clear delineation
of roles, responsibilities, and accountability; and required competencies
2. Create PSCM Steering Committee at DOH, chaired and co-chaired by the undersecretaries
of PSCMT and FICT, respectively; members to consist of representatives from the League
of Governors, City Mayors, and Municipal Mayors; Department of Budget Management
(DBM); and development partners and private and civil society organizations, including
patient groups
a. PSCM Steering Sub-Committee in CHDs, including LGUs and Health Service Delivery
Network (HSDN) (chaired by FICT assistant secretary of island groups)
b. Clear delineation of roles, functions, and outputs of committees and frequency of
meetings and reports, including creation of sub-committees at the central level (headed
by director IV of PS, SCMO, DPCB, Knowledge Management and Information
Technology Service [KMITS], Bureau of Local Health System Development, FDA,
Finance and Management Service, and PD); identify offices as members with
permanent/dedicated supervisorial role
3. Create an M&E framework for performance management of PSCM
4. Institutionalize a performance management system for PSCM (in coordination with Office of
Strategic Management, Bureau of Local Health System Development, Health Policy
Development and Planning Bureau); leverage use of existing Program Expenditure
Classification (PrExC) and office performance commitment reviews (OPCRs)
5. Get support from Department of Interior and Local Government (DILG) to guarantee LGU
participation (i.e., joint memorandum/ circulars)
6. Develop clear M&E system using high-level performance monitoring tool; develop
performance metrics for Steering Committee
7. Institutionalize policies and functional committees that sustain functionality despite changing
leadership and priorities of new administrations
8. Publish and disseminate standards for good PSCM practices (quantification and forecast
accuracy, procurement, warehousing and distribution practices); standardize and
consolidate guidelines and processes across programs, including measures to ensure
compliance
9. Ensure monitoring of 3PLs: monitor 3PL and PSCM functions by engaging third-party
monitoring firm through use of framework agreement
10. Commission comprehensive capability maturity and performance assessment of PSCM
system every three years, including contribution of 3PLs
11. Conduct annual performance improvement reviews (PIRs) and consultative meetings with
supply officers, program managers, and representatives from 3PLs
Existing  Joint memorandum circular on FP commodities and the linked role of the Population
enablers Commission (fostering effective coordination and stewardship mechanism at program level)
 Auditing body/firm currently engaged by DOH (to facilitate performance reviews)
 Existing DOH accountability framework, OPCRs based on balanced scorecard (section 7)
and KPIs

1.4 Expanded Leverage of Private Sector Capacity

Leveraging Private Sector Capacity More Systemically

The DOH is already engaging the private sector as part of the national PSCM system, for example,
by using 3PLs. The intent of this SO is therefore to take a strategic and systemic view on the role of
the private sector and consider how it can be more effectively engaged to enhance, complement,
and outsource public sector PSCM functions. This considers engagement with the private sector to
expand beyond 3PLs (such as existing material handling and storage equipment rentals), cover
subnational levels, strengthen the capacity of ROs, and where strategic, bundle private sector
services (such as the current warehousing/distribution) to include procurement service provisions.
Potential roles where private sector capacity can be better utilized include:

11
 Processes that DOH cannot do at this time or that will improve PSCM system efficiency
 Outsourcing capital-intensive functions to improve return on capital assets used for managing
health commodities

Addressing Challenges in Managing 3PLs, Leveraging Existing Good Practices

Meanwhile, DOH recognizes that effective contracting, assessment, management, and monitoring of
private sector service providers is a key priority and will be addressed through this SO. DOH will
extract lessons and effective practices in this role from current experiences (such as piloting
framework contracts with suppliers to enable flexible engagement) and mechanisms (such as the
engagement of the PPPI to manage the entire health commodity SC for Botika Ng Bayan from
procurement to distribution). Other additional services in consideration of the UHC are technical
support in information systems maintenance; procurement framework agreements, including HR
services and equipment rental services; and providing services and commodities to geographically
isolated and disadvantaged areas (GIDAs).

Expected result Availability of essential health commodities at the point of care is ensured through an efficient
and effective SC system (more responsive, accountable service delivered on time; all
processes implemented as expected/intended)
Indicator: PSCM functions appropriately outsourced to private sector: TBD TBD
baseline and No. and % of outsourced functions
2022 target No. and % of entities leveraging private sector/outsourcing services
Amount and % of budget utilized for private sector engagement
% of GIDAs reached through private sector engagement
No. of private entities participating in government bidding
Key 1. Do market analysis of possible private sector engagement
interventions 2. Assess what areas the private sector can provide comparative advantage compared to
the DOH managing internally through cost benefit analysis
3. Monitor timelines in production versus marketing; use streamlined payment mechanism
4. Assess private sector management of contracting, including HR, etc. (further discuss
contract management)
5. Develop two-way performance evaluation for private sector linked to performance
evaluation of government (in connection to SO #1), including KPIs, and monitoring
tool/scorecard
6. Issue policy on private sector engagement, accreditation requirements (streamline with
the on-going civil society organization accreditation efforts of legal office)
7. Accredit private sector providers
8. Streamline regulatory requirements for private sectors and incorporate into procurement
requirements (leverage with SO #5)
9. Identify standards of practice for good logistics management for health commodities (part
of SO #1)
10. Incorporate standard practices in the TOR/tender documents/framework agreements with
private sector suppliers and conduct prequalification of potential service providers
(leverage with SO #5)
11. Adopt SOPs on logistics management of health commodities at sub-national levels to
reflect 3PL management (leveraging with SO #5)
12. Create or use existing monitoring unit and capacitate its members to monitor and manage
3PLs (leveraging with SO #1)
13. Include or use framework agreements when engaging 3PLs and 4PLs through multi-year
obligational authority for appropriate functions of the PSCM, including automated
solutions and IT maintenance (leveraging with SO #5)
14. Harmonize information that can be shared with private sector suppliers across PSCM
levels (leveraging SO #7 as part of information dissemination for transparency purposes)
Existing  Existing experiences and practices for effective engagement of private sector (e.g., PPPI,
enablers pilots of long-term health commodity procurement framework agreements)
 UHC Act encouraging private sector engagement and contracting services

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1.5 More Competent, Professional, Accountable HR for PSCM

Skills to Ensure Effective Stewardship and PSCM Performance Management

While leveraging SO #2 to engage private sector capacity to enhance, complement, and outsource
public sector PSCM functions, DOH will require professional skills and staff to carry out stewardship
and performance management roles. These roles will also involve leading the implementation of
SOs #4 and #5 to ensure optimization of PSCM systems and support all PSCM SOs with quality,
real-time data.

Adequate Number of Competent, Professional, Accountable Personnel

Successful achievement of the NSP-PSCM goals requires that DOH attract, recruit, retain, and
motivate highly competent personnel while working through the HR management context and
challenges of the health sector. In addition, institutionalizing the PSCM HR structures in the central
office to CHDs and LGUs based on requirements and demands will be guided by PSCM system
redesign. The DOH central office shall facilitate CHD- and LGU-level HR and institutional capacity
building.

Expected results Increased efficiency, resilience and accountability in PSCM processes

Indicator: Availability of recruitment guideline/policy to fill PSCM structure with N/A Yes
baseline and adequate procurement and/or SC management skills and experiences
2022 target % of PSCM positions filled with personnel with qualified procurement and/or TBD 90%
SC management skills and/experiences
% of identified partners engaged for capacity building of PSCM staff N/A TBD
% of CHDs and LGUs with appropriate HR complement for PSCM N/A TBD
Key 1. Strengthen and develop the capacity of PSCM personnel: address recruitment,
interventions capacitation, generation, training, retraining, retention and reassessment, and regulation
of needed personnel
2. Assess competency and organization design requirements of DOH PSCM considering
expected roles in this strategic plan
3. Rationalize and propose HR complement to the DBM to increase regular positions:
justify the need, define training plan
4. Hire the right people in the right quantity for the right positions and ensure that needed
skills are developed for the future state of PSCM
5. Develop succession plan to ensure PSCM HR continuity
6. Accredit training institutions that will provide sustainable procurement and SC capacity
building
7. Include PSCM curricula on the list of DOH scholarship programs and conduct post-
training evaluation
Existing  Proposed national HR for health under UHC
Enablers  Health SC workforce performance management framework
 Existing capacity building and training opportunities:
o Skills development and coordination with the help of learning and development
intervention officers
– Trainings (annual for PS)
– Consultative meeting (quarterly for SCMO)
– Program implementation reviews
o Review personnel qualification standards (appropriate job descriptions)
– Putting the right people in the right positions

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1.6 More Streamlined, Unified, and Cost-Effective PSCM System

Harmonizing and Streamlining PSCM Functions for All Centrally Procured Health
Commodities
The goal of this SO is to create a single, clearly defined PSCM system for all centrally procured
health commodities; it requires strong collaboration between PSCMTs, health programs, and lower-
level PSCM stakeholders. Collaboration with entities, such as the Population Commission and its
revised mandate to play a more active role in management of FP commodities, will be considered.
Overall, the process of streamlining PSCM functions will be designed around better serving LGUs,
local health systems, and point of care needs.

Addressing Fragmentation of Health Commodity PSCM and Related Functions

Significant waste occurs because of lack of streamlined and rationalized processes across health
programs for demand and supply planning, procurement, storage, and delivery of commodities to
LGUs and even to points of care. Analysis and realignment of these processes is needed through
harmonized guidelines that are customized and aligned with policies, regulations, and laws.

Proactively Managing the Impact of Major Reforms that will Impact PSCM Systems
The enactment of the UHC Act has introduced greater complexity into the roles played by UHC
stakeholders in planning, procurement, distribution, and access of various health commodities.
Although SO #5 aims to address better alignment and efficiency in existing PSCM practices,
upcoming developments will bring new realities to PSCM responsibilities. The aim of this SO is to
get ahead of these developments and ensure a design that optimizes the use of resources available
across PSCM stakeholders, paying particular attention to local health systems.

Applying Modern PSCM Analytics and Practice to Design a Cost-Effective SC System

Analysis of PSCM system investments and returns and linked benefits would provide evidence for
better resource management decisions. Additional gains in efficiency are possible through
framework arrangements and adoption of alternatives models, such as 4PLs.

Expected Efficient and resilient PSCM system that delivers accurate, quick, responsive, transparent service
results and ensures availability of health commodities to lower levels, including points of care
Indicator: % health commodity (value) wastage reduction TBD <1%
baseline and % received commodities from Central Office distributed to HF based on allocation List TBD
2022 target Health commodity inventory turnover rate
% inventory holding reduced (across the entire pipeline)
Total cost of ownership of PSCM system reduced
Key 1. Analyze current network map of PSCM roles and responsibilities for health commodity
interventions categories and identify areas of duplication, non-alignment, and risks
2. Develop business case and implementation/roll-out plan for optimized redesign of PSCM system
a. Conduct PSCM system design, analytical study, and optimization under future state
scenarios, including cost-benefit analysis, strategic location of hubs, and prepositioning for
disaster management; study will consider:
 Network optimization
 End-to-end process harmonization/integration
 Options for engagement of 3PLs/4PLs
 New and innovative modalities of sourcing for health commodities
 Assessment of cost of freight, HR, inventory holding, return on assets, leasing
warehousing
 Risk management, risk mitigation, accountability, and governance

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 3. Define possibilities for redesigning PSCM roles and responsibilities to promote better alignment
and service to common endpoint (LGU and/or point of care and the local health system network
under the UHC Act) and obtain buy-in to new processes and responsibilities
a. Clarify, document and disseminate managerial roles and responsibilities of stakeholders
4. Implement better procurement planning (especially for common health commodities procured by
different programs and at different levels), starting on time (or early); using most efficient
available procurement mechanism; ensuring supply from central level and less duplicative
procurement at lower levels
5. Define standard list of commodities (based on the UHC Act and its implementing rules and
regulations [IRRs]) that should be procured centrally, which would not be procured at
decentralized level (unless central level unable to supply)
6. Develop and obtain regulatory endorsement (as required) for specific guidelines for health
commodity procurement that address specific needs of this sector, rather than treat health
commodities as general goods (e.g., framework contracting)
7. Paperless transactions linked with SO #7 allowing e-signature for inventory transactions
(considering Commission of Audit, e-commerce law)
8. Roll out in selected CHDs/LGUs most preferably in UHC integrated sites
Existing  Draft warehouse (and distribution) operations manual for all commodities and (pharmaceutical)
enablers waste disposal guideline
 Draft AO of DOH Pharmacy Department (PD) (implementation guidelines for ensuring the
efficacy, quality, and safety of essential medicines/health commodities in the DOH)
o Proposal to FDA to reduce proportion of batches that will be sent to FDA for quality control
test, based on risk assessment (will improve flow to lower levels)
o Strengthening FDA’s post-marketing surveillance
 Procurement framework agreements guideline; can be translated into health commodity
procurement framework agreement guideline
o Draft proposal/guideline on delineation of procurement between central DOH and CHDs
 Use of shipment plans: extend application to be more comprehensive and owned by multiple
stakeholders
 UHC Act IRRs development task force or working group
 Public health investment plan
 4PL-PPPI model can be used to inform new system
 Framework agreement can be potential model, based on what works in pilot

1.7 Unified Information System for PSCM at all Levels

Data Visibility across PSCM System as an Input to Higher Performing PSCM Functions and
SCs
Data from all levels needs to be visible and reliable, based on near real-time reporting from different
levels (e.g., through PSCM Performance Management Dashboard [see SO #2]).

Data Culture Needs to Drive PSCM Decision Making

The purpose of this SO is to promote the availability and use of a centralized, end-to-end information
system that allows sharing of accurate data across all PSCM stakeholders for decision making. The
system should leverage existing information systems that meet functional requirements, retire
redundant data or systems, and fill gaps with cost-effective solutions. Beyond systems, this SO will
also address barriers to data culture and use by applying strategies related to governance,
accountability, HR, and performance management.

Expected results Data used for decision making and PSCM performance monitoring by programs
Indicator: Existence of PSCM visibility across all levels Partial Full
baseline and Existence of functional integrated and interoperable procurement and Partial Yes
2022 target SC information systems for immediate and long-term decisions and
performance management
Procurement and SC data quality (% reporting, % completeness, % TBD >80%
of timely submission, and % accuracy)

15
 Number of informed SC decision made increased, based on TBD TBD
statistical report and analysis
 Forecasting decision
 Procurement decision
 Allocation decision
 Warehousing and distribution decision
% of software and hardware incidents troubleshot (including TBD TBD
time/speed of fix)
% of CHDs and LGUs using the unified PSCM (UPSCM) system 0 CHDs
Assumption: LGUs will buy-in to the UPSCM system because of UHC 100%
Act requirement LGUs 70%
Key 1. Assess and analyze existing information systems vis-à-vis data needs for decision
interventions making (PSCM functions, including performance management); define data and system
requirements based on user and system needs at all levels of the health system
2. Consider options to harmonize and enhance existing information systems and/or
develop new systems, taking into consideration the UHC Act and its IRRs; pilot use of
data/information system at selected implementation sites (early adopters)
3. Deploy a unified system that would allow access to complete, reliable information down
to health-facility level (2,600 RHUs, 600 government-retained hospitals); system will
consider potential for linkage or interoperability with warehouse management system,
facility information management systems reporting products, and patient information;
update information systems for linkages, data analytics, and PSCM decision making
4. Implement harmonized information system (e.g., based on global standards, such as
GS1) to pool data with standards for location, supplier, and health commodity data (e.g.,
issuance of AO of national policy mandating the use of integrated system)
5. Link with SO #4 to automate difficult-to-perform and labor-intensive business processes
Existing  Manuals/SOPs for existing information platforms
enablers  ICT requirements (infrastructure, hardware, software, Internet connection)

16
5. Opportunities and Risks

1.8 Opportunities
The NSP-PSCM is being developed at an opportune moment for the Philippine health sector,
considering the following:

Enactment of UHC Act  Creates a single goal for the organization of health commodity availability and
financing
 Establishes IRRs that will help define process flow, responsibility of different
agencies/players, and the mechanism to hold these accordingly responsible
 Sets appropriate targets and resources for health (PSCM) and development
Creation of SCMS  SCMS has a key role in oversight, coordination, and performance management
 Official recognition of SCMS positions will increase likelihood of filling available
positions that will be key to NSP-PSCM implementation and PSCM performance
management
Strong top  In addition to support for creation of PSCMT, top management levels at DOH have
management support expressed and demonstrated support for PSCM (e.g., request to convert SCMO
for PSCMT job order positions to permanent ones, support for construction of hubs, funding for
activities, etc.)
PSCM capacity  NSP-PSCM considers the presence of KMITS an asset to be leveraged
development, for  KMITS was also considered a valuable resource in the development of end-to-end
example, KMITS and data visibility (through a unified information system)
Philippine Institute for  Existence of local institutions that provide certification-level training for
Supply Chain procurement that can be leveraged in other SCM areas, including access to
Management refresher courses available through e-learning
Existence of capable  While strategies to ensure effective and robust engagement of the private sector
private sector are the subject of SOs and interventions in this NSP, the availability of a strong
private sector is an opportunity for PSCM (considering models for effective product
and service provision, all the way to potentially outsourcing PSCM functions [e.g.,
information systems development/management, vender managed inventory
management systems]).
Stakeholders’  Development and implementation partners prioritized strengthening the Philippine
commitment PSCM capacity and are willing, long-term partners for implementation of the NSP-
PSCM

1.9 Risks and Mitigation

Meanwhile, the NSP-PSCM has also assessed important internal and external risks that can limit the
success of the plan. These are summarized in table 1 along with potential strategies for mitigating
the impact of these risks.

17
Table 1. NSP-PSCM Risks and Mitigation Responses
Risk Likelihood Impact Possible Mitigation Response
Limited buy-in from CHD levels/ LGUs to NSP-PSCM SOs: H H  Consult and engage with LGUs in the planning, take their inputs
Under devolution of health system, LGUs may not adhere to on board; should be bottom-up engagement, from community to
centrally planned systems, processes, and responsibilities national level; use the UHC IRR as an opportunity to incorporate
PSCM components aligned with NSP-PSCM objectives
 Pass local ordinance that requires adherence to NSP objectives
(could be cross sector)
Insufficient HR knowledge and capacity and high turnover to H M  Adoption of innovative capacity-building strategies to minimize
deliver SO areas: Stewardship, contract management, competency gap for key PSCM functions
performance management, information systems  Continued negotiation, advocacy, and lobbying for more staff
 Request for permanent positions from DBM (initiated)
 Identify and source short-term expertise needs, e.g., through
technical working group (TWG)
 Close coordination with clearing house on training
 Possible coordinating with Civil Service to fit the position to the
functions in the office
 Improve computer literacy of some staff
Challenges to expanded leverage of private sector: Examples H H  Engage measures to extend existing contract within specific
of challenges include failed bidding; delayed payment of timeline and same TOR
private sector service provider; no 3PLs at the sub-national-  Enforce Anti-Red Tape Act for timely processing of claims/
level meeting; new process/contract requirements; high cost, payment
resulting in failed bidding
Poor ICT infrastructure for achieving unified information H L  Address infrastructure limitations in design of solutions and
system goals system roll-out plans
Non-compliance with existing and new policies and M H  Target effective, collaborative approach to development and
guidelines: Resistance from programs in following dissemination of new SOPs
harmonized guidance; lack of political prioritization for new  Present strong arguments and justifications for change to gain
systems/processes/new interventions at central level; lack of commitment from other sections
acceptance of new processes by technical staff at central  Elevate issue of adherence to the Executive Committee
level (EXECOM) level to ensure compliance
 Request intervention from the secretary
 Build adherence with processes into individual personnel
commitment and review (personnel evaluation)
 Explore outsourcing options for functions where noncompliance
risk has high impact
Insufficient funding: Operational expenses and or for key M H  Propose rational annual investment/work and financial plan to
change/reform interventions support PSCM activities
 Secure additional funds for operational expenses through the
work financial plan

18
 Risk Likelihood Impact Possible Mitigation Response
Too many scorecards: Risk that measurement of M M  Harmonize/incorporate new KPIs to existing scorecards
performance will be intensive and distract from use of
performance measures, diluting the effect of performance
systems
Inadequate buy-in to unified information system: LGUs and M M  Diagnose and appropriately address factors influencing
others may reject policy issuance to use harmonized or resistance to use of information systems
integrated system developed by DOH  Prerequisite for license to operate
Nonapproval of DBM for proposed additional permanent M M  Evidence-based justification for proposed permanent positions
positions (or approval of limited number of positions)  Secretary to secretary negotiations between DOH and DBM
Lead time for key interventions to demonstrate results: M M  Elevate approval of key interventions to the DOH EXECOM for
Needed policy or SOP development takes a long time (many fast tracking
months) and will affect ability to develop new systems and  Refer to changes as new processes vs. policies
new harmonized guidelines  Plan for lead time in NSP-PSCM implementation plan
 Generate quick wins to build and maintain political will
H = High, M = Medium, L = Low

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6. Performance Management Framework

1.10 Performance Measurement/Management Systems

The NSP-PSCM and its outcomes will be evaluated under the existing consolidated framework for
accountability established by the DOH to achieve UHC and long-term Sustainable Development
Goals for the Philippine (figure 4). This will require the adoption of DOH’s OPCR and PSCM
department performance and commitment report (DPCR). The latter is more advanced for the
procurement units of PSCM, with indicators, such as agency procurement compliance performance;
the SCM component of the DPCR will be finalized in alignment with the needs of this NSP.

Figure 4. DOH performance accountability framework (DOH 2018b)

In addition to DOH scorecards, the NSP-PSCM will review and ensure alignment of scorecards of
key stakeholders to achieve mutual accountability for PSCM results. This means alignment with
hospital, LGU, and development partner scorecards and the local health systems in line with the
UHC IRRs.

1.11 Performance Measurement Metrics

The DOH has established metric targets for 2022 that the NSP-PSCM will align with and support,
namely:

 Health center properly stocked with selected essential medicines

 No stock-outs
 Improved processes for PSCM
 Equitable distribution of quality and affordable health goods and services

20
 Ensure continuous availability of quality-assured, affordable, essential health commodities at points of care
through an integrated, effective, and sustainable PSCM system
1. % and number of public health facilities with no stock out: from 70% to 100% by 2020
2. % CHDs with no stock outs of centrally procured ICESDP commodities

SO 1: SO3: SO4:
SO2:
Stronger More More SO5:
Expanded
stewardship competent, streamlined, Unified
leverage of
and functional professional, unified and information
private sector
oversight of accountable cost-effective system
capacity
PSCM HR for PSCM PSCM system

 % of LGUs with  PSCM functions  Availability of  % of health  Existence of

functional and appropriately recruitment commodity functional
effective PSCM outsourced to guideline/policy (value) wastage unified
oversight private sector to fill PSCM reduction procurement
mechanism  No. and % of structure with  Health and SC
 % of CHDs and outsourced adequate commodity information
LGUs with functions procurement inventory systems for
functioning  No. and % of and/or SC turnover rate decisions and
PSCM entities management  % of inventory performance
organizational leveraging skills and holding reduced management
structure private sector/ experiences (across the  % of CHDs and
 Existence of outsourcing  % of PSCM entire pipeline) LGUs using the
functional DOH services positions filled  Total cost of unified
Central Steering  Amount and % with personnel ownership of information
Committee of budget with qualified PSCM system system
 No. of PSCM utilized for procurement reduced  Improved
issues private sector and/or SC  % received procurement
discussed and engagement management commodities and SC data
decided at the  % of GIDAs skills and from Central quality (%
DOH Central reached through experiences Office reporting, %
Steering private sector  % of identified distributed to HF completeness,
Committee engagement partners based on % of timely
 No. of joint  No. of private engaged for allocation List submission, and
circulars/issuan entities capacity % accuracy)
ces issued by participating in building of  Existence of
DOH and LGUs government PSCM staff PSCM visibility
related to PSCM bidding  % of CHDs and across all levels
 No. of regular LGUs with  No. of informed
PSCM appropriate HR SC decisions
performance complement for made increased
appraisals PSCM based on
conducted information
 No. of reports analysis and
on PSCM reports
performance  % of software
management and hardware
published incidents
publicly troubleshot

Figure 5. Illustrative PSCM performance measurement framework

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7. Stewardship of the Strategic Plan

DOH, as a steward of the PSCM, provides vision, guidance, and oversight. It also leverages multiple
PSCM actors and explores diverse options available; for example:

 Setting standards and alliance-building with all stakeholders, such as LGUs, local health
systems, service delivery points, the private sector, and development partners
 Introducing innovative PSCM systems, framework agreements, and/or mechanisms
 Performing oversight of implementations

The NSP-PSCM will leverage existing structures supported by stewardship mechanisms, TWGs,
and sub-TWGs to ensure its integration into DOH, PSCM activities, and commitments, with the
possibility of replicating stewardship mechanisms/structures at lower SC levels. Figure 6
summarizes the organizational structure that will be used to shepherd the NSP-PSCM.

EXECOM

PSCM Steward
and Oversight
Committee

Luzon Visayas Mindanao

PSCM TWG (CHD and LGUs) (CHD and LGUs) (CHD and LGUs)
sub-committee sub-committee sub-committee

Quantification sub-
TWG

LMIS sub-TWG

Distribution sub-
TWG

Procurement sub-
TWG

Figure 6. Structure for NSP PSCM stewardship

NSP-PSCM implementation will rely on the PSCM stewardship team at the DOH EXECOM level, co-
chaired by the undersecretaries for PSCMT and FICT, plus members from hospitals and CHDs and
representatives from the League of Governors, City Mayors, and Municipal Mayors; DBM;
development partners; private sectors; civil society organizations; and patient groups. There will also
be three sub-committees covering the three CHDs and respective LGUs and one central-level

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PSCM TWG. The PSCM TWG’s core function will be coordinating PSCM activities among the
different sub-TWGs, overseeing system designs, analyzing options, and advocating for PSCM
resources.

The PSCM TWG will be supported by sub-TWGs for quantification, procurement, LMIS, and
distribution. The quantification sub-TWG will have members from health programs, SCMO, PS, PD,
and development partners; its core function will be facilitating annual forecasting and regular,
quarterly (or more frequently) supply planning and synchronizing with procurement and other related
functions. The LMIS sub-TWG members will be composed of staff from DOH (KMITS, PSCMT, and
PHST), DICT, and PhilHealth (considering the UHC Act, which stipulates that DOH and PhilHealth
are responsible for establishing and implementing information systems); with the core function of
defining data, processes, tools, management support, systems, users, and infrastructure
requirements. The distribution sub-TWG will involve SCMS, PS, PHST, and ROs with primary
responsibility for planning the distribution of health commodities, considering information received
from health programs, LMIS, and PS. The procurement sub-TWG, composed of SCMS, PS, and
PHST, will mainly focus on procurement operational activities, pending procurements, outstanding
shipments, suppliers’ performance, and linking information to other functions of the SC. For all
committees and TWGs, membership, meeting frequencies, and detailed roles and responsibilities
will be defined through the development and approval of clear terms of reference.

The stewardship and oversight team will also seek stronger but transparent partnerships with the
broader key PSCM stakeholders, including the private sector. Reporting tools and mechanisms will
be established based on a review of existing resources or creation of additional ones. An AO for
strategic plan implementation in alignment with F1+ and the UHC act will be considered.

The PSCM team will manage and monitor routine aspects of NSP implementation using the:

 Implementation plan
 Defined milestones and indicators
 SWOT analysis and intervention
 Gantt chart development
 Program implementation reviews for PSCMT units (annual)

Establishing the necessary stewardship mechanism for the NSP-PSCM is a critical element and will
require an expedited budget proposal to DBM for staffing operations and services (a separate line
item will have to be dedicated to NSP-PSCM operations).

Coordination with development partners will also be critical in establishing the necessary
stewardship mechanisms and supporting key interventions. Clear terms of reference, including
detailed roles and responsibilities, membership, and meeting frequencies, will be defined. Finally, a
robust stakeholder engagement strategy will be designed to effectively leverage the contributions
and role of all PSCM stakeholders in achieving the SOs. The stakeholders’ support-mapping
exercise that identified particular stakeholders and their area of support will leverage resources and
eliminate duplication of efforts. Table 2 depicts the stakeholders’ commitment matrix that will guide
implementation of the strategic plan.

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Table 2. NSP-PSCM Stakeholders Commitment Matrix
Stakeholders Area of support
Stronger DOH offices Commitment of the steering committee and sub-committees, permanent representation to the PSCMT Oversight Committee
stewardship CHDs Creating CHD PSCMT; providing technical assistance and cascading policies to LGUs; complying with policies and regulations; providing
and functional stewardship of resources; conducting CHD performance appraisals; cascading national PSCM policies to LGUs and partner agencies; monitoring
oversight performance
LGUs Adoption of DOH issuances on creation of oversight PSCM Committee
UNICEF Technical assistance on policy development, such as AO on procurement and SC; technical assistance on procurement, SC, and delivery
mechanism; capacity building; technical assistance on HR, e.g., detailing of staff to DOH
WHO Conducting policy dialogue: development, review, and updates; evidence generation: data mapping, baseline data, and M&E framework
USAID Technical assistance on overall PSCM system strengthening
Expanded CHDs Partnership/collaboration with stakeholders
leverage of LGUs Involvement of private sector/organizations in GIDA municipalities
private sector Private sector Expanded leverage of private sector capacity: representation/consultation on policy making; involvement in capacity building; supporting continuing
education/training
USAID Technical assistance on overall PSCM system strengthening
More DOH PSCMT Duplicate PSCMT structure at CHDs (with HR/competencies)
competent, CHDs Capacity building of PSCMT; public-private partnership/collaboration
professional, LGUs Support recruitment of pharmacist and pharmacy assistant per RHU
accountable PACOP Trainings and partnerships, development of training module/short course programs/internship program at all levels
HR PBSP HR for NTP; technical assistance to NTP drugs and supply management team
UNICEF Technical assistance in forecasting and quantification
WHO Experts for HR capacity building/development
USAID Technical assistance on overall PSCM system strengthening
More DOH PHST Funding support, M&E
streamlined, DOH PSCMT Issuance of guidelines/SOPs/manuals, etc.
unified and DOH KMITS UPSCM system development funding
cost-effective CHDs Implementation of PSCM system, M&E, warehouse inventory and distribution management
PSCM System LGUs Assist development management officers in lobbying for LGU procurement of supplies and medicines based on needs of RHUs to avoid receiving
medicines not needed; compliance with PSCM implementation; timely submission of reports
Private sector Provide contingencies in warehouse and distribution management, contribute to policy making, process mapping and evaluation
PBSP Distribution of NTP products, retrieval/disposal; warehousing for MDR-TB medicines and supplies; warehouse renovation for second-line drugs;
procurement of NTP drugs, medicines, and laboratory supplies; emergency procurement of NTP commodities; support to NTP PSM activities;
UNICEF Provide technical assistance/inputs on policy development: quantification and forecasting of DOH-procured health commodities; provide technical
assistance on identifying bottlenecks in assessment of procurement, SC, and cold chain capacity
USAID Technical assistance on overall PSCM system strengthening
Unified DOH FICT Support cascading and roll-out of policies and systems developed to CHDs
information DOH KMITs TOR development; PSCM system development and implementation, funding support for 2020 (including hardware, database, and other
system connectivity requirements)
CHDs Technical assistance for eLMIS implementation; implementation of UPSCM developed
LGU Coordinate with DILG regarding establishing connectivity in barangays; regular feedback to DOH PSCM on available medicines and commodities
PBSP M&E for NTP
PhilHealth Data gathering/collection; UHC section 31
UNICEF Provide technical assistance/inputs on harmonizing and enhancing existing information system, e.g., web-based vaccination supply stock
management; technical assistance on capacity building on eLMIS implementation
USAID Technical assistance on overall PSCM system strengthening

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Annex 1. Philippine National PSCM Strategic Plan - Implementation Plan

SOs SN Implementation plan milestones

Y1 Stewardship and functional oversight 1.1 Oversight mechanism and modalities defined at national and sub-national levels (positions and functions
1st half of oversight mechanisms: TOR)
1.2 SOPs, policy and governance tools developed (presented to EXECOM)
1.3 Performance management system designed
Y1 1.4 Oversight staff/committee on-boarded (members and staff proposed, presented to EXECOM)
2nd half 1.5 Performance management system implementation strategy defined
1.6 Performance management system in place
Expanded leverage of private sector capacity 2.1 Private sector engagement situational review conducted (market analysis)
More streamlined, unified and cost-effective PSCM system 4.1 Masterplan/Project for Increasing Access to Health Commodities launched, linking PSCM to UHC
4.2 Optimization study/analysis conducted
4.3 System (re)design/optimization conducted
4.4 Procurement bottlenecks prioritized (framework and pooled procurement guidelines developed to
address bottlenecks)
Y1 More competent, professional, accountable HR for PSCM 3.1 HR for PSCM requirements defined at national and sub-national level
2nd half
Y1 Unified information system 5.1 eLMIS landscape and requirements analysis conducted
5.2 eLMIS options presented and selected and business case developed
Y2 Stewardship and functional oversight 1.7 Standard reference materials available and disseminated
1st half 1.8 Regular communication activities started, including quarterly PSCM consultations
Expanded leverage of private sector capacity 2.2 Strategy for improved 3PL engagement defined
More competent, professional, accountable HR for PSCM 3.2 Supporting HR for PSCM policies/guidelines in place
More streamlined, unified and cost-effective PSCM system 4.5 Critical bottlenecks to SCM performance resolved
4.6 Procurement bottlenecks addressed and procurement framework agreement and pooled procurement
guidelines implemented
Y2 Stewardship and functional oversight 1.9 Annual PIRs initiated and conducted
2nd half 1.10 Annual PIRs and performance management audits initiated and conducted
Expanded leverage of private sector capacity 2.3 Implementation of private sector engagement plan
Y1 and More competent, professional, accountable HR for PSCM 3.3 Cost-effective PSCM capacity-building program developed
Y2 3.4 HR management plan developed
3.5 Key PSCM positions filled at national/sub-national levels
3.6 Competent PSCM staff running PSCM functions at all levels
More streamlined, unified and cost-effective PSCM system 4.7 System (re)design implementation plan available
4.8 System (re)design tested at selected UHC integration sites
Unified information system 5.3 Unified eLMIS piloted in UHC implementation sites
5.4 eLMIS evaluated and improved
Y 2 and Stewardship and functional oversight 1.11 Evaluation of performance management strategy completed
Y3 More streamlined, unified and cost-effective PSCM system 4.9 Efficient, streamlined SCM processes scaled up
4.10 System (re)design rolled out to all CHDs
Unified information system 5.5 National eLMIS rolled out
Y4 More streamlined, unified and cost-effective PSCM system 4.11 System (re)design evaluated routinely
Unified information system 5.6 National eLMIS evaluated

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Annex 2. Bibliography

Dayrit MM, Lagrada LP, Picazo OF, et al. Philippine Health System Review. Asia Pacific
Observatory on Health Systems and Policies. Health Systems in Transition. 2018; 8:2.

Department of Health. 2017. Philippine Strategic TB Elimination Plan (2017–2022

https://www.doh.gov.ph/family-planning

Department of Health. 2018a. F1+ for Health: Philippine Health Agenda 2017-2022.

Department of Health. 2018b. Philippine National Objectives for Health 2017-2022.

MTaPS. 2019. Rapid Diagnostic Report: Health Commodity Procurement, Supply Chain
Management and Pharmacovigilance in the Philippine. Arlington, VA: Management Sciences for
Health

Nfor E, Agaceta C, Linatoc I, Desano C. SIAPS. Strengthening the Department of Health’s

Warehouse Management System in the Philippine. 2017. USAID

Sarol JN Jr. 2016. Survey on Availability of Essential Maternal and Child Health Care Supplies in the
Public Health Facilities in the Philippine.
https://pharmadiv.doh.gov.ph/images/publication/DASMREGIONrugs2016FinalReport.pdf

Sarol JN Jr. 2016. Survey on Essential Drug Availability in Public Health Facilities in the Philippine.
https://pharmadiv.doh.gov.ph/images/publication/DASEssentialDrugs2016FinalReport.pdf

Universal Health Care Act (Republic Act 11223)

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