Regional Distribution Centers
With state-of-the-art regional distribution centers (RDC's) operating in Ghana, Kenya and South Africa, SCMS is providing the most frequently requested essential medicines and other health products within shorter delivery times, trimming the turnaround time from three to four months to between four to six weeks for planned orders. The RDCs also hold 'buffer stock' that are available to prevent potential stockouts and eliminate the high cost related to emergency shipments direct from manufacturers. By working with recipient countries to better plan their commodity needs, SCMS is increasingly switching from air freight to lower-cost sea and road freight.
Since December 2006 we have saved our clients more than $30 million by shifting shipments from air to sea and more than $2 million with road freight out of regional distribution centers (RDCs). Total savings for 2009 were more than $13 million for sea shipments (85 percent less than air freight) and $0.56 million for land shipments (59 percent less than air).
The continuing success of the SCMS RDCs can be attributed to the design of the RDC logistics model, which is based on sound supply chain principles, accommodating the specific challenges of a large scale program such as PEPFAR. The RDCs are placed close enough to the target countries to allow flexibility and rapid response, yet also to leverage economies of scale across multiple countries. The RDCs were created without USAID capital expense and are accessed on a "pay-as-you-go" activity-based costing model, with SCMS only paying per actual pallets stored. In this way, the SCMS model has been designed to address the high-variance environment in which it operates, while minimizing costs.
Ghana was chosen as the best location for the RDC in West Africa due to a number of factors, including the nearby port facility, relative economic and political stability, receptivity of the government in having the facility located there and proximity to Nigeria and Côte d’Ivoire (two PEPFAR countries).
Kenya was chosen in East Africa for similar reasons, including the receptivity of the government to the RDC and the country’s proximity to a number of PEPFAR countries and a good aircraft hub.
In South Africa, PHD, one of SCMS’s 13 team member organizations, already had a large warehousing facility; therefore the RDC was located adjacent to existing facilities for continuity of management and services.
