Waqas Masood

Storage Capacity Optimization of Warehouses for Integration of Vertical Programs in Balochistan Province Table of Contents Abbreviations and Acronyms ......................................................................................................................... i Executive Summary ....................................................................................................................................... ii Background ................................................................................................................................................... 1 Key Objectives of Scope of Work ............................................................................................................. 2 Methodology ................................................................................................................................................. 3 Findings ......................................................................................................................................................... 4 Recommendations for Proposed Integrated Warehousing ............................................................................ 9 Annexures ................................................................................................................................................... 10 Annex- 1: 3D Layout Plan with Specifications for Proposed Integrated Warehouse ............................... 10 Annex-2: Estimated Costs ........................................................................................................................ 13 Annex- 3: List of Warehousing Focal Persons in Balochistan ................................................................. 14 ii Abbreviations and Acronyms FMJC GoP DoH MNCH MCP HCP LWH MSD SCM TA USAID Fatima Jinnah Medical College Government of Pakistan Department of Health Maternal Neonatal & Child Health Program Malaria Control Program Hepatitis Control Program TB Control Program Lady Health Worker Program Nutrition Medical Store Depot Supply Chain Management Technical Assistance United States Agency for International Development i Executive Summary The United States Agency for International Development (USAID) has been providing technical assistance (TA) aimed at supply chain management and commodity security to the Government of Pakistan (GoP) since 2009. In a recent yet connected launch of the USAID Global Health Supply Chain Program, a new approach of supply chain technical assistance was put in place for strengthening supply chain systems. The objective of this renewed supply chain TA mechanism is to introduce significant and sustainable changes in provincial supply chain landscapes. This involves transformation of health and population welfare systems and other vertical programs with a particular focus on gradual shift to integrated supply chain functions which will warrant efficiency with economy and reliability. This proposal focuses on optimization of warehousing infrastructure for appropriate utilization of space in the vertical programs of Balochistan Province. Based on the initial assessment of the current space requirements and supplies volume in all the vertical programs- including MNCH (Maternal Neonatal & Child Health Program), MCP (Malaria Control Program), HCP (Hepatitis Control Program), TB Control Program, HIV/AIDS Program, LWH (Lady Health Worker Program), Nutrition, and MSD (Medical Store Depot) programs of Balochistan, a hybrid approach was adopted to propose storage space optimization by identifying space utilization requirements of products with similar characteristics stored under one roof of integrated warehouses. When the current space utilization versus future space requirements of warehousing facilities of each program was evaluated for their annual bulk purchase of supplies at central level, it was identified that the current storage capacity can be optimized up to 50% by introducing racking system and utilizing vertical space in the existing warehouses. Above all, an integrated warehouse for all the vertical programs of Balochistan Province would be an efficient approach considering the status quo. In a follow-up visit for feasibility assessment, the TA team deemed Fatima Jinnah Medical College (FJMC) Quetta fit for the purpose because:     This is properly purpose built warehouse building with sufficient space i.e. 16,000 sq. ft. If this is converted to an integrated warehouse, the space can be optimized up to nearly 62,000 sq. ft. by installing racking system and utilizing the space up to the top roof. Since the estimated space of FJMC Quetta warehouse building is 62,000 sq. ft. upon conversion into an integrated warehouse, this still is even greater than the total space requirement (42,000 sq. ft.) of all the vertical programs in the province of Balochistan. This is located in a prime area of Quetta with easy accessibility. ii To facilitate an all-inclusive decision making for the Government of Balochistan, a comprehensive plan for the proposed integrated warehouse has been put down in 3D layout along with budget required for installation of racking system. Table 1: Summary of Recommendations Focus Problem Identified ̶ Warehouse Infrastructure ̶ Inadequate space utilization No installation of racking system Non-purpose built warehouses for health supplies Poor layout plans No utilization of vertical space ̶ ̶ ̶ Integrated warehouse ̶ No integrated warehouse Accessibility to health supplies ̶ Due to space shortage, each vertical program could not meet supplies volume. Warehousing functions are compromised and independent. ̶ iii Recommendations Storage capacity optimization by:  Installation of racking system  Identified purpose built warehouse building (FJMC Quetta),  3D Layout Plan for utilization of vertical space up to top of roof.  FJMC will be the best option to be converted into an integrated warehouse.  Setting up a centralized warehouse in FJMC Quetta  Linking up all district level warehouse facilities with central warehouse  Improved access Background The adequate warehousing infrastructure requires significant considerations for efficient warehouse layout, appropriate storage installations (pellets, shelving), security and safety of commodities, quality control, and stock management. Balochistan Department of Health is responsible for ensuring safe storage conditions for health products and supplies. With an increase in the procurement of bulk supplies in recent years, there is a need for an integrated warehouse that can function as a central storage space to meet the requirements. In a recent move of launching the USAID Global Health Supply Chain Program- Procurement and Supply Management Program which was commenced in July 2016 immediately after the closure of DELIVER Project in June 2016, the mechanism of providing technical assistance for supply chain management and commodity security has been transformed to keep it in line with 8 pillars of the National Health Vision- and Sustainable Development Goal 3. The major objective of this new TA approach is to further accomplish goals by putting strong public health supply chain systems in place. The scope of TA has been extended, as requested by Balochistan Department of Health, to provide them and other stakeholders the support for optimization of currently available warehouse space allocated for the vertical programs. These vertical programs include MNCH, MCP, HCP, TB, HIV/AIDS, LWH, Nutrition, and MSD in the province of Balochistan. In a series of field visits and follow-up engagements with focal persons and relevant stakeholders of Balochistan Department of Health, the key challenges identified for their vertical programs regarding warehousing functioning were:  Insufficiency of currently available space in the warehouses of vertical programs to meet the space requirements for bulk supplies procured annually;  Incompatibility of geographical expansions of health services with future requirements for maximum coverage of clients at both primary and secondary levels in urban and rural Balochistan;  Poor infrastructure and non-purpose built warehouse buildings causing hindrance to utilize maximum space available for storage. With a focus on extended scope of TA, this proposal was developed for optimized utilization of currently available space in the warehouses of the vertical programs in this province. This was endeavored for achievement of the primary goal which was to consider future space requirements of each vertical program for safe storage of their supplies volume. For this purpose, the program technical team will provide assistance regarding the feasibility of the proposed recommendations in lieu of findings discussed later. 1 Key Objectives of Scope of Work      The initial assessment of optimized space utilization of existing warehouses/stores for all vertical programs including MSD in Balochistan. Identifying opportunities for optimization of space utilization in the available space of warehouses/stores for all vertical programs. Using hybrid approach to suggest optimization of storage space utilization by characterizing with similar products procured for other programs and stored under one roof integrated warehouse. Analysis of current space utilization and future space requirements for each vertical program. Development of proposed plan for integration of all vertical programs to optimize warehouse space utilization. MNCH Program Malaria Control Program HCP TB Control Program HIV/AIDS Program LHW Program Nutrition MSD Program Figure 1: Vertical Programs of Balochistan 2 Methodology In pursuance of providing technical assistance to Balochistan Department of Health for optimization of warehouse space utilization, the program technical members visited Quetta and engaged in discussions with key officials of DoH (Department of Health). This includes engagements with focal persons of DGHS (Director General Health Services), program coordinators of all vertical programs, and additional director of MSD on 5th April 2017. The venue of these meetings was Quetta Serena Hotel (List of Participants in Annex- 2). The desk reviews of current warehousing infrastructure and systems (Tools, Policy, Literature, PC1 Budgets of DoH Supplies, Products Characteristics, and National & International Procurements) were performed. The plan for meetings with key persons of Balochistan Department of Health (including vertical programs and other relevant stakeholders was developed. The tools/questionnaires were defined for data collection from different tiers of DoH warehousing and distribution at provincial, district, and sub-district levels. The hybrid approach was adopted to determine the current space utilization and contrast it with future space requirements by identifying storage optimization of products with similar characteristics. A baseline questionnaire was developed and shared with logistics officers and store incharges of each vertical program to gather information about the annual supply flow transactions for their respective warehouses/stores. Also, the data was collected from all government counterparts, and stakeholders during field visits to MNCH, MCP, HCP, TB, HIV/AIDS, LWH, Nutrition and MSD warehouses/stores using same baseline questionnaire. The data collected from each program warehouse/store during these field visits provided information about their annual supply flow volumes and their current space utilization for each warehouse/store per volume of supplies requirements. The logistics officers and storekeepers were interviewed in each vertical program to identify gaps between current space utilization and future space requirements in the current warehouse infrastructure of Balochistan Department of Health. The assessment was focused primarily on the existing warehouse infrastructure regarding available space and/or installation in the warehouses and to determine the space requirements of each program for their supplies volume. For this purpose, the annual flow of products supplies for each program was evaluated in terms of required volume and required space considering their current and future space requirements. 3 Findings A common demand of a well-functioning integrated warehouse from senior officials of the government counterparts and vertical programs was recorded in interviews and warehouse visits during the warehousing space assessment. While describing this further, they emphasized on the development of an integrated warehouse with:      A strong governance structure, An appropriate space and infrastructure, A smooth operations management system, Sufficient and qualified human resource, An ability to monitor warehouse functions. Also, the multiple interdependent and interlinked cross-cutting supply chain problems were identified. These problems were found to impact the smooth warehousing functions of a program causing interruption in timely last mile delivery at the service delivery points. The program managers, logistics officers, and storekeepers identified the key drivers of warehousing and logistics in the vertical programs. Table 2: Common Barriers of Last Mile Health Supplies Delivery and Promising Practices to Address Those Barriers The following table highlights the promising practices that have been put in place to address the common barriers of last mile health supplies delivery: Common Barriers Description Promising Practices that Address the Barriers Poor warehouse infrastructure The storage space available  Improving health due to: for the volume of products to warehouse move through warehouse is ̶ Inadequate available infrastructure for inadequate. In case of no space optimal storage ̶ Poor/No installation of installation of racks/shelves in capacity. a warehouse, the maximum racks/shelves  Installation of racking utilization of vertical space in a ̶ Non-purpose built system which may warehouse is not possible warehouse buildings increase the existing which may lead to for health supplies space availability up to compromised quality of 50% with the products. Poor layout of utilization of vertical warehouse is another space in an existing challenge to optimize space warehouse/store. utilization in a warehouse. 4 ̶ ̶ Poor product traceability Manual inventory management Stock leakage and security ̶ ̶ Government poor capacity of warehouse management coupled with aging or inadequate warehouse infrastructure Poor performance by existing warehousing staff due to: ̶ Lack of proper resources ̶ Lack of training The records about in- and out-flow of products in a warehouse is usually paperbased. This is time-consuming process with greater chances of error. With no definite process in place, a paperbased system may limit the visibility of data at different levels of the supply chain. Stock leakage, security issues, and product traceability throughout the supply chain frequently lead to stock-outs. The upgradation of aging infrastructure and information systems (WMS/HMIS) to modern standards may require an investment which the provincial government is not willing/able to make. Outsourcing of warehousing functions may be a costeffective approach for the management of medicines and supplies in a national health system.  If the staff responsible for monitoring warehouse operations are not properly trained, they will not be able to appreciate their defined goals and responsibilities resulting in lack of accountability for their actions and thus, the warehouse operations will be inefficient and ineffective.       Improving inventory management and security using barcoding Installation of webbased Warehouse Management System (WMS) at all levels of supply flow transaction points to track products Outsourcing warehouse functions to specialized third party logistics service providers Development of parastatal, semiautonomous and central medical store managed by a professional health warehousing firm as per international warehousing standards Dedicated logistics personnel Increased SCM capacity for health personnel at service delivery points Performance management and supportive supervision for supply chain activities It was noted that the distribution, storage, and quality of supplies in Balochistan Department of Health and vertical programs could be at risk due to inadequate storage space and poor infrastructure of warehouses/stores. During the assessment of in-flow and out-flow supply against volume of products for each program, it was found that the existing space could not meet space 5 requirements for procured supplies volume. While considering the central warehouse for vertical programs in Balochistan, it was observed that there was a stronger need for storage capacity optimization for meeting space requirement of bulk supplies procured annually. Table 3: Space Requirements for Each Vertical Program The in- and out-flow of supplies were calculated for last year in warehouses visits and findings regarding the space requirements for each vertical program have been put together in the table below: Sr. # Provincial Program Total Area sq. ft. Walk Way 30% 1 2 3 4 5 MNCH MCP HCP TB Control Program HIV/AIDS Control Program LHW Program Nutrition Program - 6 7 Storage Area Cubic Feet - Storage Area sq. ft. Avg. Piling, 6.5 ft. 805 x 6.5 350 x 6.5 350 x 6.5 595 x 6.5 350 x 6.5 540 NA 1260 x 6.5 4000 x 4.5 = 8190 = 18000 = 5333 = 2275 = 2275 = 3868 = 2275 The infrequent distribution of products resulted in larger stock storage with limited space availability. The installation of racks in warehouses/stores of vertical programs would not be feasible due to inappropriate layout of rooms and thereby, there are risks of compromise on quality of products. There was a decartelized storage of supplies within small rooms in MCP, TB and HIV/AIDS Control programs due to shortage of space. Since the warehouse building of MSD was not purpose-built, it could not allow maximum utilization of space in the wake of limited height and non-installation of racks. Nutrition program has no warehouse at provincial level. They rented WFP tarpaulin made Rub Hals warehouse for storage of nutrition supplies on an annual contract basis. In this outsourced warehouse, WFP oversees the warehousing functions, storage, and inventory management. This is a classic example of warehouse outsourcing to third party specializing warehousing firm in Balochistan. 6 Figure 2: Nutrition Program Rented Warehouse Balochistan Department of Health already sanctioned restructuring of MSD building for constructing a new purpose-built warehouse followed by redesigned layout which was completed by a professional architect. The standardized layout of health supplies warehouse PC-1 was approved earlier. Fatima Jinnah Medical College (FJMC) located in a prime geographical area of Quetta was found with sufficient space and purpose-built infrastructure where the space could be enhanced from 14,000 sq. ft. to 62,000 sq. ft. upon adjustments in the current space. This facility has also the potential of installing racking system which would allow vertical space utilization up to the top of the roof. 7 Figure 3: FJMC Warehouse 8 Recommendations for Proposed Integrated Warehousing Balochistan Department of Health in collaboration with stakeholders and donors is providing health services in 34 districts with a resolve for enhancing accessibility to the clients at all levels. This is their responsibility to ensure quality health services in their province by meeting both the perspectives of both current and future requirements. Since a well-resonated need for an integrated warehouse was surfaced during interviews with senior officials of vertical programs and government counterparts, the feasibility assessment identified the possibility of the conversion of an existing purpose-built FJMC warehouse building into an integrated warehouse. The current storage facility of FJMC was found with sufficient space with a great potential for installation of racking system which would allow vertical space utilization. This building is newly constructed and has sufficient outside throughput area for receiving, dispatching, and sorting supplies. Also, this building has an easy access for larger trucks and containers and has an adequate parking space for large vehicles and warehouse operating equipment. However, it was observed that this warehouse building might require small repair for blocking water leakage during rainy season. The current occupancy and space utilization of this building is almost 35%. There is no racking system currently in this building and therefore, the supplies are dumped and stored without utilizing existing vertical space. Given the current scenario, FJMC Quetta would be an ideal option for setting up an integrated warehouse. This will also be cost-effective and efficient approach of implementing integrated warehousing in the province of Balochistan. The installation of racking system would boost the existing space utilization from 16,000 sq. ft. to 62,000 sq. ft. by using vertical space up to the roof. This would even be greater than the total space requirement (42,000 sq. ft.) of all the vertical programs of this province. Balochistan Department of Health should take the initiatives to utilize this opportunity of converting the existing FJMC Quetta into an integrated warehousing for the vertical programs. The last mile delivery of vertical programs can be improved if the supplies are properly stored and distributed under one roof where many other interdependent and interlinked supply chain management issues can be streamlined. Each vertical program supplies can be segmented in the integrated warehouse with a proper warehouse management system (WMS) for better inventory management and real time stock traceability for all vertical programs. FJMC Quetta can be easily converted into the integrated warehousing at central level for all vertical programs with only installation of racking system in the existing warehouse building up to the top roof. The existing FMC Quetta can be converted into a state-of-art integrated warehouse by investing in installation of racking system in the warehouse. 9 Annexures Annex- 1: 3D Layout Plan with Specifications for Proposed Integrated Warehouse 3D Layout Plan for Racking and Storage Racks Installation Specifications Steel structure racks Type of application: Selective Racking system Number of Racks: 154 Number of Starting bay: 10 Number of Extension bays: 144 Number of Pallets: 1232 Rack Size: H. 6700 mm x W. 2290 mm x D. 1065 mm Number of Levels: Ground + 3 Temperature: 5/45℃ closed warehouse Clear Pallet Entry on Each Level: 1346 mm (min.) Truck Lifting Height: 4877 mm Aisle Distance (Pallet to Pallet): 3630 mm Load bearing capacity: 2000 kg. Per level Total Gangway: None Clear Height: 6096 mm 10 There are 2 basic components of these racks: a) Upright Frame       b) Box Beam    Upright: 6700m Frame Width: 1065mm Cold Rolled form steel Dimension Upright: 90 x 75 x 2.0mm Frame consisting of two upright (column) bolted to horizontal and diagonal braces. Punching on upright enables Beams to be adjusted at 3” increments. The Upright frames are stove   Beam Length: 2290mm Designed for heavy loading Connector angle of 3.0 mm thickness with 4 lugs duly welded at the both end of beam to fix with the upright frames. Beams will bear uniformly distributed load up to 2000 kg (Per pair of beam). These beams are stove painted in Alert orange. Note    Quantity may increase or decrease at time of installation Fire proof , non-oil based powder paint for racks preferably All components preferably painted through a process of painting i.e. Degreasing with chemical; De-rusting ; Blue Stove powder coat finish for Upright Frames and alert orange Beams for easy visibility 11 Pallets Specifications Fire proof pallets (High quality plastic made), blue in color Dimensions      Facing 1000mm, Depth 1200mm, Height 140mm Load Bearing Capacity Minimum: 1000Kg Pallet with load (Height): 1370 mm Preferably with rubber stopper base for better handling through reach truck The Jack opening height on all sides should be 100mm Loading Specifications        Facing: 1000 mm Depth: 1200 mm Height: 150 mm Orientation of pallet bears: 2 Beams Range of load: max. (Kg): 1000 per Pallet Pallet with load (Height): 1220 mm All loads in the racks have the same specifications and weight as above: YES Method of loading pallets: Through Reach Truck Method of unloading pallets: Through Reach Truck 12 Annex-2: Estimated Costs Estimated Costs of Racks Sr. Item # 1 Starter Bay 2 Add-on Bay Required Number of Bays 10 144 Per Bay Cost Rs. 49,700 Rs. 36,100 Total Cost Total Cost of Bays = Rs. 497,000 = Rs. 5,198,400 = Rs. 5,695,400 Estimated Costs of Pallets Handling and Placing Equipment Sr. # 1 2 3 Item High Reach Truck (Stacker) Hydraulic Pallet Lifter Plastic Pallets Required Unit(s- Per Unit Cost Total Cost Rs. 5,000,000 Rs. 18,000 Rs. 5,000 Total Cost = Rs. 5,000,000 = Rs. 180,000 = Rs. 6,160,000 = Rs. 11,340,000 Summary of Total Costs Sr. # 1 2 Item Total Cost Racking System Cost Equipment Cost Total Cost Rs. 5,695,400 Rs. 11,340,000 = Rs. 17,035,400 13 Annex- 3: List of Warehousing Focal Persons in Balochistan Sr. # 1 Name Designation Department Remarks Mr. Muhammad Shafique Lodhi Mr. Naseebullah LMIS Operator Department of Health - Pharmacist - Logistics Officer Logistics Officer Logistics Officer HIV/AIDS Program - MCP Program - 9 Mr. Abdul Wali Khan Mr. Salah Uddin Kasi Mr. Muhammad Khan Zehri Mr. Muhammad Dawood Kakar Mr. Zafar Ahmed Mr. Abdul Hannan Dr. Khudaidad MSD, Department of Health TB Control Program LHW Program 10 Dr. Nasir Bugti 2 3 4 5 6 7 8 Logistics Incharge Logistics/Store MNCH Program Incharge Store Logistics EPI Program Officer Pharmacist Hepatitis Control Program Nutrition Nutrition Program Program PC 14 ------