Coke in Africa 2, or Why Soft Drink Supply Chains Could Inspire Better Performance in Global Health

In response to my previous post on Coke in Africa, comments from A. Barnes and Eric Meade draw our attention to the use of Coca-Cola distribution networks as ways to distribute essential medicines and supplies in poor countries. This is one of those nuggets that people always highlight when lamenting lack of access in Africa and elsewhere, but is it a good idea?Prashant Yadav is a professor of supply chain management at Zaragoza-MIT Logistics Center that works across the developing world. In a recently released paper, Yadav and his co-authors compare medicine supply chains to soft drink supply chains. While Yadav’s paper doesn’t help us decide if piggybacking on Coke distribution is a good idea, it reveals that soft drink supply chains have plenty of features to emulate:

1. Supply chain planning: Medicine supply chains tend to rely on old data and strong assumptions about demand and use in front-line clinics, while soft drink supply chains utilize continuous information about deliveries and consumption at points-of-sale, often done cooperatively with many consumer product companies. The result is an always-available product.
2. Competition: In soft drink land, if a distributor doesn’t perform, the manufacturer simply changes distributors. In medicines land, if the Central Medical Stores (CMS) does not perform, the consequences are borne by patients who do not receive life-saving interventions. While recognizing that storage and distribution of medicines may be more complex and likely requires certification, Ministries of Health could structure performance-based contracts with private distributors, or at least set up better contracts with CMS that include…
3. Incentive structures: In soft drink land, distributors are paid based on sales and pricing, resulting in incentives for efficient distribution and larger sales of the product. In medicines land, we don’t want to promote irrational use, but we do want to encourage timely, accurate deliveries, non-expired stocks, and better reporting on medicines use.  What if Ministries or donors pay CMS for on-time, accurate deliveries and regular reports on medicines stock and use, then randomly audit facilities on a regular basis to minimize perverse incentives to misreport?