Building an Agile Supply Chain for Public Health Commodities in Indonesia

1. Fragmented Forecasting and Planning Mechanisms

Forecasting for ATM commodities is often disconnected from real-time consumption patterns at the facility level. Many provincial and district health offices rely on outdated or incomplete data due to delays in reporting and inconsistencies between stock and patient data. This fragmentation leads to inaccurate quantifications—either overestimating or underestimating needs—which in turn causes stockouts or excess inventory.

2. Rigid Procurement and Budgeting Systems

Government procurement processes are constrained by annual budgeting cycles, lengthy approval chains, and limited adaptability once the procurement plan is locked in. This rigidity makes it difficult to respond to unexpected shifts in demand, emergency outbreaks, or changes in treatment guidelines—especially when donor funding is blended with domestic budgets. As a result, even when commodities are available globally, local delivery is delayed.

In Indonesia, the procurement of health commodities through government budgeting mechanisms is bound by a highly structured and time-sensitive cycle. While this ensures compliance, accountability, and transparency, it also introduces significant challenges in terms of timeliness and adaptability.

The process typically begins with annual budget planning—often finalized many months before actual implementation. Health offices and programs must forecast commodity needs far in advance, with limited room to adjust once allocations are set. This misalignment between forecasted demand and actual consumption trends often leads to mismatches in supply levels.

Once funding is disbursed, procurement follows a multi-tiered approval process, involving national, provincial, and often district-level verifications. Each step—from tender preparation and vendor selection to contract signing and payment scheduling—requires time and coordination, with limited flexibility to fast-track or reallocate funds in real time.

Even after contracts are awarded, delays can arise during distribution and delivery, particularly when linked to centralized procurement systems. Suppliers must adhere to delivery windows that may not align with actual regional stock levels, leading to either stockpiling or stock-outs at the facility level.

Additionally, the use of single-year budget cycles discourages long-term procurement planning or buffer stock maintenance, as unspent funds cannot always be carried over. Emergency procurement is possible but often bureaucratically complex, creating a system where timeliness is sacrificed for procedural compliance.

Furthermore, the procurement process under government budgeting mechanisms tends to be rigid and time-consuming. The lack of flexibility in adjusting purchase orders, timelines, or supplier arrangements—especially under national programs—prevents rapid response to emerging needs or disruptions.

These limitations underscore the need for procurement reform, digital forecasting integration, and hybrid procurement models that combine public oversight with private sector efficiency

3. Siloed Information Systems

Key logistics and programmatic data for HIV, TB, and Malaria are often stored in separate digital platforms (e.g., SIHA, SITB, SISMAL), which do not always integrate seamlessly with national supply chain or warehouse management systems. The lack of interoperability makes it difficult for central planners to monitor commodity flows, consumption, and wastage in real time.

Compounding the problem is the issue of data reliability and accuracy. Many health facilities still operate with manual reporting or partially digitized systems that do not sync in real-time. As a result, decision-makers lack visibility into actual stock levels, consumption trends, and lead times—making responsive planning and reallocation extremely difficult.

4. Inefficient Distribution and Warehousing

Delivery budgets are often limited, while timelines for distribution are tight and inflexible. With minimal room for adjustment, even minor logistics delays can cascade into service interruptions, particularly in remote or underserved areas.

Delays in last-mile delivery are common due to limited third-party logistics engagement, poor route planning, and under-resourced provincial warehouses. In remote or high-burden areas, deliveries may be infrequent and irregular, with little visibility into delivery timelines or stock balances at the destination points. Moreover, many facilities lack sufficient space or infrastructure for safe storage, particularly for cold chain commodities like certain malaria RDTs or HIV test kits.

5. Limited Human Resource Capacity and Accountability

Many district- and facility-level staff involved in logistics are overburdened or insufficiently trained in supply chain management principles. Errors in inventory recording, poor use of tools (e.g., stock cards, LMIS), and inconsistent supervisory support contribute to unreliable data and mismanagement of stock. Additionally, accountability frameworks for stock losses or expirations are weak, particularly in decentralized settings.

6. Delayed Implementation of Program Transitions

Policy shifts—such as transitioning to new regimens, updating diagnostic algorithms, or changing test kit types—are not always matched by procurement and distribution readiness. Lag between policy change and commodity availability leads to parallel systems and field-level confusion, increasing the risk of wastage and expired stock.