Best Practice Third-Party Logistics Service Provider (3PL) or a Lead Logistics Service Provider (LLP) Supply Chain Model: An Operational Guide

It aims to lead the country's universal health care (UHC) agenda by 2040, with a mission to make Filipinos among the healthiest people in Asia. Seamless implementation of UHC requires a robust supply chain system to support the country's needs. The archipelagic nature of the Philippines makes it logistically challenging to cater to the needs of its population, comprising 108,743,043 Filipinos as of 2021, which continues to grow at a rate of 1.63% annually. Each segment of the population requires varying healthcare interventions and investments from national and sub-national governments. This increase in population has a significant impact on the public health supply chain, leading to a higher demand for healthcare services and commodities. The demand for healthcare services and commodities increases as the number of people grows, potentially straining the supply chain. This necessitates the need for more healthcare facilities, such as hospitals, clinics, and pharmacies, which require significant resources and planning to build and maintain. Additionally, there is a need for efficient and effective distribution networks to ensure access to healthcare products by the population. The DOH is already engaging the private sector as part of the national Public Sector Logistics Management (PSCM) system, using third-party logistics (3PL) service providers. The DOH has also developed a strategy identifying "Expanded Leverage of Private Sector Capacity" as one of the strategic objectives of the 2019 National Supply Chain Strategy. This objective aims to take a systemic and strategic view on the role of the private sector in enhancing, complementing, and outsourcing public sector PSCM functions. The study conducted by the USAID Medicines, Technologies, and Pharmaceutical Services (MTaPS) Program in 2021 and 2022 assessed the capabilities of private sector fourth-party logistics (4PL), third-party logistics (3PL), and lead logistics (LLP) service providers in supporting public health supply chains. The dual objectives of the study were to assess the potential for implementing such relationships in the Philippines and low- and Middle-Income Countries (LMICs) in general, and to identify the motivations, incentives, and incentives that may hinder or promote the adoption of these relationships. The study found that 49% of organizations in the Philippines outsource 3PL services, while 51% handle domestic logistics activities in-house. The most commonly outsourced logistics services are domestic logistics, domestic ocean freight, customs brokerage, and transport. The DOH has already engaged private sector logistics service providers, and the study recommends considering the engagement of private sector capacity to expand beyond 3PLs, cover sub-national levels, strengthen the capacity of Regional Offices (ROs), and bundle private sector services. The study also identified potential roles where private sector capacity can be better utilized, including processes that the DOH cannot do or that can improve the PSCM system, and outsourcing capital-intensive functions to improve the return on capital assets used for health commodities. The study concludes that the DOH should consider the engagement of private sector capacity to enhance, complement, and outsource public sector PSCM functions, and to take a systemic and strategic view on the role of the private sector in supporting public health supply chains.