Consultant

Scope of Work

Assessment to Strengthen Private Sector Distribution Strategy

BACKGROUND:

The CRS Company of Nepal has been conducting social marketing activities in Nepal since 1978.  Over the years, CRS has grown its staff, its budget, and its product line to include three male condoms, two oral contraceptives, one injectable contraceptive, one emergency contraceptive pill, an ORS product, and a water treatment product.  Its products are sold throughout the country and it makes a substantial contribution to the national contraceptive prevalence.  Currently, CRS’s primary source of funding is from USAID through the Ghar Ghar Maa Swasthya (GGMS), or Healthy Homes, project which works in 49 districts in the hill and mountain areas to improve the access to and use of health products by underserved and vulnerable populations.  GGMS contributes directly to the fulfilment of Development Objective 3: “Increased Human Capital” and its Intermediate Result 3.2: “A Healthier and Well-Nourished Population.”   The specific purposes of the GGMS project are to:

1. maximize the health impacts to Nepalese through the social marketing and social franchising  of FP/RH and MCH commodities (including behavior change communications ), and
2. improve efficiency of the CRS organization as it relates to the successful achievement of GGMS program objectives.  

CRS procures and distributes  over 14millioncondoms per year, 1.5million cycles of oral contraceptives (OC), 750,000 units of 3 month injectable contraceptives, over 500,000 doses of emergency contraceptive tablets each year as well as smaller quantities of ORS packets, IUCDs, implants, and water treatment solution.  CRS procures D’zire and Panther condoms, Sunaulo Gulaf and Nilocon White OC’s and Econ emergency contraception on the international markets through competitive tenders which have to be compliant with either KfW or USAID procurement procedures depending on which donor is funding the procurement. In addition, CRS receives commodity donations from USAID for Dhaal condoms and Sangini injectables which CRS must order through the USAID commodity logistics program.  With these different sourcing issues, forecasting the timing and the quantities to procure can be challenging.In many cases, CRS’s ability to go to market to resupply its stocks is conditional on the renegotiation or approval of a pending donor agreement which can also interrupt resupply.

CRS commodities are repackaged (over branded) in country so the timing of commodity deliveries must alsotake into account packaging production schedules before products are available for shipping. In addition, Nepal is a landlocked country with a limited number of sources of supply that are vulnerable to political problems. CRS must also take into account the availability of warehouse space.  Currently their guidelines are to hold no less than a six month’s supply and no more than a 12 month supply of any one product.  All of these factors mean that CRS must build in adequate lead times in all steps in the procurement process to avoid product stock outs or rationing.

Once in country and packaged for shipping, CRS distributes its products through its 36 distributors and its own sales force that is based in six area offices.  Roughly 80 percent of sales volume of non-medical products is shipped through distributors.The remaining 20 percent is sold by CRS’s own sales force (approximately 20 sales agents, Rural Field Reps and Sales Reps).  Planning distribution to these distributors as well as internal shipments to the CRS Field Offices also requires adequate forecasting and planning, particularly when national stocks are insufficient for demand.

Having a large number of distributors means that no one distributor has a significant amount of business, so CRS is not able to use a high value for its business to negotiate smaller margins to distributors on sales of its products.  Most of the retailers that CRS sells to are also supplied by wholesalers and stockists for other products, so it is not always clear why CRS has to sell directly to these retailers rather than direct these retailers to obtain their resupply of CRS product from their local wholesaler.  CRS staff open new outlets in more hard-to-reach areas, but these areas are also where population density is lower and the cost of distribution is higher.  In opening new outlets, CRS staff typically sells directly from their own stocks, but then those outlets are not always transitioned to wholesalers for resupply, making the distribution less sustainable and more costly for CRS.

With the help of SHOPS Plus project, CRS will begin to use data from Lot Quality Assurance Sampling (LQAS) surveys to assess product availability and will focus distribution efforts on districts or VDCs where availability is below the required coverage standard.  This may require frequent reassignment of sales routes and selling efforts.  In addition to a more flexible deployment of CRS’s own sales staff, some areas should be reserved for wholesalers to resupply and sales staff should only monitor the supply chain and trouble shoot distribution problems.  The criteria for determining which areas will only be served by wholesalers needs to be established and then the territories clearly defined to reduce overlap.

Finally, CRS has a mandate from its main donor, USAID, to become more sustainable and improve its cost recovery while fulfilling its social mission.  To achieve this, CRS must eliminate all wasteful or redundant processes in order to reduce its operational costs.  A well performing supply chain that requires minimal intervention from CRS to ensure continuous sales is critical.  To this end, better planning in procurement, logistics and deployment of sales staff and vehicles is essential.

SCOPE OF WORK

In view of the situation described above, SHOPS Plus seeks to contract the services of a Private sector distributionand Supply Chain Specialist in Nepal to assess CRS’s commodity forecasting, procurement and distribution capabilities by performingthe following scope of work:

a. Review the distribution agreement with all 36 distributors and their assigned territories.   Assess the capacity of the existing distributors to take on larger territories or whether new distributors will need to be engaged to improve efficiency. Assess whether margins to distributors can be reduced by giving larger territories to a smaller number of distributors.   Assess the possible advantages to using national distributors and/or a combination of national and regional distributors.  Make recommendations for an optimal number of distributorsto achieve CRS’ distribution objectives.

b. Assess the existing distribution agreements and the incentives and targets included.  Make recommendations on improving these incentives to improve distributor performance and better achieving CRS’ objectives.  Make recommendations on points to renegotiate in the distribution agreements.

c. Assess CRS’sstaff sales activities to determine to what degree CRS staff are competing with or complimenting distribution of products through distributors and wholesalers.   Make recommendations for instituting operational rules to clearly define areas to be served by wholesalers versus areas to be served by CRS staff or through other remote area strategies.

d. Analyze CRS’s cost per product sold in selected remote, mountain districts.  Assess cost-benefit of serving remote areas. Questions to be answered include:How else can remote areas be served besides sending CRS staff and vehicles to deliver product directly to retailers?  For staff that split their time between distribution and promotion, is the current time allocation appropriate?  Should more time be spent on promotion and behavior change than distribution?  Make recommendations for improving cost efficiency in field operations.

2. Preferred Skills/Prerequisites

• Private sector specialist with an advanced degree in business or public health with a specialization in supply chain and logistics for health and/or pharmaceutical products.
• Strong knowledge of the pharmaceutical and fast moving consumer goods sectors in Nepal.
• Ten to fifteen years professional experience with at least eight years in sales, distribution or supply chain and logistics at a significant level of responsibility.  
• At least five years of professional experience working in the private commercial sector in Nepal working with the distribution of health products and medicines.
• Demonstrated ability to read and write both Nepali and English fluently.
• Strong analytical skills and ability to think creatively.
• Ability to communicate well both orally and in writing.
• Proficient in Microsoft word, Excel and PowerPoint.

3. Timing/Period of Performance

Interested candidates/ firms should submit their CVs and a cover letter briefing describing their qualifications for the assignment.  In addition, candidates should write a short technical proposal (no more than six pages) briefly describing their understanding of the scope of work, their approach to the assignment and the key issues to be resolved.    A timeline of the steps in the work should be included.   Candidates should also present a one page cost proposal that shows the level of effort for different tasks, the daily rate for the consultant(s) assigned to the tasks and any travel or administrative costs.   All the elements of the proposal should be submitted to Mr. Jeffrey Barnes (JeffreyBarnes@abtassoc.com) and Gopal Bhujol (Gopal_Bhujel@abtassoc.com)  by  April 21th, 2017.

Any questions regarding this request for proposals should be sent to Mr. Barnes no later than April 14th.

Estimated level of effort is as follows:

• 3-5 days preparation, review of literature, inventory and procurement records, project documentation.
• 15 to 20 days (including travel) interviewing project staff, distributors, wholesalers and relevant stakeholders.
• 5 to 7 days writing report, including additional literature review.

4. Deliverables

The consultant who is selected for this assignment will be expected to produce the following deliverables, subject to review and approval by SHOPS Plus:

• A powerpoint presentation to be given to CRS Management and SHOPS Plus Chief of Party with main findings and recommendations within 10 days of completing field work.
• A written report to be delivered no more than 20 days after giving the powerpoint presentation and hearing initial feedback from CRS and SHOPS Plus with the following components:
• Description and analysis of CRS’ current distribution strategy and arrangements including a map showing the coverage areas of CRS’ distributors, its sales force and storage units. 
• Description and analysis of CRS current deployment of his sales and distribution staff identifying where efficiency can be improved and where commercial distributors or wholesalers can be incentivized to play a larger role.
• Analysis of CRS’ distribution costs disaggregated by product, field office and territory if possible.  Identification of areas or sales routes where cost per product distributed to CRS more than 3 times the national average for CRS.
• Recommendations for an improved system for distribution making more efficient use of distributors and wholesalers, with a more efficient configuration of national and regional distributors and a well defined role for CRS sales staff that complements the activities of CRS distributors.
• Recommendations for improved deployment of sales/distribution staff, including consolidation or elimination of some sales territories.