Vendor Managed Inventory for Pediatric Vaccine Ordering System

Background: Through Vaccine for Children program (VFC), the CDC is ensuring that immunization coverage is maximized in all populations by distributing routinely recommended pediatric vaccines to those who cannot otherwise afford vaccination. Under the Vaccine Management Business Improvement Program (VMBIP) started in 2003 to improve the current vaccine ordering system, a centralized distribution of vaccines is implemented via two distribution centers. The VMBIP requires health care providers to determine how many vaccine doses to order. Commonly these vaccine orders are based on historical vaccine usage, but are not determined by any lot sizing procedure. Consequently, an induced bullwhip effect amplifies the uncertainty of vaccine demand perceived by the VFC.

Setting:  Public health vaccination provider sites, pediatric clinics, and hospitals where inoculation is provided under VFC.

Population: Providers and nurses who order vaccines under VFC, distributors who send vaccines to providers and vaccine manufacturers.

Project Description: We evaluate a VFC centralized vaccine distribution system where stockpiling decisions are made by a third party. The current centralized distribution typically focuses on distributing vaccines centrally but still lets the providers decide when and how many doses to order. The proposed strategy considers vendor managed inventory (VMI) to replenish vaccines for each provider. We assume that the vaccine demand at each provider can be obtained from the state immunization registry in which each child is enlisted and then the manufacturer or centralized decision-makers replenishes vaccine stocks for each provider under a continuous review policy. A simulation model is used to determine the efficiency of present and proposed system.

Results/Lessons Learned:  Results show that a VMI for the VFC may reduce demand fluctuations, and hence decrease inventory and distribution costs while improving service level. The challenge for implementing this policy resides in building trust between public health providers and centralized vaccine distributor.