SPARE PARTS SUPPLY CHAIN STUDY FOR PIPED WATER SYSTEMS Report by Dr. Kwabena Biritwum Nyarko Dr. Eugene Appiah-Effah April 2017 SPARE PARTS SUPPLY CHAIN STUDY FOR PIPED WATER SYSTEMS Final Report Submitted by Dr. Kwabena Biritwum Nyarko Dr. Eugene Appiah-Effah April 2017 2 SPARE PARTS SUPPLY CHAIN STUDY FOR PIPED WATER SYSTEMS EXECUTIVE SUMMARY Context Scope The delivery of sustainable water service services require readily available spare parts for timely repairs and maintenance. Spare parts supply chain for rural water supply based on boreholes and hand pumps in Ghana has received some attention but there is a dearth of information on spare parts supply chain for community water supply relying on other technologies such as mechanised boreholes, Slow Sand filtration (SSF), Ultra violet (UV) and Ultra Filtration (UV) systems. Objectives The main objective of the study is to contribute to The study was conducted in three (3) districts namely strengthening operational sustainability of water Biakoye and North Dayi districts in the Volta Region, systems by examining the spare parts supply chain. and Asikuma Odoben Brakwa district in the Central The specific objectives covered are as follows: Region as indicated on the map. In all a total of 24 piped water systems were assessed. » identifying spare parts outlets; » determining the type and availability of spare parts; Results » identifying repair and maintenance service providers and their operational The Private Sector is the major player in the spare status, capabilities and challenges parts supply chain for piped water systems. The typical spare parts supply chain identified extends from the » mapping out the distribution/supply manufacturer (International) to local distributors or chains for spare parts in the two regions; wholesalers (at the national level in Accra) and to retailers (in other regional and district levels) to the » identifying gaps in the spare parts supply maintenance service providers and finally to the end chains/network; user/operators and managers of water systems at the » identify barriers and issues to spare parts community level. The spare parts identified from the availability and provide recommendations study were classified into basic (minor) and advanced for improving access to spare parts and (major) (Table 2, page 13). The basic spare parts are strengthening the supply chains network; those available within the districts where the water supply systems are located whereas the advanced spare » quantify the costs of improved spare parts parts are the parts available outside the district where inventory management to water systems the water supply system are located. Majority of the water system (22 out of 24) had no access to advanced 3 spare parts outlet in their communities. The advanced spare parts were usually available in plumbing and Conclusion and other hardware shops located in major towns within the district or region or the national capital, Accra. Recommendations The WSMTs had technical operators in charge of basic (minor) repairs and maintenance of water system such The spare parts supply chain is working fairly well on as sealing of leakages, replacement of taps etc. Aside market based principles. However, the supply chain the minor repairs by technical operators, some of the could be strengthened with interventions to promote piped water systems had service contracts with private 1) easy identification of the outlet with required maintenance and service providers to undertake spare part of good quality and the lowest price routine maintenance and break down maintenance. and 2) timely access to the required spare part. The Spare parts were obtained from three main sources recommendations to address these challenges are: (1) -operators of water systems buy spare parts either making information on spare parts readily available to directly from the retail shops, distributors or through the water supply operators to increase access to spare the assistance of private repair and maintenance parts and provide options to stimulate competition service providers. The total annual expenditure on by exploring option of using technologies such as basic and advanced spare parts for a single water the Mobile Phone Technology (MPT) (2) Explore system ranged from GHS 1,200-2,200 and GHS 1,800- the feasibility of a policy on standardisation of water 3,500 (USD 418.50-813.80) respectively. Spare parts supply parts to enhance the quality of spare parts (3) distributors/wholesalers and retailers indicated that To reduce the travel time in accessing major spare they usually obtained their parts mainly from France, parts by exploring the use of technologies (emerging India, China or Germany through importers. The social media and mobile money platforms) to order barriers and gaps in identified in the study were (1) parts and also make payment. Individual water system operators and managers are left to purchase spare parts from any available outlet they identify on market based principles (2) There is no documented information on profile of spare parts outlet to offer customers the opportunity to buy from their preferred supplier (3) There is no known quality assurance and control of piped water system spares parts (4) There is no regulation in place to eliminate or reduce the presence of sub-standard parts, which are likely to result in reduced lifespan and increased breakdown of parts and (5) Inadequate incentives for spare parts suppliers to decentralize their distribution centres to the community level. The study revealed the average downtime for water systems to be approximately 4 days per system per year. Improving the supply chain to reduce the downtime of each water system from 4 days to 1.5 days could lead to financial savings of USD 13,570 from 500 small towns water systems in Ghana. If the cost of improving the supply chain with Mobile Phone Technology is USD 30,000 then the payback period will be 2 years 3 months. In addition, the will be other economic benefit in the form time savings made in collection of water and reduction in absenteeism from work and school as a result of reduction in water related diseases. 4 SPARE PARTS SUPPLY CHAIN STUDY FOR PIPED WATER SYSTEMS CONTENTS EXECUTIVE SUMMARY 2 CONTENTS 4 LIST OF TABLES 5 LIST OF FIGURES 5 LIST OF ABBREVIATIONS 6 GLOSSARY 7 1. INTRODUCTION 8 1.1 Background 8 1.2 Objectives 8 2. METHODOLOGY 9 2.1 Introduction 9 2.2 Sampling 9 2.3 Data Collection 9 2.3.1 Literature Review 9 2.3.2 Interviews with key informants 10 2.3.3 Observations and inspection of water system records 10 2.4 Data analysis 11 3. POLICY FRAMEWORK ON SPARE PARTS SUPPLY CHAIN MANAGEMENT 11 3.1 Context 11 3.2 Policy framework on spare parts supply chain 11 3.3 Supply chain: Public or Private? 12 4. FINDINGS 13 4.1 Identification and access to spare parts outlets 13 4.2 Mapping out the distribution/supply chains for spare parts 15 4.3 Repair and maintenance service providers and their operational status, 17 capabilities and challenges 4.4 Market Assessment of Spare parts- business 19 4.5 Barriers and Gaps in Spare Parts Supply Chain/Network 19 4.6 Quantifying the cost of improved spare parts inventory management 20 to water systems 5 5. RECOMMENDATIONS FOR IMPROVING SPARE PARTS SUPPLY CHAIN 21 REFERENCE 22 ANNEXES 23 Annex 1: Study questionnaire 23 Annex 2: Communities visited and information about their piped water 24 systems Annex 3: Type of Spare parts available in study districts 25 Annex 4: Concept of Mobile Phone Technology as a tool for improved 26 spare parts inventory management Annex 5: List of people contacted 27 LIST OF TABLES Table 1: Rationale of Assessment Tools 9 Table 2: Classification of Water Supply Spare Parts in Study Areas 13 Table 3: Number of Repair and Maintenance service providers in study district 19 LIST OF FIGURES Figure 1: Map of Ghana showing study areas 1 Figure 2: Distribution of piped water systems/communities visited in the study 9 districts Figure 3: Components of water system with associated Spare Parts 13 Figure 4: Existing Spare Parts Supply Chain Model 15 Figure 5: Map showing spare parts purchase route for water systems in AOB 16 Figure 6: Map showing spare parts purchase route for water systems in North 16 Dayi Figure 7: Map showing spare parts purchase route for water systems in Biakoye 17 Figure 8: operational status, capabilities and challenges of maintenance service 18 providers 6 SPARE PARTS SUPPLY CHAIN STUDY FOR PIPED WATER SYSTEMS LIST OF ABBREVIATIONS AOB Asikuma Odoben Brakwa CWSA Community Water and Sanitation Agency DA District Assembly DCD District Coordinating Director DCE District Chief Executive GOG Government of Ghana GWCL Ghana Water Company Limited LMS Limited Mechanised System MPT Mobile Phone Technology SWN Safe Water Network UF Ultra filtration UV Ultraviolet 7 GLOSSARY Beneficiary Communities/End users refers to a group of individuals, a small community, a small town, a district or a community for whose benefits from water supply facility District Assembly means a district assembly organised in accordance with the Local Government Act (Act 462) of the laws of Ghana, which shall be responsible for implementing projects Limited Mechanized System is a piped system using decentralized overhead plastic tanks (e.g. polytanks) on galvanized or block work towers with one or two points with spouts Maintenance describes the set of measures and activities aimed at keeping, or restoring optimal and reliable functionality of equipment, and sustaining and protecting natural resources Operation means the safe, reliable and economic use of a facility over its Life Span. Preventive maintenance means measures that are taken before major problems and disturbances like breakdowns occur Rural water supply covers all the measures taken to satisfy the demand for water in predominantly rural population Small Town Piped Water Systems refers to piped systems that supply water to a community with a population between 2,000 and 50,000 Sustainability is the capacity to maintain a certain process or state indefinitely.