GAMBY MEDICAL AND BUSINESS COLLEGE

SCHOOL OF BUSINES ADMINESTRATION

Determinants of Supply Chain Performance in the

Ethiopian Health Sector: Evidence from Addis Ababa

BY

Admasu Kebede (GAMBY/002/12)

ADVISOR: Dr. Mesfin Workineh (PhD)

A Thesis Submitted to Gamby Medical And Business College in

Partial Fulfillment of the Requirements for the Award of Masters of
Arts Degree in Business Administration

JULLY,2022

ADDIS ABEBA,ETHIOPI
DECLARATION

I the undersigned, hereby declare that the work which is presented in this thesis
entitled ‘‘Determinants of Supply Chain Performance in the Ethiopian Health
Sector: Evidence from Addis Ababa’’ is the original work of my own effort
and done under the guidance of Dr. Mesfin Workineh (Phd), and that all the
sources of materials used for the study have been duly acknowledged. I further
confirm that the thesis has not been submitted either in part or in full to any
other university for the purpose of earning any degree.

Declared by:

Admasu Kebede _

Student Signature Date

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i
 GAMBY MEDICAL AND BUSINESS COLLEGE

SCHOOL OF BUSINES ADMINESTRATION

ENDORSEMENT

This thesis has been submitted to Gamby Medical And Business College school of
Business Administration Graduate Studies for examination with my approval as a
university advisor.

Dr. Mesfin Workineh (Phd),

Advisor Signature Date

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 Determinants of Supply Chain Performance in the
Ethiopian Health Sector: Evidence from Addis Ababa

BY

Admasu Kebede (GAMBY/002/12)

APPROVED BY BORED OF EXAMINERS AND ADVISORS

1. Dr. Mesfin Workineh (Phd), …………………… …….………..

(Advisor) signature date
2. Dr. Busha Temesgen (Phd) ……………………
………………..
(Internal examiner) signature date
3. Dr Habtamu Regassa (Phd) ……………………
……………….
(External examiner) signature date

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 ACKNOWLEDGEMENTS

First and foremost, thanks to the Almighty GOD for providing me the strength, grace and
knowledge to finalize this thesis work successfully.

Next, I would like to acknowledge my advisor Dr. Mesfin Workineh for his great support,
encouragement, and guidance he provided me through the process.

I also want to express my thanks to those Healthcares for their cooperation, support they
provided and willingness they showed me in all my time of data collection process.

Last but not least I want to extend my deepest heartfelt thanks to my wife Zinash tayachew
for Her unending encouragement and support throughout this work. I wish to express my
gratitude and respects to my parents for their unending support. And my friends for their
comments and ideas.

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Contents
Acknowledgment......................................................................................................................................i

Lists of table…..........................................................................................................................................iv

Lists of figure............................................................................................................................................v

Abbreviations and acronym......................................................................................................................vi

Abstract.................................................................................................................................................. vii

Chapter one: - Introduction..........................................................................................................................4

1.1. Background of the study................................................................................................................4

1.2. statements of the problem..............................................................................................................6

1.3 Research Questions..............................................................................................................................7

1.4. Objectives of the Study.......................................................................................................................8

1.4.1. General Objective........................................................................................................................8

1.4.2 Specific Objectives.......................................................................................................................8

1.5. Significance of the study.....................................................................................................................8

1.6. Scope of the study...............................................................................................................................9

1.7 Organization of the study....................................................................................................................9

1.8 Definition of Terms.............................................................................................................................9

CHAPTER TWO:-REVIEW OF RELATED LITERATURE...................................................................10

2. Overview of Theoretical review, Empirical Review and Conceptual Framework of Supply Chain
Performance..............................................................................................................................................10

2.1 Introduction........................................................................................................................................10

2.2 Theoretical review.............................................................................................................................10

2.2.1. Health care supply chain............................................................................................................10

2.2.2. pharmaceutical supply chain......................................................................................................11

2.2.3. supply chain performance..........................................................................................................12

2.3. Empirical Literature Review.............................................................................................................16

2.4. Conceptual frame work.....................................................................................................................20

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Chapter Three; - Research Methodology...................................................................................................21

3.1 Research design.................................................................................................................................21

3.2 Study population................................................................................................................................21

3.3 Sampling techniques..........................................................................................................................21

3.4 Sample Size........................................................................................................................................22

3.5 Data Collection Instrument................................................................................................................23

3.6 Data collection procedure..................................................................................................................24

3.7 Source of Data...................................................................................................................................24

3.8 Data analysis techniques....................................................................................................................24

3.9 Ethical Considerations.......................................................................................................................24

CHAPTER FOUR.....................................................................................................................................25

4. Results and Discussion..........................................................................................................................25

4.1. Introduction.......................................................................................................................................25

4.2. Demographic Characteristics of Respondents..................................................................................25

Forecasting and Procurement of Pharmaceuticals at Facility Level....................................................32

Inventory Management of Pharmaceuticals at Facility Level.............................................................33

4.2 Main Challenges for Medical Supply Chains of Public Health Facilities.........................................35

4.3.Determinants of Supply Chain Performance of Public Health Facilities In addis abeba.................36

4.4. Association between external supply chain and supply chain performance.....................................38

CHAPTER FIVE.......................................................................................................................................45

5. Conclusions and Recommendations....................................................................................................45

5.1. Conclusions.......................................................................................................................................45

5.2. Recommendation..............................................................................................................................47

Reference..................................................................................................................................................49

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LIST OF TABLES

Table 1: Supply chain attributes and SCOR key performance indicators

Table 2: Demographic character of respondents (sex)

Table 3: Educational background of respondents

Table 4: Use of recording formats in the hospital

Table 5: Frequency of requisition and purchasing of medication

Table 6: Determination of facilities resupply quantity

Table 7: Supply chain responsiveness

Table 8: Supply chain responsiveness

Table 9: Supply supply chain activity total cost of resource used chain flexibility

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LIST OF FIGURE

Figure 1: proposed conceptual framework

Figure 2: work experience of pharmacy staff

Figure 3: work position of respondents

Figure 4: effect of supply chain performance on sales rate

Figure 5: effect of supply chain performance on supply chain reliability

Figure 6: Hospital ability to respond to and accommodate period of poor supplier

performance

Figure 7: Ability to respond to and accommodate new product, new market or new
competitor

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LIST OF ACRONYMS & ABBREVIATIONS

BLSH Black lion specialized hospital

EPSA Ethiopian pharmaceutical supply agency

FMOH federal ministry of health

IPLS integrated pharmaceutical logistics system

KPI key performance indicators

PSC pharmaceutical supply chain

SCOR Supply Chain Operations Reference

SCC Supply chain council

SCM Supply chain management

SCPM Supply chain performance measurement

WHO world health organization

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Chapter one: -

Introduction
1.1. Background of the study
The term supply chain management was introduced; there has been a great deal of confusion about
what it actually involves. While some managers and researchers continue to use it interchangeably
with logistics, there is an increasing understanding that supply chain management is much more
than logistics (Rogers et al., 2001). The concept of Supply chain management (SCM) is the group
of activities to enhance customer value and to achieve competitive advantage on sustainable basis
(Cooper, D. R., Schindler, P. S., & Sun, J. 2006). It represents all those efforts and measures which
considered by organization for development of a smooth supply chain process. Supply chain covers
all the activities involved for the development of products, distribution on a final destination,
production process, and transportation and to coordinate the process through the best information
systems required (Zsidisin & Ritchie, 2009).

According to Ronnqvist and Weintraub (2008), Supply chain management (SCM) represents a
significant change in the way that organizations view themselves and has witnessed values created
through the integration and coordination of supply, demand and relationships in order to satisfy
customers in an effective and profitable manner both in the private and public sectors. Supply chain
management is applied by companies across the globe due to its demonstrated results such as
delivery time reduction, improved financial performance, greater customer satisfaction, building
trust among suppliers, and others.

In today’s highly competitive global environment, performance can no longer exclusively be

determined by the decisions and actions that occur within a firm as the contribution of all members
involved gives overall results of the supply chain. The competition has changed from being
between individual organizations to being between supply chains. As organizations form global
alliances, it is essential that they understand how supply chain management (SCM) can be
successfully implemented (Halldorsson, A., Larsson, P.D. &Poist, R.F. 2008).

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Supply chain management (SCM) approach is progressively recognized by many organizations as a
strategy to attain their business goals today. It has become one of the new era in business paradigms
for organizational sustainability and competitiveness (Gunasekaran, A. and Ngai, E. W. T (2004).
In this aspect, many companies have truly striving hard to achieve superior supply chain
performance in order to outperform its competitors. Enhancing supply chain performance is a
critical approach for achieving competitive advantages for companies (Cai, Liu, Xiao and
Liu,2009).

Remaining responsive to customers’ preferences is a big challenge for companies in this

globalized world. For satisfying customers with better products and services, companies around the
world are adapting their business strategies in the fast changing business environment. Supply chain
strategies are also playing a significant role in this regard. One of the main objectives of supply
chain strategy is to increase the firm’s supply chain performance with respect to its customers
(Hanson, J.D., Melnyk, S.A. and Calantonr, R.A. (2011)

The relative importance of SCM is on the rise, as current global trends are moving it to the
forefront of business strategy and company executives realize its role in defining how a business
can and should operate (Medows, 2011). Especially for the global healthcare sector, which is one
the world’s largest and fastest growing industries, comprising various sectors such as
pharmaceutical, medical equipment and supplies and healthcare services, the management of its
supply chain is as complex and important as the industry’s size and velocity. Healthcare, among
providers and payers in public and private settings, is a very costly industry sector. The Economist
Intelligence Unit (EIU) estimates that global health care spending as a percentage of Gross
Domestic Product (GDP) will average 10.5 percent in 2018, with regional percentages of 17.4
percent in North America, 10.7 percent in Western Europe, 8.0 percent in Latin America, 6.6
percent in Asia/Australasia, and 6.4 percent in the Middle East/Africa. Among developed nations,
health is the second-largest category of government spending (World Healthcare Outlook, 2018).

Well-functioning supply chains to deliver medicines, vaccines, and other health products form
the backbone of the health system. Health product supply chains in developing countries are fraught
with many problems. Ineffective supply chains weaken the overall health system's ability to
respond to the healthcare needs of the population and put treatment programs at risk (Prashant
Yadav (2015)). However, Innovations in supply chain (SC) management are rapidly spreading in
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public healthcare sectors across developed countries. In particular, healthcare managers and
policymakers view SC innovation as a way to lower costs and improve quality.

Efficient logistics are increasingly becoming more important, even critical, in the performance of
the healthcare sector. In a broader context, Supply Chain Management (SCM) systems are gaining
an increasing importance due to globalization and strong competitive pressures. They represent a
paradigm shift in conducting business in the modern era, where collaboration rather than conflict
seems more important and rewarding among the firms operating in a networking environment.
Therefore, it seems that researching and analyzing SCM systems in the healthcare industry is a
promising and fruitful area of research today having major practical consequences. Regulation and
reform, cost management, global perspectives and technology investment are all important issues to
be considered in the evaluation of the performance of the supply chains in the health sector. The
healthcare sector consists of businesses that provide medical services, manufacture medical
equipment or drugs, provide medical insurance, or otherwise facilitate the provision of healthcare to
patients

Supply chain performance measure can be defined as an approach to judge the performance
of supply chain system. Supply chain performance measures can broadly be classified into
two categories −
 Qualitative measures − For example, customer satisfaction and product quality.
 Quantitative measures − For example, order-to-delivery lead time, supply chain
response time, flexibility, resource utilization, delivery performance.
Here, we will be considering the quantitative performance measures only. The performance of
a supply chain can be improvised by using a multi-dimensional strategy, which addresses
how the company needs to provide services to diverse customer demands.

Quantitative Measures
Mostly the measures taken for measuring the performance may be somewhat similar to each
other, but the objective behind each segment is very different from the other.
Quantitative measures is the assessments used to measure the performance, and compare
or track the performance or products. We can further divide the quantitative measures of
supply chain performance into two types. They are −

 Non-financial measures
 Financial measures

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Non - Financials Measures
The metrics of non-financial measures comprise cycle time, customer service level,
inventory levels, resource utilization ability to perform, flexibility, and quality. In this section,
we will discuss the first four dimensions of the metrics −
Cycle Time
Cycle time is often called the lead time. It can be simply defined as the end-to-end delay in a
business process. For supply chains, cycle time can be defined as the business processes of
interest, supply chain process and the order-to-delivery process. In the cycle time, we should
learn about two types of lead times. They are as follows −

 Supply chain lead time

 Order-to-delivery lead time
The order-to-delivery lead time can be defined as the time of delay in the middle of the
placement of order by a customer and the delivery of products to the customer. In case the
item is in stock, it would be similar to the distribution lead time and order management time. If
the ordered item needs to be produced, it would be the summation of supplier lead time,
manufacturing lead time, distribution lead time and order management time.
The supply chain process lead time can be defined as the time taken by the supply chain to
transform the raw materials into final products along with the time required to reach the
products to the customer’s destination address.
Hence it comprises supplier lead time, manufacturing lead time, distribution lead time and the
logistics lead time for transport of raw materials from suppliers to plants and for shipment of
semi-finished/finished products in and out of intermediate storage points.
Lead time in supply chains is governed by the halts in the interface because of the interfaces
between suppliers and manufacturing plants, between plants and warehouses, between
distributors and retailers and many more.
Lead time compression is a crucial topic to discuss due to the time based competition and the
collaboration of lead time with inventory levels, costs, and customer service levels.
Customer Service Level
The customer service level in a supply chain is marked as an operation of multiple unique
performance indices. Here we have three measures to gauge performance. They are as
follows −
 Order fill rate − The order fill rate is the portion of customer demands that can be
easily satisfied from the stock available. For this portion of customer demands, there is
no need to consider the supplier lead time and the manufacturing lead time. The order
fill rate could be with respect to a central warehouse or a field warehouse or stock at
any level in the system.
 Stockout rate − It is the reverse of order fill rate and marks the portion of orders lost
because of a stockout.

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  Backorder level − This is yet another measure, which is the gauge of total number of
orders waiting to be filled.
 Probability of on-time delivery − It is the portion of customer orders that are
completed on-time, i.e., within the agreed-upon due date.
In order to maximize the customer service level, it is important to maximize order fill rate,
minimize stockout rate, and minimize backorder levels.
Inventory Levels
As the inventory-carrying costs increase the total costs significantly, it is essential to carry
sufficient inventory to meet the customer demands. In a supply chain system, inventories can
be further divided into four categories.

 Raw materials
 Work-in-process, i.e., unfinished and semi-finished sections
 Finished goods inventory
 Spare parts
Every inventory is held for a different reason. It’s a must to maintain optimal levels of each
type of inventory. Hence gauging the actual inventory levels will supply a better scenario of
system efficiency.
Resource Utilization
In a supply chain network, huge variety of resources is used. These different types of
resources available for different applications are mentioned below.
 Manufacturing resources − Include the machines, material handlers, tools, etc.
 Storage resources − Comprise warehouses, automated storage and retrieval
systems.
 Logistics resources − Engage trucks, rail transport, air-cargo carriers, etc.
 Human resources − Consist of labor, scientific and technical personnel.
 Financial resources − Include working capital, stocks, etc.
In the resource utilization paradigm, the main motto is to utilize all the assets or resources
efficiently in order to maximize customer service levels, reduce lead times and optimize
inventory levels.

Finanacial Measures
The measures taken for gauging different fixed and operational costs related to a supply
chain are considered the financial measures. Finally, the key objective to be achieved is to
maximize the revenue by maintaining low supply chain costs.
There is a hike in prices because of the inventories, transportation, facilities, operations,
technology, materials, and labor. Generally, the financial performance of a supply chain is
assessed by considering the following items −
 Cost of raw materials.
 Revenue from goods sold.
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  Activity-based costs like the material handling, manufacturing, assembling rates etc.
 Inventory holding costs.
 Transportation costs.
 Cost of expired perishable goods.
 Penalties for incorrectly filled or late orders delivered to customers.
 Credits for incorrectly filled or late deliveries from suppliers.
 Cost of goods returned by customers.
 Credits for goods returned to suppliers.

statements of the problem

The healthcare sector is facing major challenges nowadays. Healthcare providers and institutions
are under an increasing pressure to deal with a number of inefficiencies, in order to achieve an
optimum balance between improvements in quality healthcare services and cost effectiveness.
Supply chain costs can account for over one quarter of a hospital‟ operating budget, while the
healthcare industry could significantly improve its ability to deliver quality healthcare products and
services to consumers and save much.

Many authors (Towill, and Christopher 2005; Schneller and Smeltzer, 2006), have pointed out that
saving opportunities are not currently exploited by organizations due to supply chain inefficiencies,
such as ineffective inventory control and materials management, inadequate purchasing orders, and
distortion of information flows involved in the transport and delivery of supplies to the health care
providers (Matopoulos and Michailidou, 2013).

Hospital supply chains are often confronted by several economic, environmental, and social problems
From the economic point of view, increasing healthcare expenditures demand greater efficiency in the
delivery of services [Weisz, U.; Haas, W.; Pelikan, J.M.; Schmied, H.,2011]. The Organization for
Economic Co-operation and Development has estimated that hospitals account for approximately 40%
of total health expenditures, Between 30% and 40% of a hospital´s budget is dedicated to supply chain
costs, which can be reduced by up to 8% through the use of best practices. In addition, said best
practices allow clinical personnel to focus on their core mission of caring [Landry, S.; Beaulieu, M.;
Roy, J.2016]. Regarding the environmental dimension, hospital processes and services are intensive in
terms of material, energy, and water consumption, generate significant amounts of waste especially
toxic waste, as compared to other sectors, and account for a large carbon footprint [Zhu, Q.; Johnson,
S.; Sarkis, J. Lean,2018)

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The performance of the health supply chain represents a particular challenge to achieve sustainable
development in emerging economies as is evident from research on the importance of public health
services as a driver for the sustainable development goals (Pablos-Mendez et al., 2016), For
Ethiopia in particular, poor inventory management, inefficient tracking and tracing and fake or sub-
standard products especially counterfeit medicines are major challenges identified for the health
commodities supply chain (Bergen et al., 2019).

It is desirable for health service provider to uncover what attributes determine the performance of
supply chain management and which attributes are more important. It is important that the supply chain
managers provide cost effective with high quality services to survive in the highly competitive
business. For this, the health sector players first need to understand the attributes that increase
performance and enhance the service performance. The intention of this study is, therefore to assess
determinants of Supply Chain Performance in the Ethiopian Health Sector.

1.3 Research Questions

Based on the previous statement of research problem, the following main research questions were
formulated.

1. Is there any association between supplier-buyer relationship and supply chain performance?

2. What is the association between external supply chain and supply chain performance?

3. Do have any association between human metrics and supply chain performance?

4. What is the association between information sharing and supply chain management
performance?

5. Do have any association between environmental factor and supply chain management
performance?

1.4. Objectives of the Study

1.4.1. General Objective

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The general objective of this study was to assess the major determinant factors of Supply Chain
Management Performance of Ethiopian health sectors.

1.4.2 Specific Objectives

The specific objectives of the research are:

 To measure supplier-buyer relationship and supply chain management performance

 To measure external supply chain and supply chain performance
 To measure human metrics and supply chain performance
 To measure information sharing and supply chain management performance
 To measure environmental factor and supply chain management performance

1.5. Significance of the study

The health sector is given attention by the government in growth and transformation plan and by
respective stakeholders; it will be useful to know the practice and challenges related to SCM in the
sector. When the challenges will be addressed, there will be better SCM of health sectors. In
addition, the study will contribute on the limited knowledge in the area of SCM of the health sector.

Despite that, the rationale of the study will support to generate new knowledge and comprehensive
approaches to be used by health sector participant to help them manage their Supply Chain
management performance. Furthermore, Government and non-government who engage on health
sectors will be benefited from the findings of this study by getting to understand the effect and
contributions of SCM practices and procedures that promote efficient service.

1.6. Scope of the study

the work of this research is delimited to some major factors that determine supply chain performance
in case of Addis Abeba health care in Ethiopia . and also To identify the correlation between

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supplier-buyer relationship and supply chain management performance, To explore the association
between external supply chain and supply chain performance, To know the correlation between
human metrics and supply chain performance, To identify the association between information
sharing and supply chain management performance and To examine the association between
environmental factor and supply chain management performance. The research is not cover all
hospital in Addis Ababa, rather some hospitals has be selected based on to get accesses data for my
research

1.7 Organization of the study

This research paper was organized in five chapter. Chapter one provide the general introduction
about the whole study. Chapter two describes the review of related literature .Chapter three
provide detail descriptions of the research methodology which is the back bone of the study.
Chapter four data presentation ,analysis and interpretation .Finally, the last chapter five concludes
the total work of the research and gives relevant recommendations based on the find.

1.8 Definition of Terms

1. Supply chain encompasses all activities associated with the flow and transformation of goods
(products and services) from initial design stage through the early raw material stage, and on to the end
user, (Hines, 2004).
2. Supply chain management encompasses the planning and management of all activities involved in
sourcing, procurement, conversion, and logistics management, (Council of Supply Chain Management
Professionals).
3. Public health facilities: these are health facilities owned by the government of Ethiopia and
managed under FMOH or regional health bureaus.
4. Pharmaceuticals: means any substance or mixture of substances used in the diagnosis, treatment,
mitigation or prevention of a disease, and include medical instruments and medical supplies
(Proclamation No 553/2007).

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CHAPTER TWO:-

REVIEW OF RELATED LITERATURE

2.1 Theoretical review
2.1.1. Health care supply chain

Health supply chains can be characterized by different modes of integration which are: Integration
and co-ordination of processes, information flows, planning processes, integration of intra- and
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inter organizational processes, integration of market approach and market- development. Hospital
supply chain is divided in to two areas which are, supply chain of pharmaceuticals and medical
products, and supply chain of non-medical products that aids in providing service to the patient
(Yongyi, 2014).
The hospital supply chain includes four areas. These are goods and services planning, procurement
and contracting, materials management and working capital management. To set up an extra
ordinary supply chain, hospitals need to establish an integrated governance system, employ
dynamic processes, and automate their IT systems. Integration of the internal and external hospital
supply chain may reduce the costs associated with supply chain almost half. It is believed that
staffs in any hospital spend 10% of their time performing logistics tasks instead of taking care of
patients (Nawshad et.al, 2016).
Hospital Supply Chain Management is a set of approaches to efficiently integrate suppliers or
vendors, transport, hospital services (including outpatient, emergency, inpatient, laboratory,
radiology, stores and purchase, food, laundry and medicines or equipment) to achieve Total Quality
Management (TQM) in health care services by optimum utilization of resources SCM in hospitals
involves the internal chain, including patient care unit, hospital storage, patient and the external
chain, including vendors, manufacturers, and distributors. Healthcare SCM processes have three
types of flows: physical product flow, information flow, and financial flow (Yongyi, 2014 and
Kazemzadeh et al, 2014).

Healthcare supply chains are characterized by multiple stakeholders that work together in order to
ensure the flow of products and services. Inside and outside hospital, medicine management
requires a wide variety of human intensive processes which are poorly supported by technology.
This results in an increased of workload and a higher possibility of errors. Moreover, healthcare
supply chains are high regulated and must respect a number of standards and procedures. In fact,
national and international healthcare organizations and government have defined several standards
for the distribution, storage, preparation and administration of medical products and materials.
Finally, healthcare supply chains are vulnerable to terrorism and criminal facts. According to many
observers, this industry experiences a strong possibility of being affected by the presence of
counterfeited products. From the above-mentioned reasons, one can conclude that healthcare
supply chains are indeed inherently complex (Romero, 2013).
2.2.2. pharmaceutical supply chain

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Pharmaceutical supply chains are different because they usually have large and extended global
pipelines requiring high levels of product availability with high uncertainty in supply and demand.
In order to sustain and expand the successful interventions, these supply chains need to be made
more robust and flexible through better management and increased investment of resources to
achieve supply chain optimization (Ames, 2011 and Nilay, 2004).

The management of drug supply is organized around five basic functions of the Medicines
Management cycle namely, selection, quantification, procurement, distribution, and use. At the
center of this cycle is a core of management support systems, which include organization, financing
and sustainability, information management, human resource and quality assurance management.
The selection of pharmaceuticals is a basic function of the qualified hospital pharmacist who is
charged with making decisions regarding products, quantities, product specifications, and sources
of supply. Although the pharmacist has the authority to select a brand or source of supply, with
economic considerations and quality (Ames, 2011 and Javid et.al, 2017).

In selecting a vendor, the hospital must consider price, terms, shipping times, dependability, quality
of service, returned goods policy, and packaging. It’s estimated that there are 3000 4000drugs,
registered in any country of which almost 70% are non-essential. National list of essential
medicines should have 300-400 drugs. , selection of essential drugs is very important and is
considered as a crucial step in ensuring access to essential drugs and in promoting rational drug use
(Javid et.al, 2017)

Quantification is the process of estimating needs for quantities of specific health commodities
during a specific period of time. Accurate quantification requires information from various sources
including the consumption data, epidemiological (morbidity) data, prescription patterns, minimum
and maximum stock levels, frequency of stock-outs, and length of the procurement cycle. Delivery
and distribution of drugs at various levels is not possible without effective drug procurement and
inventory control. Various medicine management tools help managers with the process of
distributing drugs and supplies to health facilities and ultimately to patients by following a series of
steps, forecasting needs, tendering, ordering, receiving, storing warehousing, and distribution
(Javid et.al, 2017 ).
2.2.3. supply chain performance

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Supply Chain Performance Measures (SCPM) serve as an indicator of how well the SC system is
functioning. Measuring SC performance can facilitate a greater understanding of the SC and
improve its overall performance. Effective performance measurement systems characterized as
Inclusiveness (measurement of all pertinent aspects), Universality (allow for comparison under
various operating conditions), Measurability (data required are measurable) and Consistency
(measures consistent with organization goals) (Kazemkhanlou et al., 2014 and Sillanpaa, 2012).

A performance measurement system offers the necessary information for the monitor, control,
evaluation, and feedback function for operations management. It might help as a motivation driver
and a driver for continuous improvement and help achieve strategic objectives through measuring
key performance indicators (KPI) of the supply chain (Nicolas G. et.al, 2015 and Hosein. et al,
2013)
The supply chain operation reference (SCOR) model is a framework which supports communication
between supply chain partners and enhances the effectiveness of supply chain management,
technology, and related supply chain improvement activities. The model provides a unique framework
that links performance metrics, processes, best practices, and people into a unified structure. It was
developed in 1994 by the Supply Chain Council (SCC) as a tool to address, improve, communicate and
evaluate the performance of SC and assist an organization in its supply chain performance

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The model has five attributes, which are Supply chain delivery reliability, Supply chain
responsiveness, Supply chain agility, Supply chain costs and Supply chain asset management
efficiency. It describes the business activities of the SC in order to meet customer demand, from
the simplest to the most complex, covering many different industries and projects (Supply Chain
Council, 2010 and Samuel, 2008).
The SCOR model provides a common process oriented language for communicating among
supply-chain partners in decision areas of plan, source, make, and deliver. Recently, the details for
the decision area of return have been added to the SCOR Version 5.0 model (Archie et al, 2004 and
Richardo 2013).
The SCOR model published twelve subsequent versions of the original by updating analysis
dimensions related to performance which describe the performance of SC, processes which explain
how the SC is configured, practices to see unique ways to configure the SC processes and in
terms of people assessing needs, and availability of skills gaps in the workforce SC.

14
 Performance attribute Performance attribute Measurement metrics

definition
1 Supply chain delivery The performance of the supply on-time delivery, right quality
reliability chain in delivering the correct (perfect order fulfillment),
product, to the correct place, at right quantity (fill rate)
the correct condition and
packaging in the correct
quantity, with the correct
documentation, to the correct
customer
2 Supply chain The speed at which tasks are Order fulfillment lead time

responsiveness performed.
3 Supply chain agility The agility of a supply in Response rate
(flexibility) responding to market place Production flexibility
changes to gain or maintain
competitive advantage
4 Supply chain cost Costs associated with Cost of goods sold
operating the supply chain Total supply chain
management costs

5 Supply chain asset Effectiveness of an Cash to cash cycle

organization in managing
assets to support demand
satisfaction. This includes the
management of all assets:
fixed and working capital

Table 2.1: Supply chain attributes and SCOR key performance indicators (Supply Chain Council,
2010)
15
According to SCOR model version 12.0, the supply chain of an organization can be assessed
based on five categories of processes which are planning, procurement, manufacturing,
distribution and return. The model encompasses all customer interactions including from order to
the payment of the bill, all material transactions from the first suppliers to the last customers, and
all interactions with the marketplace which is from prediction of aggregate demand to the
fulfillment of each request. The SCOR model is structured in 4 levels (Archie et al, 2004,
Delipinar. et al, 2016 and Richardo 2013).

 Level 1: defines the models scope and content by setting core process of plan, source, make,
deliver and return.
 Level 2: contains four process categories explains the main process categories that exist in
real and created supply chain in an enterprise.
 Level 3: includes information for the supply chain management to plan source and build
goals for supply chain management strategy. This also consists of definitions, benchmarks,
and system software capabilities
 Level 4: centers on implementation. Since the supply chain management implementations are
special to each company, the specific parts of level 4 are not explained in the SCOR model. (
Delipinar et al, 2016).

16
2.3. Empirical Literature Review
Supply chain management (SCM) is a rapidly evolving area of interest to academics and business
management practitioners alike. As a result most of the industries innovations in improving
efficiency and reduce cost targeted innovations on key functions including logistics
(Charu&Swatantra, 2004). The aspects of marketing, economics, logistics and organizational
behavior are all important for developing insights into how and why different SCM arrangements
emerge and for understanding the consequences of these arrangements for industry efficiency and
competitiveness (Jill & Hobbs, 1996). Like most other industries, SCM in public health is now 14
slowly evolving. Public health programs consider supply chain starting from the planning and
acknowledge the specialization and importance in accomplishing programs.

Public health supply chain in most developing countries are designed and implemented to meet
demands of specific program logistics. Some of the examples of vertical or standalone public health
supply chains are supply chain systems for tuberculosis, HIV/AIDS, family planning, malaria,
vaccines and so on. As a result, the public health supply chain systems are very fragmented and
undeveloped. The different health programs have multiple parallel SCM but all basically perform
similar functional activities i.e. primarily meeting the supply needs of their clients or customers.
However, as the health programs mature and funding from donors decline, there are interests and
efforts for integration to takeover. The main anticipation for integrations is SCM knowhow
improves and capacity developed. Because of these and recent worldwide notion to improve and
integrate public health supply chain, Ethiopia government started moving to make the public health
SCM more efficient and integrated.

However, unlike other sectors such as discrete parts in manufacturing and fast-moving consumer
goods where there has been a long history and experience with management of inventory, the
healthcare sector is behind other industry sectors in implementing effective supply chain
management (SCM) practices (McKone et al., 2005; Baltacioglu et al., 2007).

The main reason for the sector’s difficulties in implementing effective SCM practices is that the
healthcare supply chains are much more complex compared to supply chains in other industries
(Vikram, Prakash, &Amrik, 2012). However, several factors contribute to this complexity. The first
is that physicians are the key decision-makers regarding the procurement of prescription medicines,
but they generally have a limited understanding of operations management and SCM techniques
and practices (Vikram et al, 2012). There are also new health programs and new medicines
continually adding to the SCM, demanding specific conditions like storage and shelf life that
challenges the supply chain and inventory management. One good example in Ethiopia is the
launching of free ARV treatment in 2003, which was characterized with a large infusion of
commodities that require high logistics capacity (FMOH, 2004). Like that of other health program
and industries, the success of expanded HIV/AIDS program is dependent on ability to reliably and
consistently supply of the essential commodities.

Second, strong institutional and regulatory pressures, such as the number of mainstay or tracer
drugs that are ending their patent protection tenure, thereby fuelling the growing competition 15
from generic drugs, influence the pharmaceutical industry. The regulatory regime of the
pharmaceutical industry causes problems in determining accurate sales forecasts. This is essentially
because it is difficult to gauge the magnitude of the competition from generics entering the
marketplace (Vikram et al, 2012). The Ethiopia case is that Food, Medicine and Health Care
Regulatory Authority adapts and follows stringent registration and market authorization procedures.
Food and health products need to undergo registration and licensing with detail product
descriptions, manufacturer information Andover, there are regular import permit approval and
licensing requirements.

Third, pharmaceutical products are characterized by long developmental cycles that are distinctly
different from medical devices. These long lead times have a significant impact on capacity
planning and supply chain strategies, particularly inventory management. The final challenge with
inventory management within the healthcare supply chains is that hospitals are operationally
different from the other businesses because it is extremely difficult for them to predict their patient
mix and ultimately their supply consumption (Vikram et al, 2012). This is specifically the case in
emergency interventions, as it is difficult to ascertain the “type” of patient that will come to the
hospital.

Forth, there are regular updates and changes of standard treatment protocols and guidelines that
significantly affect the capacity of forecasting and quantify the products needed for each health
programs. Moreover, as the level of customer care increases, the possibility of changing regimens,
and addition or deletion of products will increases that have an influence on the supply chain
management. These all brings challenges for public health supply chain in ensuring the product
needs of customers to be effective and efficient.

All these have major ramifications, particularly for pharmacy departments in hospitals that carry
high levels of safety stock to hedge against uncertainties such as daily demand fluctuations and
supply bottlenecks. The net result is that hospital pharmacies have to maintain excess stock to
insulate them against emergencies and an unpredictable demand ((Vikram et al, 2012). These
factors lead to recurrent problems such as stock-outs and drug expiry within pharmacy departments
in hospitals, health centers and health posts. The estimated expiry of pharmaceuticals in Ethiopia is
8.2% (FMOH & WHO, 2003). Supply chain in most industries is key factor for their efficiency and
considered as core competency whereas in public health is to save lives and ensure the proper care
to customer. As a result, in public health SCM, getting a 16 child vaccinated, a mother an
appropriate medicine and controlling any epidemic outbreak are all very critical while ensuring the
proper management and use of medicines. That makes supply chain in public health program more
difficult while it requires the bulk of the health resources. However, this does not necessarily mean
that public health supply chains are only designed to be effectiveness; there are also huge chance
for cost savings and efficiency too. In Ethiopia, PFSA attempts to cover the need of hospitals and
health centers that have several problems in SCM include documentation, SCM knowledge,
management capacity, and human resource and SCM tools, which of course affect the national and
sub national SCM systems.

Many countries have several logistics systems for selecting, procuring, and distributing health
supplies to customers where Ethiopia is one. Often, programs such as HIV/AIDS, family planning,
maternal and child health, malaria control, tuberculosis control, and nutrition, all manage and
distribute supplies for their programs which is called vertical programs, they have historically been
managed by separate management units, often from the central level.

Many countries, however, have been moving away from several vertical logistics systems toward
one integrated system that distributes supplies for all programs. For example, a system that
manages contraceptives for the family planning program might also manage oral rehydration salts
(ORS), vitamin A, and other products for the maternal and child health program. This was one of
the reasons for establishment of PFSA in Ethiopia. Although, vertical and integrated systems each
have advantages and disadvantages there are valid technical reasons, often reflecting changes in the
environment, make integrating a logistics system more advantageous or feasible. Some of the
advantages include improved transportation infrastructure, improved data management, improved
communications system coverage, new customer service requirements and increased storage and
transportation efficiency (USAID | DELIVER PROJECT, 2009).

Therefore, adopting SCM initiatives primarily requires that companies take a long-term view and
have an extensive focus, on all the channels that are employed in the total transformation process
from the earth to the end-user to create a productive and reliable supply chain network system.
Specially a public health supply chain needs to consider the various administrative levels and wide
variety of health programs that requires specific storage conditions, shelf life, regulated levels of
usage, and seasonal and campaign effects and bulkiness of the products and storage capacity at all
levels. Proper execution of SCM requires commitment and champion from senior management too.

In old days and currently even in some organizations, internal supply chain and inventory
management were over emphasized. However, organizations and partners have to re-think how
their SCM linked to others within and outside the organization, locally and internationally, and
upwards and downwards supply chain. Hence by evaluating and mapping a specific supply chain, a
company is able to find and reduce system redundancies while improving reliability and flexibility
of a system. SCM needs to begin by investigating each function a department handles and breaking
it down if necessary.

Despite the challenges that are created developing an effective and efficient supply chain become a
core competency or even a distinctive competency. A core competency is any function, which a
firm does well at performing. On the other hand, a distinctive competency is a function that is
performed well and is unique. Literature has shown that the basis of competition in many industries
in the future will revolve around supply chain development (Das &Narasimhan, 2000). Supply
chain analysis advocates reducing non-core processes (waste) and streamlining the supplier and
logistics network. Thus the supply chain network includes upstream, downstream and lateral
suppliers producing goods, services or other value adding activities. The information and
communication technologies provide a backbone support to distribute and share information real-
time for effective decision making by supply chain partners.
2.4. Conceptual frame work

challenges

Human Resource
Supply chain
Performance

Financial Resource

Infrastructure And
Information
Source: Developed by student researcher based on literature

21
Chapter Three; - Research Methodology
3.1 Research design
In order to achieve the objectives of this study, both qualitative and quantitative research design
method with cross-sectional survey will employed. Reason for making use of quantitative research
approach is that quantitative research aims to determine how one variable affects another in a
population, by quantifying the relationships between variables (Creswell, 2009). So, the study will try
to quantify the relationship between supply chain performances and Supplier-buyer relationship,
external supply chain, human metrics, information sharing and Environmental factor. In addition
qualitative design will be used to collect comprehensive data using open –ended questioner for the
purpose of evaluating and assessing the issue in depth and in detail (Creswell, 2009). Furthermore,
the study will also apply qualitative approach to characterize determinates፤ strength; and weakness
supply chain performance of the health sector evidence from Addis Ababa

Research approach
The study focused on collecting both qualitative and quantitative data and results are expressed both
qualitatively and quantitatively.

3.2 Study population

The target population for the study consisted all Governmental and private Hospitals in Addis Ababa
Region In this research there will be three respondents those are, the first one All pharmacy section
heads the second pharmacy store managers and the third one will be laboratory section heads of
those hospitals. Selection of the three respondents from each health facility for the study was guided
by non- probability purposive sampling procedure wherein respondents were selected on the
basis of their involvement in pharmaceutical supply chain management activities and being able to
provide adequate information on the topics being analyzed.

3.3 Sampling techniques

Multi-stage sampling (smaller groups are successively selected from large populations to form the
sample population techniques will used for this study. Addis Ababa was selected using convenience
sampling techniques. Convenience sampling technique’s is a type of non-probability sampling
techniques where the sample is taken from a group of people/institution easy to contact or to reach.

22
According to Dörnyei (2007) Convenience or opportunity sampling is the most common type of
sampling where the only criterion is the convenience of the researcher.

Health sector includes businesses that provide medical services, manufacture medical equipment or
drugs, provide medical insurance, or otherwise facilitate the provision of healthcare to patients. So for
the purpose of this study private hospital was selected from health sectors using lottery sampling
techniques by assigning specific number to each types of business included in health sector.
According Dörnyei (2007) with a lottery method, each member of the population is assigned a
number, after which numbers are selected at random Because, individuals who make up the subset of
the larger group are chosen at random, each individual in the large population set has the same
probability of being selected and this method the best method for selected samples from
homogeneous group.

Purposive sampling technique, also known as judgmental, selective, or subjective sampling, is a form
of non-probability sampling in which researchers rely on their own judgment when choosing
members of the population to participate in their surveys and this method will be used to select the
study participant to be only from logistic and procurement department of each hospital for the
purpose of this study. Lastly simple random Sampling technique will be employed for the selection of
the sampling units.

3.4 Sample Size

Sample size was calculated according to the guide for conducting supply chain assessments using
the LIAT (USAID | DELIVER, 2011). A confidence level of 90% with a margin of error of 10% was
used. The sample size was then calculated using formula for calculating sample sizes in finite
population bases. With this formula, sample size of 40 health facilities was obtained.
The general formula for calculating a sample size is: = 138

n= z2 *p(1-p)

m2

n= (1.64)2x0.5(1-

0.5) (0.1)2
23
 n=67

where: n = required sample size

Z = Z value (e.g. 1.64. for 90% confidence level)

p = estimated prevalence of the indicator (The product of p and [1-p] is maximized when p = 0.5).

Therefore, when prevalence is unknown, 0.5 should be used.

m = margin of error you wish to allow in estimating the prevalence at 10 percent, m =0.1
However, there is a predetermined population (e.g., total number of hospitals in ADDIS
ABABA 52), the sample size generated from the above equation needs to be multiplied by
the Finite Population Correction (FPC) factor. For our purposes, the formula can be
expressed as:
n
New n= 1+
[(n−1)/N]

Where: New n = the adjusted new sample size N = the population size n = the sample
size obtained from the general formula
67
New n=

1+[(67−1)/52]

New n= 31.01~30 health facilities

Sample size in number of respondents= 30 health facilities * 3 respondents from each HF=90

3.5 Data Collection Instrument

Self-administered close ended questionnaire will be used to collect data from employees at
departments of logistic and procurement at different levels in the department. The study were adopt a
standard questionnaire used by Marwah et al. (2014, p. 49). In this study, both primary and secondary
sources of data was used as important sources of data. The researcher was gathe primary data from
hospitals employees through ML/8iinmtquestionnaire. Primary data weregathered through
questionnaires allows the researcher to test the current perceptions of participants towards a business
circumstance under investigation (Boyer & Swink 2008, p.34). This technique is also quicker,
24
cheaper and more anonymous to administer than face-to-face interviews or direct observations, as a
large number of respondents can be given the questionnaire to complete at their convenience (Veal
2005, p.37).The questionnaire contains close-ended questions and the close-ended items which
constructed in such a way that they are measured on a five-point Likert Scale format range from
strongly agree to strongly disagree. Moreover, the study will employ documentary analysis of
secondary data from the hospitals logistic reports, documents, books, journals, published and/or
unpublished research papers.

3.6 Data collection procedure

After obtaining the department approval and letter of support, official permission will be sought from
hospitals for data collection. After that data will collected after assuring confidentiality and
willingness of the participants to participate.

3.7 Source of Data

To meet the objective of the research and to answer the research question’s both primary and
Secondary data will be used. The primary data is collected through structured questioner and in-depth
interview and the secondary data about factors that are important to health care collected from
journals, books, and articles which will be used as input for the quantitative data.

3.8 Data analysis techniques

Data will be analyzed by using SPSS version 21.0 after special codes have been assigns to analysis
then the manual screen of data has been performed and responses with high mission values and same
responses will be been deleted. Furthermore, by the histogram, Q-Q plot and skewness and kurtosis
data have been clean from missing values and outliers. Additionally, data reliability has been checked
through Cronbach’s ơ.

Finally Descriptive statistic will used to explain determinates of supply chain performance and
inferential statistics Pearson correlation will be used to identify relation b/n supply chain performance
and Supplier-buyer relationship, external supply chain, human metrics, information sharing and
Environmental factor. Furthermore, narration will be used to analysis the qualitative data which
would be obtained from in-depth interview.

25
3.9 Ethical Considerations
Informed consent will be acquired at the commencement of the research. The whole process of the
study will be explained in clear and simple language. To protect the participants’ rights, needs, values
and anonymity, confidentiality of their responses will be ensured. Participants will be informed that
they have a right to withdraw from participating in this study at any time without any questions being
asked.

26
27
 CHAPTER FOUR

4. Results and Discussion

4.1. Introduction
This chapter presents the data analysis, results, and interpretation of the findings. The findings are
based on data collected from primary sources, by the use of questionnaire and observation during visit
so as to assess the pharmaceutical supply chain activities. The analysis is performed around the
objectives for this study; however, other relevant details are added for better presentation of
findings .From thirty (30) selected health facilities The questionnaires have distributed to 84 health
professionals (61 pharmacy professionals, 13 laboratory professionals and 10 nurses). 59 pharmacy
professionals, 12 laboratory professionals and 8 nurses participated on the study. The return rate from
the distributed questionnaires is 79/84*100=94.05%.

4.2. Demographic Characteristics of Respondents

The findings of demographic characteristics include: sex, age, Service year, work position and Type of
health facility . Table 1 below shows the details of background information of the respondents.

Demography Characteristics Frequency Percent (%)

Male 57 67.5
Gender Female 27 32.5
Total 84 100
Table 4.1: demographic character of respondents (sex)

28
Grapic 4.1: demographic character of respondents (sex) personal interview 2014
As noted in table 2 above, the majority of the respondents (67.5%) were male and the remaining 32.5%
were females. From this we can see that the pharmacy staff is well versed on gender

Demography Characteristics Frequency Percent (%)

20-30 49 58.4
30-40 24 28.6
Age
Above 40 11 13
Total 84 100

Table4. 2: demographic character of respondents (age) personal interview 2014

29
Grapic4.2: demographic character of respondents (age) personal interview 2014
Majority of the respondents 58.4% are between 20-30 years old and 28.6% of the respondents between
30-40 years old and 13% are Above 40 years old. This shows us different age groups included in the
study

Demography Characteristics Frequency Percent (%)

Pharmacy section 31 36.9

head

Laboratory section 30 35.7

Position
head
Pharmacy store 23 27.3
manager
Total 84 100

Table 4.3: demographic character of respondents (position)

30
Grapic4.3: demographic character of respondents (position) personal interview 2014

Their positions in the facilities, 36.9% pharmacy section heads, 35.8% laboratory section heads and
27.3% store managers participated on the study

Demography Characteristics Frequency Percent (%)

0-2 year 21 25
2-5 year 43 51.1
Work Experience
5-10 year 20 23.8
Total 84 100
Table4. 4: demographic character of respondents (Work Experience)

31
Graphic4.4: demographic character of respondents (Work Experience) personal interview 2014

As show on the chart most of the respondents (23.8%) have work experience of more than 5-10 years,
51.1% has work experience of 3-5 years and 25% has 0-2 years of experience. This indicates the
pharmacy service has appropriate work experience and therefore they were well versed with relevant
information on supply chain practice which was needed for the study.

Demography Characteristics Frequency Percent (%)

Hospital 9 10.7
Type of health
Health center 75 89.3
facility
Total 84 100
Table 4.5: demographic character of respondents (Type of health facility)

32
Graphic4.5: demographic character of respondents (Type of health facility) personal interview 2014

Pharmaceutical supply chain management activities at facility level Pharmaceutical supply chain
management activities include selection, forecasting, procurement and inventory management of
pharmaceuticals. Respondents were asked to rate their opinion from 1(strongly disagree) to 5 (strongly
agree). The mean of their responses score for each variable illustrates the level of achievements in
pharmaceutical supply chain management activities where as standard deviation (SD) illustrates the
deviation from the central value.

33
Selection of Pharmaceuticals at Facility Level
Response

Disagree(2)
Disagree(1)

Neutral(3)

Deviation
Agree(4)

Agree(5)

Standard
Strongly

Strongly

Mean
Total
Selection of pharmaceuticals
Your health facility has Drug and 58 16 3 5 2 84 1.53 1.3
S1
Therapeutics Committee (DTC)

S2 Your health facility has list of common 2 3 23 41 15 84 3.76 3.33

health problems

S3 Your health Facility has its own drug 41 31 5 4 3 84 1.77 1.54

list prepared by DTC
Essential medicines are available all
times at adequate quantities and in the 47 31 2 3 1 84 1.57 1.24
S4
appropriate dosage forms
Mean 2.1
Standard Deviation 1.85
Table 4.6: Pharmaceuticals at Facility Level

From the table 4.6, 88.09% of the health facilities disagreed or strongly disagreed that health facilities
have DTC. 66.66% agreed or strongly agreed the health facilities have list of common health problems.
85.71% of respondents disagreed or strongly disagreed on availability of drug lists prepared by health
facilities. 92.85% of the respondents disagreed or strongly disagreed on the availability of essential
medicines all times at adequate quantities

It was noted most of respondents disagreed with the achievement of pharmaceutical selection
activities at facility level with aggregated mean of 2.1 and standard deviation of 1.85
From the interview with the informants the following qualitative data obtained; there are no
functional DTCs at facility level, no facility specific drug lists, and the requests presented to the
supplier by estimation. The pharmaceuticals expired due to lack of proper selection

34
Forecasting and Procurement of Pharmaceuticals at Facility Level
Annual forecasting, coinciding of forecasts with budgets, challenges of forecasting, timely
arrangement of requests and procurement processes are discussed under this category.

Response

Disagree(2)
Disagree(1)

Neutral(3)
Agree(4)

Agree(5)

Deviation
Strongly

Strongly

Standard
Forecasting and procurement of

Mean
Total
pharmaceuticals
FP1 Forecasts are updated at least annually 1 6 8 60 9 84 3.83 3.38
Forecasts are prepared on a schedule
coinciding with local budgeting and 84 2.94 2.59
5 29 18 30 2
FP2 procurement cycles
There are no challenges during
8 46 10 18 2 84 2.52 2.2
FP3 forecasting process
Essential pharmaceuticals are available
all times at adequate quantities and in 84 1.57 1.21
45 34 2 2 1
FP4 the appropriate dosage forms
Arrange timely request to your
suppliers to avoid shortage and stock 84 2.84 2.59
14 24 10 33 3
FP5 outs
The correct amounts of all products are
procured and obtained in an 84 2.66 2.65
FP6 appropriate time frame 24 32 1 2 25

Aggregate mean 2.72

Aggregate Standard Deviation 2.43

Table 4.7: Forecasting and procurement of pharmaceuticals at facility level

35
 From the table 4.7, 82.1% of respondents agreed or strongly agreed with that forecasts were
updated at least annually. 40.47 % of respondents disagreed or strongly disagreed forecasts were
prepared on schedules coinciding with local budgeting and procurement cycles whereas 23.80 %
of respondents agreed or strongly agree with forecasts were prepared on schedules coinciding
with local budgeting and procurement cycles. 64.28 % of respondents disagreed or strongly
disagreed that there were no challenges during forecasting process. 94.04 of respondents
disagreed or strongly disagreed on the availability of essential pharmaceuticals at all times at
adequate quantities. 45.23 % of respondents disagreed or strongly disagreed with arrangement of
timely request to the suppliers to avoid shortage and stock outs where as 42.85 % of the
respondents agreed or strongly agreed with arrangement of timely request to the suppliers to
avoid shortage and stock outs. Finally, 66.67% of respondents disagreed or strongly disagreed
the correct amounts of all products are procured and obtained in appropriate time.

It was noted most of respondents disagreed with the achievement of pharmaceutical forecasting
and procurement activities at facility level with aggregated mean of 2.72 and standard deviation
of 2.43.

From the interviews the following qualitative data on forecasting and procurement was obtained.
The health facilities conduct their forecasts annually and submitted to EPSA. The forecasting
process conducted manually and there were no automation. Even if there is no automation, there
was an improvement on the availability of summarized data from year to year. One of the
informants at the health facilities said the EPSA did not provide the necessary pharmaceuticals as
per the health facilities’ requests.

Inventory Management of Pharmaceuticals at Facility Level

Availability of guidelines and established policies for maximum and minimum stock level, safety
stock, recording of consumption data, written provision for redistribution of over stock supplies,
First expiry first out (FEFO) policy, separation of expired drugs from active ones, stock outs
problems of pharmaceuticals, physical inventory and disposal of expired drugs are discussed
under this category.

36
 Response

Disagree(2)
Disagree(1)

Neutral(3)

Deviation
Agree(4)

Standard
Strongly

Strongly

Mean
Total
Inventory management of pharmaceuticals
There are guidelines and established 28 39 10 5 2 84
policies for maximum and minimum 1.97 1.67
stock levels at which full supply Products
IM1
should be maintained
Safety stock level is set according to the 4 17 13 43 7 84
frequency of delivery and average 3.38 3.02
IM2 Consumption
Pharmaceuticals are reordered according 3 15 16 40 10 84
3.46 3.09
IM3 to their consumption
There are written provisions for the 28 35 10 9 2 84
2.07 1.8
IM4 redistribution of over-stocked supplies
The program has a policy of storing and 3 4 4 57 16 84
issuing stock according to first expiry 3.94 3.51
first out (FEFO) inventory control
IM5
procedures
Damaged/expired products are physically 1 2 54 27 84
separated from inventory and removed 4.19 3.77
IM6 from stock records at all levels 0

Stock outs have not occurred for any 63 2 1 1 84

product in the last 12 months at your 1.38 0.96
IM7 Facility 17

There is a policy that requires at least one 84

physical inventory of all products per 4.38 3.9
IM8 year at each storage facility 1 1 1 43 38

Expired products are destroyed according 60 200 3 1 84

1.39 1.06
to the program’s disposal guidelines
37
 IM9
Aggregate mean 2.75
Aggregate Standard Deviation 2.53

Table 4.8: Inventory management of pharmaceuticals at facility level

4.2 Main Challenges for Medical Supply Chains of Public Health Facilities
Frequency of main challenge
Human resource capacity and skill 78
sustainable financial resources 72
General management and management of 65
processes
Transparency and communication between 51
levels
Budget planning 40
Physical capability and resource 29
Use of data for management decision 21
Commitment and motivation 15
Accountability 12
Table 4.9: Frequency of main challenges

38
4.3.Determinants of Supply Chain Performance of Public Health Facilities In
addis abeba
The first objective of this study was to determinate of supply chain of public health facilities
. Is there any association between supplier-buyer relationship and supply chain performance?

2. What is the association between external supply chain and supply chain performance?

3. Do have any association between human metrics and supply chain performance?

4. What is the association between information sharing and supply chain management performance?

5. Do have any association between environmental factor and supply chain management
performance?

39
Table 4.5: association between supplier-buyer relationship and supply chain performance of public health
facilities of Addis Ababa.

Response

association between supplier-buyer relationship and

supply chain performance

Disagree(1)

Disagree(2)

Neutral(3)

Deviation
Agree(4)

Agree(5)

Mean
Total
1 lead time was4 important in effective buyer supplier 3 23 14 36 8 84 3.27 2.9
relationship on supply chain performance
Cost affects buyer supplier relationship on Supply6
46 23 0 15 0 84 1.80 1.64
2 Chain Performance

3 Quality affects buyer supplier relationship on supply 33 45 1 1 4 84 1.78 1.49

chain performance
organization ensures good to be delivered to 28 32 13 11 0 84 2.08 1.84
4
customers were of good quality
organization motivates their employees 9 16 28 21 10 84 3.08 2.78
5

supply chain performance was important in addis

3 33 10 33 5 84 3.04 2.72
abeba corporate organizations
6
7 There is adequate supportive supervision with 21 47 10 4 2 84 2.03 1.69
Feedback
Aggregate mean 2.44

Aggregate standard deviation 2.15

Source:Ownsurvey,2022

40
 Table 4.5 shows respondents’ responses on association between supplier-buyer relationship and
supply chain performance. It is indicated 52.3 % of the respondents agreed or strongly agreed
that the supplier-buyer relationship on lead time and skills whereas only 30.9% of the respondents
disagreed or strongly disagreed on this issue. 82.14% of the respondents disagreed or strongly
disagreed on the sufficiency of the Cost affects buyer supplier relationship on Supply Chain
Performance . 92.85% of the respondents disagreed or strongly disagreed on the Quality affects
buyer supplier relationship on supply chain performance . 65.4% of the respondents disagreed or
strongly disagreed on organization ensures good to be delivered to customers were of good quality .
29.7 % of the respondents agreed or strongly agreed on the organization motivates their employees
whereas 42.8 % of the respondents disagreed or strongly disagreed with supply chain performance was
important in Addis Ababa corporate organizations.
It was noted most of respondents disagreed with the achievement of association between supplier-buyer
relationship and supply chain performance with aggregated mean of 2.44 and standard deviation of 2.15

4.4. Association between external supply chain and supply chain performance

External supply chain integration refers to close collaboration with other members of the supply chain, such as
suppliers and customers, to streamline the flow of materials and information. This includes the coordination of
resources as well as information sharing, the latter of which can include demand forecasting, production plans and
inventory management. Growing uncertainty in the business environment has enhanced the need for external
integration with suppliers to counter disruption and maintain business continuity.

41
 Response

Strongly Disagree(1)

Standard Deviation
association between external supply chain and
supply chain performance

Disagree(2)
Neutral(3)

Agree(4)
Strongly

Mean
Total
Establishment of a strategic plan for 46 29 6 2 1 84 1.60 1.28
supply chain management.
1
Sharing information with suppliers related to 84 1.94 1.5
material flow management

2 20 50 13 1 0

Promotion of Transportation 84 2.03 1.61

and distribution
management 18 47 17 2 0
3
Use of information systems and technologies in 84 3.33 2.97
interactions between hospital

4 Departments 2 21 17 35 9

Purchasing 10 37 20 13 4 84 2.57 2.26

management Coordination between hospitals to
increase buying power for economic,
environmental,
5 and ethical purposes
Aggregate Mean 2.29
Aggregate Standard deviation 1.92
Source: Own Survey, 2020

Table 4.6 shows the respondents’ response on financial resources challenges on pharmaceutical
supply chain management in public health facilities of. As stated in the table 4.3, 82.% of the
42
respondents disagreed or strongly disagreed with Establishment of a strategic plan for supply chain
management.. 83.3% of respondents disagreed or strongly disagreed Sharing information with
suppliers related to material flow management in pharmaceutical supply chain management.
Regarding the understanding of pharmaceutical supply chain management Promotion of
Transportation and distribution management, 77.38 % of the respondents disagreed or strongly
disagreed. Finally, 27.38 % of the respondents agreed or strongly agreed on the Use of
information systems and technologies in interactions between hospital Departments

It was noted most of respondents disagreed with the achievement of financial resources related
activities regarding pharmaceutical supply chain management with aggregated mean of 2.29 and
standard deviation of 1.92.

43
 4.5. association between environmental factor and supply chain management
performance
Response

Strongly Disagree(1)
association between environmental factor and

Standard Deviation
supply chain management performance

Disagree(2)
Neutral(3)

Agree(4)
Strongly

Mean
Total
Establishment of a strategic plan for 40 29 9 5 1 84 1.71 1.51
supply chain management.
1
Sharing information with suppliers related to 84 1.92 1.50
material flow management

2 22 47 14 1 0

Promotion of Transportation 84 2.02 1.6

and distribution
management 18 48 16 2 0
3
Use of information systems and technologies in2 19 16 38 9 84 3.39 3.02
interactions between hospital

4 Departments

Aggregate Mean 2.25

Aggregate Standard deviation 1.9

Table 4.5 shows respondents’ responses on aassociation between environmental factor and supply
chain management performance It is indicated 7.14 % of the respondents agreed or strongly agreed
that the establishments of a strategic plan for supply chain management whereas only 82.14% of the
respondents disagreed or strongly disagreed on this issue. 82.14% of the respondents disagreed or
strongly disagreed on Sharing information with suppliers related to material flow management.
78.7% of the respondents disagreed or strongly disagreed on the Promotion of Transportation and
44
distribution management. 55.9 % of the respondents agreed or strongly agreed on Use of information
systems and technologies in interactions between hospital Departments whereas 25% of the
respondents disagreed or strongly disagreed with the Use of information systems and technologies in
interactions between hospital Departments.
Do have any association between human metrics and supply chain performance
Performance Measurement Approaches

Response

any association between human metrics and

Strongly Disagree(1)

Standard Deviation
supply chain performance

Disagree(2)

Neutral(3)
Agree(4)
Strongly
the extended meeting end-customer 84 1.55 1.22
requirements, in all the necessary

1 inventory and capacity 48 29 4 2 1

the human resources are well managed and in 84 1.97 1.58

strategy

2 21 47 14 1 1

willingness to take risks to build high level of trust 84 1.51 1.63

3 20 43 19 2 0

The exchange partner believing that an 84 3.34 2.9

outgoing relationship with another

4 2 19 18 38 7

5 employees have relationship in their own 23 20 34 2 5 84 2.35 2.09

organization(internal networks) and outside
their organizations
Aggregate Mean 2.14
Aggregate Standard deviation 1.88

45
Table 4.6 shows respondents’ responses on association between human metrics and supply chain performance.
It is indicated 3.57 % of the respondents agreed or strongly agreed that on the extended meeting end-customer
requirements, in all the necessary inventory and capacity whereas only 91.6% of the respondents disagreed or
strongly disagreed on this issue . 82.14% of the respondents disagreed or strongly disagreed on the human
resources are well managed and in strategy. 75% of the respondents disagreed or strongly disagreed on the
willingness to take risks to build high level of trust. 53.5 % of the respondents agreed or strongly agreed on
The exchange partner believing that an outgoing relationship with another whereas 25% of the respondents
disagreed or strongly disagreed with it . 51.2% of the respondents disagreed or strongly disagreed on employees
have relationship in their own organization(internal networks) and outside their organizations employees have
relationship in their own organization(internal networks) and outside their organizations.
What is the association between information sharing and supply chain management performance?

Response

association between information sharing

Strongly Disagree(1)

Standard Deviation
and supply chain management
performance?
Disagree(2)

Neutral(3)
Agree(4)
Strongly

The effect of information sharing on the 5 8 19 22 30 84 3.76 3.43

integration of drug supply chain
1
The effect of information sharing on the 0 18 15 26 25 84 3.69 3.34
2 efficiency of drug supply chain

The effect of information sharing on the 4 12 20 30 18 84 3.54 3.20

performance of drug supply chain

3
Aggregate Mean 3.66
Aggregate Standard deviation 3.32

46
The effect of information sharing on the integration of drug supply chain
According to the results obtained by analyzing the questionnaires, about 17.8% of the experts agree
with the effect of information sharing on the integration of drug supply chain, and around 60% of
them were in complete agreement. About 15.4% of them had no idea about this issue.
The effect of information sharing on the efficiency of drug supply chain
The analysis of the questionnaires revealed that about 21.4% of the experts have no idea about the effect of
information sharing on drug supply chain, 17.8 % agree, and 60.7% completely agree with it.
The effect of information sharing on the performance of drug supply chain
The results showed that about 4.7% of the experts disagree with the role of information sharing in the performance
of drug supply chain, 19.4% have no idea, 35.1% agree, and 21.4% completely agree with it.

Investigating the effect of information sharing on the integration, efficiency, and performance of drug

supply chain from the viewpoints of experts: According to table 6 which shows the output of one sample t-test, the
P-value of drug supply chain integration is about ≤0.001, and since it is smaller than significance level (0.05), it
can be concluded with 95% confidence that the mean score of this variable is not equal to critical value (3). Since t
value is positive, the mean score of this variable will be larger than 3 (rejection of null hypothesis µ≤3), therefore,
it can be concluded that according to the experts of the field, information sharing has a positive effect on the
integration of supply chain. As it can be observed in table 4.2.1.1, the mean score of the effect of information
sharing on the integrity is about 4.12. Comparison of this value with status index1 1 shows its high impact on the
status. The P-value of efficiency of drug supply chain is about ≤0.001 and because it is smaller than significance
level (0.05), it can be concluded with 95% confidence that the mean score of this variable is not equal to critical
value (3). Since t-value is positive, the mean score of this variable is larger than critical value (3) (rejection of null
hypothesis µ≤3). Hence, it is concluded that information sharing has a positive effect on the efficiency of drug
supply chain. The mean score of the effect of information sharing on the efficiency of drug supply chain was 3.98,
that, when compared with status index, show the high impact of this factor on the status. The P-value of drug
supply chain performance is ≤0.001, and since it is smaller than significance level (0.05), it can be concluded with
95% confidence that the mean score of this factor is not equal to critical value (3). The t-value is positive, so the
mean score of this variable is larger than 3 (rejection of null hypothesis µ≤3), proving that information sharing has
an effect on the performance of drug supply chain from the perspective of experts. The mean score of drug supply
chain performance was obtained to be 3.87, and when compared with status index, shows the high effect of this
factor on the status (table5, 6).

47
 CHAPTER FIVE

5. Conclusions and Recommendations

This chapter presents the conclusion, and recommendations.

5.1. Conclusions
This study aims assessing to determine of Supply Chain Performance in the Ethiopian Health Sector: Evidence
from Addis Ababa

. The study utilized mixed research approach by using structured questionnaire and interview
guide. Based on the results of the study obtained and summary of findings the following
conclusions are given.
 Customers' expectations are also increasing and organizations are prone to more and more
uncertain environment. Health sector will find that their conventional supply chain integration
will have to be expanded beyond their peripheries. The strategic and technological innovations in
supply chain will impact on how health sector service in the future. However clear vision, strong
planning and technical insight would be necessary to ensure that the health sector maximize the
potential for better supply chain management and ultimately improved competitiveness. The
organization must realize that they must harness the power of technology, effective relation with
their supplier to collaborate with their business partners.
By adding an effective SCM system , the added global efficiency can lead to lower costs of raw
materials. This system efficiently plans for materials to be brought to your organization from the
lowest cost provider possible and at just the right time to ensure there is no excess or deficiency in
the material thereby creating good rapport with the suppliers. SCM can improve your
organization's relationship with vendors so that there are opportunities to cut costs like through a
volume discount..It was concluded that this phenomenon has resulted in an emphasis on the
alignment of all functional activities of the health sector toward the achievement of strategic
objectives One consequence of this trend is that many have called for a new strategic role for the
HR function. This role entails two major aspects. First, the HR executive should provide input
into the hospitals strategy to ensure that the firm has the human resource capabilities to
implement new strategies. Second, the HR function needs to ensure that the HR programs and
practices are in place to effectively implement the strategy. Research has identified a variety of
collaboration enablers including the following: aligned objectives, a , technological connectivity,

48
 relationship trust, supplier development, and process redesign and integration .The centrality of
human resources is usually accounted for by the fact that nowadays health sector are facing such
challenges as a need to increase productivity, good service, develop new technologies,), which, of
course, emphasizes the significance of human resources and capabilities.

 Nowadays, information sharing is one of the vital aspects for the survival of different supply
chain in the competitive world which has many advantages like increasing efficiency,
decreasing inventory level at each time period, reducing totals costs of the chain, increasing
certainty and decreasing uncertain conditions, as well as optimal use of resources and increasing
productivity in all sectors involved throughout the chain. Considering its different sections, the
drug supply chain is not exempt from this rule, and information sharing has a significant effect
on its performance. Health and treatment supply chain, like supply chain management in a
production system can lead to integration and coordination of processes, integration of information
flow and coordination of planning processes. Information sharing is acquisition and dissemination of
information relevant to planning and controlling supply chain operations. Information sharing is
important for the efficiency and effectiveness as well as competitive advantage of the supply chain. The
results obtained in this study show that most experts completely agree with the effect of information
sharing on the integration, efficiency, and performance of drug supply chain and confirm its positive
effect. According to the analyses of this study, managers and policy-makers of health and treatment
sector should pay more attention to the role of information sharing in drug supply chain to improve its
efficiency and performance and increase the quality of drug distribution
 Our study suggested a relationship between environmental uncertainties, supply chain flexibility
and supply chain innovation. There are certain limitations that must be taken into consideration
despite the interesting findings of this study. For example, this study only discusses the effect of
supply chain flexibility and environmental uncertainty on supply chain innovation briefly.
Several management theories have been mentioned briefly in relationship to either supply chain
flexibility or environmental uncertainty. It would be interesting to explore several theories and
relate them to both supply chain flexibility and environmental uncertainty and how they can
contribute toward supply chain innovation.
 The results of testing data show that there is no significant difference between the likelihood of
internal and external risks. But external supply chain risks have a greater impact on the supply
chain than internal supply chain risks and also the result of indicated that there is significant
49
 differences between the different levels of the health sector risk management with performance.
whatever higher the level, the average corporate performance will be higher.

5.2. Recommendation

This study is not without limitations.

 It is explorative in nature and without empirical validation; the inferences of the relationship
will not be valid. At this stage, we are not able to test any relevant hypotheses. While we
acknowledged that the study has limitations, it has also provided interesting contributions. First,
we explored the potential relationship of collective supply chain practices that should create
flexibility. Environmental uncertainties also played a role in contributing towards supply chain
innovation. Our conclusion through extensive literature review indicated that supply chain
flexibility and environmental uncertainties should be a combination of integrative efforts of
operation processes that would lead to more innovations being introduced to the supply chain

 And also the subject of comprehensive view in relation to the identification of potential risks
throughout the supply chain is important. Therefore should attempt to the management system to
identify and assess overall risks in each component of chain. In relation to the overall supply
chain can be attempt to identify, analyze and monitor and have better respond and more flexibility
than the risk. The results of the second hypothesis show that external supply chain risks have a
greater impact on the supply chain than internal supply chain risks. Therefore, it is recommended
that with risk management avoid from occurrence of risks and be devised constantly measures to
deal with these risks. The results of the second hypothesis show that companies with a high
degree of supply chain risk management show a higher performance than companies with a low
degree. Therefore, it is recommended that be used proactive and reactive risk management tools,
such multiple sources; develop suppliers, suppliers of high quality....

 To remain competitive, organization has to offer superior quality goods at the lowest prices
possible. The need to minimize product costs makes effective supply chain management vital.
The organization should have good relation with the supplier to enhance efficiency. There are
costs involved in every process of the SCM and the buyer supplier relationship, and it is the
responsibility of management to ensure that these costs are kept low, so the organization can
continue to pass along these savings to the consumer. Supply chain management involves
50
 identifying those processes that increase cost without increasing the value of the final product.
These processes are wasteful and do not add value, and should be eliminated whenever possible.
Businesses exist to make profits. One of the most efficient ways of increasing an organization’s
profits is by ensuring that costs are kept as low as possible. The application of supply chain
management by organization leads to cost reductions due to elimination of wasteful processes.
Since these are operating costs for the organization, the savings on these costs reflect increased
profits by the organization.
 An organization that employs effective supply chain officers is able to achieve efficiency of its
operations since only those values adding activities (VAA) are encouraged. This ensures that the
organization’s processes flow smoothly and output keeps in line with the organization's needs.
The employees who are highly motivated works towards achieving the goals of the organization.
The organization should ensure that they have competent supply chain staffs who focus on
ensuring buyer supplier relationships are met. Effective buyer supplier relationship will in turn
ensure the organization runs smoothly since the supplier is able to supply goods early in advance
thus limiting delay. An organization that employs supply chain management can foster close-knit
relationships with its suppliers and customers, ensuring the timely fulfillment of orders. An
organization known for its timeliness and responsiveness will attract more customers, and will
grow as a result of increased output and sales.
 Closer integration with suppliers results in higher levels of reliability, delivery times (lead time),
flexibility and customer satisfaction, ultimately making the buyer more competitive long-term.
Increasing levels of operational integration with key suppliers leads to greater relationship
performance. The procurement staffs should ensure that they place the orders early for the
suppliers to be able to deliver in time. When the goods are delivered in time the procurement
personnel can inspect the goods thereby ensuring they are of high quality. High quality goods will
lead to growth of the organization, customer satisfaction and employee morale since the
employees are motivated to work towards achieving organizational tasks.

51
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