Benchmarking Supply Chains for Better Performance

Abstract

Donors play a significant role in funding medicines and other commodities in global health. Of the approximately US $28.2 billion spent by donors in 2010, approximately 40% went towards medicines, vaccines and other health commodities, mainly in sub-Saharan Africa. The efficiency of this spend is therefore of great concern, given the large variability in supply chain costs.

In this paper, we develop quantitative estimates of the feasible opportunity for efficiency improvement in country level reproductive health supply chains in sub-Saharan Africa. We used Data Envelopment Analysis (DEA) to identify peer groups of countries in the region (whose inputs and outputs are similar) that could share best practice to deliver efficiency improvements. Our first analysis suggested an opportunity to improve contraceptive prevalence rate (CPR) by on average 61% and timeliness by 32% for the set of initially classified as inefficient countries, which corresponds to 84% of the countries studied. We then identified country specific environmental variables that could affect outcomes, and estimated their impact on managerial efficiency. This analysis suggested that the observed output CPR values should be adjusted on average by a factor of 5.18 and the observed timeliness should be adjusted by an average factor of 0.86 – suggesting that environmental factors have a significant impact on health outcomes. Our adjusted outputs continue to suggest an opportunity to improve CPR by 56% and timeliness by 26% for the set of inefficient countries, which now corresponds to 75% of the countries.

Thus, despite the impact of environmental variables, there continues to be an opportunity to improve both health outcomes and supply chain performance through process improvement and benchmarking. Finally, we document a significant relationship between donor funding fragmentation and efficiency and suggest steps to mitigate that effect. Our analysis suggests a set of concrete steps to improve supply chains for global health products along with an estimate of their impact.