Assessment of Pharmaceutical Supply Chain Risk management: The Case of Ethiopian Pharmaceuticals Supply Agency
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Date
2021
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Addis Ababa University
Abstract
Background: Supply chain risk management is the process of identification, assessment,
mitigation, and monitoring of risks. Pharmaceutical suppliers and distributors face multiple risks
that disrupt the supply of drugs interms of quantity, quality, and delivery at the right place and
time to the right customer. Therefore, caution must be taken as health is critical and
pharmaceuticals are unique.
Objective: To analyze the pharmaceutical supply chain risks and assess the risk management
practice of the Ethiopian Pharmaceuticals Supply Agency.
Method: An explanatory and descriptive case study design was employed. Totally, 101 samples
were involved in the study selected through purposive sampling technique. An interview guide,
questionnaires, and risk checklists were used to collect quantitative and qualitative data from
respondents. The Excel-derived failure mode and effect analysis template, and SPSS version 23
were used for the data analysis. Thematic analysis of qualitative data was also employed.
Result: Eighty nine risks were identified and categorized into six groups. Among these, supply
and demand side risks take the priority in affecting the supply chain operation. Inability to meet
customer demand, lead time variability, and poor logistics performance of suppliers are under
high risk score categories. Most of the respondents, 45 (44.6%), agreed that the risk management
practice at Ethiopian pharmaceuticals supply agency is at its infancy. Risk identification methods
being used are found to be risk estimation, previous risk assessment, and brainstorming sessions.
The most applicable risk management tools are inventory optimization (29.9%), sales (22.4%),
and operation planning tool (27.6%). The overall implementation of risk management strategies
are below the average. Supply side (β = -2.171, P ˂ 0.020), process (β = -0.979, P ˂ 0.026), and
control (β = -1.694, P ˂ 0.004) risks negatively affect the supply chain performance, while risk
management practices (β = 6.440, P ˂ 0.002) affect it positively.
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Conclusion: Supply side risks took the primary position during prioritization followed by
demand side and operational risks while environmental risks were at the least position. The
overall risk management practice of the Ethiopian pharmaceuticals supply agency is weak. The
level of implementation of risk management processes are low while the applicability of risk
management tools are above the average level in the last 5 years history of the agency. Supply
side, process, and control risks affect the supply chain performance negatively. However, supply
chain risk management practices have a positive impact on performance.
Recommendation: The Ethiopian pharmaceuticals supply agency should establish a separate
team that primarily assess, analyze and control supply chain risks at all hubs. The agency should
also be engaged in more scientific methods of risk identification methods like surveys, and risk
assessment to identify, control, and minimize impacts of risks.
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Keywords
Risk Management, Supply Chain, Supply Chain Risk Management, Risk Analysis, Risk control.