Sourcing Strategy and Supply Chain Risk Management in the Healthcare Sector: A Case Study of Malawi’s Public Healthcare Delivery Supply Chain

Abstract

The study primarily investigated the role of single sourcing strategy in either exacerbating or mitigating persistent supply failure in Malawi’s public healthcare delivery supply chain. It also investigated the role of the single supplier in recurrent drug stockouts in the country’s public hospitals. The study was conducted at five public healthcare delivery centres in southern Malawi. Data was collected using two sets of self administered questionnaires to, hospital managers and procurement staff at participating hospitals. Follow up interview with randomly selected managers were also scheduled to complement the data from questionnaires. The study findings confirmed that single sourcing exacerbates the risk of supply failure, evidenced by persistent stockouts of drugs in hospitals that consequently put at risk lives of many patients who rely on the public healthcare system. Such stockouts had multiple effects on the public healthcare delivery supply chains ranging from death of patients, deterioration of medical conditions of patients, hospital overcrowding, to transfer of patients to other hospitals (mostly private). Failure by the government instituted single supplier namely the Central Medical Stores, to maintain an adequate inventory of drugs both in quantity and variety, was found to be the most important cause of stockouts. From the study, it has been shown that the single sourcing strategy exacerbated the risk of supply failure, and is therefore generally inappropriate for healthcare delivery systems. It is hoped that these findings will help policy makers in making the right procurement strategies and policies in order to enhance healthcare delivery.