1.

Introduction

1.1.Background of the study

Ethiopia Pharmaceutical Supply Agency is  legal  entity  established  under  the  law  of  Federal
Democratic Republic of Ethiopia Government to overcome the problems and assure uninterrupted
supply of pharmaceuticals to the public at an affordable price. The Pharmaceuticals Fund and
Supply Agency was established in September 2007 by Proclamation No. 553/2007 to procure and
supply Medical Supplies, Laboratory Reagents & Chemicals, Medicines and Medical
Equipment’s for both Revolving Drug Fund and Program items. All the item sunder Revolving
Drug Fund must in the approved EPSA procurement list consideration with national essential
medicine list with an average per annual budget in billions dollar (EPSA plan2021) for around
119,494,155 populations (https://www.worldometers.info/world-population/ethiopia- population/).
The agency has 19 branch warehouses that serve more than 3,800 health facilities that in turn serve
more than 120 million people in 10 regional states and two administrative states. The agency
procure products centrally and has four major directorates namely; human resources and finance
directorate, outbound logistics directorate (warehousing and inventory management unit,
distribution and fleet management unit), management information system directorate, and inbound
logistics directorate (quantification and market shaping unit, tender management unit, contract
management unit). The quantification and market shaping unit should prepares the supply planned
of commodities based on need of end users and send the procurement request to tender management
unit. This unit prepares the budget analysis and procurement plan then send to endorsing
committee. After endorsed tender will float on air then open by tender evaluation team, next tender
evaluation is approved by endorsing committee. Contract along with files is transferred to contract
management unit and will process Logistics Committee opening, clear all commodities from port
then handover to warehouse and inventory management unit for receiving, and also the distribution
and fleet management unit is responsible to distribute to all branches. EPSA is responsible for
commodity distribution across 1.1 million km square (425,000 square miles) (RPSTP 2018-2020).

Supply chain management is the whole process of an organization from end to end and this
comprises planning, acquisition, distribution, commissioning & decommissioning (in case of
medical devices), disposal, performance measurement and monitoring. EPSA uses three types of
procurement methods for medical devices which are; International Competitive Bidding, Restricted
bidding, and Two Stage Bidding.
Currently local manufacturers are limited for manufacturing of medical devices in our country
thus their procurement is conducted mostly through international competitive bidding and this need
hard currency and also have time delay. The agency is procuring a lot of medical devices starting
from small medical device to capital medical devices such as Linear accelerator or radiotherapy
machine with a value of around USD 4.3million per each. The agency enters an agreement between
public health facilities to procure and supply the products within certain period of time but the
health facilities has complaint on delaying of procurement. As procurement includes the installation
and warranty management of medical devices it has also issues raised by health facilities on delay
of installation. So, this study will assess the performance of procurement and roles of information
technology on medical device supply chain management of EPSA .

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1.2 Background of the Organization
The Pharmaceuticals Fund and Supply Agency was first established in 1947 with a capital of
80 million birr under the name “the main Pharmacy.” The military regime then restructured “the
main Pharmacy” in 1976. Organizations that carried out similar activities were merged to create a
new organization called Ethiopian Pharmaceutical and Medical Supplies Corporation.The main task
of EPHARMECOR was to distribute human, animal and plant pharmaceuticals and medical
supplies it manufactured and imported from abroad. However, the steady plunge in the
corporation’s capital and the subsequent weakened supply necessitated another restructuring which
came during the period of the transitional government in 1994.

Accordingly, the transitional government allocated a huge budget to bridge the

pharmaceutical gap and restructured EPHARMECOR into a new organization called Pharmaceutical
and Medical Supplies Importer and wholesale Distributor (PHARMED).PHARMED had over 400
workers back then and distributed two-hundred eighty million birr worth of Pharmaceuticals and
medical supplies primarily to governmental health institutions. Seeking to ensure the organization
fulfils its mission optimally, it was restructured eight years later, in 2002, as a share company that
distributes pharmaceuticals and medical supplies purchased locally and from overseas.Taking the
changes in the sector into consideration, PHARMED was once again re-established with reformed
vision, mission and goals in 2007 under proclamation No. 553/2007 bearing the name
“Pharmaceutical Fund and Supply Agency (PFSA).” PFSA is structured to sustainably supply basic
pharmaceuticals used for treating the main health problems in the country along with medical
equipment and to consider the purchasing capacity of the society in providing its services.PFSA has
once again changed its name at the beginning of the 2019 to “Ethiopian Pharmaceuticals Supply
Agency(EPSA).” Despite the changes in organizational structure, naming and goal throughout its
history, the institution’s primary activity has always been supplying pharmaceuticals and medical
equipment mainly to governmental health institutions.

1.3.Statement of the problem

From the Pillars of Procurement Value for money is one of the main principles to acquire the
products at the right time, right quality, and right price thus need to improves the efficiency and
effectiveness of the supply chain management process. . EPSA is conducting procurement and
supply of medical devices to all government health institutions at an affordable after price since
2007 G.C. The Ethiopian Pharmaceutical Supply Agency (EPSA) is responsible for supply chain
management of public health commodities in Ethiopia. EPSA is responsible for commodity
distribution across the country. Some communities are difficult to reach due to their remoteness or
lack of Information technology access to deliver health commodities. Understanding the levels and
gaps of coverage in EPSA’s branch network is essential for EPSA and the Ministry of Health
(MoH) to improve access to essential health commodities for the people of Ethiopia. EPSA’s
currently not doing the assessment of supply risk of products and supplier positioning relationships.
The health facilities are not satisfied due to the delay of procurement process, less quality of
products, slow conducting installation and slow hand over warranty management by supplier’s.
EPSA, procurement conducts of all categories of goods is conducted manually which is paper
based system and this leads inefficient and ineffective procurement due to unnecessary time taken,
file management issues.
An integrated procurement MIS is not available. The current processes are paper-based which,
unless some level of automation and digitization are introduced, will hamper any future attempts to
streamline the overall process lead time and situation that makes the supply chain in the
procurement is in efficient and not effective. Therefore, this study is important to assess the
performance of procurement process and roles of information technology on medical devices
supply chain system in Ethiopian Pharmaceuticals Supply Agency (EPSA).

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1.4.Research question

The following main research questions will be proposed

⦁ What are the performances of medical device procurement in Ethiopian Pharmaceuticals Supply
Agency?
⦁ what are the role of information technology in the performance of medical device procurement?
⦁ What are the factors affecting the performance of medical devices procurement?

1.5.Research hypothesis

 There is a significant relationship between information technology and performance of

medical device procurement.
 There is positive relationship between E-procurement and performance of medical device
procurement.

1.6.Objectives of the Study

1.6.1.General Objective
The objective of this research proposal is to assess the performance of medical devices
procurement and role of information technology in the supply chain management system of
Ethiopian Pharmaceuticals Supply Agency(EPSA)

1.6.2.Specific Objective

 To determine the performance of medical device procurement.

 To identify the factors affecting the performance of medical devices procurement supply
chain system.
 To identify the role of information technology in the performance of medical devices
procurement

1.7.Scope of the study

The scope of the study relies on medical device procurements in supply chain system of
Ethiopian Pharmaceuticals Supply Agency. It includes all departments that are participating in
procurement process of Ethiopian Pharmaceuticals Supply Agency head office.

1.8.Significance of the study

This study will assess about medical device procurement system at EPSA such as the practices of
procurement and their challenges, communication among stakeholders and internal units , practices
of handling installation and warranty management, and Roles of Information Technology. The
result of this study will be useful for the agency to take a necessary action that strengthens the
supply chain system in the procurement. There are rarely researches conducted previously on this
area, so this research paper helps some directions to other researcher for their further future
investigations.

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 Chapter Two

2.Review of Literature
2.1 Introduction

Medical device supply chain management involves the planning and management of all activities
involved in need assessment and procurement. According to the Ethiopian Public Procurement
Proclamation (No 649/2009), procurement means “obtaining goods, works, consultancy or other
services through purchasing, hiring or obtaining by any other contractual means.” Based on WHO
procurement process involves technology assessment, device evaluation, planning and need
assessment, procurement, installation, commissioning and monitoring(WHO 2011). According to
CIPS/UNDP (2019) procurement process includes planning and strategy, specification, methods of
procurement, sourcing, obtaining offers, evaluation and contract award and management.
This section explained more in the aspect of theoretical review, empirical realities and conceptual
model.

2.2.Theoretical Literature Review

Currently Supply Chain Management (SCM) becomes a popular to business management

organizations as well as academics and has a critical role in continuous improvement of the health
system. EPSA uses a primary mechanism which is called IPLS to ensure uninterrupted supply and
continuous availability of quality assured essential products to government health facilities.
According to UNDP (2018) Procuring a quality assured health products has an important role in
increasing the health service provision and improving quality of lives. According to WHO (2011)
the public procurement insists to have values and conducts such as accountability, transparency,
responsiveness, professionalism, competition, appeal rights and thus assures good governance. In
addition, an effective procurement system attains the right product or service through the
procurement principles of five rights such as the right quality, right price, right quantity, right time
and place (WHO, 2011). There are seven procurement principles’ and those are best value for
money, fairness, integrity, accountability, transparency, effective competition, the interest of the
enterprise (UNDP/CIPS, 2019). From the above points satisfying customers is the end result of all
activities in the procurement supply chain system.

2.3.Empirical Litrature Review

Empirical studies by Ross, D.F., (1998) confirmed Supply chain performances theory that, SCM
practices considerably improve companies performance. Moreover, the results specifically highlight
that IT and information sharing significantly contributes to more performance measures than
supplier and customer relationship practice. With regard to the relationship between SCM strategies
and operational performance, Tan, etc., observed that the following SCM-related strategies were
significantly related to overall product quality and overall customer service: namely determination
of customer’s needs, reduction in response time and supplier delivery time, improvement of
integration activities, trust among supply chain members, communication of future needs, use of
information sharing and assistance of suppliers in JIT (just in time) capability. The supply chain
performance is now increasingly perceived as critical means for attaining a competitive edge over
others competitors. The traditional way of measuring performance based on cost alone has giving

4
way to more innovative approach incorporating non-cost performance measures like quality,
flexibility, time and the need for customer satisfaction(Agarwal,A., R. Shankar and et.al 2006).
Medical devices are a critical part of the healthcare industry. Whether they’re being shipped to
pharmacies, hospitals, or other Healthcare Professionals, medical devices supply chains are vital,
ensuring that products arrive safely and securely. With increasing numbers of these products
requiring specialist handling, it’s important for manufacturers to work with logistics providers who
understand and have in depth experience in this sector. Procurement is a vital element of equitable
access to health care. It can be defined as “the acquisition of property, plant and/ or equipment,
goods, works or services through purchase, hire, lease, rental or exchange” and is taken to include
“all actions from planning and forecasting, identification of needs, sourcing and solicitation of
offers, evaluation of offers, review and award of contracts, contracting and all phases of contract
administration until delivery of the goods, the end of a contract, or the useful life of an asset.”
(UNOPS procurement manual, p.6). Medical devices procurement is not only about adequate
resources. It is about managing the supply chain from selection and procurement to local
distribution and rational use. To achieve equitable access and cost-effectiveness, there is a need to
develop technology transfer networks among countries such as E-procurement. The use of
electronic data interchange and web-based bidding is seen as a tool for both efficiency and
transparency. The UN handbook (UN 2006, Section 4.2).
WHO estimates that around 95% of the medical devices in developing countries are imported,
much of which does not meet the needs of national health care systems and is not used effectively
and efficiently(WHO 2004-2007).Centres of excellence can be helpful in training and encouraging
countries to address and/or deal with many medical device-related problems. To ensure appropriate
access, a list of essential devices is required (WHO 2004). According to the globalization and health
review (2017), absence of safety and well functioning of medical device affects the service
provision across the national health system thus leads to less patient output, increases patient risk
and death. In addition the literature states that in a low resource setting countries around 40% to 70
% of the medical devices are broken, not functional. The most common key issues happen are
indiscriminate procurement methods, absence of preventive and service maintenance, poor capacity
building on technical staffs (Diaconu et al. Globalization and Health, 2017). So, in this case most
patients are not diagnosis as well as not get treatments on time as they are belong to the nationality
of one country. EPSA attempts to satisfy the need of health facilities that have many issues in the
supply chain management consists of procurement methods and system, non value adding activities,
capacity building of technical staffs and professionals, handling of installation and warranty
management,and lack of effective Information Technology supply chain management system.

2.4 Conceptual framework

From the above literature review the conceptual model is developed as shown below and Six
independent variables that can affect EPSA’s medical device procurement performance are included
in this study. Contract
management

Quantification & Installation

Market Shaping &
EPSA
Warranty
Procurement
management
Performance
Supplier’s
relationship, delivery
Tender
& response time
management
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 Information
Technology
Chapter Three

3.Research Methodology
3.1.Introduction

In this study, the type of research approach We are going to use is descriptive research approach.
The section will focuses on the overall procedures of a research used by gathering relevant data for
the achievement of the objectives of the study. The methodology consists: research design, target
population and sample size, sampling technique, research instrument, data analysis, presentation of
data.

3.2.Research Design

The research design will focus majorly on descriptive study hence the response will be summarized
and present by using descriptive statistics. In addition the research design will also include an
exploratory study which used for triangulating in order to gain some relevant information which is
not going to be assessed by descriptive so that it increases the efficiency and reliability of the data
of this study.

3.3. Research approach

The study consists of mixed approach which is both qualitative and quantitative methods. The
qualitative approach generates non-numerical data and its primary aim is to get specific information
from participants for better understanding of underlying reasons. In addition it will explore the
behavior, attitudes and experiences through unstructured and/or semi structured techniques or focus
group discussion or observation. On the other hand quantitative method generates numerical data
that can be converted to numbers and it focuses on counting and classifying features, constructing
statistical tool and figures to describe what is observed through questionnaires or structured
techniques.

3.4.Sampling design

3.4.1.Target Population

The study will be conducted in Ethiopian Pharmaceutical Supply Agency head office which is
found in Addis Ababa Addis Ketema Sub city Arbegnoch Street in front of St Paul’s Hospital. The
unit of analysis will be EPSA staffs who are engaged in quantification and market shaping, tender
management, contract management directorate and management Information system directorate
with a total population of 72 in number.

3.4.2. Sampling Frame

The lists of all those source material within target population who will be sampled for the study are
as follows; 12 officers and 1 team leader from tender management, 17 officers and 1 team leader
from contract management, and 9 officer and 1 team leader from management Information system
and the rest 15 officers and 1 team leader from quantification and market shaping units. In addition
directors from tender management 1, contract management 1, management Information system 1

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and quantification and market shaping unit 1 will also involved in the study because most of the
operations are managed by them.

3.4.3. Sampling technique and Sample size

The selected population in the study is heterogeneous so that in order to collect primary data
from the subject different samples will be drawn among the respective population using the non-
probability purposive sampling technique because the criterion chosen allows the study to focus on
people who have exposure, experience, and know how on the practices and challenges of the
procurement on medical devices. According to the slovins-formula for sample size determination in
a finite population i.e. n = N /(1 + Ne2) where n is the sample size, N represents total number of
population size and e represents sampling error/level precision which is 5%, the sample size used
for the study will be 47 respondents from EPSA staffs including officers, team leader and directors.

3.4.4. Sampling procedure

EPSA medical device procurement supply chain system will be grouped in to four major
categories i.e. those administered by quantification and market shaping directorate, tender
management directorate, management information system and contract management directorate.
Accordingly the survey will be collected first from officers and team leader and then finally an
interview with directors will be conducted as per the sampling frame based on the purposive
sampling technique.

3.5. Sources of Data

3.5.1. Primary source

Primary source of data will be collected from tender management officers, management
information system ,contract management officers and quantifications and market shaping officers
as well as from team leaders of those four units using self-administered questionnaires which have
closed ended questions and some open ended questions. In addition to collect some qualitative data
from target groups of four directorate units will be interviewed through an interview schedule .

3.5.2. Secondary source

Secondary sources of data such as Standard Operation Procedures (SOPs) , monthly, quarterly and
annual report, Proclamation 649/2009 , Directive 2010,strategic and annual plan, will be used as
Secondary sources of data inputs for this study.

3.6.Data Collection methodology

First of all the selected participants will be communicated for their consent prior to distributing
the research instrument. Then after knowing the willingness of participants, the prepared self-
administered questionnaire will be distributed to each respondent. After a certain time
questionnaires will be collected by checking the completeness of the data and along with
appreciating for their participation as well as spending their precious time. Similarly, for interview
questionnaires the researcher will ask the participants and get answers for each question with a

7
necessary clarification and finally the investigator will remark thank you a message for their
cooperation.

3.7. Data collection instrument

Self-administered semi-structured questionnaire, interview questionnaire through schedule and any

necessary secondary data such as quarterly performance reporting template and etc will be used to
collect data on the procurement of medical device.

3.8 .Data analysis methods

The collected data will be checked initially to detect for any errors to ensure consistency and
completeness. After the data is checked it will be coded, entered and analyzed by the use of IBM
Statistical Package for the Social Sciences (SPSS) version 20. Study results we will be presented by
using descriptive statistics. (mean, standard deviation, proportion, and frequency), graph/or table
and Hypothesis Testing inferential analysis of variability (standard deviation), Pearson
correlational and regression analysis are use.

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4. Working plane

4.1 Time schedule

Table 1: Time schedule to assess medical device procurement in case of EPSA, 2022

S.No Activities Duration in months (jan-Jun, 2022)

Feb Mar Apr May Jun Jul
1 Preparing and Finalizing           
questionaries and data
collection sheet format

2 Finalizing the Review of           

Related Literature
3 Finalizing the Research           
Methodology
4 Development of the           
research instrument
5 Discusses with ethiopia           
pharmaceutical supply
agency selected departments

6 Distributing questionary 

7 Data collection 

8 Data analysis 

9 Submission of Final           
document
10 Presentation           

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5. Budget schedule

Table 2: Proposed budget breakdown to assess medical device procurement in case of EPSA, 2022

No Item Unit Quantity Unit Cost in Birr Total cost in Birr

1 Note book Piece 15 20.00 300.00

2 Pen Piece 15 8.00 120.00

3 Photocopying page 600 1.50 900.00

4 A4 papers Packed 2 250 500.00

5 Secretarial page 400 5.00 2000.00

service

6 Printing page 600 2.00 1200.00

7 Binding No. 10 17.00 170

8 Internet GB unlimited 1500.00

9 Telephone fee minute 5000 0.25 1250.00

10 Transport exp km 200 10 2000.00

11 Fee for data Questionnaire 40 150.00 6000.00

collectors

12 Advisor fee once 6 months 2000.00 12000.00

Sub Total cost in Birr 27,940.00

Contingency cost (10%) in Birr 2794.00
Grand Total Costs in Birr 30,734.00

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6. References
 Ethiopian Public Procurement Proclamation (No 649/2009). Federal public property and
procurement Agency.
 Ethiopian population number (https://www.worldometers.info/world-population/ethiopia-
population/)
 Revised Pharmaceutical Supply Transformation Plan 2018 - 2020
 UNDP/CIPS (2019) introductory certificate in public procurement, level 2 training manual, P.6
& 8-9
 UNDP (2018). value proposition in health procurement, p.10
 Karin D.,Yen-fu C.,Carole,C.,Gabriela JM., Semira MH. & Richard L. (2017). Methods for
medical device and equipment procurement and prioritization within low- and middle-income
countries, findings of a systematic literature review, 13 (59), P 1-2 (DOI 10.1186/s12992-017-
0280-2)
 PFSA (2017). Pharmaceuticals supply process reengineering for pharmaceuticals fund and
supply agency.
 https://www.alloga-network.com/sectors/medical-devices
 Myriam L., Kasper W. & Luis D. (2016). Effects of procurement practices on quality of medical
device or service received, a qualitative study comparing companies. BMC Health Services
Research, 16 (362), P.2 (DOI 10.1186/s12913-016-1610-4)
 Pharmaceuticals Fund and Supply Agency (2016). Integrated Pharmaceuticals Logistics System
Manual, Addis Ababa, Ethiopia.
 WHO (2015). World Health Organization procurement strategy
 USAID Deliver Project (2013). addressing public health procurement bottlenecks, lesson from
the field, P.1
 UNOPS procurement manual(p-6), New York, UN Offi ce for Project Services 2010
(http://www.unops.org/SiteCollectionDocuments/Procurement/docs/UNOPSprocurement
manual EN.pdf).
 UN procurement practitioner’s handbook, New York, United Nations (UN) 2006 (section-4.2)
(http://www.unicef.org/supply/fi les/UN_Practitioners_Handbook.pdf)

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 GHTF final document (2012). Definition of medical device
 Essential health technologies: Strategy 2004–2007. Geneva, (WHO 2004)
 Towards a WHO model list of essential medical devices. Geneva, (WHO 2004)
 WHO (2011). medical device technical series on procurement process resource guide, P.10&18
 Medical equipments definition (https://www.who.int/medical_devices/definitions/en/)
 UNDP/CIPS, UN procurement practitioner’s hand book, p.172
 Agarwal, A., R. Shankar and M.K. Tiwari, 2006. Modeling the metrics of lean, agile and leagile
supply chain: An ANP-based approach. Eur. J. Oper. Res., 173: 211-225.
 globalization and health review (2017),
 Ross, D.F., 1998. Competing Through Chin Management: Creating Market Winning Strategies
Through Supply Chain Partnership. Chapman and Hall, New York, USA
 slovins-formula https://www.statisticshowto.com/probability-and-statistics/how-to-use-slovins-
formula

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