Contractual procurement alternatives of air force contingency pharmaceuticals: a cost-benefit analysis

Abstract

Purpose – This paper aims to explore effective supply chain principles, through the theory of transaction cost economics, as measures to improve current contingency pharmaceutical item shortfalls in the Air Force Medical Service (AFMS) Contingency Pharmaceutical Programme. Design/methodology/approach – In this research, AFMS contingency pharmaceutical data was collected from various databases, including the Joint Medical Asset Repository, Medical Contingency Requirements Workflow and the Medical Requirements List. Through the methodology of cost-benefit analysis, alternative sourcing and fulfilment practices are evaluated. Findings – The findings of this research indicate that the application of centralized purchasing principles, in an effort to leverage prime vendor contract fill rates for shortage items, can lead to 12%–17% increases in pharmaceutical material availability across the programme. Originality/value – This research clearly shows that consolidating demand for shortage items across Active Duty War Reserve Material assemblages, though applications of centralized purchasing principles that leverage prime vendor contract fill rates, can lead to substantial increases in material availability at costs that justify the calculated benefits.

Keywords

• strategic sourcing
• cost-benefit analysis
• pharmaceutical procurement