HARAMAYA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT
MBA Program (Weekend, Harar)

Operations and Supply Chain Management (MBA 523) Assignment

Academic Year: 2023/24 Submission Date: July 15, 2024

By Getachew Shunki (ID: CPGP/298/15)

Course Instructor: Mr. Admike Haile (Asst. Prof.)

Go through the given case scenario

Choose an organization operating any of (Cement industry, super market, food processing industry or
an electronics equipment manufacturer/distributor, automobile manufacturer or automotive parts or
retail goods or services). The organization that you choose should either manufacture or market or
distribute some goods or services. The competition in these businesses mostly depends upon price,
quality, timely delivery and service (which are core aspects of Operations and Supply Chain Manage-
ment). Here is the highest pressure on all the business organizations in these to keep the four aspects
mentioned. As most of the Ethiopian businesses are the most emerging industries, the operations
and supply chain need transformations. The operations and supply chain management practice are
getting to the maturing stage in developed countries so that their business become more and more
competitive, and the customer gets only the best products in the market.
Note:
You can make use of graphs, tables, illustrations, maps, pictures, images to add clarity to your an-
swers. Submit the assignment in the report format (Follow Haramaya University SGS guidelines for
citations and reference). The report should contain the following.

1. Examine and evaluate your chosen organization’s Operations and Supply Chain, describe its
basic working, strategy used by them, key drivers for achieving an integrated supply chain.
What is the SCM model used?

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Solution
The Ethiopian Pharmaceutical Supply Agency (EPSA) has been selected for this assign-
ment.
In Ethiopia, pharmaceuticals market is increasing from time to time. Most of the phar-
maceuticals (75%) are imported; however 25% of the pharmaceuticals are manufactured
locally (MARITZ, 2024). So the distribution of Pharmaceuticals needs great attention
in order to reach the end customers. The pharmaceuticals supply chain passes steps
from demand forecasting by health facilities, procurement from international and na-
tional suppliers, importing, storage and distribution to health facilities and end users.
The pharmaceuticals supply chain passes steps from demand forecasting by health fa-
cilities, procurement from international and national suppliers, importing, storage and
distribution to health facilities and end users (ABAMECHA, 2020).
Distribution of pharmaceuticals by the agency follows integrated pharmaceuticals logis-
tics system (IPLS), through which all pharmaceuticals requested, reported, received and
managed integrated manner.

Figure 1: Integrated Pharmaceuticals Logistics System (IPLS) (EMIRU, 2021)

Currently the Central EPSA has 10 warehouses and 31 functional vans and heavy load
Vehicles to distribute pharmaceuticals (PFSA, 2016).
Though IPLS has been developed and implementation started, the Ethiopian pharmaceu-
tical supply chain has several problems including non-availability, un affordability, poor

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 storage, lack of stock management and weak distribution system including weak fleet
management. Health Facilities have problems to get right products; right quantity and
right quality are not available at the right time, right place, for the right cost due to poor
distribution system (EPSA, 2015).
Products which are found at central level may not found in all hubs. Central EPSA uses
8 rental warehouses which are located at different Part of Addis Ababa City. This has
high negative impact for Smooth distribution system.
As Lissanework, (2013), Referenced, mechanical assistance is low in these warehouses.
In addition to this EPSA is constrained by shortage of vehicles, portable cold chains,
cold rooms, racks and pallets. The main Challenges that affect EPSA performance are
; its dependency on international suppliers due to lack of local Competitive supplier,
very long procurement process, limited vehicle Capacity for distribution, lack of skilled
manpower and poor demand forecasting Capacity (Mered,2015). The situation seems
higher at hub levels. This also leads to the problem in the operational performer and
also affecting profitability and operations of the organization. Due to this the hubs are
not sufficient to satisfy the need of clients. Besides to shortage of vehicles there is weak
coordination among general internal and external stakeholder. Currently, as explained
above, the push-based supply chain model is used by EPSA.

2. Go through the typical working of the chosen organization’s operation and supply chain pro-
cess. Is there a role for reverse logistics for your chosen organization’s products? If there is a
role, explain the process that is applicable.

Solution
Reverse Logistics (RL) can be defined as “the process of planning, implementation
and controlling the efficient, cost-effective flow of raw materials, in-process inven-
tory, finished goods and related information from the point of consumption to the
point of origin for the purpose of recapturing or creating value or proper disposal”
(Rogers and Tibben-Lembke, 1999). As can be seen from the definition, reverse logistics
has both environmental and economic benefits. A typical forward and reverse logistics
is shown in Figure 2.

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 Figure 2: Reverse Logistics in the Pharmaceutical Industry (Narayana et al., 2014)
Coming to the case of Ethiopian Pharmaceutical Supply Agency, there is a good transport
facility that connects branches with catchment public health facilities. However, there is
a poor reverse logistics practice in the agency.

• products with defects are not immediately collected,

• the agency does not have a modern way of disposing damaged and expired prod-
ucts,

• near expiry products are sent to service delivery points unknowingly,

• products supplied by wrong forecasts are not returned to suppliers,

• poor transportation access to off-road centers which makes product return/recall a

challenge,

• poor reporting system for product quality defects,

• poor product arrangement in warehouses,

• the agency does not have fixed disposal cites.

For the agency to have an efficient and effective reverse logistics system, the following
are recommended.

• conducting product quality defect tests at central and branch levels to minimize
recall after distribution,

• having modern disposal facility,

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 • having a system of controlling expiry date of products to minimize unnecessary
distribution of products to branches and to end service delivery points,

• having proper product consumption data analytics to minimize erratic availability

of products and to prevent demand estimation errors,

• implement standard warehouse management to minimize product wastage and

damage,

• implement effective and efficient pharmaceutical reverse logistics practices at cen-

tral and branch levels.

3. Understand and analyze the operations and supply chain strategy employed by your chosen
organization. Indicate whether the current arrangements are effective. Suggest improvements
for making the operations sustainable.

Solution
As explained above, the agency implemented integrated pharmaceuticals logistics sys-
tem (IPLS) for distribution of pharmaceutical products. But studies show that there
is no clear supply chain strategy employed in the agency. More emphasis is given to
timely distribution of pharmaceutical products. So the agency recommended to imple-
ment pharmaceuticals warehouse management practice like regular compliance check of
storage equipment (material handling equipment), fit transport vehicles with temperature
and humidity monitoring devices or use special vehicles for transportation of cold chain
items, implement appropriate human resource management, implement appropriate data
analytics for accurate decision making in supply chain management.

4. What is the facility layout, and warehouse design used by the chosen organization and provide
your idea on the appropriate facility layout and warehouse design that will be suitable for the
future. Justify your choice with proper reason.

Solution
According to the USAID global health supply chain program technical brief, EPSA is
committed to improving access to and equity of essential medicines and related health
commodities. In recent years, EPSA has made significant progress. It expanded dis-
tribution networks to 19 subnational branches, increasing national coverage and direct

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delivery to public health facilities. It also developed the Revised Pharmaceuticals Sup-
ply Transformation Plan (2018–2020) aims to secure uninterrupted product availability
and delivery of excellent customer service. This strategic plan identified four thematic
areas in pharmaceutical supply management that call for excellence in:

• pharmaceutical supply,

• financial management system,

• leadership and governance, and

• supply chain systems capacity.

The center of excellence was designed to accelerate the agency’s change management
process through continuous improvement of its warehouse and inventory management
operations. Figure 3 shows a revised warehouse of the agency at Hawassa as part of the
effort to improve the supply chain system.

Figure 3: Revised/Improved Warehouse Layout Design at Hawassa (USAID, 2021)

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 Figure 4: Recommended Warehouse Layout Design for Pharmaceutical Products (Pha,
2024)

References
(2024). Pharmaceutical warehousing.

ABAMECHA, A. (2020). The effect of supply chain management practice on operational perfor-
mance: The case of ethiopian pharmaceutical supply agency (epsa).

EMIRU, E. (2021). Analysis of pharmaceuticals supply chain management practices and challenges
- the case of ethiopian pharmaceuticals supply agency nekemte branch.

EPSA (2015). Ethiopian pharmaceutical warehouse operations management manual.

MARITZ, J. (2024). Ethiopia: Potential to capitalise on demand for affordable pharmaceuticals.

Narayana, S. A., Elias, A. A., and Pati, R. K. (2014). Reverse logistics in the pharmaceuticals indus-
try: a systemic analysis. 25(2).

Rogers, D. S. and Tibben-Lembke, R. S. (1999). Going Backwards: Reverse Logistics Trends and
Practices. Reverse Logistics Executive Council.

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USAID (2021). Center of excellence: Achievements and lessons learned from ethiopian pharmaceu-
ticals supply agency hawassa branch warehouse in ethiopia.