Chair of Logistics and Quantitative Methods

Multi-Supplier Sourcing Strategies for Global Health Products

Problem & Objective:

In the past, a number of global health initiatives as well as financing and donor organizations (e.g. UNITAID, the Stop-TB-Initiative, GAVI, or The Global Fund; in the following referred to as "organizations") have significantly improved access to essential medicines and healthcare products/services in developing countries. They have been particularly successful in lowering purchasing prices through volume consolidation and centralization of purchasing activities. However, besides the significant benefits from economies of scale, risk pooling, transaction cost reduction, etc., full consolidation of procurement volumes may not always be feasible and there may also be very good reasons to opt for other sourcing strategies.

UNICEF, for example, diversified the supplier base for ready-to-use therapeutic food (RUTF) from one to fourteen suppliers to ensure sufficient capacity, competition in the supply market, assurance of quality, as well as to support local economies (Komrska, 2013). GAVI announced a long term plan to procure pneumococcal vaccines from multiple suppliers through an advance market commitment "...to accelerate the development of new [Pneumococcal] vaccines, to contribute to the creation of a healthy market with multiple suppliers, and to enhance the possibility to access lower tail prices through future offers..." (GAVI Alliance Secretariat, 2013a, p. 32). More examples can be found here (more).

These examples show that organizations acknowledge that volume consolidation through single sourcing has a potential to undermine supply market health and long term welfare in the developing countries. A sourcing strategy not only determines procurement and supply chain costs, but also innovation, competition, supply market health etc. (see Figure). Choosing the right strategy is difficult, because of complex trade-offs between the advantages and disadvantages in multiple dimensions, misalignment between long term and short term objectives, and diverging incentives of multiple stakeholders. In our research we aim to develop a toolkit that supports the management of global health initiatives and associated procurement organizations to develop sourcing strategies that guarantee healthy supplier markets and long term welfare maximization.

Read the complete motivation of our research here (more).

Research Agenda:

Our research currently focusses on the elements that shape the sourcing strategies of procurement organizations that focus on essential medicines and other products and health care services for developing countries. Our research agenda continuously evolves - current topics are:

Supply Market Commitments: Efficiency and Incentives for Long-Term Market Health and Innovation (more)

Supply resilience in the presence of suppliers’ economies of scale (more)

Optimal Mechanisms to Award Contracts (more)

Healthcare Supply Market Interventions (Collaboration with Prashant Yadav)

Publications and Working Paper

[ 2016 ] [ 2012 ]

2016 [ nach oben ]

  • Drug Procurement with Long Term Considerations: Volume Splits and Volume Guarantees Rothkopf, A; Spiliotopoulou, E (2016).
  • Maverick Buying: Eliminate, Participate, Leverage. Rothkopf, A; Pibernik, R in International Journal of Production Economics (2016). 179 77--89.
  • The Value of Entrant Manufacturers: A Study of Competition and Risk for Donor-Funded Procurement of Essential Medicines Lauton, F; Rothkopf, A; Pibernik, R (2016).
  • Sourcing uncertain product quality: Competition, learning, and volume postponement Lauton, F; Rothkopf, A (2016).

2012 [ nach oben ]

  • Reservation and Allocation Policies for Influenza Vaccines. Samii, A B; Pibernik, R; Yadav, P; Vereecke, A in European Journal of Operations Research (2012). 222(3) 495--507.