The Effectiveness of Third Party Logistics Providers in the Public Health Sector

Abstract

The main function of the Ministry of Health and Social Services (MOHSS) in Namibia is to provide health care services to population of Namibia. A large portion of the budget is usually spent on issues relating to logistics. This Ministry makes use of in-house logistics services. The current trends of many facilities are to make use of Third Party Logistics Providers (3PL’s). The main objective of the research is to investigate the possibility of using 3PL’s for the provision of logistics services in an attempt to improve healthcare services. This research identified six logistics activities: procurement, transport, warehousing, ordering, inventory and information technology, which form the main aspects of logistics in the MOHSS.

The methodology used was a mixed method whereby data was collected through the survey of literature and the use of a questionnaire. Staff members from three (3) referral hospitals and eight (8) National level directorates from the MOHSS completed the questionnaires. The data obtained was, therefore, both qualitative and quantitative.

The survey results illustrated that the health care system is complex and unique and thus requires a very good logistics system. They further revealed that information technology plays a huge role in a proper logistics setup. Based on the analysis done, a conclusion was made that there are still some areas that need to be improved and some area that are still problematic. Procurement and ordering were identified as logistics activities that have more positive outcomes. The other four activities: 1) Transport, 2) Warehousing, 3) Inventory and 4) Information Technology were identified as areas of concern in which some interventions are necessary. Furthermore, many of these activities are done mainly manually with limited use of Information Technology or computerized systems. These areas were also identified as possible areas for outsourcing.

The key recommendations were fivefold and are summarised as follows: Firstly, 3PL providers can be used to provide logistics activities. Secondly, information technology must form the main basis on which logistics services must be done. Thirdly, the training of officials in the logistics set up is an important aspect that needs attention. Fourthly, logistics strategies need to be developed. Finally, inventory management must get special attention as it is the core activity of the logistics function.