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  • Esteban Lizarazo (Researcher in Healthcare Supply

Researching in supply chain for emerging markets.


In articles comparing Inventory Management performance between developed world and developing world context, the special characteristics of the context, if there are any at all, don`t seem to matter much or play an important role in determining the performance of Hospitals in emerging markets (Amaya et al., 2010). The purpose of my research mainly is to find out these particularities, in part, because I do believe that special conditions of developing world countries do affect inventory and supply chain performance. As a matter of fact, some of these particularities and its implications in a developing world context could be found in literature in other sectors. As an example, Just-in-time, a paramount priority for companies in the automotive and construction sector, was tested through simulation in a developing world context, giving as a result, that Just-in-case approach for inventory management should be highly recommended (Polat and Arditi, 2005). It follows that, the few literature that takes into account these kind of constraints and particularities recommends to undertake different practices including non-conventional and non-common-sense approaches for coping developing world context.

Some of these special circumstances of a developing world context could be cultural like the lack of trust between buyers and suppliers (and most of the times between everyone) or systemic like traffic congestion and national logistics infrastructure (Mustaffa et al., 2009). Operational philosophies like Just-in-time are difficult to implement due to the latter. However other are more suitable for these markets like the Vendor Managed Inventory (VMI) (Krichanchai and Maccarthy, 2017) and which I have written in my blog. According to the few literature found in the matter in other sectors, therefore, I can conclude that the special circumstances of the context may put to one's wit's end for implementing best practices.

On the other hand, in a developing world context, financial situation of most hospitals and the country's NHS may restrain technological investments and logistics innovations (Ramani, 2006).A possible and feasible solutions is partial information systems implementations.

The work done for developed world countries that recommend the application for low-budget hospital (Rosales, Magazine and Rao, 2015) can have a broader application in a developing world context. As an example, the implementation of a 2-bin Kanban solution may increase performance in this context, as it has proved to work out for Canda and the USA. Hence, the investment required in technology and automation could be smaller and the results could be far better in comparison with actual inventory management practices.

In the case of developing world context regulations and price control will continue rising and putting more cost pressure in the Healthcare system (Maniadakis et al., 2017). At the same time, the difficulty around a continuous and healthy cash flow makes it an endeavor to operate Inventory Management in a developing world countries. Sometimes you need just to work with any available supplier and planning the sourcing becomes a challenge for the supply chain (Chandra et al., 2013). An important characteristic of developing world context is the impact of delayed payments from hospital to suppliers in the availability of inventory due the latter. In an article about Ghana’s hospital logistics, the delay in payments to supplier impacts the availability. This consideration that is manifested regularly in a developing world context breaks out any optimization model proposed so far by academia. Therefore it is difficult to have a good inventory management in such a different and unstable environment according to some academics (Adu-Poku, Asamoah and Abor, 2011)

With regard to the tight cashflow of hospitals (Ketelhöhn and Sanz, 2016), the appearance of government GPO or affiliation of hospitals should also probably gain strength. As a consequence, the affiliation to a hospital system can decrease the risk of stock-out and therefore achieve lower levels of inventory. Literature makes a point about the positive correlation between logistics infrastructure and inventory performance (Zepeda, Nyaga and Young, 2016). From a geographic's perspective, operation in a weak national or metropolitan logistics service infrastructure can produce higher inventory costs (above 40% compared to good national infrastructure), a common singularity in a developing world context.

Comparisons and benchmarks between developed countries and developing world for inventory management practices have been insufficiently explored. A recent and very nice publication comparing Singapore (developed country) against, Thailand, Malaysia, Myanmar and Laos (developing world countries) showed clearly how the performance was different between these two categories. As shown in the following table, the gap between the two country's category is remarkable. Part of the explanation for these results is explained by the interdependence between national level and operational levels decisions (the latter is influenced by National planning policy, IT infrastructure, and data standardization). And part of the solution or recommendations are that inventory management and information and technology management must be a National priority in order to see some improvements in the logistics performance in hospitals (Kritchanchai, Hoeur and Engelseth, 2018).

Secondly, the power and influence of physicians are an important elements in the performance of hospitals as developed by some authors (De Vries, 2011). However, to the author’s knowledge there is no work whatsoever, that have tested this conceptual model in a developing world context. As noted by some authors, constraints and characteristics of inventory management issues are magnified when the developing world context is in the order of the day (Goonatilake, 1984). Henceforth, it should be interested to understand how the stakeholders in this context could heavily influence the inventory management practices.

Finally, it is important however to explore the capabilities that developing world could bring on to the inventory and supply chain management, like resilience, flexibility and complexity, and important lessons would be probably learnt from this special context. As a conclusion, research in developing world context is low compared to the work done in a developed world inventory management context (Volland et al., 2017), and ironically, large part of the global population (four-fifth) lives in this "special context"


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