distribution systems

The costs of delivering specific products are poorly understood and ballpark estimates are often used to inadequately plan for the budgetary implications of supply chain expenses. The purpose of this research was to estimate the country level costs of the public sector supply chain for artemisinin-based combination therapy (ACT) and rapid diagnostic tests (RDTs) from the central to the peripheral levels in Benin and Kenya. A micro-costing approach was used and primary data on the various cost components of the supply chain was collected at the central, intermediate, and facility levels between September and November 2013. Information sources included central warehouse databases, health facility records, transport schedules, and expenditure reports. In Benin, supply chain costs added US$0.20 to the initial acquisition cost of ACT and US$0.34 to RDTs; in Kenya, they added US$0.24 to the acquisition cost of ACT and US$0.19 to RDTs (normalized to US$1). Total supply chain costs accounted for more than 30% of the initial acquisition cost of the products in some cases and these costs were highly sensitive to product volumes. The major cost drivers were found to be labour, transport, and utilities, with health facilities carrying the majority of the cost per unit of product. Product volumes should be considered when costing supply chain functions rather than dollar value. Further work is needed to develop extrapolative costing models that can be applied at country level without extensive micro-costing exercises.

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