ARC helped identify a gap in transport and fleet management presenting challenges for the EPSS and advised on solution opportunities presented by the outsourcing toolkit (OSTK).

March 3, 2023
Africa Resource Centre


The second most populous country in Africa is Ethiopia. The Ethiopian Ministry of Health (MoH) runs about 400 hospitals, more than 3 500 health centres and 18 600 health posts to provide healthcare services to people in Ethiopia. Ethiopian Pharmaceutical Supply Service (EPSS) manages public sector pharmaceutical and medical device procurement and distribution.

Distribution of pharmaceutical goods is one of the EPSS’s primary functions. To achieve this, the country has 19 hubs arranged into seven clusters, directly delivering medical supplies to healthcare institutions. The EPSS has around 240 distribution vehicles, 61 are at the central warehouse, and the rest are divided amongst the 19 hubs.

Transport and fleet management are critical for the effectiveness of the country’s pharmaceutical supply chain management system.

The EPSS’ leadership has been concerned about the efficiency and cost-effectiveness of the current transport and fleet management system. EPSS has many vehicles. Still, it has experienced delayed product delivery to health facilities, contributing to significant patient dissatisfaction.

The management team found the delivery of health commodities from EPSS to service delivery points suboptimal due to inadequate transport management and planning. It identified that effective pharmaceutical delivery requires a comprehensive maintenance system and other fleet management interventions.

These limitations have negatively impacted the EPSS’s operation, finances, and service delivery. High fuel costs, long turnaround times, downtime, maintenance costs, and underutilized GPS systems have led to ineffective distribution. Pharmaceutical and medical supply security during transit is not always assured, leading to invoice discrepancies at different stock receiving points.

The Pharmaceuticals Supply Transformation PSTP II identifies private sector collaboration as key to helping EPSS achieve more effective and efficient distribution of pharmaceuticals.

The EPSS’s managing board considers transport a crucial element of its pharmaceuticals and health-related supply chain management system. As part of the PSTP II, the EPSS has stipulated that implementing public-private partnerships in relevant areas is fundamental.

Approaches to the challenges

ARC has an Enabler at EPSS. The Enabler helped identify that this gap in the transport and fleet management was presenting challenges for the unit. This Enabler advised the EPSS on the solution opportunities presented by ARC’s outsourcing toolkit (OSTK).

Outsourcing is not well accepted and had a bad reputation due to poor implementation in the past. Therefore, it was a challenge to convince the management to implement the OSTK concept, despite their commitment to improving fleet management at EPSS.

We supported the EPSS first by introducing the OSTK concept to management. An Advisor from ARC’s Solution Centre Team travelled to Addis Ababa and presented the web based OSTK tool and its different elements. The OSTK tool has four sections that focus on aspects of introducing an outsourcing solution: assessing, evaluating, contracting, and implementing.

The four Process Steps from the OSTK: Assess, Evaluate, Contract, Implement

The four Process Steps from the OSTK

This toolkit, OSTK was accepted, and the assessment phase started in July 2021. The OSTK implementation process began with assessing and identifying significant bottlenecks and recommending options for the current fleet were engaged in hiring local consultants. They paid for the local costs associated with the assessment.

ARC helped the EPSS by sourcing resources, hiring a consultant, and coordinating local partners to assist with the activities. We also advocated for the EPSS management to use OSTK tools for outsourcing if the assessment recommendation warranted outsourcing.

A transport and fleet management assessment conducted in July and August 2021 covered four branch hubs. The central EPSS, and benchmarking information from six private NGOs and United Nations organisations. ARC organised a local support team to develop the assessment tools. An international consultant was recruited and developed the assessment tool with the EPSS Unit.

The assessment result was circulated to a broader audience at EPSS. All partners and donors’ representatives participated in an appraisal workshop as well.

ARC presented the assessment result to the EPSS’ managing board.

As a result of these consultations, the executive committee, management committee, technical working group of the managing board, and the MoH State Minister’s office got approval to use the OSTK tool. This was used to implement the outsourcing solution identified as an option during the assessment phase.


ARC recruited consultants and coordinated the involvement of VillageReach technical advisors. They worked on the evaluation (market assessment) and business case development component of the OSTK. Their efforts enabled ARC to highlight the benefits of using the tool. This was to convince the EPSS managing board and the MoH to pilot the OSTK tool, for the outsourcing solution suggested in the assessment report.

Our team prepared the project proposal and sourced the funds for the next phase of the OSTK, which was evaluation. The evaluation phase of OSTK, including business case development, was conducted by two international consultants. They were supported by the task force led by the Deputy Director of EPSS and Enabler of ARC. The result of the evaluation phase was presented to the technical working group of the Managing Board. This was accepted with a few adjustments.

Lessons learned

Introducing a new concept, especially one that includes private sector involvement, requires perseverance. Convincing decision makers to take the risk of trying different solutions for a chronic problem can be a painstaking task. The transport and fleet management assessment phase were completed in two months.

Three outsourcing options were provided for strengthening the existing system. The options and proceeding with the implementation of the OSTK has taken 10 months despite the top EPSS’s management interest.


Supply chain managers must continuously create awareness to equip healthcare managers, politicians, and leaders enabling them so they are open to new initiatives and alternatives like public-private partnerships and outsourcing solutions.

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