A decision-support tool for policy makers in healthcare supply chains to balance between perceived risk in logistics outsourcing and cost-efficiency

Abstract

In recent years, governments are increasingly interested in developing public–private partnerships such as outsourcing logistics to service providers to benefit from better performance. A major obstacle to developing such partnerships is the lack of decision-support tools to investigate supply chain and outsourcing decisions, taking into account perceived risk that arises from such partnerships. This paper develops a decision-support tool for policy makers to quantify perceived risk and jointly optimize network design and logistics outsourcing. It is based on a multi-phase approach which quantifies perceived risk as a function of outsourcing decisions using policy makers judgment, solves a multi-objective optimization problem, and constructs efficient frontiers that balance total supply chain cost and perceived risk. The proposed approach is applied to the real case study of the Moroccan supply chain of pharmaceuticals. Several outsourcing strategies are investigated and corresponding efficient frontiers are constructed. Our analysis shows that outsourcing cost-efficiency and the degree of perceived risk have a great impact on the optimal distribution network design and outsourcing strategies.