Strategic Sourcing of Air Force Contingency Pharmaceuticals: A Cost-Benefit Analysis Approach

The purpose of this research is to identify and explore effective supply chain management principles as mitigating measures to improve contingency pharmaceutical item shortfalls in the Air Force Medical Service Contingency Pharmaceutical Program. Analysis of current pharmaceutical shortages demonstrates a significant trend of insufficient demand signals for various pharmaceutical items, resulting in instances of non-fulfillment by private sector suppliers. Through the scope of transaction cost economics, a cost-benefit analysis for various alternatives was conducted. The proposed alternatives evaluated in this thesis include continuation of the status quo, centralized procurement models from a single site, and procurement from regionally designated ordering sites. This research clearly shows that consolidating demand of shortage items across Active Duty War Reserve Material assemblages, though applications of centralized purchasing principles that leverage prime vendor contract fill rates, can lead to substantial increases in material availability at costs that justify the calculated benefits