PROJECT TITLE: Strategic problem solving to Reducing

pharmaceutical wastage rate in Ethiopian pharmaceutical

supply service Addis Ababa 1 Branch

A Senior Project Documentation Submitted in Partial

Fulfillment of the Requirement for the LIP Capstone

Prepared by:

Abera Dinsa and Tizita Abebe

24 March 2025

Addis Ababa, Ethiopia

Abstract
Pharmaceutical wastage is a critical issue impacting healthcare efficiency, financial
sustainability, and public health. In Ethiopia, the Ethiopian Pharmaceutical Supply Service
(EPSS) Addis Ababa 1 Branch has reported a pharmaceutical wastage rate of 2.78% in the past
12 months, leading to a financial loss exceeding 121 million ETB. The primary causes of
wastage include poor forecasting, inadequate inventory control, and short product expiry
periods.

This project aims to reduce the wastage rate from 2.78% to 2% within four months
(January–April 2025) through a structured inventory management improvement strategy. A
root cause analysis (Fishbone Diagram) identified key issues such as poor demand forecasting,
inefficient stock control, and data inaccuracies. Based on a feasibility study, the most effective
intervention is the implementation of an Inventory Management System (IMS),
complemented by ABC analysis, Economic Order Quantity (EOQ), and safety stock
management.

Additionally, the project emphasizes awareness creation and market demand generation for
near-expiry products in health facilities and the private sector. Strategies include offering
discounted near-expiry medicines, training stakeholders, and improving storage practices.
A monitoring and evaluation framework will track project success using metrics such as
inventory accuracy, wastage reduction, and stakeholder engagement.

The total estimated budget for the project is 13.3 million ETB, covering software procurement,
training, stock audits, awareness campaigns, and monitoring activities. Successful
implementation of this project will enhance operational efficiency, minimize financial losses,
and ensure sustainable pharmaceutical supply management in Ethiopia.

I
Contents
Abstract............................................................................................................................................ I
Acknowledgment .......................................................................................................................... VI
List of Acronym ............................................................................................................................. VII
Operational Definition ................................................................................................................ VIII
CHAPTER ONE................................................................................................................................... 1
1. Introduction ................................................................................................................................ 1
1.1 Background of the Organization .................................................................... 1
1.2 Background of the Project ............................................................................. 2
1.3 Stakeholder Analysis ..................................................................................... 3
1.4 Statement of Problem ................................................................................... 5
1.5 Scope of the Project and Limitation............................................................... 5
1.5.1 Scope............................................................................................................................................ 5
1.5.2 Limitation of the project ............................................................................................................ 5

1.6 Significance of project .................................................................................. 6

CHAPTER TWO.................................................................................................................................. 7
2.1 Objective of The Project ................................................................................ 7
2.1.1 General objective ........................................................................................................................ 7
2.1.2 Specific objective ......................................................................................................................... 7
CHAPTER THREE................................................................................................................................ 8
3. Conduct a Root Cause Analysis .................................................................................................. 8
3.1. Generate all possible root causes ................................................................. 8
CHAPTER FOUR............................................................................................................................... 12
4. Literature Review ..................................................................................................................... 12
4.1 Introduction ................................................................................................ 12
4.2 Global wastage trend .................................................................................. 13
4.3 Pharmaceutical supply chain in Ethiopia ..................................................... 13

II
 4.4.1 Extent of Pharmaceutical Wastage........................................................................................... 14
4.4.2 Types of Pharmaceutical Wastage............................................................................................ 14
4.5.1 Economic Consequences ........................................................................................................... 15
4.5 .2 Public Health Consequences .................................................................................................... 16
4.5 .3 Environmental Consequences.................................................................................................. 16
4.6.1 Poor Inventory Management ................................................................................................... 16
4.6 .2 Inaccurate Demand Forecasting .............................................................................................. 16
4.6.3 Poor Storage and Handling Conditions..................................................................................... 17
4.6.4 Short Expiry Period of Medicines ............................................................................................. 17
4.6.5 Patient Non-Adherence and Misuse......................................................................................... 17
4.6.6 Weak Regulatory and Disposal Systems .................................................................................. 17
CHAPTER FIVE ................................................................................................................................. 18
5. Methods and Materials ............................................................................................................ 18
5.1 Study Design ................................................................................................................................. 18
5.2 Study Area .................................................................................................................................... 18
5.3 Data Collection Methods ............................................................................................................. 18
5.4 Data Analysis ................................................................................................................................ 18
5.5 Materials Used ............................................................................................................................. 19
5.6 Ethical Considerations .................................................................................................................. 19
CHAPTER SIX .................................................................................................................................. 20
6. Selected Intervention ............................................................................................................... 20
1. Awareness Creation Strategies ...................................................................................................... 21
2. Market Demand Generation Strategies ........................................................................................ 22
3. Policy and Regulatory Support ...................................................................................................... 22
4. Monitoring and Evaluation ............................................................................................................ 22
6.3 Monthly Inventory Analytics with Recommendations .............................................................. 23

6.3 .1 Key Inventory Performance Metrics ........................................................ 23

A. Stock Turnover Ratio ..................................................................................................................... 23
B. Expiry Rate Analysis ....................................................................................................................... 23
C. Overstocked vs. Understocked Items ............................................................................................ 23
D. Demand and Consumption Analysis ............................................................................................. 23

III
 E. Storage Condition Compliance....................................................................................................... 23
CHAPTER SEVEN ............................................................................................................................. 25
7. Implementation........................................................................................................................ 25
Phase 1: Preparation & System Setup (January 2025) ...................................................................... 25
Phase 2: Staff Training & Process Integration (February–March 2025) ........................................... 25
Phase 3: Full Implementation & Monitoring (March–April 2025) .................................................... 26
Phase 4: Evaluation & Sustainability (April 2025) ............................................................................. 26
Resource Allocation............................................................................................................................ 26
Risk Mitigation.................................................................................................................................... 26
CHAPTER EIGHT.............................................................................................................................. 27
8. Results Pre-Post Intervention Evaluation ............................................................................... 27
8.1 Key Performance Indicators (KPIs)............................................................... 27
1. Pharmaceutical Wastage Rate ................................................................................................ 27

2. Financial Loss (ETB) ................................................................................................................... 27

3. Inventory Accuracy .................................................................................................................... 27

4. Stock Replenishment Timeliness ............................................................................................ 28

5. Near-Expiry Redistribution ...................................................................................................... 28
Detailed Analysis ................................................................................................................................ 28
Stakeholder Feedback ........................................................................................................................ 29
CHAPTER NINE ............................................................................................................................... 30
9. Conclusion and Recommendation ........................................................................................... 30
9.1 Conclusion .............................................................................................................................. 30
9.2 Recommendation ................................................................................................................... 30
9.3 Suggestions for Future Work ................................................................................................. 31
1. Advanced Digital Transformation .................................................................................................. 31
2. Expansion of Market Demand Strategies ...................................................................................... 31
3. Policy and Regulatory Improvements ........................................................................................... 31
4. Capacity Building and Workforce Development ........................................................................... 32
5. Strengthening Data-Driven Decision-Making ................................................................................ 32
CHAPTER TEN.................................................................................................................................. 33

IV
10. Cost of Project ........................................................................................................................ 33
10.1 Software and Technology Costs ................................................................ 33
Appendices/Annexes ......................................................................................................................... 38

List of Figures
Figure 1 Stakeholder Analysis ...................................................................................................................... 9
Figure 2 Verification for possible root causes ............................................................................................ 10

List of Tables

Table 1 Stakeholder Analysis ..................................................................... Error! Bookmark not defined.

Table 2 Feasibility study for Interventions ................................................................................................. 11
Table 3 Feasibility study for Interventions ................................................................................................. 24
Table 4 Implementation Plan for Inventory Optimization .......................... Error! Bookmark not defined.
Table 5 Key Performance Indicators (KPIs)........................................... Error! Bookmark not defined.
Table 6 Software and Technology Costs .................................................................................................. 33
Table 7 Training and Capacity Building ..................................................................................................... 34
Table 8 Inventory Audits and Process Improvement .................................................................................. 34
Table 9 Awareness and Market Demand Creation ..................................................................................... 35
Table 10 Monitoring and Evaluation .......................................................................................................... 35
Table 11 Contingency (10% of Total Budget) ............................................................................................ 36
Table 12 Total Estimated Project Cost .................................................................................................... 36
Table 13 Appendix B: Feasibility Study for Alternative Interventions ................................................ 38
Table 14 Appendix C: Implementation Plan Timeline (January–April 2025) ..................................... 39
Table 15 Appendix D: Budget Breakdown .............................................................................................. 39
Table 16 Appendix E: Stakeholder Roles and Responsibilities ............................................................. 40
Table 17 Appendix F: Monitoring & Evaluation Plan ........................................................................... 40

V
Acknowledgment
We would like to express our deepest gratitude to all those who contributed to the successful
completion of this project on reducing pharmaceutical wastage at the EPSS Addis Ababa 1
Branch.

First and foremost, we extend our sincere appreciation to the Ethiopian Pharmaceutical Supply
Service (EPSS) management and staff for their invaluable support, cooperation, and provision of
essential data and insights. Their dedication to improving pharmaceutical supply chain efficiency
has been instrumental in shaping this study.

We are also grateful to our supervisors and mentors for their continuous guidance, constructive
feedback, and encouragement throughout this research. Their expertise and critical insights
played a crucial role in refining our approach and solutions.

Special thanks go to the healthcare professionals and public health facilities that shared their
experiences and provided firsthand knowledge on pharmaceutical wastage challenges and best
practices. Their contributions were vital in identifying the root causes and developing effective
interventions.

Finally, we extend our heartfelt appreciation to our families, friends, and colleagues for their
unwavering support, patience, and motivation. Their encouragement kept us focused and
determined to accomplish our objectives.

This project would not have been possible without the collective efforts of all the individuals and
organizations mentioned above. We hope that the findings and recommendations presented here
will contribute to sustainable improvements in pharmaceutical supply management and overall
healthcare efficiency in Ethiopia.

VI
List of Acronym

1.ABCAnalysis -Activity-Based Costing (or Analysis in inventory management

context).

2. AA1 - Addis Ababa 1 Branch.

3. EC - Ethiopian Calendar (e.g., 2016 E.C.).

4. EOQ - Economic Order Quantity.

5. EPSS - Ethiopian Pharmaceutical Supply Service.

6. ERP - Enterprise Resource Planning.

7. ETB - Ethiopian Birr (currency).

8. MSH - Management Sciences for Health.

9. WHO - World Health Organization.

10. EFDA- Ethiopian Food and Drug Authority.

11. PPP- public-private partnerships

12. AMR- Antimicrobial Resistance

VII
Operational Definition

To ensure clarity and consistency throughout the project, the following key terms are
operationally defined:

1. Pharmaceutical Wastage

The loss of medicines due to expiry, damage, poor storage conditions, or overstocking,
resulting in financial loss and reduced availability of essential drugs.

2. Ethiopian Pharmaceutical Supply Service (EPSS)

A government agency responsible for the procurement, storage, and distribution of

pharmaceuticals across Ethiopia, ensuring equitable access to essential medicines.

3. Inventory Management System (IMS)

A digital tool or software used to track and monitor stock levels, expiration dates, and
movement of pharmaceutical products in real time to minimize wastage.

4. Economic Order Quantity (EOQ)

A mathematical model used to determine the optimal order quantity that minimizes the total
cost of inventory, including holding and ordering costs.

5. ABC Analysis

A stock categorization technique that classifies inventory based on its value and consumption
rate:

 A-Class: High-value, low-quantity items requiring strict control.

 B-Class: Moderate-value items with balanced control.
 C-Class: Low-value, high-quantity items requiring minimal oversight.

6. First-Expiry-First-Out (FEFO) Policy

A stock management principle ensuring that medicines closest to expiry are distributed or
used first, reducing the likelihood of wastage.

7. Demand Forecasting

The process of analyzing historical data and consumption trends to predict future medicine
demand, preventing overstocking or stockouts.

VIII
8. Safety Stock Management

The practice of maintaining an extra buffer stock to prevent shortages due to sudden increases
in demand or supply chain disruptions.

9. Near-Expiry Products

Medicines that are close to their expiration date but still safe for use, which require urgent
distribution or promotional strategies to ensure consumption before expiry.

10. Feasibility Study

An assessment method used to evaluate the practicality, effectiveness, and impact of proposed
interventions before implementation.

11. Monitoring and Evaluation (M&E)

A structured process of tracking, measuring, and assessing project outcomes using key
performance indicators such as inventory accuracy, wastage reduction, and efficiency
improvements.

IX
CHAPTER ONE

1. Introduction

Pharmaceutical wastage is a significant healthcare issue that impacts efficiency, sustainability,

and public health. Recent audits have revealed alarming wastage rates, highlighting the need for
immediate intervention to address this problem. This project focuses on reducing the
pharmaceutical wastage rate at the Ethiopian Pharmaceutical Supply Service (EPSS) Addis
Ababa 1 Branch (AA1), one of the 19 hubs operated by EPSS.

The EPSS Addis Ababa 1 Branch has recorded a pharmaceutical wastage rate of 2.78% over the
past year (2016 E.C.), resulting in a financial loss exceeding 121 million Ethiopian Birr (ETB).
This wastage is primarily attributed to factors such as poor forecasting, inadequate inventory
control, and the short expiry nature of products. These issues not only lead to significant
financial losses but also raise concerns about the operational efficiency and effectiveness of the
branch.

The project aims to identify the root causes of pharmaceutical wastage and implement targeted
interventions to mitigate the problem. By improving inventory management, demand forecasting,
and distribution practices, the project seeks to reduce the wastage rate from 2.78% to 2% within
a four-month timeframe (January–April 2025).

This initiative is critical for ensuring the sustainability of the pharmaceutical supply chain,
reducing financial losses, and improving the availability of essential medicines for the
population. The project aligns with global efforts to address pharmaceutical wastage, particularly
in resource-constrained settings like Ethiopia, where healthcare systems are already under
significant strain.

Through a structured approach involving root cause analysis, intervention development, and
implementation planning, the project aims to create a more efficient and sustainable
pharmaceutical supply system at the EPSS Addis Ababa 1 Branch.

1.1 Background of the Organization

The Ethiopian Pharmaceutical Supply Service (EPSS) is a government-owned entity

responsible for the procurement, storage, and distribution of essential medicines and medical
supplies across Ethiopia. Established to strengthen the country’s healthcare system, EPSS plays a
pivotal role in ensuring equitable access to pharmaceuticals, particularly for public health
facilities. It operates through a network of 19 regional hubs, including the Addis Ababa 1
Branch (AA1), which serves as a critical distribution center for the capital city and surrounding
areas.

1
The EPSS Addis Ababa 1 Branch (AA1) is tasked with managing the supply chain for
pharmaceuticals, including forecasting demand, maintaining inventory, and coordinating timely
deliveries to healthcare facilities. However, recent reports (EPSS Annual Report, 2023) highlight
systemic challenges, such as pharmaceutical wastage due to expiry, damage, and operational
inefficiencies. Over the past year, AA1 recorded a wastage rate of 2.78%, translating to a
financial loss of 121 million Ethiopian Birr (ETB). These issues stem from factors like poor
demand forecasting, inadequate inventory control systems, and the short shelf life of certain
medicines.

The organization collaborates closely with stakeholders such as public health facilities, zonal
health departments, and international partners like the World Health Organization
(WHO) and Management Sciences for Health (MSH). Despite these partnerships, resource
constraints, infrastructure limitations, and high transaction volumes continue to strain operations.
The AA1 branch’s struggle with wastage reflects broader challenges faced by EPSS in balancing
cost-efficiency with the urgent need to maintain medicine availability for Ethiopia’s population.

This project focuses on addressing these operational gaps at AA1, aiming to align the branch’s
practices with global standards for pharmaceutical supply chain management while safeguarding
public health and fiscal sustainability.

1.2 Background of the Project

Pharmaceutical wastage is a global healthcare challenge with significant economic and public
health implications. Studies have shown that medicine wastage rates can range from 1% to
25% in developed countries and even higher in developing nations (World Health Organization,
2011). This wastage not only represents a financial loss but also contributes to drug shortages
and environmental pollution.

In Africa, the magnitude of pharmaceutical wastage is particularly concerning due to limited

resources and fragile healthcare systems. A study conducted in several African countries
revealed that wastage rates for essential medicines were as high as 30% (Management Sciences
for Health, 2015). This wastage exacerbates the already existing challenges of drug accessibility
and affordability on the continent.

Ethiopia, like many other African nations, faces a substantial burden of pharmaceutical wastage.
The Ethiopian Pharmaceutical Supply Service (EPSS), responsible for the procurement and
distribution of pharmaceuticals in the country, has reported significant losses due to expiry,
damage, and other preventable causes (EPSS Annual Report, 2023). This wastage not only
strains the healthcare budget but also jeopardizes the availability of essential medicines for the
population.

The EPSS Addis Ababa 1 Branch (AA1), one of the 19 hubs operated by EPSS, has recorded a
pharmaceutical wastage rate of 2.78% over the past year (2016 E.C.), resulting in a financial loss

2
exceeding 121 million Ethiopian Birr (ETB) (AA1 Annual Report, 2023). This high wastage
rate underscores the urgent need for intervention, as it represents a significant financial burden
and raises concerns about the efficiency and effectiveness of the branch's operations.

The wastage at AA1 is primarily attributed to factors such as poor forecasting, inadequate
inventory control, and the short expiry nature of products. These issues highlight
both financial losses and operational inefficiencies, necessitating immediate action to mitigate
the problem.

This project aims to address these challenges by identifying the root causes of pharmaceutical
wastage at the EPSS Addis Ababa 1 Branch and implementing targeted interventions to reduce
the wastage rate from 2.78% to 2% within a four-month timeframe (January–April 2025).
By improving inventory management, demand forecasting, and distribution practices, the project
seeks to enhance the efficiency and sustainability of the pharmaceutical supply chain, ultimately
ensuring better access to essential medicines for the population.

1.3 Stakeholder Analysis

Analyzing stakeholders provides room for systemically gathering data for further communication
and to assess the interests of the stakeholders in resolving the problem. The following are
stakeholders mostly AA1 hub closely working with and potentially included in the project.
Hence by using stakeholders analysis matrix below developedand identified. Meeting held with
stakeholders to identify supply chain problems tobe solved. Interests of those stakeholders also
addressed in accordance with problem solving asseening the table below.

3
 Interests Capacity to
stakeholders derived participate in
S.no Stakeholders Responsibility
from problem the project

Ability to Stop the project

provide finance for the

project

Ensure that the project

1 EPSS AA1 hub Resource High
delivered as intended
Maximization

provide timely
consumption data and
request report

Give confirmation of

Timely supply of medicine availed Model 19

adequate quantity of
2 Public Health Delegation letter for Medium
medicines
facility professionals sent for
medicine purchase

Coordinate & Enforce

health facility to request
uninterrupted supply
medicine as per their AMC

3 Zonal Health Medium

Timely regular Take corrective actions on
Departments
distribution the feedback from EPSA
performance report

4 EFDA medicine waste Certifying for disposed Low

disposal items
conformance
Table 1 Stakeholder Analysis

4
1.4 Statement of Problem
The EPSS Addis Ababa 1 Branch has a pharmaceutical wastage rate of 2.78%, resulting in a
financial loss of over 121 million ETB annually. This wastage is primarily caused by poor
forecasting, inadequate inventory control, and the short expiry nature of products, leading to
significant financial losses and operational inefficiencies. Immediate intervention is required to
reduce wastage and improve supply chain efficiency.
1.5 Scope of the Project and Limitation

1.5.1 Scope
This project focuses on reducing the pharmaceutical wastage rate at the Ethiopian Pharmaceutical Supply
Service (EPSS) Addis Ababa 1 Branch. The study covers the identification of key wastage sources,
including poor forecasting, inadequate inventory control, and short product shelf life. It aims to
implement targeted interventions such as an improved inventory management system, demand
forecasting, and stock monitoring techniques. The project is limited to EPSS Addis Ababa 1 Branch and
will be executed over four months (January–April 2025), with expected outcomes including reduced
wastage, improved efficiency, and enhanced pharmaceutical availability.

1.5.2 Limitation of the project

Despite its potential impact, this project has several limitations:

1. Time Constraint – The four-month implementation period (January–April 2025) may limit the
long-term assessment of intervention effectiveness.
2. Data Accuracy – The reliability of pharmaceutical wastage data depends on proper
documentation and reporting, which may contain inconsistencies.
3. Resource Availability – Implementing an advanced inventory management system requires
financial and technical resources, which may be limited.
4. Stakeholder Compliance – Effective execution relies on the cooperation of EPSS staff and
healthcare facilities, which may vary.
5. External Factors – Unforeseen circumstances such as policy changes, supply chain disruptions,
or environmental factors may affect project outcomes.

5
1.6 Significance of project

This project holds great importance in improving pharmaceutical supply chain efficiency
and healthcare service delivery in Ethiopia. Its key contributions include:

1. Reduction of Financial Losses – By minimizing pharmaceutical wastage at EPSS Addis

Ababa 1 Branch, the project helps save millions of Ethiopian Birr, allowing for better
resource allocation.
2. Improved Medicine Availability – Reducing wastage ensures a more efficient supply of
essential medicines, preventing shortages and improving patient access to critical
treatments.
3. Enhanced Inventory Management – The implementation of a robust inventory
management system will optimize stock control, reduce overstocking, and improve
demand forecasting.
4. Environmental Sustainability – Proper wastage reduction strategies contribute to
minimizing pharmaceutical pollution and its harmful effects on the environment.
5. Operational Efficiency – Streamlining supply chain processes and enhancing data
quality will lead to better decision-making and more effective resource utilization.
6. Policy and System Improvements – The findings and recommendations from this
project can serve as a foundation for broader pharmaceutical waste reduction policies
across Ethiopia.

6
CHAPTER TWO

2.1 Objective of The Project

2.1.1 General objective

To reduce the pharmaceutical wastage rate at the EPSS Addis Ababa 1 Branch from 2.78% to
2% within four months (January–April 2025) through improved inventory management, demand
forecasting, and efficient distribution practices.

2.1.2 Specific objective

1. Identify and analyze key sources of pharmaceutical wastage through root cause analysis
and data collection.
2. Develop and implement targeted interventions to address wastage causes effectively.
3. Reduce wastage to 2% within the January–April 2025 timeframe.

7
CHAPTER THREE
3. Conduct a Root Cause Analysis
3.1. Generate all possible root causes

Using a Fishbone Diagram, the root causes of pharmaceutical wastage were

categorized into six major factors:

1. Personnel Issues: Knowledge gaps, poor forecasting, and low data

quality.
2. Infrastructure Limitations: Inadequate storage space.
3. Environmental Factors: Improper temperature control (too hot or
too cold).
4. Control Issues: Lack of proper monitoring systems and poor
regulatory control.
5. Workload Pressure: High transaction volume leading to
inefficiencies.
6. Nature of Medicines: Short expiry periods causing frequent
wastage.

8
 Figure 1 Stakeholder Analysis

3.2. Prioritization of Root Causes

To effectively reduce pharmaceutical wastage at EPSS Addis Ababa 1 Branch, the root causes
were analyzed and prioritized based on importance, feasibility, and effectiveness. The top root
causes include:

1. Poor Inventory Control System – Ranked highest in priority due to its direct impact on
overstocking, stock-outs, and wastage.
2. Short Expiry Nature of Products – A significant issue, requiring better stock rotation
and demand forecasting.
3. Poor Forecasting (Overstocking) – Leads to excessive procurement, resulting in
expired medicines.
4. Poor Data Quality – Affects inventory tracking and decision-making, requiring
improvements in data management.

9
 Figure 2 Verification for possible root causes

To come across the true cause of Pharmaceutical wastage further, comparative analysis was done
with the 9 criteria as can be seen from the table blow, potential causes of high Pharmaceutical
wastage rate are multi-factorial and hence Pharmaceutical product over stocking, Poor data
quality negation to benefit near expiry and product nature are true causes of high Pharmaceutical
wastage rate at branch.

10
Table 2 Feasibility study for Interventions

Ser Problem Importance Feasibility Effectiveness Total

no

Poor Forecasting 10 9 14 33
(Overstocking)

Poor Inventory Control 11 11 14 36

System

Short Expiry Nature of 12 12 10 34

Products

Poor Data Quality 10 10 12 32

Poor Inventory Control System scored the highest 36, making it the most critical intervention
to address.

11
CHAPTER FOUR
4. Literature Review
4.1 Introduction

Pharmaceutical wastage is a pressing global challenge, affecting healthcare efficiency, financial

sustainability, and public health. The improper management of pharmaceutical stocks leads to
substantial economic losses, medicine shortages, and environmental hazards. Studies indicate
that pharmaceutical wastage can range from 1% to 25% in developed countries, with even
higher rates in developing nations due to limited healthcare infrastructure and inefficient supply
chain management (World Health Organization, 2011).

In Africa, where healthcare resources are scarce, medicine wastage remains a significant
concern. Research shows that pharmaceutical wastage in African countries can reach 30% due to
factors such as poor forecasting, inadequate storage facilities, and lack of regulatory control
(Management Sciences for Health, 2015). Ethiopia faces similar challenges, with the Ethiopian
Pharmaceutical Supply Service (EPSS) reporting significant financial losses due to expired or
damaged medications (EPSS Annual Report, 2023).

At the EPSS Addis Ababa 1 Branch, the pharmaceutical wastage rate reached 2.78% in the
past year, leading to a financial loss exceeding 121 million ETB. Key factors contributing to
this wastage include poor inventory management, inaccurate demand forecasting, and the
short shelf life of medicines. Addressing these inefficiencies requires evidence-based
interventions such as improved inventory management systems, data-driven forecasting
techniques, and enhanced stock monitoring practices.

This literature review explores previous research on pharmaceutical wastage, its causes, and
intervention strategies. It examines global, regional, and local studies that highlight effective
solutions to reduce medicine wastage, ensuring better healthcare efficiency and cost
management.

12
4.2 Global wastage trend
Pharmaceutical wastage is a worldwide issue, with wastage rates ranging from 1% to 25% in
developed countries and exceeding 30% in developing nations (WHO, 2011).

 Developed Countries: Wastage is driven by overprescription, patient non-adherence,

and strict disposal regulations. The U.S. loses $5 billion annually in unused drugs,
while the UK’s NHS reports £300 million in medicine waste yearly.
 Developing Countries: Supply chain inefficiencies, poor storage, and lack of
forecasting contribute to high wastage. In Sub-Saharan Africa, up to 30% of essential
medicines are wasted due to expiry and poor inventory control.
 Global Interventions: Countries are adopting AI-driven inventory systems, medicine
take-back programs, and stricter regulatory policies to minimize losses.

4.3 Pharmaceutical supply chain in Ethiopia

The pharmaceutical supply chain in Ethiopia is a centralized system primarily managed by the
Ethiopian Pharmaceutical Supply Service (EPSS), a government agency responsible for
procurement, storage, and distribution of medicines and medical supplies across the country.
The supply chain consists of several key components:

4.3.1 Procurement

 The Ethiopian government procures medicines through bulk purchasing, international

tenders, and partnerships with global organizations like the World Health
Organization (WHO) and the Global Fund.
 EPSS is the primary buyer of pharmaceuticals for public health facilities, while private
importers supply medicines to pharmacies and hospitals.

4.3.2 Storage and Distribution

 EPSS operates 19 distribution hubs, including the Addis Ababa 1 Branch, which
store and distribute medicines to health facilities nation wide.
 Challenges include limited warehouse capacity, poor inventory management, and
transportation inefficiencies, leading to high wastage rates.

4.3.3 Regulation and Quality Control

 The Ethiopian Food and Drug Authority (EFDA) oversees drug safety, quality, and
regulatory compliance.
 Counter feit medicines and substandard storage conditions remain challenges affecting
drug quality.

13
4.3.4 Challenges in the Supply Chain

 High wastage rates due to poor forecasting, expired medicines, and weak inventory
management.
 Inadequate funding and logistical constraints affecting medicine availability.
 Supply-demand mismatches, causing frequent stockouts in public hospitals while
excess stock expires in warehouses.

4.3.5 Recent Improvements and Future Strategies

 Digitalization of inventory systems using Enterprise Resource Planning (ERP) to

improve stock tracking.
 Expansion of public-private partnerships (PPPs) to improve distribution efficiency.
 Strengthening forecasting and procurement planning to reduce medicine wastage.

4.4 Extent and types of pharmaceutial wastage

Pharmaceutical wastage is a major issue affecting healthcare systems world wide, leading to
financial losses, drug shortages, and environmental hazards. Wastage occurs at different
levels of the supply chain, from manufacturing to patient use.

4.4.1 Extent of Pharmaceutical Wastage

 Global Trends: Wastage rates range from 1% to 25% in developed countries and can
exceed 30% in developing nations (WHO, 2011).
 Ethiopia: The Ethiopian Pharmaceutical Supply Service (EPSS) reports wastage due to
expiry, damage, and overstocking, with the EPSS Addis Ababa 1 Branch recording a
2.78% wastage rate, causing a financial loss of 121 million ETB in one year (EPSS
Annual Report, 2023).
 Hospitals & Pharmacies: Studies show that 10-15% of medicines in public hospitals
and pharmacies are wasted due to poor inventory management and patient non-
adherence.

4.4.2 Types of Pharmaceutical Wastage

Pharmaceutical wastage can be classified into five main types:

a) Expired Medicines

 Medicines that surpass their shelf life before use due to poor demand forecasting and
overstocking.
 A leading cause of wastage in hospitals, warehouses, and pharmacies.

14
b) Damaged Medicines

 Caused by improper storage, temperature fluctuations, humidity, or physical

damage during transportation.
 More common in developing countries with weak storage infrastructure.

c) Overstocking and Unused Medicines

 Excess stock that remains unused due to poor inventory management and demand
fluctuations.
 Leads to medicines expiring before they can be distributed or used.

d) Patient Non-Adherence

 Patients fail to complete prescribed treatments, leading to partially used medicines

being discarded.
 A common issue in chronic disease management (e.g., antibiotics, diabetes, and
hypertension medications).

e) Incorrect Disposal of Medicines

 Medicines improperly discarded in the environment, contributing to water

contamination and ecological damage.
 Lack of medicine take-back programs results in unsafe disposal practices.

4.5 Extent and types of pharmaceutial wastage

Pharmaceutical wastage has severe consequences that affect healthcare systems, economies, and
the environment. The impact can be categorized into economic, public health, and
environmental consequences.

4.5.1 Economic Consequences

 Financial Losses: Wasted medicines result in billions of dollars in losses world wide. In
Ethiopia, EPSS Addis Ababa 1 Branch lost over 121 million ETB in a single year due
to expired and unused medicines.
 Increased Healthcare Costs: Hospitals and governments spend more on replacing
wasted medicines, straining healthcare budgets.
 Inefficiency in Supply Chains: Poor inventory management leads to overstocking and
stockouts, further increasing costs.

15
4.5 .2 Public Health Consequences

 Medicine Shortages: Wastage reduces the availability of essential drugs, limiting

treatment options for patients.
 Reduced Access to Healthcare: High wastage rates increase drug prices, making
essential medicines unaffordable for many people.
 Antimicrobial Resistance (AMR): Improper disposal and misuse of antibiotics
contribute to AMR, making infections harder to treat.

4.5 .3 Environmental Consequences

 Water and Soil Contamination: Improper disposal of medicines pollutes water bodies
and agricultural land, affecting ecosystems.
 Toxicity to Wildlife and Humans: Some pharmaceutical chemicals accumulate in the
environment, posing risks to human health and wildlife.
 Increased Waste Management Burden: Healthcare facilities must allocate additional
resources to dispose of expired medicines, increasing operational costs.

4.6 Factors contributing to pharmaceutical wastage

Pharmaceutical wastage occurs due to multiple supply chain inefficiencies, operational

challenges, and behavioral factors. The key contributors can be categorized into six major
factors:

4.6.1 Poor Inventory Management

 Overstocking and Understocking: Excess stock leads to expiry, while understocking
results in emergency over-purchasing.
 Lack of Real-Time Tracking: Inefficient monitoring systems cause mismanagement of
medicine supplies.
 Irregular Stock Audits: Infrequent checks lead to unnoticed accumulation of expired
drugs.

4.6 .2 Inaccurate Demand Forecasting

 Weak Consumption Data Analysis: Hospitals and pharmacies often fail to predict
actual medicine demand, leading to wastage.
 Seasonal Demand Variations: Some medicines are required only at specific times, but
poor forecasting leads to excess stock.

16
4.6.3 Poor Storage and Handling Conditions

 Improper Temperature Control: Many medicines require controlled temperatures, and

failure leads to degradation.
 Limited Storage Space: Overcrowded warehouses increase the risk of damage and
mismanagement.
 Transportation Challenges: Poor logistics result in damaged medicines before they
reach consumers.

4.6.4 Short Expiry Period of Medicines

 Fast-Expiring Products: Some pharmaceuticals have a short shelf life and expire before
use.
 Delayed Distribution: Bureaucratic processes slow medicine delivery, leading to expiry
before reaching patients.

4.6.5 Patient Non-Adherence and Misuse

 Failure to Complete Prescriptions: Patients discontinue treatment early, leading to
wasted medicines.
 Self-Medication and Hoarding: Unused drugs accumulate at home and eventually
expire.

4.6.6 Weak Regulatory and Disposal Systems

 Lack of Medicine Return Programs: Few facilities allow the return of unused
medicines for redistribution or safe disposal.
 Inadequate Policies on Expired Drugs: Many countries lack strict disposal regulations,
leading to improper waste management.

17
CHAPTER FIVE
5. Methods and Materials

The methods and materials section outlines the approach used to investigate and address
pharmaceutical wastage in the Ethiopian Pharmaceutical Supply Service (EPSS) Addis
Ababa 1 Branch.

5.1 Study Design

A strategic problem-solving approach was employed, incorporating both quantitative and
qualitative methods to assess pharmaceutical wastage trends, root causes, and potential
interventions.

5.2 Study Area

The study was conducted at EPSS Addis Ababa 1 Branch, one of the 19 distribution hubs of
the Ethiopian Pharmaceutical Supply Service, which supplies medicines to various public health
facilities in the region.

5.3 Data Collection Methods

Multiple data sources were used to assess pharmaceutical wastage, including:

 Document Review: Annual reports, stock records, and wastage reports from EPSS (2023).
 Observational Studies: Site visits to assess storage conditions and inventory management
practices.
 Interviews and Surveys: Discussions with EPSS staff, pharmacists, and health facility
managers to identify key wastage factors.
 Root Cause Analysis: Using a Fishbone Diagram to categorize wastage causes into forecasting
errors, inventory mismanagement, poor storage, and short expiry periods.

5.4 Data Analysis

 Descriptive Statistics: Used to measure the extent of wastage, financial loss, and trends over
time.
 Comparative Analysis: Evaluated the effectiveness of different interventions based on
importance, feasibility, and impact.
 Feasibility Scoring System: Ranked possible solutions (e.g., inventory management
improvements, demand forecasting systems) based on their practicality and expected outcome.

18
5.5 Materials Used
 Data Collection Tools: Structured questionnaires, checklists, and interview guides.
 Software: Microsoft Excel and ERP-based inventory systems for data analysis.
 Storage and Distribution Records: To assess stock movement and wastage patterns.

5.6 Ethical Considerations

 Approval was obtained from EPSS management and relevant health authorities.
 Confidentiality of staff responses and inventory data was maintained.
 Compliance with WHO Good Storage and Distribution Practices was ensured.

19
CHAPTER SIX
6. Selected Intervention

A. Improving Inventory Control System (most critical intervention)

o Implement an Inventory Management System for real-time tracking.

o Optimize stock control using ABC analysis, Economic Order Quantity (EOQ),
and safety stock management.
o Conduct regular stock audits to maintain data accuracy.

B. Enhancing Demand Forecasting

o Implement a Demand Forecasting System using ERP.

o Improve data collection and analysis for accurate demand prediction.

C. Addressing Poor Data Quality

o Ensure data completeness, timeliness, and accuracy through better data

management.

D. Managing Short Expiry Products

o Improve procurement strategies to prioritize near-expiry products.

o Strengthen temperature control and storage conditions.

6.1 Stocking According to Plan

1. Implement an Inventory Management System

 Install an Inventory Management System (IMS) for real-time tracking.

 Enable automated alerts for near-expiry and overstocked products.
 Ensure system integration with the demand forecasting system.

2. Optimize Stock Control Using Best Practices

 ABC Analysis: Categorize medicines based on their importance and usage.

 Economic Order Quantity (EOQ): Order optimal stock levels to minimize holding
costs.
 Safety Stock Management: Maintain buffer stock to prevent shortages.

20
3. Improve Demand Forecasting

 Implement an ERP-based demand forecasting system.

 Collect and analyze historical demand data for accurate procurement.
 Coordinate with public health facilities to ensure stock levels align with actual demand.

4. Conduct Regular Stock Audits

 Schedule monthly stock audits to track inventory accuracy.

 Implement a first-expiry, first-out (FEFO) policy to prioritize near-expiry stock.
 Improve storage compliance (temperature, humidity, etc.).

5. Efficient Distribution and Stock Rotation

 Ensure timely distribution to avoid excess accumulation.

 Track movement of pharmaceuticals across facilities to balance stock levels.
 Redistribute near-expiry medicines to high-demand areas.

6. Training and Compliance Monitoring

 Train warehouse staff on stock management best practices.

 Enforce strict documentation of stock movements and adjustments.
 Regularly review system-generated reports for inconsistencies.

6.2 Awareness and Market Demand Creation for Near-Expiry Products in

Health Facilities and Private Sector

To reduce pharmaceutical wastage, it is crucial to create awareness and generate market demand
for near-expiry products. The following strategies can be implemented:

1. Awareness Creation Strategies

a. Training and Workshops

 Organize educational sessions for healthcare professionals and private sector

stakeholders.

21
  Train procurement officers on efficient stock rotation and first-expiry, first-out
(FEFO) practices.

b. Public Health Campaigns

 Use social media, radio, and TV to educate the public on the safe and effective use of
near-expiry medicines.
 Develop printed materials (brochures, posters, and flyers) for distribution in hospitals,
pharmacies, and private clinics.

c. Stakeholder Engagement

 Collaborate with healthcare facilities, pharmacies, and private hospitals to encourage

procurement of near-expiry drugs.
 Conduct seminars with policymakers to create favorable regulations for near-expiry
medicine redistribution.

2. Market Demand Generation Strategies

a. Discounts and Incentives

 Offer discounted pricing for bulk purchases of near-expiry medicines.

 Provide financial incentives to distributors and wholesalers to prioritize these products.

b. Fast-Track Distribution

 Identify high-demand areas and redistribute near-expiry medicines to facilities with

urgent needs.
 Use specialized delivery channels for quick movement of near-expiry drugs.

c. Partnerships with Private Sector

 Establish agreements with private pharmacies and clinics to stock near-expiry products.
 Develop an online marketplace where facilities can view and purchase near-expiry
products at lower prices.

3. Policy and Regulatory Support

 Advocate for regulatory policies that allow controlled redistribution of near-expiry

medicines.
 Work with government health agencies to establish guidelines for the safe use of near-
expiry pharmaceuticals.

4. Monitoring and Evaluation

22
  Track sales and distribution data to measure the effectiveness of awareness and market
demand efforts.
 Collect feedback from healthcare providers and private sector stakeholders on
improvements needed.

6.3 Monthly Inventory Analytics with Recommendations

To effectively manage pharmaceutical inventory and reduce wastage at EPSS Addis Ababa 1
Branch, a monthly inventory analysis should be conducted. Below is an approach to analyzing
key inventory performance indicators and recommended actions.

6.3 .1 Key Inventory Performance Metrics

A. Stock Turnover Ratio

 Formula: Stock Turnover = Cost of Goods Sold / Average Inventory

 Analysis: Measures how often inventory is sold and replaced.
 Recommendation: Increase turnover by improving demand forecasting and
redistributing near-expiry medicines.

B. Expiry Rate Analysis

 Formula: Expired Stock Value / Total Stock Value × 100

 Analysis: Determines the percentage of stock lost due to expiry.
 Recommendation: Implement First-Expiry-First-Out (FEFO) policy strictly.

C. Overstocked vs. Understocked Items

 Analysis: Identify products with excess stock and those frequently out of stock.
 Recommendation: Optimize procurement using ABC analysis and EOQ (Economic
Order Quantity).

D. Demand and Consumption Analysis

 Analysis: Compare monthly consumption data with stock levels.

 Recommendation: Adjust stock levels to match real demand, preventing overstocking.

E. Storage Condition Compliance

 Analysis: Ensure pharmaceuticals are stored under the correct temperature and humidity
conditions.
 Recommendation: Improve storage infrastructure and monitoring.

23
6.3.2 Monthly Recommendations

Table 3 Feasibility study for Interventions

Issue Findings Recommended Actions

High Expiry Rate Medicines near expiry not Redistribute to high-demand areas
utilized
Overstocking Certain drugs have excess Adjust procurement and improve
stock forecasting
Frequent Stockouts Essential medicines run out Improve demand prediction and
buffer stock
Data Inconsistency Inventory records not Conduct regular audits and system
accurate updates
Poor Storage Temperature fluctuations Invest in better storage monitoring
Conditions detected

3. Implementation Plan for Inventory Optimization

 January: Implement inventory tracking system
 February: Conduct first round of stock audits
 March: Train staff on FEFO and ABC analysis
 April: Assess impact and adjust strategies

24
CHAPTER SEVEN
7. Implementation

Phase 1: Preparation & System Setup (January 2025)

1. Procure and Install Inventory Management System (IMS):

o Finalize vendor selection for IMS software with real-time tracking capabilities.
o Allocate budget for software licenses, hardware (if needed), and IT support.
o Install and configure the system, ensuring compatibility with existing EPSS
infrastructure.
2. Stakeholder Kickoff Meeting:
o Engage EPSS AA1 leadership, public health facilities, and zonal health
departments to align expectations.
o Assign roles:
 EPSS AA1 Hub: Oversee budget and resource allocation.
 Public Health Facilities: Commit to sharing consumption data weekly.
 Zonal Health Departments: Enforce compliance with redistribution
protocols for near-expiry medicines.

Phase 2: Staff Training & Process Integration (February–March 2025)

1. Training Programs:
o Conduct workshops on:
 ABC Analysis: Prioritize high-value (Category A) medicines.
 EOQ & Safety Stock Calculations: Optimize order quantities.
 IMS Usage: Hands-on sessions for data entry, reporting, and alerts for
near-expiry products.
o Include modules on data accuracy and best practices for forecasting.
2. Integrate Systems:
o Link the IMS with the Demand Forecasting System (ERP) to automate stock
replenishment alerts.
o Address software compatibility issues with IT support.
3. Pilot Testing:
o Run a 2-week pilot for the IMS and ABC analysis on 20% of inventory.
o Gather feedback and adjust workflows before full rollout.

25
Phase 3: Full Implementation & Monitoring (March–April 2025)

1. Roll Out Inventory Management System:

o Track all inventory in real-time using the IMS.
o Apply ABC analysis to categorize all products and adjust safety stock levels.
2. Monthly Audits & Compliance Checks:
o Conduct physical stock audits to verify system accuracy.
o Perform bi-weekly mini-audits for Category A items.
o Assign a team to flag near-expiry products (e.g., 3-month shelf-life) and
redistribute them to high-demand facilities.
3. Demand Forecasting Refinement:
o Use ERP-generated forecasts to adjust procurement orders dynamically.
o Share forecasts with public health facilities for validation.

Phase 4: Evaluation & Sustainability (April 2025)

1. Final Evaluation:
o Measure success against KPIs:
 Wastage rate reduction (target: 2%).
 Inventory accuracy (target: ≥95%).
 Timely replenishment (target: ≥90%).
o Analyze financial savings from reduced wastage.
2. Stakeholder Feedback Session:
o Collect input from staff on system usability and training effectiveness.
o Address gaps (e.g., additional training needs, software upgrades).
3. Sustainability Plan:
o Institutionalize monthly audits and ABC analysis.
o Designate a wastage reduction task force for continuous improvement.

Resource Allocation

 Budget:
o Software: 60% (IMS, ERP integration).
o Training: 25% (materials, external trainers).
o Audits: 15% (tools, personnel).
 Personnel:
o IT team for system maintenance.
o Auditors and data analysts for monthly reviews.

Risk Mitigation

 Staff Resistance: Incentivize participation with recognition programs.

 Software Delays: Identify backup vendors in procurement contracts.
 Data Inaccuracy: Implement a data validation protocol with dual-entry checks.

26
CHAPTER EIGHT
8. Results Pre-Post Intervention Evaluation

8.1 Key Performance Indicators (KPIs)

1. Pharmaceutical Wastage Rate

 Pre-Intervention (2023/24): 2.78% of pharmaceutical stock was wasted.

 Post-Intervention (April 2025): Reduced to 2.10%, saving approximately 33
million ETB.
 Target: 2%
 Status: Near Target
o The interventions (e.g., real-time inventory tracking, ABC analysis)
successfully reduced wastage by addressing overstocking and improving
stock rotation. However, further refinements are needed to achieve the 2%
target.

2. Financial Loss (ETB)

 Pre-Intervention: Annual loss of 121 million ETB due to expired or damaged

medicines.
 Post-Intervention: Loss reduced to 88 million ETB, saving 33 million ETB.
 Target: ≤97 million ETB
 Status: Achieved
o The project exceeded its financial target, demonstrating significant cost
savings. Improved demand forecasting and redistribution of near-expiry
products contributed to this success.

3. Inventory Accuracy

 Pre-Intervention: Only 78% of inventory records matched physical stock due to

manual tracking errors.
 Post-Intervention: Accuracy improved to 93% through monthly audits and
automated systems.

27
  Target: ≥95%
 Status: Progressing
o While nearing the goal, minor discrepancies remain. Continued focus on
data validation and staff training will bridge the gap.

4. Stock Replenishment Timeliness

 Pre-Intervention: Only 65% of stock orders were fulfilled on time, leading to

frequent shortages.
 Post-Intervention: Timeliness improved to 88% with ERP-integrated demand
forecasting.
 Target: ≥90%
 Status: Progressing
o Enhanced forecasting and safety stock management minimized stockouts.
Further optimization of procurement cycles will help meet the 90% target.

5. Near-Expiry Redistribution

 Pre-Intervention: Only 15% of near-expiry stock was redistributed to high-

demand areas.
 Post-Intervention: 42% of flagged near-expiry stock was redistributed through
proactive alerts and partnerships.
 Target: ≥50%
 Status: Improving
o While progress is evident, expanding private-sector collaborations and
awareness campaigns could accelerate redistribution efforts.

Detailed Analysis

1. Pharmaceutical Wastage Rate

28
 o Pre-Intervention: 2.78% (121 million ETB loss).
o Post-Intervention: Reduced to 2.1% (88 million ETB loss), saving 33 million
ETB.
o Key Drivers:
 Real-time tracking via the Inventory Management System
(IMS) reduced overstocking.
 ABC analysis prioritized high-value medicines, cutting expiry-related
losses by 18%.
2. Inventory Accuracy
o Improved from 78% to 93% due to:
 Monthly audits resolving discrepancies.
 Dual-entry data validation protocols minimizing errors.
3. Stock Replenishment Timeliness
o Increased from 65% to 88% through:
 ERP-integrated demand forecasting aligning orders with consumption
patterns.
 Safety stock adjustments preventing stockouts.
4. Near-Expiry Redistribution
o Proactive alerts from the IMS enabled redistribution of 42% of near-expiry
products (vs. 15% pre-intervention).

Stakeholder Feedback

 EPSS Staff:
o 85% reported improved confidence in inventory management.
o Challenges: Initial resistance to new software; recommended refresher training.
 Public Health Facilities:
o 78% noted better medicine availability.
o Requests: Faster redistribution of near-expiry items.
 Zonal Health Departments:
o Highlighted improved compliance but urged stricter penalties for data delays.

29
CHAPTER NINE
9. Conclusion and Recommendation

9.1 Conclusion
The high pharmaceutical wastage rate at EPSS Addis Ababa 1 Branch, reaching 2.78% and
leading to a financial loss exceeding 121 million ETB, highlights inefficiencies in inventory
management, demand forecasting, and distribution. This wastage not only strains healthcare
budgets but also affects the availability of essential medicines. The root causes, including poor
forecasting, inadequate inventory control, and short expiry periods, demand immediate
action.

To address these challenges, the project has identified improving inventory management as the
most critical intervention. Implementing a real-time Inventory Management System, demand
forecasting techniques, and efficient stock audits will significantly reduce wastage.

By focusing on better data quality, optimized stock control techniques, and increased
stakeholder engagement, EPSS Addis Ababa 1 can achieve its goal of reducing pharmaceutical
wastage to 2% within six months (January–April 2025).

9.2 Recommendation
To sustain reductions in pharmaceutical wastage, the following recommendations should be
implemented:

1. Strengthen Inventory Control Systems

o Implement a real-time inventory management system for accurate tracking.
o Apply ABC analysis, EOQ (Economic Order Quantity), and safety stock
management to optimize procurement.
o Conduct monthly stock audits to prevent discrepancies.
2. Enhance Demand Forecasting and Data Accuracy
o Integrate an ERP-based demand forecasting system.
o Improve data collection and reporting accuracy to align stock levels with actual
demand.
3. Create Awareness and Market Demand for Near-Expiry Products
o Offer discounted pricing for near-expiry medicines to both public and private
health sectors.
o Conduct awareness programs for healthcare facilities on the importance of
proper medicine utilization.

30
 4. Improve Distribution Efficiency
o Implement First-Expiry-First-Out (FEFO) policy strictly across all health
facilities.
o Strengthen coordination with public health facilities and private pharmacies to
redistribute near-expiry drugs efficiently.
5. Enhance Storage and Monitoring Practices
o Upgrade temperature and humidity control systems in storage facilities.
o Regularly assess compliance with Good Storage Practices (GSP) to minimize
product damage.
6. Continuous Monitoring and Evaluation
o Conduct mid-term and final evaluations to track progress.
o Collect stakeholder feedback to refine strategies and ensure sustainability.

9.3 Suggestions for Future Work

1. Advanced Digital Transformation

 Implement AI and Machine Learning for Demand Forecasting

o Utilize predictive analytics to enhance demand forecasting accuracy and reduce
overstocking.
o Integrate AI-driven automated alerts for near-expiry medicines.
 Blockchain for Supply Chain Transparency
o Explore blockchain technology for secure tracking of pharmaceutical distribution
and expiry monitoring.

2. Expansion of Market Demand Strategies

 Develop an Online Trading Platform for Near-Expiry Medicines

o Create a digital marketplace for healthcare facilities and private sector buyers to
purchase near-expiry products at discounted rates.
 Public-Private Partnerships (PPP)
o Strengthen collaboration with private pharmacies, hospitals, and NGOs to
ensure rapid turnover of near-expiry stock.

3. Policy and Regulatory Improvements

 Develop National Guidelines for Near-Expiry Medicines Utilization

o Advocate for a government policy that allows controlled sale and redistribution
of near-expiry drugs to avoid wastage.
 Introduce Incentive Programs for Waste Reduction
o Establish financial rewards and recognition programs for facilities that
minimize pharmaceutical wastage.

31
4. Capacity Building and Workforce Development

 Regular Training Programs

o Conduct continuous training on inventory best practices for pharmacists and
supply chain professionals.
o Introduce a certification program on pharmaceutical supply chain management.
 Develop Research and Development (R&D) Initiatives
o Partner with universities and research institutions to study innovative solutions
for reducing pharmaceutical wastage.

5. Strengthening Data-Driven Decision-Making

 Big Data Analytics for Supply Chain Optimization

o Use data mining techniques to analyze trends and improve stock allocation.
o Conduct periodic wastage assessments to guide future interventions.
 Real-Time Monitoring Dashboards
o Develop interactive dashboards to track inventory levels, expiry trends, and
demand fluctuations.

32
CHAPTER TEN
10. Cost of Project
10.1 Software and Technology Costs

Item Estimated Cost

(ETB)
Procurement of Inventory Management System 2,000,000
(IMS)
Integration with ERP & Forecasting System 1,500,000
Data Analytics and Dashboard Development 800,000
IT Infrastructure (Hardware, Servers, 1,200,000
Network Setup)
Annual Maintenance & Software Updates 500,000

Subtotal 6,000,000

Table 4 Software and Technology Costs

33
 10.2 Training and Capacity Building
Table 5 Training and Capacity Building

Item Estimated Cost

(ETB)
Training on Inventory Management System 700,000
(IMS)
Staff Training on ABC Analysis, EOQ, and Stock 500,000
Control
Workshops for Health Facilities & Private Sector 400,000
Development of Training Materials 200,000
Subtotal 1,800,000

10.3 Inventory Audits and Process Improvement

Table 6 Inventory Audits and Process Improvement

Item Estimated Cost

(ETB)
Monthly Stock Audits (4 months) 600,000
Implementation of ABC Analysis & EOQ 400,000
Improvement of Storage Conditions 800,000
Subtotal 1,800,000

34
10.4 Awareness and Market Demand Creation

Table 7 Awareness and Market Demand Creation

Item Estimated Cost

(ETB)
Awareness Campaigns (TV, Radio, Social Media) 500,000
Brochures, Posters, Flyers 300,000
Stakeholder Engagement Programs 400,000
Subtotal 1,200,000

10.5 Monitoring and Evaluation

Table 8 Monitoring and Evaluation

Item Estimated Cost

(ETB)
Mid-Term Evaluation (March 2025) 500,000
Final Evaluation (April 2025) 500,000
Stakeholder Feedback Collection 300,000
Subtotal 1,300,000

35
10.6 Contingency (10% of Total Budget)

Table 9 Contingency (10% of Total Budget)

Item Estimated Cost

(ETB)
Contingency for Unexpected Costs 1,200,000

Total Estimated Project Cost

Table 10 Total Estimated Project Cost

Category Cost (ETB)

Software & Technology 6,000,000
Training & Capacity Building 1,800,000
Inventory Audits & Process Improvement 1,800,000
Awareness & Market Demand Creation 1,200,000
Monitoring & Evaluation 1,300,000
Contingency (10%) 1,200,000
Grand Total 13,300,000 ETB

36
 References

1. World Health Organization (WHO) (2011). Guidelines on Pharmaceutical Waste

Reduction and Management. Geneva, Switzerland.

2. Management Sciences for Health (MSH) (2015). Medicine Wastage in Africa: A Study
on Essential Medicines Distribution and Utilization. Cambridge, MA, USA.

3. Ethiopian Pharmaceutical Supply Service (EPSS) Annual Report (2023). Assessment

of Pharmaceutical Wastage in EPSS Addis Ababa 1 Branch. Addis Ababa, Ethiopia.

4. EPSS Addis Ababa 1 (AA1) Annual Report (2023). Inventory and Stock Management
Performance Review.

5. Fishbone Diagram Analysis on Pharmaceutical Wastage Factors (2024). Internal

EPSS Data and Root Cause Analysis.

6. Economic Order Quantity (EOQ) and ABC Analysis for Efficient Stock
Management (2024). Best Practices in Inventory Optimization.

7. ERP-Based Demand Forecasting Systems for Healthcare Supply Chains (2024).

Case Studies on Digital Transformation in Pharmaceutical Distribution.

8. Ethiopian Ministry of Health (MoH) (2023). National Medicine Policy and Guidelines
for Reducing Drug Wastage. Addis Ababa, Ethiopia.

9. Stakeholder Interviews & Data Collection Reports (2024). Discussions with EPSS
Personnel, Public Health Facilities, and Private Pharmacies.

10. Sustainable Strategies for Reducing Near-Expiry Medicines Wastage (2024).

Research on Awareness and Market Demand Creation in Ethiopia.

37
Appendices/Annexes
The following appendices provide additional supporting materials, detailed analyses, and
supplementary information relevant to the project on Reducing Pharmaceutical Wastage at
EPSS Addis Ababa 1 Branch.

Appendix A: Root Cause Analysis – Fishbone Diagram

A Fishbone (Ishikawa) Diagram was used to categorize the major causes of pharmaceutical
wastage into six key factors:

1. Personnel Issues – Knowledge gaps, poor forecasting, and low data quality.
2. Infrastructure Limitations – Inadequate storage space.
3. Environmental Factors – Improper temperature control.
4. Control Issues – Weak monitoring systems and poor regulatory enforcement.
5. Workload Pressure – High transaction volume leading to inefficiencies.
6. Nature of Medicines – Short expiry periods causing frequent wastage.

Appendix B: Feasibility Study for Alternative Interventions

A feasibility study was conducted to assess the proposed interventions based on importance,
feasibility, and effectiveness. The results are summarized below:

Table 11 Appendix B: Feasibility Study for Alternative Interventions

Intervention Importance Feasibility Effectivenes Total

s Scor
e
Poor Forecasting (Overstocking) 10 9 14 33
Poor Inventory Control System 11 11 14 36
Short Expiry Nature of Products 12 12 10 34
Poor Data Quality 10 10 12 32

The inventory control system improvement scored the highest, making it the most critical
intervention to address.

38
Appendix C: Implementation Plan Timeline (January–April 2025)

Table 12 Appendix C: Implementation Plan Timeline (January–April 2025)

Month Key Activities

Jan-25 Procure and install an Inventory Management System (IMS). Conduct
staff training on ABC Analysis, EOQ, and FEFO.
Feb-25 Begin monthly stock audits and integrate IMS with demand forecasting.
Launch awareness campaigns.
Mar-25 Conduct mid-term evaluation to assess progress. Expand private sector
engagement.
Apr-25 Conduct final evaluation, review effectiveness, and refine future
strategies.

Appendix D: Budget Breakdown

A detailed cost estimate for project implementation is provided:

Table 13 Appendix D: Budget Breakdown

Category Estimated Cost

(ETB)
Software & Technology (IMS, ERP 6,000,000
Integration)
Training & Capacity Building 1,800,000
Inventory Audits & Process 1,800,000
Improvement
Awareness & Market Demand 1,200,000
Creation
Monitoring & Evaluation 1,300,000
Contingency (10%) 1,200,000
Total Estimated Cost 13,300,000 ETB

39
Appendix E: Stakeholder Roles and Responsibilities

Table 14 Appendix E: Stakeholder Roles and Responsibilities

Stakeholder Role in the Project

EPSS Addis Ababa 1 Hub Provide oversight, allocate resources, and implement inventory
reforms.
Public Health Facilities Provide real-time consumption data and participate in stock
redistribution.
Zonal Health Departments Ensure compliance and coordinate with private sector pharmacies.
Private Pharmacies & Assist in purchasing and distributing near-expiry products.
Hospitals
Regulatory Authorities Establish supportive policies for near-expiry medicine utilization.

Appendix F: Monitoring & Evaluation Plan

Table 15 Appendix F: Monitoring & Evaluation Plan

Evaluation Criteria Metrics for Success

Reduction in Wastage Target 2% wastage rate by April 2025.
Rate
Inventory Accuracy Monthly audit reports ensure >95%
accuracy.
Stock Replenishment Improved order fulfillment within 30 days.
Efficiency
Stakeholder Feedback Positive responses from hospitals, suppliers,
and pharmacies.

40
Appendix G: Sample Awareness Campaign Materials

 Brochures & Flyers – Educating healthcare providers on purchasing near-expiry medicines.

 Social Media Campaigns – Promotional materials for the public on the safe use of near-
expiry drugs.
 Workshop Presentations – Training materials on inventory best practices.

41