ABC of Vaccine Supply Chain Outsourcing

Intrigued by the idea of supply chain outsourcing of US Federal Government in the article Smarter Medicine, I conducted a small research to dig out more information about vaccine supply chain outsourcing.

Here's an article I came across.
Outsourcing Vaccine Supply Chain and Logistics to the Private Sectors
http://www.path.org/publications/files/TS_opt_outsourcing_br.pdf

Contrary to what VFC program chose to do, which is to outsource the whole supply chain to a third party, there are 2 other models regarding vaccine supply chain outsourcing:
1. To outsource one or more functions (procurement, arrival and importation, cross-docking, storage, or transport) of the vaccine supply chain
2. To sign lease contract (mostly short-term) with a third party regarding equipment (vehicles, or cold-room space), maintenance of equipments, or fuel resupply

Instead of outsourcing the whole vaccine supply chain, government of South Africa outsourced its procurement, storage and distribution to meet its urgent need to upgrade cold chain system while there was no budget available to upgrade the provincial-run vaccine store. Thai government, which faced challenges such as wasted or expired vaccines and inventory control issues, took the initiative to outsource their vaccine supply chain through a vendor-managed inventory system. Their way of implementing the new supply chain model, however, is similar to what is done in the US: start in some cities, and expand it to nationwide, which is a smart way to carry out gargantuan changes on a national scale. The efficiency of those outsourcing initiatives can be illustrated by figures below:

However, as supply chain outsourcing enables governments to focus on what they are good at, some taxpayers are questioning the value of this approach. According to a report released by nonpartisan Project on Government Oversight (POGO)(http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf), private contractors working for the federal government earn 183% as much as in-house workers, which indicates a huge waste of federal tax money. I believe this is the problem on which governments should ponder before they go for outsourcing services. To measure the feasibility of government outsourcing is essential in the preparatory stage of this project. And, from my perspective, although outsourcing to one contractor is very efficient and easy for supervision and tracking, this approach is subject to failure if the contractor (or subcontractor if there is any) fails to deliver such service at a certain point of the "chain".

So here's the question: which part of the outsourcing government supply chain do you think is fragile and is most likely subject to failure?

Sources:

1. http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf

2. http://www.path.org/publications/files/TS_opt_outsourcing_br.pdf

3. http://deliver.jsi.com/dlvr_content/resources/allpubs/guidelines/EmerTrenSCM_Outs.pdf