Exploring the role of ICT in pharmaceutical supply chain practices and operational performance in Ethiopia: a structural equation modeling approach

Abstract Background A well-coordinated supply chain ensures the sustainable availability of life-saving medicines that improve public health outcomes. Information Communication Technology (ICT) is one of the strategies for optimizing supply chain coordination. However, there is a paucity of data on how it affects supply chain practice and performance at the Ethiopian Pharmaceutical Supply Agency (EPSA). Objective This study aimed to explore the relationships between information and communication technology, supply chain practice, and pharmaceutical supply chain operational performance using a structural equation modeling approach. Methods We conducted an analytical cross-sectional study between April and June 2021. Three hundred twenty EPSA employees participated in the survey. We used a pretested, self-administered five-point Likert scale questionnaire to collect the intended data. A structural equation modeling confirmed the relationship between the constructs (information communication technology, supply chain practices, and performance). Thus, the measurement models were first validated using exploratory and confirmatory factor analysis in SPSS/AMOS software. A p-value of less than 5% indicated statistical significance. Results Of the 320 questionnaires distributed, 300 participants (202 males and 98 females) duly responded. In this survey, supply chain practices (mainly customer relationship management and information sharing) and ICT had significant positive direct effects on operational performance with standardized regression weights (β) of 0.65 (p < .001) and 0.29 (p < .001), respectively. On the other hand, 73% of the variations in operational performance were explained by ICT and supply chain practices, wherein ICT played moderate mediation effects between supply chain practice and performance (VAF = 0.24, p < .001). Despite the significant positive influence of ICT, the agency still faced data visibility problems with customers and other supply chain partners. Conclusion The findings revealed that supply chain practices and ICT implementation impacted the agency’s supply chain performance positively and significantly. The ICT implementation practice in the agency posited a significant positive partial mediating role between supply chain practice and operational performance. Thus, if the agency focuses on the automation and integration of customer relationship management and the practice of information exchange, the essential supply chain practices, it can further improve operational performance.