Leapfrogging for Last-mile Delivery in Health Care: Drone Delivery for Blood Products in Rwanda
48 Pages Posted: 14 Sep 2022 Last revised: 16 May 2023
Date Written: October 12, 2022
Last-mile delivery is one of the most challenging and costly facets of the supply chain. We examine whether and the extent to which the adoption of a technological innovation---delivery drones—leapfrogs traditional remedies that increase geographical connectivity—specifically, paving roads. Using data from Rwandan public hospitals that transfuse blood (i.e., transfusing facilities), we examine the impact of adopting the drone delivery system for blood transport on the inventory management of blood products and on health outcomes. We compare these effects to the impact of paving roads. Exploiting the staggered rollout of the drone delivery system and of paving roads, we use a generalized difference-in-differences approach to estimate the causal effect of adopting the drone delivery system and of paving roads, respectively, on blood inventory management and health outcomes. We find that transfusing facilities substantially decrease their on-hand inventory and wastage as a result of the drone delivery system, but do not find any change in the management of blood inventory after paving roads. For health outcomes, both after adopting the drone delivery system and paving roads, transfusing facilities see large reductions in in-hospital mortality in conditions where blood is required for treatment; additional analyses suggest that the drone delivery system exhibits a leapfrogging effect. Our results highlight key considerations for decision makers allocating scarce resources to improve hospital operations and health outcomes. While the drone delivery system implies large inventory cost savings and improvements in health outcomes, its benefits should be critically weighed against its costs and the objective of investments.
Funding Information: Support from the Wharton Dean’s Research Fund, the Wharton Global Initiatives Research Program, the Mack Institute Research Fellowship, the Fishman-Davidson Center for Service and Operations Management, and the Claude Marion Endowed Faculty Scholar Award.
Conflict of Interests: None to declare.
Keywords: empirical operations, last-mile delivery, delivery drones, leapfrogging, resource-constrained settings
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