Economic Analysis of Digital Technology Implementation in Health Logistics Systems: A Case Study of SMILE SSL in Indonesia

Abstract

Objectives: To assess the economic value of the SMILE SATUSEHAT Logistics (SMILE SSL) digital logistics system in improving supply chain visibility, reducing expired medicines and medical consumables, and enhancing operational efficiency compared with the existing manual reporting (MR) system in Indonesia. Design: Micro-costing analysis, return on investment (ROI), benefit-cost ratio (BCR), and sensitivity analysis. Setting: Primary healthcare and public health logistics systems across three Indonesian provinces representing urban, rural, and remote settings. The study included 100 primary healthcare centres (PHCs), 11 district health offices (DHOs), three provincial health offices (PHOs), and national-level institutions. Participants: The analysis used cost and operational data from PHCs, DHOs, PHOs, the Ministry of Health, and the UNDP. Interventions: Implementation and evaluation of SMILE SSL, a cloud-based electronic logistics monitoring system providing real-time tracking of stock, distribution, and expiry information for medicines and medical consumables, compared with the existing MR system. Primary and secondary outcome measures: Primary outcomes included implementation costs, potential cost savings from reduced expired stock, operational efficiency gains, ROI, and BCR. Secondary outcomes included barriers and enabling factors influencing implementation and sustainability. Results: The projected six-year implementation cost of SMILE SSL was USD20.06 million, compared with USD24.12 million for the MR system, representing a 16.9% reduction in costs. SMILE SSL generated total projected benefits of USD36.72 million and direct cost savings of USD4.06 million. The system achieved a positive ROI of 0.831 and a BCR of 1.831, whereas the MR system demonstrated a negative ROI (−0.581) and a BCR of 0.419. Sensitivity analysis confirmed the economic robustness of SMILE SSL across multiple scenarios. Conclusions: SMILE SSL demonstrated greater economic value and operational efficiency than MR systems and supports scalable digital transformation of health logistics systems in resource-constrained settings.