Kathleen McDonald asks for my views on INGOs who set up their own (parallel) supply lines for medical supplies, as opposed to using the country’s normal supply lines.

Let me start with a truism: horses for courses. When deciding to use the local supply chain or set up your own, you will need to take into account your programme needs as well as your environment; and that means that it is impossible to make any sweeping statements about which way to go is better.

Reasons to set up a parallel supply chain

Some of the reasons that INGOs give for setting up a parallel supply chain:

• Specific supplies are not locally available. Some programmes are so far ahead of what happens locally, that they use supplies that cannot be gotten through the national supply chain. This happened quite a lot in the early years of the international HIV response, when it was hardly ever possible to source antiretrovirals locally. It is still a consideration in some programmes.
• Local supplies are of unproven quality. An INGO that takes its duty of care towards its patients seriously, will want to ensure that medications and other medical supplies qualitatively sufficient. This is not always easy: local producers and distributors are not always open to audits by customers, especially not if they cannot be guaranteed a certain minimum amount of custom. National regulatory agencies in ‘weak’ nations often lack the means to adequately ensure quality.
• Local suppliers cannot scale up sufficiently. This can be a consideration in very large programmes or responses, especially in case of outbreaks/epidemics.
• Local supply chains have broken down (temporarily). This will often be the case after large disasters or areas that are prone to violent conflict.
• Local supplies are (much) more expensive than imported ones. It might be surprising, but in quite a number of cases imported supplies – even factoring in transport, taxes and import duties, clearing costs, and other incidental costs – can be cheaper than locally bought ones, sometimes by a large margin. This usually happens when only a small number of suppliers have a stranglehold on the market.

Reasons not to set up a parallel supply chain

Of course, there are some very good reasons not to set up a parallel supply chain too:

• Parallel supply chains damage local structures. If local suppliers are pushed out of business due to our parallel supply chain, the long-term damage to the health of the population might actually be worse than what is gained by our programme.
• Parallel supply chains send the wrong message. In the long term, the goal of every INGO should be to restore the population’s own capacity. Note that I am not saying here that every organisation, even emergency responders, should do developmental work – but I do maintain that we should always do our best to keep that long-term goal in mind and should select solutions that (at the very least) damage it as little as possible. Parallel supply chains send a message that is diametrically opposed to this: ‘only what comes from abroad has sufficient quality’.
• Using local supply chains is a great way to find out where and how to help. If we know first-hand what are the strength and weaknesses of the local supply line, we are in a prime position to offer support to address those weaknesses.
• Local suppliers can be great sources of information. Any supplier worth their salt (in fact, any entrepreneur worth their salt) knows their markets well. Build up a good and lasting relationship with your supplier, and they might be the first one to flag that sales of ORS in a certain district have gone through the roof – your first indication of that cholera outbreak that the local government desperately wanted to keep under wraps. Do you think you would ever get that information if you are undermining their position?
• Local supplies sometimes are more appropriate. Your European-made oxygen concentrator might work perfectly well in a hospital in Berlin, but will it work in the hinterlands of whatever dusty, hot, voltage-challenged country you find yourself in? You are more likely (although by no means certain) to find something that works at your friendly local medical supplies salesman.

So what’s best?

As always, you will need to weigh the pros and the cons as they apply to your situation. There is no set ‘best’ model that is valid always and everywhere, and you will need to do some serious and active fact-finding to be able to find what’s best in your situation. It will probably mean that you will need to set up more than one supply chain, procuring some supplies locally while importing others. And what’s worse: you will need to do so again and again as circumstances change: in many developing countries, local markets can change dramatically over the course of as little as a year. But then, nobody said our work was easy.

Having said all this: many INGOs do not do their due diligence and set up parallel supply chains by default, without considering whether this is the right thing to do. While this is perfectly reasonable in an emergency response situation in which we don’t have time to research all pros and cons, and could even be acceptable in the first phases of a project while we scope out the local situation, I would say that this is not acceptable in the long term. If you work in one of these organisations, or in a programme in which these decisions are not regularly examined and re-examined, you could do worse than to start a discussion whether you are really doing the right thing.

[Image: Skies 1 (& visitor) by B Cleary]

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1. Blood will flow: fragility and robustness of supply lines
2. Do you see? Technology aiding supply lines – or not
3. Supply chain risk management

• Remember my post on how to get patients and health care together? It turns out that I had forgotten one major factor: legal bickering. At least, in Australia.
• Yet another idea to combat counterfeit medicine. Not a bad one as things go, but again missing the poorest. Not that I would know how to do better.
• The UNDP has put out an RFP for ‘the Provision of Services to Strengthen the National Supply Chains for HIV/AIDS, TB and Malaria Programmes in Northern Sudan’. Section 8 can lead to some interesting issues.
• This year’s Aid & International Development Forum seems to have a lot of logistics subjects, starting with the first session: “Transport – How to achieve effective transport with smaller NGOs”. Could be very interesting if you are anywhere near. If you do go there, please post some feedback here.
• Fast Company showcases eleven designs for when disaster strikes. Unsurprisingly, logistics figures prominently.
• The International Transport Journal writes about aid logistics. It paints an overly rosy picture, but overall it is not a bad introduction into international emergency aid logistics.

[Image: Liquid Links by Desirae; some rights reserved.]

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3. Humourless links for March 1, 2010

• Crown Agents are looking for senior procurement specialists for their office in Arlington VA (USA) and Malawi; procurement specialists for Mongolia and Malawi; an ARV logistics officer for Botswana; a procurement consultant for Tanzania; a supply chain operations manager for Malawi; an SCMS deputy country director for Rwanda; a logistics assistant for their office in London (UK); public procurement advisors for several countries; and a team leader for Malawi
• Save the Children is looking for an operations director, a senior procurement specialist and two roving logistics specialists for Haiti; a senior manager procurement, contracts and compliance for the West Bank/Gaza; and two senior logistics specialists to be based in Washington DC (USA).
• Maxwell Stamp is looking for a project costing and procurement specialist for Laos
• UNICEF is looking for a procurement assistant for their office in Geneva (Switzerland), a contracts officer for their office in Copenhagen (Denmark), and a supply and logistics specialist for North Korea. Sorry, no links, they still hide their vacancies behind a registration process.
• DanChurchAid is looking for a field logistics officer for Katanga (Congo DRC).
• Merlin is looking for deputy logistics coordinators for Côte d’Ivoire and Congo (DRC); a logistician for Congo (DRC); logistics managers for South Sudan, Kenya, Pakistan, Congo (DRC), and the Central African Republic; a logistics/administration officer for Gode (Ethiopia); senior logisticians for Grand Kru and  Montserado (Liberia); and a surge logistics officer for South Sudan.
• JSI is looking for a deputy chief of party SCMS for Nigeria.
• Concern Worldwide is looking for a transport manager for Haiti; an assistant country director systems for Afghanistan; and a general systems manager and a logistics and administration coordinator for Zambia.
• The IRC is looking for logistics managers for Congo (DRC) and Haiti.
• The IFRC is looking for a trainee logistics delegate for based in Kuala Lumpur (Malaysia), an operation coordinator for Guatemala, a head of support services based in Panama City (Panama), a procurement delegate for Haiti, and a senior procurement officer based in Geneva (Switzerland).
• MSH are looking for a senior program associate – supply planning/MIS/M&E for Bangladesh.

[Image: Job opportunities by Coffeechica. Some rights reserved.]

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Ordering systems come in two basic flavours: push and pull, plus any number of hybrid systems. All have pros and cons, and each is most appropriate for a specific situation. In this first article in a miniseries on push and pull systems, I will discuss the basics: what exactly are pull and push systems and when would you use either.

Push versus pull

In the push model, “higher”, central levels decide on supply allocation for “lower”, local levels; these decisions are typically based on supply at hand and in the pipeline, and on calculated expected consumption – the latter often approximated, based on (in the case of medical supplies) patient numbers or population data. In the pull model, “lower” levels decide on the necessary supplies for the next supply period, which are then either procured independently or obtained/ordered from the “higher” level.

The basic difference between the two models is the responsibility for timely, complete, and accurate initiation of distribution: in the push model this is the “higher” level, in the pull model the “lower” level.

From this table, it will be clear that push systems are best used when pipeline fluctuations and interruptions are rife and unavoidable, when funds tied up in buffer stocks are not an issue, and when expertise is too scarce to be decentralised; and that pull systems come into play in the opposite situation.

Hybrid models: the best of both worlds?

Many commercial manufacturers use a hybrid system. E.g. when you order a Dell computer, your sparkling new machine does not come from stock but will be newly assembled; however, the parts (which are fairly generic and can be used for a variety of different models) are not ordered as your order comes in, but come from a pre-determined stock, the size and composition of which is calculated using expected overall numbers of orders for various models. Dell can do this exactly because many different models can be made from various parts.

We rarely use hybrid systems in global health and aid. In the next post in this series, I will look at the reasons why, and offer some ways in which hybrid models can help us solve some of our most pressing problems.

No related posts.

You have designed and implemented a pretty good logistics system and are proud of how effective and efficient your aupply line provides your programmes with any materials they need. Transport and administration cost are now at their minimum, fulfilment rates are close to 100%, and you process and fill almost every order within set timeframes. You feel pretty good about yourself (and not without reason), and are ready to hand over the system to your successor with justifiable pride.

And then the ministry of trade announces that as of tomorrow, clearing rules will be changed, adding three weeks to the current four to five days it takes you to clear your goods. Suddenly things look a lot less optimistic: your carefully balanced and trimmed-down supply chain is strained to the snapping point, and you are looking at having some of your key operations suspended. Even worse: one of those is a treatment programme for TB patients, and suspension of treatment might cause resistance to the drugs involved – making a bad situation suddenly look catastrophic.

What has gone wrong here? Of course, the ministry of trade is partly to blame here: changing rules on a day’s notice is bad governance any time. But a large part of the blame also lies with you: in your push for a lean, mean machine of a supply line, you neglected to take into account your environment and the risks it posed. In short, you built a fragile supply line.

Robustness of supply lines is generally important, but even more so when it comes to global health and aid: a supermarket might take the risk of an empty shelve, but an empty shelve in our case could cost lives. This is an important consideration when you build your risk management plan (which you did of course last year, immediately after reading my post on supply chain risk management): where a supermarket might choose to retain or transfer the risk, we will often have reduce it. Reduction strategies almost inevitably cost money: cost for storage, more expiries, more staff, and many other costs. A well worked-out risk management plan will help you explain why these costs are necessary, and that they do not mean that your supply line is in any way inefficient.

[Image: Crate containing Leg Lamp by J Stewart]

Related posts:

1. Do you see? Technology aiding supply lines – or not
2. The ways and means that divide: parallel supply lines for medical supplies
3. Supply chain risk management

• Mary’s Meals are looking for a logistics manager for Malawi.
• Oxfam GB is looking for a logistics coordinator and a procurement manager for Haiti; and an HSP supply and logistics coordinator (based in their HQ in England).
• IMC is looking for a logistics manager for Haiti, an operations manager for Sudan, and a logistics coordinator for Congo (DRC).
• UNICEF is looking for a logistics manager for Haiti.
• MSH are looking for a technical deputy director for Bangladesh.
• UNFPA is looking for a humanitarian logistics specialist, based in their HQ in New York (USA).
• ACTED is looking for a country logistics manager for Sudan, country logistics & security managers for Chad and Iraq, a logistics intern for Chad, and a pharmaceutical procurement manager for their HQ in Paris (France).
• JSI is looking for a deputy chief of party SCMS for Nigeria, and a supply chain advisor intern.
• Solidarités are looking for a logistics coordinator for Kenya/Somalia; a logistics support officer and a logistician for Haiti; and a flying logistician based in their HQ in France.
• Merlin is looking for a supply chain manager for Pakistan.
• Creative Associates International is looking for a procurement manager for Sudan.
• The British Red Cross is looking for logistics and procurement delegates for Bangladesh and Haiti.
• PSI are looking for an associate procurement & logistics officer, a procurement & logistics officer, and a voluntary pooled procurement & logistics officer, all for their HQ in Washington, D.C. (USA)
• The PNG Advisory Support Facility is looking for a procurement manager and operations advisor.

[Image: Job opportunities by Coffeechica. Some rights reserved.]

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Scenario 1: a house in your town catches fire, killing one person and making 5 people homeless. As the logistics officer of your town’s emergency services, you are in charge of the logistics support for the initial response as well as for the physical support of the newly homeless people.

Scenario 2: you are still that town’s logistics officer, but now a gas explosion rips through an entire block. Ten people are killed instantly, tens are seriously wounded, and scores are made homeless.

Scenario 3: you did well in the previous two cases, and have been promoted to your state emergency services’ logistics position. Three days after you start your new job, a number of bush fires break out under very hot, dry, and windy conditions, and converge on your state’s capital. More than a hundred people are killed in the next three days, several hundreds are seriously wounded (swamping the hospitals’ emergency, IC, and surgical departments), and almost a thousand people are now without homes.

Scenario 4: as emergency logistics coordinator at your country’s ministry of internal affairs, you are confronted with a devastating earthquake that destroys large parts of the capital and trashes the main harbour and the two airports. First reports indicate over a thousand casualties, untold numbers of wounded, and up to a million people who are living in the streets under improvised shelters.

The impact of these four scenarios more or less follows a logarithmic scale: each is about ten times as big as the previous one. Does that mean that the logistics for each is ten times as difficult as the scenario that precedes it? Nothing like it: organising the logistics for scenario 2 will take considerably less resources than ten times scenario 1; but scenario 4 will take considerably more than 1000 times as much to respond to at the same level – and organising its response logistics is probably several thousands of times as difficult. In fact, it becomes a practical impossibility to offer the same level of response: there is no way that we can give all those casualties dignified burials, all those wounded top-notch medical care, get everyone who is made homeless under a solid roof within the day; even if we would have the resources to do so.

The reason for this can be illustrated with the analogy of a crossroads. Where two busy four-lane streets intersect in a four-way crossing, traffic can be controlled by one traffic controller (not efficiently, perhaps, but safely). A five-way crossing is suddenly a lot less easy to control: you would probably need at least two controllers. Now imagine what would happen if town planners would be crazy enough to allow an eight-way crossing. You would probably need four or five traffic controllers to do this well, and coordination between them would be more than a bit difficult, if not impossible.

Yet emergencies aren’t planned, they emerge; eight-way crossings and all. This is what makes large-scale emergency response so extraordinarily difficult, and why doing this well cannot be measured by the same norms as the response to smaller-scale emergencies: complexities of scale trump everything.

[Image by Chance Agrella @ Freerange Stock.]

Related posts:

1. Smallest-scale logistics

• An analysis by Alanna Shaikh of how we tend to react to critics. Of course it is easy to take down an ill-conceived initiative like 1millionshirts, but it is important to reflect on whether we react much better when we are the focal point of criticism.
• Wired Magazine writes about the logistics of the Haiti response as a spring board for a wider discussion of disaster response logistics. It’s a bit overly endowed with ‘human interest’, but on the whole I would say that it is a very good introduction. “Organizing Armageddon”, though? (H/T Cynan Houghton.)
• Alex de Waal writes a great article on the ‘humanitarians’ tragedy’: the inescapable cruelties that come with our work. Sadly, it is hidden behind a paywall, but I recommend it highly if you do have access.
• The Royal Geographical Society is holding a conference on how to improve the response to natural disasters. I would expect that logistics will be an important part (although sometimes that sort of expectations are incorrect).
• I am trying to find somebody who can tell me more about the cooperation between Handicap International and Atlas Logistique. Email to their general address goes unanswered. So if you work with/for them or know somebody who does, could you please ask that somebody in the know contacts me?
• Texas In Africa writes an excellent post on how to go from saviourism to empowerment (but seriously, Laura: Barbra Streisand lyrics for a title?). On a related note, Linda Raftree writes about community dialogue, which in turn leads to some interesting discussion over at Tales From the Hood.
• According to Scott Gilmore, mercenaries, missionaries, and madmen should not work in aid.
• A video from MSF showing how bad logistics can cost lives.
• Aid logistics is getting more and more serious attention from universities. The Hanken School of Economics will organise an external course in supply chain management in development aid at the University of Manitoba (Canada).
• How a simple legal mistake by a national mail carrier can cost lives.

[Image: Liquid Links by Desirae; some rights reserved.]

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1. Tenacity. No, I did not put it there because I have been looking for an opportunity to use that word for as long as I can remember (although that is true): a lot of what we do in logistics needs long-term, relentless attention – you will need to follow through what you start in the long term.
2. Patience. Hardly anything will happen as quickly as you might want to. The flip side of the tenacity is that you will need the patience to wait things out – which sometimes can take quite a while.
3. Numeracy and maths skills. A lot of what we do requires a feel for numbers and some basic mathematical skills. You don’t have to be an operations research whizz (although a basic understanding might help), but you have no business working as a logistician if you don’t understand the sawtooth graph and its mathematical underpinnings, how it affects what we do, and how our decisions affect it in turn.
4. A flair for administration and communication. Information management is immensely important for what we do. Without a certain facility with the underlying paperwork and with communicating the information, you will be less effective than you could be.
5. Time management. As logisticians, we will always need to juggle several balls: it is rare that we can concentrate on one issue. If you don’t manage your time well, you are sure to drop one or more of those balls.
6. The ability to delegate. You cannot do everything yourself. If you don’t know how to delegate (without abrogating your responsibilities), you will probably do more harm than good.
7. The ability to ‘switch off’. People who cannot stop mulling over the daily problems and challenges when they go to bed are prime candidates for a burn-out. This is true for most aid professions, but especially for logisticians because logistics is usually a 24/7 process. I put in long hours, but most people I work with have learnt to respect that I prefer not to discuss work when I’m off.
8. Language skills. You will hardly ever work in a country where everyone (or even a sizable majority) will speak your native language. Speaking more than one language helps, but what is even more important is a facility to quickly pick up the rudiments of a new language.
9. Cross-cultural skills. What is true for languages, is even more true for cultures. You need the skills to deal with people from very different cultures, with different understandings of many things that we hold self-evident (yes, including those self-evident truths) and different ways of doing things from us. Whatever you might think, cross-cultural skills are not natural to anybody unless they grew up in a truly multicultural setting (which might be true for one or two in every thousand of us); and although they are not difficult to master, you will need training and practice.
10. Curiosity. Can you work logistics without knowing what exactly are the goods that you shift? Probably, but a good logistician will recognise that a large order for injectable quinine without an order for glucose is probably incorrect and will check back with the originator. Without knowledge of the context and the nature of the work we are trying to do, you will never become a superlative logistician; and the best way to get that knowledge is by developing and exercising your curiosity.
11. Zen. You might not believe in Buddhism as a religion or accept it as a philosophy (I don’t), but it does contain some very useful life skills. Especially the sense of serenity that is taught in its Zen branch, the skill to deal with whatever comes to you as it is and not as it should be, can be immensely helpful. (I am particularly weak in this skill, as it happens. I try to get better.)

I am sure there must be more skills that are useful for logisticians than just these eleven. What skills have been helpful for you? Which ones do you wish you had? And how have you acquired the missing ones? I am looking forward to your comments.

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1. The unanswered questions of aid and health logistics
2. Three parties rolled in to one: third-party logistics for global health and aid
3. Why third-party logistics is part of the future of global health and aid

• UNDP is looking for a supply chain management consultant and a procurement advisor, both based in their HQ in Copenhagen (Denmark); and for a procurement specialist for Sudan.
• The Mine Advisory Group is looking for a support services manager for Iraq.
• MERLIN is looking for a deputy logistics coordinator for Congo (DRC); logisticians for Haiti and Congo (DRC); and logistics managers for the Central African Republic, Pakistan, Haiti, and Congo (DRC).
• Marie Stopes International is looking for a senior procurement and logistics manager for their HQ in London (UK).
• Crown Agents are looking for a procurement coordinator and a procurement specialist for the USA; an ARV logistics officer for Botswana; a procurement specialist and a senior procurement specialist for Malawi; a procurement consultant for Tanzania; a supply chain operations manager for Malawi; and an SCMS deputy country director for Rwanda.
• A non-specified global health charity is looking for a finance & operations director for the UK.
• ShelterBox is looking for an operations manager for the UK.

[Image: Job opportunities by Coffeechica. Some rights reserved.]

Related posts:

1. Latest job opportunities (June 11, 2010)
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