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Humourless Links for June 13, 2010

by Michael Keizer on June 13, 2010

'Liquid Links' by Desirae

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


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'Crate containing Leg Lamp' by J Stewart

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 went wrong? Click to read on.


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Humourless links for May 8, 2010

by Michael Keizer on May 8, 2010

'Liquid Links' by Desirae

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


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Humourless links for April 28, 2010

by Michael Keizer on April 28, 2010

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


Continue Reading 0 comments }Aid and aid work, Logistics, Miscellenea, Public health, The light(er) side

In my first article on 3PL, I explored the concept and some of its advantages and disadvantages. In this article, I will explain why I think 3PL will become more and more important for global health and aid.

The push for economy

Rightly or wrongly (and if you followed this blog you know where I stand on that question), there is a big push from donors to economise on ‘HQ’ or ‘overhead’. This means that the pressure is on to decrease the size of departments in headquarters, including logistics departments[1]. Conversely, when there is a crisis, it is fairly easy to get donors to fund the necessary extra capacity that is needed specifically for that crisis. This fits very well with the 3PL model: when there is a crisis, we can quickly ‘buy’ additional capacity.

Of course, this is sound thinking anyway, even apart from donor pressure: why would you want to pay for capacity when it’s not necessary? Large logistics departments are often legacies from a different era, when it was normal to have everything in-house and outsourcing was unheard of.

The move to urbanised settings

A tricycle-truck in Liaocheng, by Frank StarmerAs more of the world’s population is concentrated in urbanised areas, more of our work is done in those areas too. Especially in aid, the idea that our work would take us mostly to out-of-the-way locations in the bush, is thoroughly antiquated: more and more, we work in the shantytowns, slums, barrios, favelas, or whatever they might be called. Local 3PL contractors (see the picture to the right for a good example) are at an advantage here compared to having our own transport fleet. Specifically for aid activities, an added bonus is that we pour more money in the local economy instead of using the iconic, imported white landcruiser.

But even more conventional 3PL providers have an edge here: unlike in many more rural areas, they do have a presence in and knowledge of most cities and many towns. I haven’t worked in any capital yet in which they were not represented, and very few larger towns.

New models of cooperation

Many 3PL providers are actively trying to acquire knowledge of and expertise in fields that were traditionally the preserve of specialised organisations like NGOs and ministries of health. They see large growth opportunities and are keen to get on board, learning as they go in order to be able to deliver better quality than the competition. This also means that they are prepared to cooperate in new ways, using new models that are a better fit with global health and aid work; e.g. temporarily stationing staff within a logistics unit to improve support and communication, or helping to make information systems interoperable (something I will write more about in the next article in this miniseries). For us, this is a big opportunity to improve our effectiveness and efficiency by using what the providers offer in the way of expertise and (not unimportantly)  funds and operations scale.

Where this will lead us

It will be clear that the use of 3PL can have big advantages for global health and aid. However, to be able to use the opportunities that are offered, we will need to work hard on some of our outlooks and practices. In the next article in this series, I will describe what this will mean for how we work.

[Images by Erik Söderström and C. Frank Starmer. Some rights reserved.]


Back to post [1] This is actually becoming a bit less of an issue for health authorities now that there is more attention for ‘systems strengthening’. Perversely, it is actually becoming more important for aid organisations.


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Latest job opportunities (November 21, 2009)

by Michael Keizer on November 21, 2009

[Image: Job opportunities by Coffeechica]


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Supply chain risk management

by Michael Keizer on May 25, 2009

A lot has been written about how to deal with logistics disasters, or how to avoid specific types of mishaps. Much less attention is given to the process of managing those risks.

Risk management for the supply chain is not really different from generic risk management. Like all risk management processes, you start by making an inventory of possible risks, based on your environment, the programmes that you try to support, possible future scenarios, etcetera. This inventory includes the nature of the risk, its likelihood of occurrence, as well as its possible and likely impact. The result should be an overview of the possible extent of risk for each of the risks that you list. Some examples:

  • If a meteorite would hit your main logistics hub, you would be in dire straits indeed. However, the likelihood of this happening is vanishingly small. As a result, the extent of your risk is still very low.
  • If one of your 15 drivers would fall ill, it would probably not pose much of a problem; however, the likelihood of this happening in any given year approaches certainty. Still, because of its low impact, the extent of the risk would be low.
  • Having your one and only purchaser fall seriously ill would not be a big problem in a well set up system, in which everything is well documented. The likelihood of this happening is also quite small, so the extent of the risk here is very low.
  • However, if documentation is sketchy and most of the knowledge about markets and suppliers is locked up inside the head of your purchaser, the impact of this happening would be a lot bigger. Suddenly, the extent of your risk is now medium or possibly even high.

This last example points to the importance of the risk environment when performing your risk analysis. (It also points towards a possible way of dealing with it, about which more later.)

The next step is to design a strategy to deal with the risks. All risk strategies can be divided into four basic categories: avoid, reduce, transfer, and retain. In our example, this would mean:

  • Avoid: an avoidance strategy could take the form of not doing any local purchasing, or perhaps withdrawing from the programme. This illustrates that avoidance strategies are rarely feasible in the environments in which we work, but nevertheless they should be considered.
  • Reduce: ways in which we could reduce the extent of the risk include hiring a second purchaser (reducing the likelihood of being marooned without a purchaser) or ensuring good systematic registration and documentation (reducing the impact of the purchaser falling ill).
  • Transfer: we could outsource our purchasing to an external company, using service level agreements to ensure that they deliver what we we need, when we need it. This is not a very likely scenario for most of us, but it is something that we often do with e.g. air transport: we transfer the (very real) risks linked to these operations to e.g. a charter company.
  • Retain: we could decided that the extent of the risk is so small (e.g. because we hardly do any local purchasing anyway), that we take no action and leave things as they are. In other words: grit your teeth and suck it up.

A risk management plan basically consists of the risk analysis, with the appropriate strategy for each of these risks. Risk management plans for multinationals often comprise whole volumes (or, more and more often, many Gigabytes of documentation, code, and data), but for most field operations there is no need to go to that length: two to five pages would normally be enough. On an organisational level, it will obviously depend on how big your organisation is as well as its nature: the risk management plan for a two-project, one-country educational organisation will probably be not much more than the one-page result of a day’s hard work, but WFP’s risk management plan will more likely resemble that of a big multinational company.

However, whatever the size or nature of your organisation: you cannot afford to go without some form of risk management; organisations that think they can tend to be unpleasantly surprised at some stage.


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The public/private mix in health logistics

by Michael Keizer on May 3, 2009

Some time back I went on a tangent to rant about the wisdom (or rather, the lack thereof) of concentrating on the public sector for health, to the detriment of the private sector. The word “logistics” was conspicuously absent in that post, a lacuna that I am going to repair in this one.

I guess that it will be clear how important the public sector is for health logistics in developing countries. But how about the private sector? What could be its role?

Combine the words “logistics” and “private sector” in one sentence, and obviously third party logistics (or 3PL) will jump immediately to mind (or it should, if you have all been paying attention and read my post on visibility and transparency). However, there are very few logistics companies (or, for that matter, health ministries or health NGOs) in developing countries who would be able to implement the necessary visibility; so I am afraid 3PL lies rather further in the future than one might wish.

An existing example of more or less successful inclusion of the private sector in the health system, are the private retail pharmacies you can find almost everywhere in developing and middle-income countries. In many of those countries, it would be (almost) impossible to get the necessary medical supplies to the patients without this private initiative.

However, it is not all sunshine and laughter. For example:

  • There are serious questions about the quality of the supplied medications by private retail pharmacies in developing countries. Not only can this be extremely harmful for the patients themselves, but it can also contribute to the further spread of resistant strains of viruses, bacteria, and parasites.
  • Likewise, the quality of advice given by private pharmacists is not always the best. Research shows that not only is this advice not always up to par due to a lack of knowledge, but there is the obvious problem that the pharmacist wants to sell items on which he can make a (larger) profit; and so they would be clearly tempted to advice e.g. anti-diarrheals instead of ORS.
  • Private pharmacies will go where there is profit to make. This means that sparsely populated areas or especially poor populations are more likely not be served by any pharmacy.
  • Likewise, private pharmacies will not give away their goods to their poorest customers either. This would mean that the poorest parts of a population that is served exclusively by private pharmacies might not be able to access the necessary medicines.

None of these issues are insurmountable; e.g., quality of supplies and advice can be increased by better supervision and training, incentives can be given to pharmacies to establish themselves in sparsely populated areas, and a voucher system can be instituted to safeguard the needs of the poorest. However, all this costs money too, and in the end it might actually be more effective to have a public (government-owned or sponsored) pharmacy than a public one. This is not something that can be decided on a system-wide level; more likely, the most effective and efficient solution is a mix of private and public pharmacies, supplemented with adequate supervision, training, and financial incentives. Finding the right mix is not an easy task, and probably finding this right mix will include a number of painful mistakes. Don’t forget that the most successful systems in developed countries are the result of many years (and sometimes centuries) of ‘tinkering’.

However, one thing is clear: an all-public system of pharmacies is as likely to be ineffective of hugely inefficient as an all-private system. Dogmatics will not help us at all, and that is as true for pharmacies as for many other issues in health logistics.

(Image courtesy of Getty Images through daylife).


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Over the last couple of weeks, a lot has been said about the interception by Dutch customs of raw materials for a generic version of the drug Losartan. Although the materials were released in the end, Dutch authorities have refused to say whether this could happen with future shipments as well.

The interception was based on European Union legislation, which requires member countries to seize counterfeit brand products as well as raw materials for their production. However, it was far from clear that the generic drugs were counterfeit under the directive in question, and it was very clear that they were not under the TRIPS agreement and the DOHA declaration, which provide for compulsory licensing of patented drugs. In any case it is clear that an incident like these could seriously endanger the flow of generic drugs to developing countries, possibly endangering public health in those countries.

For many, it looks like the Netherlands caved in under pressure from pharmaceutical companies. Merck & Co, the patent holder in Losartan, maintains a large distribution hub in the coastal town of Haarlem, and is an important employer for the region.

Schiphol Amsterdam Airport is an important logistics hub for generic drugs and their raw components as they move from (mainly) India to Africa and Latin America. This behaviour by Dutch customs could imperil that position and the Netherlands’ position as a transit hub. Perhaps that is something for the Dutch minister of Economic Affairs to mull over before deciding to let something similar happen again.

(Picture: generic drugs by Wendy House. Some rights reserved.)


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The unanswered questions of aid and health logistics

by Michael Keizer on March 22, 2009

'Small Talk' by xkcd

Some of the issues that I think should be in the forefront of aid and health logistics discussion:

  1. How should we ensure adequate logistics input in the planning phase of aid projects?
  2. Will medical professionals and health logisticians ever be able to talk each other’s language? Will non-logisticians ever feel that they own the process too?
  3. Are cold chains unbroken? Do we really vaccinate, or just administer useless stuff? (This is actually the subject of my thesis research project, so you can imagine that it is a question that is close to my heart.)
  4. What are reasonable goals when it comes to logistics efficiency in aid operations? Is it really possible to determine a minimum level of efficiency? And if not, how can we be accountable? And how about effectiveness? And the balance between the two?
  5. How much of health budgets in developing countries should be devoted to logistics? In developed countries it is often more than 80% (including procurement cost), but is that reasonable or necessary in a developing country?
  6. When should the supply chain stop being flexible (supply rubber bands?) and determine operational options instead of vice versa?
  7. Why does large-scale aid logistics seem to deliver so few economies of scale? How can we improve?
  8. How can we improve the level of logistics knowledge and skills in health systems in developing and middle-income countries? What are the determining factors for health logistics in these settings?
  9. Could health logistics be a determining factor in developing new drugs or techniques? E.g. less heat-sensitive vaccines, reagents with longer shelf lives, etcetera.
  10. Pull or push? And in which settings?
  11. Has the kit system had its time? Should we move on to less wastage-prone systems?
  12. How can we improve on training and mentoring of new health and (especially) aid logisticians? Isn’t it about time that we stop to just turn them out to swim or drown?
  13. Third-party logistics: a viable alternative in which contexts?
  14. Are logistics consultants actually worth what we pay them?
  15. Six sigma, lean, kaizen, SPC: what can we learn from them?
  16. Isn’t it time that we stop setting up parallel logistics systems for aid, instead using the ‘normal’ channels? Or is that just a pipe dream?
  17. Is it in any way possible to stop creating new patients by the environmental damage due to inefficiency of supply lines in developing countries?

Any other issues? What logistics issues keep you awake at night?

(With thanks to Alanna Shaikh for inspiring the form of this posting.)


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