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Latest job opportunities (May 4, 2010)

by Michael Keizer on May 4, 2010

[Image: Job opportunities by Coffeechica. 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.]

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Latest job opportunities (April 26, 2010)

by Michael Keizer on April 26, 2010

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

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The unkindest cut: why gifts in kind are often a bad idea

by Michael Keizer on April 24, 2010

Over the last couple of months, a lot has been written about old shoes, a.k.a. gifts in kind (GiK). Most commenters seem to agree that they are only appropriate in a fairly limited number of narrowly defined situations. Over at Tales From the Hood, J. has come up with two preconditions for GiK to be acceptable: they should fit programme design (instead of vice versa) and they should directly address the needs in the field. Of course, J. is correct as ever, but I do think that in this case he is not exhaustive. I will use the five rights of logistics to add to the list.

The right goods

Both J.’s preconditions are linked to this one. Of course, they should fit the needs of the people we are trying to serve, and that implies that the programme should fit these needs and that the goods delivered in turn should fit the programme. Another issue to keep in mind here is that they should also fit the way your organisation works: if nobody knows how to work that donated doodad, it could fit your programme like a glove but it would still be utterly useless.

The right quantity

GiK hardly ever come in the quantities needed: either too much or too little. In the former case, the challenges of dealing with the surplus could more than negate the advantages of receiving the gifts. In any case, it would be a good idea not to accept more GiK than are needed for the programme[1]. If the GiK are not sufficient to cover the full need of the programme, the extra cost having to buy and handle smaller amounts of goods from multiple sources need to be taken into account as well.

The right location

Often, there are local or regional sources of the same goods that are donated. Obviously, these goods will be available at the programme location much faster and much more cheaply than the donated goods ever can be.

The right time

For most programmes, timing is crucial. An item can be really needed at some stage, arrive in just the right quantity and be available at the right spot, but if it arrives too late it will be as useless as a recipe for lumbard mustard for McDonald’s. If it arrives too early, it will needlessly clog up storage space (which is an important consideration in many of our programmes). It is hardly ever possible to time GiK correctly.

The right price

GiK are, as the name implies, free.

Well, no, actually they aren’t. There are serious costs connected to GiK: costs when organising collection and reception, cost when handling and shipping, costs when using. Good examples are the costs for the organisation of collection points, for bundling and preparation for shipping, for cleaning and repair, and for maintenance in the field. Similar costs are, of course, connected to goods bought from donated money; but almost always these costs are much lower than for GiK – sometimes so much cheaper that, all in all, it can be cheaper to buy them new than to pay for the costs to process the GiK.

Most people understand that this is the case when comparing local goods with GiK: obviously, it is quite possible that the cost of shipping items from Freetown, Kentucky to Freetown, Liberia could be more than the full price of the same item bought on the local market. However, this could also be true for items bought in (in this case) the US. This comes as a surprise for many people: how can it be cheaper to buy e.g. medicines locally and ship them over, than to have those drugs donated at the exact same spot for free? Yet this is true quite often, caused by e.g.:

  • having to combine items from various locations instead of shipping it directly from one location (the supplier’s);
  • use of standardised items designed for cheap and simple transport, e.g. because they are lighter, can be nested or because a multiple fits exactly in a standard shipping container;
  • being able to easily consolidate shipments, leading to lower shipping costs;
  • having to deal with reverse logistics after early expiry of goods (i.e. earlier than newly bought goods).

Gifts in kind are not always kind

Time to out one of my darker secrets: back in my younger days, I have been involved in a drive to collect gifts in kind for Romanian orphanages (after the revolution of 1989). I was highly disappointed and slightly upset when none of the large aid organisations wanted to accept our goods. Now, half a lifetime later, I understand why they did so. Gifts in kind can be the right thing – but often they aren’t. Both donors (when giving or organising drives) and aid organisations (when accepting the gifts) should keep this in mind – and logisticians have a special responsibility for explaining the issues.

Update (April 28): I hardly turned my back (had a long day of lectures and didn’t read my Twitter stream) or a new GiK initiative crops up. This time, somebody want to get 1,000,000 shirts to ‘Africa’. A good analysis of the goods and bads can be found on Amanda Makulec’s blog (and it is of course always nice to called a “development logistics guru”); Aid Thoughts has a rather snarkier take on things; Tales From the Hood comments on the rather aggressive media strategy of the founder (which basically seems to come down to, “let’s get this discussion off from the internet ASAP”); Texas In Africa lists better alternatives.

Update 2 (April 30): There are now more than 30 blog posts written about the whole 1 million shirts kerfuffle. A selection of the most interesting ones:

[Image: The Park House Club in Cardiff, wrapped as a gift by Howard Dickins. Some rights reserved.]

Footnote

Back to post [1] Of course, this is true for gifts in money, too, but I leave that fish for others to fry.

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Humourless links for March 3, 2010

by Michael Keizer on March 3, 2010

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

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Distribution center of Kühne + Nagel in Hamburg, Germany.

Distribution center of Kühne + Nagel in Hamburg, Germany. K+N is one of the largest 3PL providers in Europe.

We have seen what third-party logistics is and what are its strengths and weaknesses; and why it will be part of logistics for global health and aid. But what does this mean for us? What will change in the way we work?

Improved information management practices

To be able to work well with 3PL providers, we will need to improve our information management: without knowing fairly well what needs to go where (and hence, what is where and what already goes where), we will not be able to enjoy the advantages of 3PL. What’s more, the more advanced 3PL providers have developed their own supply chain visibility solutions; and not only that, but often they are keen to help us to make our own systems interoperable with theirs, which almost inevitably will lead to better systems for our own use. They do that, not from the goodness of their hearts, but because their customers asked for it – you know, “no delegation without verification” – and because they think that better interoperability will also lead to better efficiency of their own processes.

Smaller logistics departments

If we can outsource all or most of our boring, ‘routine’ logistics work to 3PL providers, our own logistics departments can concentrate on those logistics that are not easily transferable: because they are in high-security settings, or because of specific sensitivities that mean that we cannot use 3PL providers without damaging our operations, or because they are in places where, quite simply, there are no 3PL providers. What remains is a small, highly specialised, highly professional, very flexible unit that delivers four types of services: supply chain management in places where 3PL providers cannot deliver or their services are not acceptable; leadership and coordination of quick scale-ups of operations in case of a sudden emergency; development and monitoring of logistics policies and contracts (including those with 3PL providers); and specialised logistics input for development of policies in other areas and for management.

Bigger logistics departments

Got you there, didn’t I?

Think of this: why would 3PL providers necessarily be from outside the aid world? We already see some 3PL activities from aid organisations themselves, e.g. WFP’s role as logistics provider of last resort in the cluster system. So why wouldn’t some of the larger aid organisations with strong logistics capacities act as 3PL providers for smaller organisations? I can easily foresee that organisations like WFP, MSF, or Oxfam, or perhaps even some governmental health logistics units would start delivering 3PL services to other aid organisations or even ministries of health. After all, they know better than most generic 3PL providers how to operate in the settings where we work, and hence can provide even better (and probably cheaper) services. These hybrid service delivery organisations will, by necessity, grow larger than they are now.

Greater logistics departments

Whichever of these choices these departments make, it will always allow them to become better than they are now: more specialised, more focused on their strengths and less exposed in their weaknesses, more flexible, more efficient, using synergies where they occur (instead of ignoring them as we often do now).

So what are your views? Is this too rosy a picture? Are you already going this way? Things I have missed?


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Humourless links for March 1, 2010

by Michael Keizer on March 1, 2010

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

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Latest job opportunities (February 28, 2010)

by Michael Keizer on February 28, 2010

Sigh. Did anyone read my earlier rant on bad job advertisement practices?

[Image: Job opportunities by Coffeechica]

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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.]

Footnote

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 (January 11, 2010)

by Michael Keizer on January 11, 2010

[Image: Job opportunities by Coffeechica]

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