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Supply chain transparency

The power of the pipeline

by Michael Keizer on April 24, 2009

Trans-Alaska Oil Pipeline by rickzWhen preparing a new order, you take into account goods that are still in transit (a.k.a. the pipeline), right? Right, so we need not discuss things further.

Or do we?

In practice, there are a number of issues that surround the pipeline that complicate things and ensure that in reality, we often incorporate incorrect pipeline figures in our calculations.

  • Time. When do you expect the goods to arrive? Tomorrow? Next week? In a year? And that date, does it relate to arrival in your transit port, a country away? Or at the airport next door? And how long will clearing and onward transport to your projects take? In the end, the main issue is when the goods will arrive where they are needed, in your programme; all other considerations are important only for the purpose of determining that date. However, in the settings where we work, they are often difficult to predict. An example: some years ago, I was involved in importing a large consignment for an African ministry of health. We felt that we had done our planning quite well, taking normal transit and clearing times into account and adding a buffer based on the normal spread. What we did not know, however, was that the ministry of agriculture had ordered a massive consignment of fertiliser – and when I say “massive”, I mean tens of bulk shiploads, all arriving at more or less the same time. This consignment arrived at the same time as our containers, congesting the port of entry to a point where we could not land the containers for several days, and then struggled for several weeks to find onwards transport capacity. I learned from this the value of growing and maintaining an extensive information network in whichever location you find yourself. If I had talked with some people in the main transport companies, I would soon enough have heard that their capacity was fully booked out.
  • Confirmation. You know you ordered 20 boxes of paravenozole, delivery at your warehouse due next week, but did you actually get a confirmation from your supplier? Too often we do not insist on binding timelines, with obvious results; and if we do, we do not enforce them well enough. This is improving, though: I have seen various solutions to this problem. The one I like best is to have ‘order managers’: dedicated staff who take over the management of the order once it has been placed, ensuring that confirmations are received and regularly following up status with the supplier.
  • Matching.You know that there are 20 boxes of paravenozole in the next plane to arrive, but… for which project are they? And to cover which order? The supplier of course uses a different system of identifying orders than you do, let alone of article coding. So how can you match this? Obviously, the key here is keeping your paperwork in order, ensuring a clear trail from project order ID, to your order ID, to the suppliers order ID. In reality, this is slightly more complicated than it sounds because we often need to split up orders, and might have on-the-run changes. And of course, we are not talking of one consignment with one type of goods for one project on one order… However, none of this is insurmountable. The most important thing here is discipline: the discipline to document continuously what we do, why we do it, and what are the results – in such a way that we can easily find things back. It does not really matter whether we have an old-fashioned paper-based system or a state-of-the-art ERP system: the principles of documenting and cross-referencing remain the same.
  • Units. A small last issue, but one that does trip us up sometimes: did we order twenty boxes of paravenozole, each of 100 doses, 2000 doses in total? Or twenty overboxes, each containing 50 boxes, 100,000 doses in total? Make sure that you document, double-check, and feedback to your projects and your supplier in case you have any doubt.

Taking into account your pipeline figures is your an essential part of order management; and although it may take a lot of work, most of it should be routine activities that can be done at a clerical level. Your pipeline is your connection to your future deliveries, and can give you an invaluable idea of that future for a very small investment.

(Image by rickz.)


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Visibility, transparency, and some sunshine

by Michael Keizer on April 9, 2009

Lockheed SR-71 Blackbird strategic reconnaissance aircraft taking on fuel from a USAF KC-135

One of the hotly discussed topics in logistics management is supply chain visibility. In a nutshell, you have a visible supply chain if your supply chain processes are measured and controlled on a fairly detailed level — often up to the level of the individual item. The big impetus for supply chain visibility has come from the advent of third party logistics or 3PL — the outsourcing of parts of the logistics process to specialised contractors, in an effort to gain economies of scale as well as economies of specialisation[1]. Outsourcing is basically an external version of delegation, and as any management textbook will tell you, there can be no delegation without verification; hence the need of a more visible supply chain. Good examples of extremely visible parts of logistics chains are the track-and-trace systems that are offered by most couriers.

An offshoot of supply chain visibility, supply chain transparence, has also gained a lot of traction over the last couple of years. Unlike supply chain visibility, which concentrates on supplying information to those using the supply chain, supply chain transparency concentrates on the ultimate buyer of the products supplied. A good example here is Icebreaker’s baacode, which gives customers an idea about the origins of their woollen undies and what happened to them during the production process.

I think both visibility and transparence will gain in importance in health and aid. Like I wrote before, any medical supply chain needs at least a modicum of visibility to be able to react effectively and efficiently to e.g. recalls; and transparence will undoubtedly become more important as we move towards more accountability to our customers, i.e. the populations we try to aid, our donors, and the general public.

However, there is more to this: I think we will also move more and more to 3PL (stay tuned to read about the whys and wherefores); and like the corporate sector, we will need more and more visibility in able to do so while still keep control of our supply chains. Whether we like it or not, we will need to invest more in systems[2] that make supply chain visibility possible; and as these systems take time to design and implement, we need to invest now.

We should be able to learn from systems that are being used in the corporate world. However, it will probably not be possible to use solutions from a corporate setting unaltered in (health) aid settings. Issues like insecurity, lack of instant telecommunications, etcetera, will mean that adaptations are necessary. This is why the Fritz Institute’s Helios system is such a great step forward: it offers the base for humanitarian supply chain visibility, packaged in a way that is suitable for many aid organisations. This is not to say it is without its problems; it isn’t, and it some organisations will find it more useful than others (e.g., it is tailored towards humanitarian aid, and might not be particularly suitable for developmental organisations), it is as yet incomplete in some aspects — but it is a step in the right direction.

high visibility clothingTime for a mea culpa. Some years ago, I was asked to advise on the choice for logistics management software for a large aid organisation. At that time, I advised against Helios (or the HLS as it was known back then) because I thought that its foreseen development trajectory was unfounded and too optimistic. I think I had good reasons for that recommendation, but I was also very wrong: Helios has been developed into something that is a model for supply chain visibility in aid.

Is your organisation thinking about supply chain visibility? Perhaps you are already implementing solutions? Share your best practices (and your mistakes — we can learn from those as well!) here.

(Images by James Gordon and Leo Reynolds.)


[1] This will definitely be the subject of a future posting.
[2] No, systems are not just computer systems. When I write about a system, I refer to a coordinated whole of human resources, material resources, and procedures[3, 4], aiming towards a common goal. Cf. e.g. “the humanitarian system”, “the supply system”, etcetera.
[3] And yes, a computer program is no more than a fancy procedure, a.k.a. an algorithm.
[4] Don’t you hate footnotes in footnotes?


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