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This case was prepared by Professor Jayashankar M. Swaminathan as a basis for class discussion rather than to illustrate good or bad administrative practices. Doctoral student Vidya Mani helped in preparing the first draft of the case.
UNICEF RUTF Supply Chain (A): Crisis in Horn of Africa
Paul Molinaro looked around the round table in the UNICEF Supply Division conference room at Copenhagen. Peter Hailey, a nutritional coordinator at the Regional Office was on phone with a representative from one of the donors while Emma Maspero, a logistics officer at the Somalia Country Office was lamenting the lack of visibility to Plumpy’Nut orders once they cross into Mogadishu and beyond. As soon as the call was over, Peter began in earnest to continue with his previous point. “We need to get funds in earlier; this should solve most of our problems. ECHO has agreed to meet us next week to discuss funding for the next fiscal year, let us show them why we need to change the way funds are currently distributed.” Emma chimed in at that time, “That sounds like a good plan, we could talk to them about investing in a buffer stock, but we need to first decide where to hold them” pointing to the cost benefit analysis of holding buffer stock at various warehouse locations that Jurgen Hulst had earlier passed out. Noreen Prendivilee from the Somalia Country Office frowned at this. “How does that help anyone? Are we not just tying inventory up at warehouses? How does that help us get deliveries any earlier? We already hold some safety stock at our district warehouses.” Lars Jensen from the Regional Office stated: “What we need is a safe warehouse that is easily accessible. Even while all countries border each other, we cannot do transshipments. Neither can we hold more than 45 days of stock at the Mombasa port. On the other hand we have some spare space at the warehouse in Jebel Ali that could be made use of.” Paul listened carefully to all the thoughts and said, “We have all the data. What do we do next?”
BACKGROUND
A month before the round table meeting, on a late Thursday evening in September 2008, Jurgen Hulst was having an urgent meeting with his manager Paul Molinaro1 on the recent delays and alarming increase in costs of delivery of nutritional emergency products to key affected regions in the Horn of Africa-‐ Ethiopia, Kenya and Somalia. In a typical case, an order placed in early May 2008 for 1000 cartons of RUTF (Ready to Use Therapeutic Food) or Plumpy’Nut was still shown to be enroute in the system. Paul could not quite understand how a product, with an estimated delivery time of 2 months, could still not be delivered 4 months later. Earlier in the week, Paul had finally agreed to airlift supplies from France to Ethiopia to cover for this shortage, and this was just one of the many unanticipated air shipments that were being made. Recent field reports indicated a severe shortage of supply in district offices and feeding centers. As a result, some of the NGOs on the ground were considering direct procurement from the producer to get faster deliveries, a far more costly proposition. The popularity, efficacy and ease of use had lead to an increased demand for RUTF over time. From less than 250MT world wide demand in 2003
1 Organization Structure is depicted in Exhibit 7.
July 2009, Revised: December 2014
the annual demand was over 10000MT in 20082. The UNICEF country offices in the Horn of Africa were no exceptions. Based on a recent meeting with Nutriset (producer of RUTF), Jurgen knew that their production facility was operating close to capacity which left him wondering how they would satisfy this spike in demand without incurring any additional delays. UNICEF’s current operations in the Horn of Africa involved delivery of nutritional products to children in need that would otherwise starve to death. Constant delays and rapidly increasing costs of delivery not only caused UNICEF to miss its targeted coverage but also led to frequent budget overruns. Paul had called Jurgen to understand the causes for these delays before the next regional meeting with nutrition and logistics officers from Kenya and Somalia. Jurgen was aware that the long and variable lead times were leading to poor performance of the supply chain, and this occurred frequently even after months of meticulous planning. He wondered what would cause such high variability and how UNICEF could address it to make the supply chain more efficient and responsive. An end to end supply chain analysis was essential to obtain constructive solutions to the problem at hand.
HORN OF AFRICA
The Horn of Africa had been the focus of humanitarian efforts in recent years due to the continuous escalation in natural and man-‐made disasters, leaving many children in a state of severe acute malnourishment (SAM). Regional drought, flooding and wide spread civil strife had led to reduced crop yields as well as a rise in overall food and fuel costs. This situation was most severe in countries of Kenya, Somalia and Ethiopia. For example, in the past year alone prices of basic food commodities in Kenya had increased by almost 40%. In Somalia, where an estimated 52% of the population was under the age of 18, inter and intra clan conflicts as well as lack of adequate government infrastructure made it highly vulnerable to natural and man-‐made emergencies. Ethiopia had seen similar political tensions and internal conflicts that had led to large scale violence and left many people stranded with no amenities. Rampant poverty and poor sanitation added to widespread malnutrition amongst children in the country.
UNICEF
In emergency situations, humanitarian organizations like the United Nations Children’s Fund (UNICEF) helped in disbursing necessary food and medical supplies to children in need. Created in 1946 right after World War II, UNICEF is mandated by the United Nations General Assembly to advocate for the protection of children's rights, to help meet their basic needs and to expand their opportunities to reach their full potential3. It is guided by the Convention on the Rights of the Child and strives to establish children's rights as enduring ethical principles and international standards of behavior towards children. UNICEF’s Medium Term Strategic Plan for 2006-‐2009 identifies Young Child Survival and Development as the first right of the child.
The Supply Warehouse of UNICEF came into being in 1953 in the basement of the United Nations building in New York. From the earliest days of UNICEF, the supply operation has been a major instrument for the implementation of various UNICEF-‐assisted programs. Nine years later,
2 Jarrett S. (2008)-‐ UNICEF RUTF Demand-‐ presentation slide. 3 http://www.unicef.org
in 1962, the storage, packing and assembly functions were moved to Copenhagen. When operations began in Copenhagen, the value of the annual throughput of the packing and assembly operations was between US $2 and 3 million centered on the functions of warehousing, packing and shipping. As of 2005, the total global procurement was over US $1 billion. The UNICEF Supply Division4 was responsible for all supply functions related to various internal programs as well as other externally funded programs. It had staff working in 158 Country and Regional Offices worldwide as well as at the Supply HQ in Copenhagen, Denmark. It also oversaw a supply section in New York and warehouse hubs in Dubai, Panama and Shanghai. Upstream activities (assessment, procurement, and shipping) as well as downstream activities (customs, storage, distribution) for all emergency relief products were managed by UNICEF Supply Division, along with country and regional offices. In most countries, UNICEF worked in partnership with local communities, numerous national and international NGOs, multi-‐lateral organizations, funding agencies, local administrations, civil society and the private sector, as well as in close coordination with the UN Country and Regional Teams.
PLUMPY’NUT: A FORM OF RUTF (Ready to Use Therapeutic Food)
As part of a new strategy to combat the rapidly deteriorating nutritional health status of children, UNICEF along with other humanitarian organizations facilitated the provision of Ready to Use Therapeutic Food (RUTF) sachets to severely malnourished children. RUTF are portable, shelf-‐stable, single-‐serving foods that were used in a prescribed manner to treat children with Severe Acute Malnutrition (SAM). In the current scenario, where RUTF is used for treatment of severely malnourished children, primary screening for nutritional status was conducted by community members using a simple armband that associated arm circumference with level of malnutrition. Only those children classified with SAM were then referred to a health facility. Children with complicated cases of SAM were treated in a hospital in-‐patient setting, while those with uncomplicated SAM were given home-‐based care with periodic check-‐ups at the health facility. The shift from treating severely malnourished children in hospitals to treating them in community-‐based programs was a strategic change in nutrition policy, but also presented challenges in the supply of ready-‐to-‐use therapeutic foods (RUTF) due to increasing demand in strife torn countries (Exhibit 1). A recent article in Science Magazine (October 2008) highlighted the considerable debate amongst various nutritional professionals if RUTF should also be used in prevention of SAM along with its current use in treatment of SAM. Some non-‐governmental organizations like Medecins Sans Frontieres (MSF) vociferously advocated distribution of RUTF to all children in a disaster affected area, thereby arresting any incidence of severe acute malnutrition. On the other hand many skeptics including the World Health Organization (WHO) believed that other products were needed for prevention. One of the factors fueling this debate was the high cost of delivery and limited worldwide capacity for production of RUTF.
The type of RUTF purchased most often by UNICEF was called Plumpy’Nut, an oil-‐based paste of peanuts, sugar and milk powder. Plumpy’Nut was packaged in foil sachets weighing 92 grams, each containing 500 kilocalories, which are then packed into cartons weighing 13.8 kilograms each (see Exhibit 15). They came prepared and correctly dosed, were not water-‐based and hence did not as easily host contaminants. Depending on a child’s weight, a protocol detailed how many packets of Plumpy’Nut will be needed per day to treat a malnourished child. A
4 http://www.unicef.org/supply
caretaker was typically given one or two week’s worth of Plumpy’Nut to take home, and was asked to bring all empty packets back during the next follow-‐up appointment. This product had a shelf life of 2 years and therefore could be stored in the field for an extended period of time. In case of delivery, UNICEF worked closely with the Ministry of Health (MOH) in Kenya, as well as Non-‐governmental Organizations like European Commission’s Humanitarian Aid Office (ECHO), U.S. Agency for International Development (USAID), UK Department of International Development (DFID), World Food Programme (WFP), Clinton Foundation, Medecins Sans Frontieres (MSF) and Action Against Hunger (ACF).
NUTRISET: A MAJOR SUPPLIER
Nutriset first produced a peanut-‐based RUTF named Plumpy’Nut® in 1996 and filed its first patent in France in 1997. By 2010, Nutriset and the Institut De Recherche Pour Le Developpement (IRD), a French public research institute, patented Plumpy’Nut® in over 30 countries.5 The patent in the United States, for example, specified a wide range of product formulations, including RUTF produced from various non-‐peanut sources, as well as the process of preparing the product and the method of using the product for re-‐nourishment.6 In 2005, a famine in Niger put an estimated 2.5 million lives at risk7. It was the first widespread demand for RUTF, and it pushed Nutriset to consider other options for production. Nutriset responded by forming a network of local producers.8 The franchise model was soon called the PlumpyField® network. Nutriset provided know how as well as key ingredients to the franchisee while guarantee the quality and efficacy of the product to the customer. In 2008, Nutriset had an annual RUTF capacity of 16,600 MT in France, compared to a total RUTF demand of 13,560 MT.
SUPPLY CHAIN ORDERS
UNICEF and its partners maintained estimates of Plumpy’Nut need in their communities, based on demographic information combined with partners’ knowledge of their projects. The order planning process started when a Ministry of Health or an NGO partner identified a specific need for Plumpy’Nut among severely malnourished children in its area. The partner then assessesed how much Plumpy’Nut was required for treating these children, and relayed this information either directly to the UNICEF country office (as in Somalia) or to the Ministry of Health and then UNICEF (as in Kenya).
5 Kraemer, T., 2010. Patenting Ready-‐to-‐use-‐therapeutic food: the plumpy’nut controversy. Student Prize Papers. Paper 76. Available at: http://digitalcommons.law.yale.edu/ylsspps_papers/76/ [Accessed 20 February 2013]. 6 United States Patent: 6346284. 2013. Available at: http://patft.uspto.gov/netacgi/nph-‐Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-‐bool.html&r=2&f=G&l=50&co1=AND&d=PTXT&s1=nutriset&OS=nutriset&RS=nutriset. [Accessed 20 February 2013]. 7 Niger famine crisis 'at 11th hour' | World news | guardian.co.uk . 2013. Niger famine crisis 'at 11th hour' | World news | guardian.co.uk. Available at: http://www.guardian.co.uk/society/2005/jul/20/internationalaidanddevelopment.famine. [Accessed 21 February 2013]. 8 Nutriset. 2013. Nutriset. Available at: http://www.nutriset.fr/fr/espacepresse/nutriset-‐reseau-‐plumpyfield/united-‐nations-‐standing-‐committee-‐on-‐nutrition-‐new-‐yorknutrition-‐and-‐business-‐how-‐to-‐engage.html. [Accessed 20 February 2013].
Typically, there were two types of orders for Plumpy’Nut: Non-‐Emergency and Emergency. Non-‐emergency orders were planned in advance. These comprised nearly half of all orders placed by Kenya and Somalia Country Offices. Often these orders were entered into UNICEF’s order tracking system months in anticipation of actual need. Non-‐emergency orders were typically shipped via sea freight. Emergency orders were expedited orders placed due to an unexpected increase in the need for Plumpy’Nut. Many emergency orders were shipped via air freight, to any location in the world within a few days. Most Plumpy’Nut (RUTF) was made in Malaunay (France) by Nutriset. It had several franchises around the world that also produced RUTF products, but on a small scale. Current agreements with Nutriset entailed a commitment to deliver Plumpy’Nut within one week from receipt of purchase order and that there should be a minimum of 18 months shelf life remaining when the product was delivered to the global logistics provider. Once Plumpy’Nut was manufactured and packaged, Kuehne+Nagel (K+N), a global logistics supplier, delivered the product to the port of export for sea freight at Le Havre (France), and to Paris for air freight to the destination country.
PRODUCT, INFORMATION AND FUND FLOW
The product flow for Plumpy’Nut started when it was shipped globally from Nutriset by Kuehne + Nagel, Scan Logistics or DHL, then transported from the port of arrival by local logistics suppliers and distributed by implementing partners in country (Exhibit 2)9. Kenyan and Somali orders of Plumpy’Nut had largely been shipped via sea so they travelled via a transshipment port to Mombasa from France. Upon arrival at Mombasa, the containers bound for Kenya cleared customs and are then were transported by truck to the UNICEF warehouse in Nairobi. From here, the product was released for distribution to the districts, where the District Nutrition Officer and/or NGO partners stored the product until it could be used to treat children with severe acute malnutrition. The Plumpy’Nut that was provided to partners in Somalia was held at a bonded in-‐transit warehouse in Mombasa until a local freight forwarder could move it to Somalia. This usually happened by sea, from Mombasa to Mogadishu. In some circumstances, the product was moved by land from the Mombasa warehouse to parts of Somalia. In most situations in-‐country transportation was hampered by poor road conditions and security concerns. The product was then held at UNICEF warehouses until partner NGOs requested deliveries of Plumpy’Nut for children in their catchment area. The product flow for Ethiopia was similar to that of Kenya with K+N transporting the products from France to Addis Ababa and from there on to the district warehouses. For UNICEF, the funding process began with the Country and Regional Offices. Donors examined proposals, assessed need on the ground, and decided which proposals as well as amount they wanted to fund. Once UNICEF Country Offices had the funds lined up, they could submit purchase requisitions for Plumpy’Nut. When a purchase requisition was submitted, funds were transferred to Supply Division to pay for the product and global transportation costs. When the producer received an order, they generated an invoice which was submitted to Supply Division. Freight forwarders also submitted invoices directly to Supply Division once they had picked up an order for transport. Supply Division paid invoices received from producers and freight forwarders using Country Office funds. Supply Division was responsible for payment of global
9 Swaminathan J.M. et. al., 2009. The Nutrition Articulation Project: A supply chain analysis of Ready-‐to-‐Use Therapeutic Foods to the Horn of Africa, UNICEF Technical Report.
transportation—from point of production to the point of entry (port if by sea or airport if by air). In most cases, in-‐country transportation was paid for by Ministries of Health and implementing partners, and at times supplemented by funds from UNICEF (Exhibit 3)10.
Forward information flows, such as projections of need, order processes, and financial information, and backward information flows, including stock monitoring reports, quality information, and performance data occurred as needed (Exhibit 4)11. The information flow was highly fragmented. Kuehne+Nagel, responsible for the shipments from Le-‐Havre to Mombasa, had an online system for tracking shipment data while its office in Nairobi sent weekly reports that were made accessible to the Country Office. Each stakeholder in the supply chain had its own information system in place, for e.g. UNICEF’s Supply Division used SAP, Country Offices used ProMS and warehouses used UniTrack, while Kuehne+Nagel used CEIL and Scan Logistics used TWM/LWM.
COMPLEXITIES IN THE SUPPLY CHAIN
Variable lead time Variable lead time made it extremely hard to predict arrival dates for orders. Typically, many orders received an amendment for an adjusted Target Arrival Date (TAD), an extension due to some foreseeable interruption in the supply chain (Exhibit 5)12. Transportation of Plumpy’Nut from Le Havre/Paris to Mombasa was one of the longest and most variable steps in the supply chain, regardless of whether the shipment was classified as an emergency or non-‐emergency order. For example while pure sailing time from Le Havre to Mombasa, without interruptions was 25 to 27 days, non-‐emergency orders sent by sea to Mombasa since 2005 had experienced on average transportation lead times of 34 days (with a range of 27 to 46 days -‐ Exhibit 8). Congestion at the port of arrival in Mombasa and issues with regulatory paperwork were cited as frequent problems when bringing goods through the port of Mombasa. For example even though UNICEF Country Offices worked closely with MOH -‐ Kenya to obtain speedy clearances, this process could take up to 16 days. Additionally, there was usually a 30% backlog of orders at the customs office in Nairobi. In contrast, the average delay for customs clearance at Dubai, where UNICEF housed other emergency supplies like vaccines etc., was only a few days. Orders bound for Somalia frequently faced a number of potential disruptions during transport from Mombasa to Mogadishu, and then to UNICEF warehouses and beyond. Other disruptions included the recent port strike at Le Havre and the post election violence in Kenya (Exhibit 6). As a result of variable lead times the cost of transporting Plumpy’Nut from France to eastern Africa had significantly increased. For instance, between January of 2007 and October of 2008 air freight to Kenya or Somalia cost, on average, $2.40 per kilogram; by contrast, sea freight cost an average of only $0.17 per kilogram. From May to September 2008 air freight was used for 33% of emergency orders and 21% of non-‐emergency orders to Kenya and Somalia. Air shipments became necessary because complex geo-‐political issues prevented transshipment between Ethiopia, Kenya and Somalia. When the Mogadishu warehouse at Somalia was cut off, corresponding quantities had to be airlifted from France to prevent any shortages.
10 Swaminathan J.M. et. al., 2009. The Nutrition Articulation Project: A supply chain analysis of Ready-‐to-‐Use Therapeutic Foods to the Horn of Africa, UNICEF Technical Report. 11 Swaminathan J.M. et. al., 2009. The Nutrition Articulation Project: A supply chain analysis of Ready-‐to-‐Use Therapeutic Foods to the Horn of Africa, UNICEF Technical Report. 12 Swaminathan J.M. et. al., 2009. The Nutrition Articulation Project: A supply chain analysis of Ready-‐to-‐Use Therapeutic Foods to the Horn of Africa, UNICEF Technical Report.
Sole dominant supplier By the end of 2008 demand for Plumpy’Nut matched Nutriset’s capacity to produce (Exhibit 9). Over the next two years, worldwide demand for Plumpy’Nut was expected to grow at a rate of 30% per annum (UNICEF’s demand alone was expected to increase by 35% a year). In order to meet this surge in demand, Nutriset intended to double its production capacity for Plumpy’Nut sachets to 30 MT/year in 2009, 50.3 MT in 2010 and 96.7 MT in 2011. There was also ongoing efforts to increase the worldwide production capacity for Plumpy’Nut through Plumy Field. Nutriset had provided license agreements to franchises in several countries, and UNICEF was actively seeking new sources of Plumpy’Nut. However, these new manufacturers faced challenges as they came on line, including a reliance on international sourcing of inputs (which may become more costly in future), the potential role of patent protection on the Plumpy’Nut product and production process, and logistical difficulties in scaling up production including raising capital funds, procuring equipment and securing contracts. Uneven funding Stakeholders in the Plumpy’Nut supply chain were not only affected by the unpredictability in the magnitude of funding, but also by the timing of receipt of funding throughout a 12-‐month cycle. Nutrition Officers often cited unreliable funding as a major roadblock to efficient procurement planning. The staggered distribution of funds lead to uneven ordering and made it difficult for Nutriset to plan its production ahead of time. Non emergency orders were generally planned ahead of time, but were sent for production only when production could be scheduled at Nutriset leading to uneven capacity utilization and large variations in production lead time (see exhibits 10 and 11)13. Complicating the funding picture, nutrition interventions were customarily viewed as non-‐emergency programs. A country was considered to have met official emergency standards when greater than 15 percent of the population suffered from Global Acute Malnutrition (GAM). Under less dire circumstances or on the road to recovery from famine, Country Office personnel reported that it was more challenging to raise funds for their ongoing “low-‐grade emergencies.” Since most donor funding was geared towards relief of both immediate and long-‐term emergencies (as opposed to prevention), Plumpy’Nut was usually only purchased with funds allocated for emergency interventions. Different methods for forecast generation and seasonality effects Many alternative ways were utilized to collect data for forecasting but these were inconsistent in methods and quality (Exhibit 12). Different methods of nutrition forecasts were being used across stakeholders to assess how many children were severely malnourished and required Plumpy’Nut. As a result, each of these estimates yielded entirely different estimates of demand, ordering projections, budgeting and program coverage. Depending on the location that UNICEF partners were implementing their programs, national-‐level data could at times predict twice or less than half, as many children who truly required Plumpy’Nut in the district. In addition to different methods of forecasts, seasonality in malnutrition was often not captured. As guidelines on forecasting methods changed so did the demand projections. Thus, demand forecast for Plumpy’Nut varied a lot depending on the implementing partner that assessed need for Plumpy’Nut and the forecasting method used. Inadequate Information amongst Supply Chain Partners
13 Swaminathan J.M. et. al., 2009. The Nutrition Articulation Project: A supply chain analysis of Ready-‐to-‐Use Therapeutic Foods to the Horn of Africa, UNICEF Technical Report.
Additional challenges to information flow involved the collection and transfer of information across the supply chain. First, current systems that collected information were sometimes stand-‐alone systems so data was only visible to a subset of stakeholders. Second, backward information flow, including reports on handover and feedback on quality, was either unavailable or nontransparent. The Kenya and Somalia Country Offices did not regularly receive information on the status of their orders (e.g. if the order is under production, delivered for shipment or delayed). There was little data visibility into inventory below the country-‐level warehouse, and it was reported that field officers often did not communicate stock and consumption data to Country Office program officers. A notable exception to this was the new RapidSMS program14, implemented by UNICEF in Ethiopia, Uganda and Malawi to track nutrition program admissions and Plumpy’Nut stock levels. The RapidSMS system allowed each feeding site to instantly transmit information to UNICEF on how much Plumpy’Nut they had received, how much remained in stock, and how much had been dispensed. Though only in pilot stage, the project had shown promising results as an inexpensive way to rapidly collect important data across a wide geographic area. FUTURE SUPPLY CHAIN Today all officers from nutrition, logistics and supply division had gathered to discuss how to shape the future UNICEF Plumpy Nut supply chain. They each had a copy of the data on delivery lead times (Exhibit 8 and 11) , cost benefit analysis on holding buffer stock at various locations (Exhibits 13) as well as the demand and capacity for Plumpy’Nut over the past three years (Exhibit 9 and 11). They were trying the evaluate the proposal to set up a warehouse to store Plumpy’Nut closer to Horn of Africa. The proposed locations were Mombasa (Kenya) and Jebel Ali (Dubai). While Mombasa presented proximity to the region, the port in Jebel Ali was better managed and flow thru would be easier. Shipping to other countries in eastern Africa would also be easier from Jebel Ali since it was viewed as a neutral venue. There were two main questions on the agenda for everyone to answer.
1. What changes were needed to create an efficient and responsive Plumpy’Nut Supply Chain for the future?
2. Whether or not to hold any buffer inventory and if yes, where to hold the buffer inventory (Mombasa or Jebel Ali)? How to fund it?
14 http://www.rapidsms.org
Exhibit 1: International order volumes of Plumpy’Nut® by UNICEF Country Offices, 2004-‐2008
Countries experiencing nutrition emergencies, including Ethiopia, Sudan, Niger, and Malawi, are
Exhibits15:
15 Swaminathan J.M. et. al., 2009. The Nutrition Articulation Project: A supply chain analysis of Ready-‐to-‐Use Therapeutic Foods to the Horn of Africa, UNICEF Technical Report. (all data and figures used)
Exhibit 2: Detailed product flow for Plumpy’Nut
Exhibit 4: Detailed information flows in the Plumpy’Nut supply chain
Exhibit 3: Detailed funding flows in the Plumpy’Nut supply chain
Exhibit 5: Reasons for amendment to orders for Plumpy’Nut from all country offices, 2005-‐2008
Exhibit 6: Lead times for Plumpy’Nut shipped before, during and after Le Havre strike and Kenya post-‐election violence
Exhibit 7: UNICEF Organizational Structure:
UNICEF
Supply Division
Paul Molinaro
Jurgen Hulst
Country Office
Nutrixonal Officers
Kenya -‐Noreen
Prendiville
Logisxc Officers
Somalia -‐Emma
Maspero
Regional Office (ESARO)
Regional Head of Supply
Nutrixon Coordinator
Peter Hailey
Regional Logisitcs Officer
Lars Jensen
Exhibit 8: Average lead times for order delivery to Ethiopia, Kenya and Somalia (2007 – 2008)
Lead time for Ethiopia (days) Non-‐ Emergency Orders Average Min Max Emergency Orders Average Min Max
Supply Division 22 2 35 Supply Division 5 2 10
Production Lead Time 33 0 75 Production Lead Time 38 7 79 Nutriset Port Preparation 5 0 55 Nutriset Port Preparation 10 0 41 Paris to Addis Ababa 5 2 42 Paris to Addis Ababa 2 0 5 Total Time to deliver 44 Total Time to deliver 50
Lead time for Kenya (days) Non – Emergency Orders Average Min Max Emergency Orders Average Min Max
Supply Division 11 2 30 Supply Division 5 2 10 Production Lead Time 18 1 38 Production Lead Time 10 4 25
Nutriset Port Preparation 30 28 32 Nutriset Port Preparation 2 0 4 K+N Order Preparation 10 8 11 K+N Order Preparation 10 5 15 Le Havre to Mombasa 35 28 45 Le Havre to Mombasa 30 25 45
Customs + Transport to Warehouse 5 0 5 Total time to deliver 50
Warehouse to End Location 8 1 5
Total time to deliver 75
Lead time for Somalia (days) Non-‐ Emergency Orders Average Min Max Emergency Orders Average Min Max
Supply Division 15 5 75 Supply Division 5 2 17 Production Lead Time 35 7 52 Production Lead Time 10 5 22
Nutriset Port Preparation 5 0 10 Nutriset Port Preparation 2 1 3 K+N Order Preparation 15 7 19 K+N Order Preparation 15 10 18 Le Havre to Mombasa 35 25 40 Le Havre to Mombasa 25 22 30
Transshipment in Mombasa 10 7 11 Total time to deliver 50
Mombasa to Warehouse 45 25 90
Total time to deliver 85
Exhibit 9: Yearly demand (MT) for Plumpy’Nut
Demand in MT (yr) 2008 2009 (Projected) 2010 (Projected) Total demand for Plumpy’Nut 13560 18000 23400
Demand from UNICEF 9529.215 13000 19800 Nutriset Capacity 16600 36000 36000
Exhibit 10: Nutriset Capacity utilization by UNICEF in 2007-‐2008
Month -‐ 2007 % of capacity utilized Month -‐ 2008 % of capacity utilized Jul-‐07 8.88% Jan-‐08 6.22% Aug-‐07 32.13% Feb-‐08 8.33% Sep-‐07 37.84% Mar-‐08 42.60% Oct-‐07 61.61% Apr-‐08 39.89% Nov-‐07 40.18% May-‐08 61.02% Dec-‐07 20.24% Jun-‐08 92.55%
Jul-‐08 74.19% Aug-‐08 60.09% Sep-‐08 106.61%
Exhibit 11: Production Lead time for Emergency and Non-‐emergency orders
Month Global Production Lead Time Order Volume (MT)
Average Min Max Std Dev Jan-‐07 28.33333 6 71 36.96395 12.3372 Feb-‐07 22.14286 5 63 20.13644 124.6278 Mar-‐07 3.8 2 6 1.32916 157.7064 Apr-‐07 22.5 2 142 35.86655 214.5072 May-‐07 21.33333 5 95 22.8494 713.598 Jun-‐07 33.42105 8 84 22.48616 185.9688 Jul-‐07 28.45455 10 108 28.41255 144.5274 Aug-‐07 14.125 2 63 14.31025 526.1526 Sep-‐07 26.36364 4 208 48.21731 355.2534 Oct-‐07 21.05 3 87 22.11191 530.1132 Nov-‐07 70.69231 6 293 100.4394 584.8992 Jan-‐08 44.6 6 116 45.15307 159.5832 Feb-‐08 27 4 63 23.13388 318.3108 Mar-‐08 31.10526 2 201 44.92821 658.1358 Apr-‐08 39.21429 3 129 41.55104 398.2542 May-‐08 25.95652 2 90 26.28598 5136.291 Jun-‐08 28.0625 1 71 19.0533 3282.123 Jul-‐08 49.075 2 111 28.53193 7459.976 Aug-‐08 31.48148 5 74 18.40596 2732.483 Sep-‐08 29.75 3 52 16.36282 7571.687
Exhibit 12: Forecasting methods use by different groups Group Forecasting Method Implementing NGO Number of admissions, amount of Plumpy’Nut
consumed; nutrition status Ministry of Health Number of admissions, amount of Plumpy’Nut
consumed UNICEF Country Office and Regional Office Malnutrition status in country/districts UNICEF Supply Division Historic trends of Plumpy’Nut consumption Plumpy’Nut producers Trends in ordering, qualitative projections Multilateral groups (e.g., FEWSNET, FSAU) Food security/nutrition status in districts Donors Malnutrition statistics; historic trends of
Plumpy’Nut consumption; weather, other food security trends
Exhibit 13: Average lead time for Plumpy’Nut delivery and Investment Cost for maintaining buffer stock
Buffer Stock Level (MT)
Average lead time for Plumpy’Nut delivery
(weeks)
Investment (Cost)
Mombasa Dubai
0 6 6 0
100 5.75 5.25 600,000 200 4.25 3.9 1.1 M 300 3.1 2.8 1.6M 400 2.2 2.2 2.1 M 500 1.8 2 2.6 M 600 1.78 2 3.1 M 700 1.77 1.9 3.6 M 800 1.77 1.9 4.1 M 900 1.77 1.9 4.6 M 1000 1.77 1.9 5.1 M
Exhibit 14 a: Supply Chain Times for PO 4401
Supply Chain Process Supply Chain Times Order Time 0
Purchase Order-‐Material Ready 6 Le Havre 13
Le Havre to Mombasa 52 Customs + Transport to Warehouse 11 Warehouse to End Use Location 100
Exhibit 14 b: Stock levels of PO 4401 at the Mombasa Warehouse
Date of Stock -‐ Keeping Remaining Quantity at Warehouse
05/09/08 998
5/15/08 858 5/19/08 752 7/31/08 531 8/1/08 220 8/5/08 82
Exhibit 15: Sachet of Plumpy’Nut
Exhibit 16: Map of Europe, Africa and Mid East
Dubai
Somalia
Kenya
Ethiopia
France
Questions to Consider:
1. What are the key differences between a commercial supply chain and a humanitarian supply chain?
2. Consider a situation where Paul commits to the establishment of a buffer inventory stock a. What do you think are the advantages of implementing a buffer stock policy? b. Which location would you choose for location of buffer stock and why? c. What level of buffer stock would be ideal and how much investment would be needed to
do so? d. Are there any alternate arrangements that you would propose for location and
distribution of buffer stock? 3. What other suggestions would you recommend to UNICEF that would help improve the
performance of Plumpy’Nut Supply Chain?
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