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?