Professional Documents
Culture Documents
Therapeutic FOOD
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Group Members
Arsalan Siddique
2013058
Haider Sultan
2013113
Hamza Azhar
2013117
Maiwand Sultan
2013179
2013232
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Acknowledgements
We would like to express our deepest acknowledgement to all those who provided us the
possibility to complete this report. A special gratitude to Sir Syed Abdullah for giving us this
project which allowed us to get more insight on the principles of supply chain and its different
models.
Furthermore we would also like to acknowledge with much appreciation the crucial role of the
staff of UNICEF in Islamabad, who gave the permission to use all required data and helped us in
providing the required information.
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Preface
UNICEF was established on 11 December 1946 by the United Nations to meet the emergency
needs of children in post-war Europe and China. Its full name was the United Nations International
Children's Emergency Fund. In 1950, its mandate was broadened to address the long-term needs
of children and women in developing countries everywhere. UNICEFs slogan 70 years for Every
Child indicates their vision. UNICEF has an extensive global health presence, and a strong
partnership with Governmental and Non-Governmental Organizations. They work in bringing
practical solutions to ensure the survival and health of children and women at risk.
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Table of Contents
Acknowledgements ....................................................................................................................................... 3
Preface .......................................................................................................................................................... 4
Table of Contents .......................................................................................................................................... 5
Introduction ................................................................................................................................................... 6
The Supply Chain Analysis .......................................................................................................................... 7
1. Forecasting ............................................................................................................................................ 7
Global Demand Forecasting.................................................................................................................. 7
2. Selection of Supplier ............................................................................................................................. 8
Long Term Agreement (LTA) with Single Supplier (2004-2008)........................................................ 8
Dual Supply (2008-Present) .................................................................................................................. 8
3. Inventory Management ....................................................................................................................... 10
Independent Demand .......................................................................................................................... 10
Single Product at Single Location ....................................................................................................... 11
4. Logistics .............................................................................................................................................. 12
Long Term Agreement (LTA) with Single Supplier (2004-2008)...................................................... 12
Dual Supply ........................................................................................................................................ 12
Comparison ......................................................................................................................................... 13
Conclusion and Recommendations ............................................................................................................. 14
Appendix ..................................................................................................................................................... 16
1. Process Map ........................................................................................................................................ 16
2. Statistics .............................................................................................................................................. 17
3. List of Acronyms ................................................................................................................................ 20
References ................................................................................................................................................... 15
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Introduction
United Nations International Childrens Fund (UNICEF) works for a world in which every child
has a fair chance in life. It works for child survival including from basic educational development
to water, sanitation and hygiene, and also has a significant role in the procurement of Ready-toUse Therapeutic Food (RUTF) for the treatment of severe acute malnutrition in children of thirdworld countries.
Ready-to-Use Therapeutic Food products were introduced to eliminate child mortality. The
important thing to know about the RUTF supply chain is that, it is not dependent on the customer
desire or cost. Contrary, the need of these products in developing countries is identified by nongovernment organizations (NGOs) such as UNICEF. The customers in this case are children
aged six months to 59 months. The childrens caretakers are usually unaware of the products
existence and they lack financial resources to purchase it. This the reason that the demand of RUTF
products is bumpy with spikes and growing. The most important thing in RUTF supply chain is
responsiveness that is, the proper availability of the RUTF product at the right place at the right
time.
In the following study, UNICEFs ready to use therapeutic food (RUTF) supply chain is the main
part of our discussion/analysis. The objectives of the study include, the documenting of the current
RUTF supply chain, identifying opportunities for supply chain improvement and recommending
key performance indicators to monitor supply chain performance to a better level.
UNICEF is a humanitarian organization, and like every supply chain it also utilizes a set of
fundamental processes to Plan, Procure, Produce and Deliver. So, the analysis of the current RUTF
supply chain mainly focuses on the study of the supply chain management building blocks of
product selection, forecasting, procurement, inventory management and distribution, and on the
design of a supply chain/process map of the RUTF, in the context of the model that we have
selected.
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2. Selection of Supplier
Long Term Agreement (LTA) with Single Supplier
(2004-2008)
This is a general purpose agreement for a reasonably long period during which one party agrees to
supply and the other to purchase annual quantities of products or materials. Long Term Agreement
involves establishing a yearly contract with a single supplier. The selection of supplier is based
on the technical requirements laid by UNICEF. The second thing which is taken into consideration
is the bid. Supplier having the lowest acceptable bid is preferred over the other keeping in mind
both meet the technical requirements. The agency also develops a back-up LTA with the supplier
that makes the second lowest acceptable offer. The back-up supply is taken into consideration
when the sole supplier fails to meet the demand. The first long-term supply arrangement (LTA)
for RUTF was established in 2001 with a sole qualified supplier, Nutriset, which manufactured the
product at its site in France. The supplier had quality and capacity but was located outside the
country where the products were required. Responsiveness and effectiveness of the nutrition
supply chain specifically, the ability of the United Nations Childrens Fund (UNICEF) to
quickly bring and distribute RUTF to where it is most needed is very important. Given the lumpy,
spiky growing demand for the product, it requires an extraordinarily responsive supply base and
supply chain to effectively meet that need. With only a single supplier and that too located outside
the region where the RUTF products are required was a challenging task for UNICEF. As a result,
UNICEF failed to meet the demand in Hunger Emergency take took place in 2004 in the Horn of
Africa.
with all companies that met its technical requirements and allowed for additional suppliers later as
they demonstrated that they could meet the requirements. The suppliers were divided into two
categories; Local Suppliers and Global Suppliers. The agency follows a variation of the dual
supply sourcing strategy. UNICEF uses local suppliers to meet a portion of demand in their own
countries, producing at a steady rate. It also uses global suppliers. Local Suppliers were located
in countries where the RUTF product was in use. Today there are 11 qualified suppliers located in
countries where the product is used (Democratic Republic of the Congo, Ethiopia, Haiti, Kenya,
Madagascar, Malawi, Mozambique, Niger, Sudan, Tanzania, and Zimbabwe). Fostering supply
from suppliers located in countries of use would stimulate growth in local agriculture and food
production and avoid cumbersome customs clearance processes. UNICEF typically sets an order
level and orders regularly, so the local supplier can run at a steady rate and fill its capacity. Local
manufacturers, however, faced multiple challenges, including poor infrastructure, cost and
timeliness of imported inputs, maintaining product quality, availability of working capital and
foreign exchange. While much of the demand is concentrated in Africa, nutritional emergencies
may occur anywhere. To meet the demand in these countries UNICEF had Global Suppliers.
Global suppliers are more responsive, flexible and meet the remainder of the demand needed in
those countries where there are no Local Suppliers. These Global Suppliers also come to play a
major role in respond handling sudden spikes in demand caused by immediate responses to
emergencies. Global suppliers have better access to working capital, and have demonstrated that
they can very quickly adjust quantities of inputs and levels of production. (There are 10 suppliers
outside the countries of use located in Dominican Republic, France, Norway, India and South
Africa.) UNICEF Supply Division worked from 2008 to 2011 to ensure a diverse, sustainable, and
responsive supply base, growing from a single European supplier to a network (in 2011) of 19
suppliers located around the world. The agency accomplished this in the midst of continued rapid
demand growth and while improving supply chain responsiveness and effectiveness.
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3. Inventory Management
Inventory is a stock or store of goods or services, kept for use or sale in the future. However, there
are four types of inventories but for UNICEF (as it is a humanitarian organization), it mainly
involves the finished-goods and goods-in-transit to RUTF warehouses. The main motive for doing
that s entirely the precautionary motive, to meet the uncertain increase in the amount of the childmalnourished areas.
An inventory model is determined by three key variables; demand, cost, and physical aspect of the
system but in the case of RUTF supply chain our main focus is primarily on the demand/need of
the product in the malnourished areas.
Inventory models come in many different shapes but there are two models for such an inventory
management which we can apply on UNICEFs RUTF supply chain. The discussion is below:
Independent Demand
UNICEF is frustrated with the shortage of communication back from the field to country officers
(COs), regional officers (ROs), or supply division (SD) and logistics suppliers. There is little data
visibility into inventory below the country-level warehouse, and it was reported that field officers
often do not communicate stock and consumption data to CO program officers. When an order is
placed by an NGO or a District Nutrition Officer, the UNICEF CO nutrition program office may
not know whether there is any stock remaining at the local warehouse unless it specifically requests
the information. Therefore such a situation causes lack of data visibility and communication which
makes it hard to place accurate orders as the officers do not know the inventory at that time.
To eliminate such an event Independent demand system was encouraged as such systems tend to
be managed through one of two processes: periodic review or perpetual inventory management.
Periodic Review: This process involves regular review of usage and reorder to a carrying point.
Perpetual Inventory: This process revolves around reorders when an item reaches a pre-set
minimum stocking level, or reorder point.
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So a RapidSMS system was implemented which allows each feeding site to instantly transmit
information to UNICEF on quantities of RUTF received, in stock, and dispensed. This approach
is one way to resolve the lack of data transparency between UNICEF offices and partners. It
introduces new information flows into the supply chain, thereby improving projections of need,
increasing quality of data on program coverage and impact, and facilitating the ordering process,
as a result of the exact information of the present inventory in the Local WH.
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4. Logistics
Long Term Agreement (LTA) with Single Supplier
(2004-2008)
As RUTF products are delivered to over 47 developing countries in the world and right quantity
of delivery at the right time is very necessary in case of RUTF products hence the LTA with Single
Supplier Model didnt turn out to be an effective one. Talking about The Hunger Emergency which
took place in 2008 affecting 8.4 million people in the Horn of Africa, which includes Ethiopia,
Kenya, and Somalia, the 11,000 metric tons3 a total of 72,000 cartonsordered by UNICEF,
still largely from Nutriset, was postponed by three months, on average. Furthermore, during the
summer of 2008, UNICEF had to ship two-thirds of ordered product to the Horn of Africa by air,
spending $8.2 million to do so. (Air shipment cost $36.92 per carton vs. $4.58 per carton for sea
shipment.). These results indicate the extra cost which UNICEF had to spend to meet the Hunger
Emergency in 2008. Transportation costs is significantly increased when you are sourcing from a
country far away from where the product is required. There are significant variations between the
weighted average landed price of RUTF per MT shipped by sea from global suppliers to
beneficiary countries and the weighted average price of locally purchased RUTF. (See Exhibit 2.)
While in 2008, locally purchased RUTF was cheaper compared to imported product due to
exceptionally high fuel prices and a strong euro-dollar exchange rate.8 However with increasing
purchase volumes the local price is decreasing slowly. The one more thing to consider here is the
Lead time of the product. RUTF products sourced from outside Africa have a greater lead time.
In the 2008 Hunger Emergency in Africa, only 27 percent of orders for the Horn of Africa arrived
on time, while the remaining 73 percent arrived with an average delay of 37 days.
Dual Supply
The most important thing in case of a RUTF product Supply Chain is to ensure that the product is
available to the children in need at the right time. If the supply chain fails to do so it would lead to
loss of lives and the main purpose of the RUTF product. Cost and lead time is an important factor
in products like these. Therefore, UNICEF changed its approach to ensure an effective, responsive
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and low cost logistic Process. As discussed above in a dual supply approach the suppliers are
divided into local and global suppliers. The advantage of having local suppliers is that the RUTF
products are produced in countries where they are in need. This decreases the transportation cost
and the lead time. Refer to the Appendix UNICEF has 11 Suppliers in the African Countries.
However, there are possibilities that Hunger Emergency could occur in countries outside Africa.
Not to forget that spikes can occur in the supply chain of this humanitarian product. Hence to
overcome these two factors UNICEF has a set of global suppliers. These Global Suppliers come
into action when the local suppliers are unable to match the demand and in case of Emergency
situations outside Africa. Although with Global Suppliers the transportation cost and the lead time
is increased but they are necessary to match the demand of the RUTF products throughout the
word.
Comparison
With a sole global supplier the capacity increases but greatly reduces responsiveness but increases
the lead time and transportation cost. With local suppliers comes responsiveness but they lack
production capacity. By using the dual supply approach we are able to extract the advantages of
both global and local suppliers in our supply chain.
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References
1.
Nutriset.fr. (2016). Nutriset : Bienvenue sur le site Nutriset. [online] 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 6 Dec. 2016].
2.
http://www.businessweek.com/stories/2005-09-13/a-pocket-size-famine-fighter.
[Accessed 6 Dec. 2016].
3.
Komrska,, J., Kopczak, L. and M. Swaminathan, J. (2013). When Supply Chains Save
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Appendix
1. Process Map
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2. Statistics
List of current UNICEFs RUTF current suppliers
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3. List of Acronyms
APICS
ARV
Antiretroviral
BMGF
BU
Business Unit
CCE
CHAI
CMAM
CO
Country Office
CoV
Coefficient of Variation
DP
Divisional Procedure
ECU
EPI
ERP
ESARO
ESL
EVM
FTE
Gavi
Gavi SDF
HIV PoC
HTC
IAEH kit
ITU
LLIN
LTA
Long-term Agreement
MENA
MFSDU
MNC
MoH
Ministry of Health
MRP
NGO
Non-Governmental Organization
OMP
PATH
PC
Procurement Centre
PD
Program Division
PO
Purchase Order
PSC
PS
Procurement Services
RDT
RFP
RO
Regional Office
RUTF
SAM
SIA
SCOR
SD
Supply Division
SKU
SO
Sales Order
TAD
UNDP
UNICEF
VC
Vaccine Centre
WSEC
WB
World Bank
WCARO
WHO
WH
Warehouse Unit
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Ready-to-Use
Therapeutic
FOOD
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