Case study: Getting food to disaster victims

The story.

Natural and man-made disasters have led to nutritional emergencies in many countries, and especially in the Horn of Africa. To deal with these challenges, Unicef has adopted the use of ready to use therapeutic food (RUTF). These are portable, long-lasting, single-serving foods that are rich in proteins, carbohydrates, vitamins and minerals, and are used in a prescribed manner to treat children with severe acute malnutrition.

The type of RUTF that has been purchased most often by Unicef is Plumpy’Nut, an oil-based paste of peanuts, sugar, milk powder, vitamins and minerals. It has a shelf life of two years and is packaged in foil sachets weighing 92 grammes, each containing 500 kilocalories.

Plumpy’Nut is primarily manufactured by Nutriset, a company based in Malaunay, France. Once it has been manufactured and packaged, Kuehne and Nagel, the logistics company, delivers the product to Le Havre for export by sea or to Paris for export by air.

The challenge.

In spite of meticulous planning, Unicef had observed a rapid rise in supply chain costs, delivery lead time and emergency orders.

Also, humanitarian supply chains present unique difficulties. First, underlying demand can vary widely because of difficult-to-predict factors such as drought, political instability or violence.

Second, once the need arises, Unicef must raise money from external funding organisations to purchase humanitarian products.

Finally, the combination of political instability and the underdeveloped infrastructure in many of the regions with the greatest need makes the physical distribution of products in these areas especially difficult.

How was the supply chain managed and how did it work?

The Unicef supply division is the department tasked with overseeing Unicef’s global procurement and logistics operations. It has staff working in 158 country and regional offices, as well as at the supply headquarters in Copenhagen. The division also oversees a supply section in New York and warehouse hubs in Dubai, Panama and Shanghai.

Unicef and its partners make estimates of Plumpy’Nut need in their communities. The order planning process starts when a ministry of health or a non-governmental organisation partner identifies a specific need for Plumpy’Nut.

The partner then assesses how much Plumpy’Nut is required and relays this information either directly to the Unicef country office (as in Somalia) or to the ministry of health and then Unicef (as in Kenya).

Plumpy’Nut presents a unique set of difficulties.

First, variable lead times make it hard to predict arrival dates for orders. The sea-freight journey from Le Havre, for example, to Mombasa, the Kenyan port where Plumpy’Nut is received, ranged from 27 to 46 days.

Second, Plumpy’Nut was produced by a single, dominant world supplier. Since an increase in demand was driven by emergencies, supply was severely constrained by the company’s ability to produce more quickly enough.

Third, there were a range of different methods for forecasting used by different partners, and seasonality is not factored into the process. Given that Unicef relied so heavily on partners, particularly at a local level, feedback varied depending on the implementing partner that assessed the need.

Fourth, information was not shared effectively between partners. Existing systems were often standalone structures, which meant the data collected were only available to one set of actors. Reports on handover and feedback on quality was either unavailable or not transparent.

What did Unicef do?

It diversified the supply base beyond Nutriset and has set up several new factories in Africa under licence from Nutriset. Unicef is also considering establishing a network of warehouses closer to the regions where Plumpy’Nut is needed.

Unicef has replicated the changes made to its Plumpy’Nut supply chain in its response to other crises, such in Haiti and Pakistan.

The lessons.

Unless you keep a close eye on the supply chain and make sure all partners are using the same systems and data collection tools, it can easily become bogged down. It is also important to diversify the supply base for critical products. And whether you are fulfilling the demands of consumers or hungry children, that is costly.

The writer is the Glaxo Distinguished Professor of Global Business at the University of North Carolina’s Kenan-Flagler Business School

- Financial Times, 13 Oct 2010