After conducting a thorough supply chain analysis, the project team recommended the following interventions to help address several of the problems identified during the project.
1. Pre-position buffer stock to decrease lead times and improve delivery of RUTF
An investment in the strategic placement of a buffer stock would ease stresses on the supply chain and allow for a more timely treatment of children and effective use of UNICEF’s limited resources. Holding buffer stock is a recommended practice when demand forecasts are unreliable, when there may be unexpected changes in demand, when historical data do not accurately reflect future demand, or when production and transportation lead times are long.
- Position a 300 MT buffer inventory in Jebel Ali (subject to final validation of location), to be used for satisfying demand in the Horn of Africa.
- Increase the size of the buffer inventory if it will be used for additional countries.
- Investigate alternative centralized buffer stock locations that could reduce transportation costs/times without sacrificing flexibility.
Video: the impact of using bufferstock
2. Diversify the supplier base to better serve global needs
While buffer stock would help mitigate uncertainty in demand in terms of timing and volume, it does not completely correct for uncertainties in the supply process. Single sourcing of RUTF poses significant supply chain risks related to disruptions. Any problem at the manufacturer site can have cascading downstream effects on the supply chain. Expanding the supplier base can help mitigate this risk, but it introduces new challenges into the supply chain. Although multi-sourcing can stabilize the supply chain by increasing product availability, it also risks a tradeoff between ease of supply coordination and level of competition. Working with a single producer simplifies coordination, but it does not encourage the competition that can lead to price reductions and innovation. Managing relationships with and coordinating multiple suppliers can become complex and may increase costs. In general, multi-sourcing is recommended when product demand is high enough to justify these increased transaction costs and the reduced economies of scale (such as bulk order discounts) from sole sourcing.
- Seek to qualify Kenya production facility to satisfy demand in Kenya (and possibly nearby countries).
- Seek to qualify additional non-local production facility to enhance flexibility of worldwide RUTF supply chain.
Video: the impact of using local production
3. Greater collaboration with funding partners and across agencies operating in the Horn of Africa
Orders for RUTF in eastern Africa fluctuate throughout the year: demand in some months is much greater than demand in other months. So-called lumpy demand can cause delays in production and transportation, ultimately risking stock-outs or shortages at the local level. The availability of funds ultimately determines when demand can be fulfilled, so improving flexibility in funding would permit UNICEF to more rapidly and efficiently get RUTF to malnourished children. There are a variety of funding mechanisms that might be altered to improve the RUTF supply chain.
- Seek advance funding for baseline treatment of severe acute malnutrition and pre-commitment of funds for an escalation in incidence.
- Strive for multi-year funding agreements from donors.
- Promote inter-institutional collaboration to improve response to nutrition emergencies.
Video: the impact of timely funding
4. Improve data quality for assessments of forecasted need for RUTF
Accurate and actionable information underpins any supply chain. Without this, supply chains can experience data distortions such as the “bullwhip effect”: erroneous or insufficient information becomes magnified as it travels upstream in the supply chain, ultimately resulting in production inefficiencies and higher price distortions. The RUTF supply chain would be strengthened with improved data quality. There are two important improvements that could be made to forecasting for RUTF: forecasting forms can be harmonized across COs to help ensure consistency, and the quality of forecasting data itself can be improved. More consistent and accurate forecasting data could help prevent congestion in the supply chain, which in turn can improve production decisions and transportation choices, saving money that might otherwise be wasted on expedited shipping.
- Evaluate effectiveness of new RUTF forecasting tool across country offices.
- Share forecasting tool best practices throughout UNICEF and entire Nutrition Cluster.
Video: forecasting spikes in demand
5. Improve information flow through increased transparency and new information communication mechanisms
The RUTF supply chain is made more complex by the fact that the circles of accountability, responsibility and funding authority by a stakeholder over the operations in the supply chain do not fully coincide. This distribution of control can be thought of as “circles of accountability.” Each member of the supply chain has a certain circle of accountability that encompasses the range of choices and decisions made by that stakeholder. Unfortunately, in the case of RUTF, these circles of accountability do not always correspond well to the information available to that stakeholder. Sometimes this situation is worsened by the failure to deliver or use information where it is needed to make the optimal decision for the overall supply chain.
- Use web accessible systems to share inventory and order status across supply chain.
- Utilize mobile technology (such as RapidSMS system) to provide timely information from the field.
- Automate exception reporting to relevant supply chain participants.
- Shift circles of accountability to align information and control.
Video: impact of different shipping options