Product Characteristics: RUTF are portable, shelf-stable, single-serving foods that are used in a prescribed manner to treat children with severe acute malnutrition. Each pre-dosed and prepared RUTF product is packaged in a foil sachet weighing 92g; these are then packaged into cartons each weighing 13.8 kg. RUTF has an overall shelf life of 24 months and UNICEF’s agreement with Nutriset mandates that at least 18 months of shelf life must remain at the time of handover to UNICEF.
Stakeholders: RUTF product flow relies on the coordinated efforts of a number of different entities all working closely together. RUTF is manufactured by Nutriset in Malaunay, France, shipped globally by Kuehne + Nagel, Scan Logistics or DHL, transported in-country by local logistics suppliers, and distributed by implementing partners in-country. The interconnectivity between these different entities and UNICEF can be seen in the figure above, which identifies the key stakeholders in the RUTF supply chain and the roles they play in product flow.
Lead Time in Product Flow: The RUTF supply chain experiences significant variability for both emergency and non-emergency orders (see graphs below). Lead times accumulate from one stage to the next: delay and variance experienced early often propagate to the end of the supply chain. RUTF is delivered to remote areas without good transportation and storage conditions so it is reasonable to expect some lead time variation at the end of the supply chain. Roads can be impassible (sometimes with seasonal variation) and warehouses can be rendered inaccessible, as in Mogadishu. It is therefore very important to have short and consistent lead times upstream in the supply chain, to allow for this anticipated variance in the field.
Production process variability may be caused by uneven ordering behaviors: There is considerable variability in the length of time required for production of both non-emergency and emergency RUTF orders. This may be due to worldwide inconsistency in order volumes forcing the production facility to sometimes operate at or near maximum capacity; data indicate an increase in production lead time shortly after spikes in order volumes. Delays in order production can increase overall supply chain costs and lead time. In extreme circumstances this may lead to gaming as partners increase orders to buffer for such delays in the future, which would have a ripple effect as the suddenly increased order volumes further exacerbate the problem.
Variability in global transport is caused by a number of factors: Transportation of RUTF from Le Havre/Paris to Mombasa/Addis Ababa introduces the greatest amount of variability of any step in the supply chain, regardless of whether the shipment is classified as an emergency or non-emergency order. This variability is the result of a multitude of factors, including delays at the ports of departure, transshipment and arrival. Outside circumstances at these ports–such as the recent strike at Le Havre or election violence in Kenya–sometimes lengthen lead times (though not always), but variability exits regardless of exceptional circumstances at ports of export or entry.
Landed Cost in Product Flow: There is a close relationship between landed cost and lead time for RUTF: modes of transportation that move product quickly are often the most costly. The inverse is not always true for RUTF, as orders that are planned in advance and therefore have long lead times are sometimes airlifted for delivery due to sudden changes in funding or overbooked capacity at the producer. Orders shipped by air are very expensive in the RUTF supply chain (see figure below).The cost of transporting RUTF from France to eastern Africa is a significant factor in the supply chain. This is especially important when a significant portion of a country’s orders arrive via air (as in the case of Ethiopia, which received nearly all its orders by airfreight). While the majority of shipments of RUTF to eastern Africa are transported by sea, the fourteen-fold increase in transportation costs for air freight means that even a relatively small number of airlifted orders can have a significant effect on cost.
Future Demand for RUTF is Uncertain: It may be shaped by a variety of factors including buy in from different implementing partners and donor organizations, affordability of RUTF, range of suppliers available to meet demand etc. In the Dynamic Model section, possible future demand scenarios are evaluated. Increase in demand introduces additional stress on the supply chain as it struggles to keep pace with increasing demand. It is important to recognize that future demand can be shaped by not only actual need but also by affordability of the program, range of suppliers to meet the demand and the capabilities of implementing partners to distribute RUTF in the affected areas.
Demand Will Soon Exceed Supply: By the end of 2008 RUTF demand matched Nutriset’s capacity to produce. Worldwide demand for RUTF will grow each year, and Nutriset will expand its production capacity and introduce new production sites as it works to keep pace with this demand. Unfortunately, if growth remains steady at 30% each year, demand will again reach the limits of production capacity by 2014. In addition, greater demand for RUTF could result from its broader use, such as among HIV/AIDS patients–in which case the trajectory of increased demand may be steeper, and demand may exceed capacity even sooner than 2014.
Dominant Global Supplier Operating at Capacity: Supply chains that rely on a single supplier are highly vulnerable to supply chain disruptions like emergency shut downs, changes in operating environment and government regulations. Currently Nutriset produces 90% of all RUTF manufactured per year. The RUTF supply chain has seen ongoing efforts to increase the worldwide production capacity for RUTF. Nutriset has provided license agreements to franchises in several countries. Some challenges facing new manufacturers include a reliance on international sourcing of inputs, potential role of patent protection on Plumpy’Nut product and production process and logistical difficulties in scaling up production including raising capital funds, procuring necessary equipment and securing contracts.
Maintaining Quality Control: Comprises in the quality of RUTF might also lead to disruptions in product flow that can result in supply chain uncertainty. From aflatoxin in peanuts to substandard nutrient level, maintaining the quality of RUTF is an important concern, particularly as the supplier base for production is widened. Any breach of quality in manufacturing could hold up the entire supply chain, especially when there is only a single global supplier. Spoilage or damage can happen en route or during storage at regional and local warehouses. These could disrupt the product flow as well incur extra costs in additional procurement, global shipping and warehousing. All of these increase the landed cost of RUTF.