MTTN45 Humanitarian Logistics - PowerPoint Presentation

Slide1

MTTN45 Humanitarian Logistics

Sourcing and Procurement 10 April 2014

Slide2

Module

April 9 and 10Introduction to sourcing and procurement in the humanitarian contextLecture on relevant issuesCase discussion among groups

Relevant topics of the dayProcurement at the UN and the issue of sustainability

Slide3

Modul

e 4 in

the course

Assess

m

ent

C

onso

li

date, pub

li

s

h

N

eeds

Modu

l

e 4: Source

Modu

l

e 5: Transport

Modu

l

e 7: Stock

Modu

l

e 8: Distribution

3

Items

•

N

FI•Shelter•Food•Health•Watsan•Cash

Facili

t

ie

s

& other infrastructure

•

W

arehouse space•Office space•Communication/IT•Transport infrastructure•Transport means•Equipment

Hu

m

a

n

resources

•

R

osters of logisticians and other technical experts•Training courses

S

y

s

t

e

ms and relationships

•

T

ools•SOP, standards & plans•Manuals•Contracts & framework agreements•Suppliers, donors

Module

2:

Strategic

&

T

a

ctical

Planning

Module

3

&

9:

Accountabilit

y

,

Performance

Measurement

&

Coordination

Slide4

Content

Introduction to sourcing and procurement in the humanitarian contextNeeds assessmentSupplier selectionContracting

OrderingFollow up and evaluation

Slide5

Sourcing in the

humanitarian contextProcuremen

t accounts

for

a

large

share

of

total

cost (Schulz

2008)

65% procurement (supplies and

equipment) (varies

if it

is included in

logistics cos

t in t

he organizations)15% transport

and w

arehousing

How goods

and services are

purchased has

consequences for effectiveness and efficiency of an

operation

How e.

g. t

ransport, storage an

d deliveries can be set upHow coordination of ac

tivi

ti

es

can

be undertakenHow relationships betw

een

actors involved in t

he supply network can/should be developed

Slide6

Some issues with it …

http://wbi.worldbank.org/wbi/multimedia/improvingtransparencyandaccountabilityinpharmaceutical

Slide7

Objectives of

the lectureHow to work with sourcing and procurement process and strategies in the humanitarian contextSome understanding in the links between disaster response and development

P

r

epa

r

edness

R

e

sponse

R

ec

o

v

e

ry

S

udden

onset

Long

term

Development

can be

compared

to

R

ecovery

, preparedness and long term response

S

ource:

H

eigh;

E

verywhere (2010)

Slide8

Natura

l

disaster

s

are

naturally

occurring

ph

y

sical

phenomena

cause

d

eithe

r

by rapid

or slow

onset events w

hich can be:Geophysical (earthquakes, landslides,

tsunamis and

volcanic activit

y),H

ydrological (avalanches and floods),Climatological

(extreme temperatures, drought and wildfires),Meteorological (cyclones and storms/wave

surges)

or,

Biological

(disease epidemics

and insect/animal plagues).Man-made disasters are events tha

t are

caused by humans and occur i

n or close to human settlements.This can include environmental degradation, pollution and accidents. Examples are: complex emergencies/conflicts, famine, displaced populations, industrial accidents

and

transport

accidents.

Disaster types

Challenges

,

such as climate

change, unplanned-urbanization, under-development/poverty as well as the threat of pandemics, will shape humanitarian assistance in the future.

These factors

wi

ll result in

increased

frequency, complex

ity and severity of disasters.

Sour

ce: EM-Dat and

International Federation of the Red Cross and Red Crescent Societies: www.ifrc.org

Slide9

Agenda

The

purchasing

process

P

racticin

g

differen

t

stage

s o

f the

purchasing process in the

humanitarian

context

What can go wrong?

Case example

Slide10

Purchasing

(Source:

van

Weele,

2010,

p.

9)

Pu

r

chasing Strategy

Pu

rchasing Organi

zation Pu

rchasing process

D

eter

mining specification

Selecting s

u

pplier

Negot

iate and contract

De

v

elo

p ordering process& or

der

Expediting a

n

devaluatio

nFollow-up and evaluation

Su

ppli

er

Internal custo

mer

Slide11

Purchasing strategy

Based

on

higher

level

strategy

Why

are

we

buying?For-profit

vs. nonprofit

Disaster vs. DevelopmentResponse

vs. preparedness

Who'

s buying?Company: for-profit

(differentiation, lean, etc.)

http://www.peepoople.com/

Organization: nonprofit (lowest cost, fastest deploy,

etc.)Country

: development vs.

disaster relief!

Slide12

Determining

specifications

W

her

e to

get

in

f

o

rmat

ion?

Finding th

e right

need ClimateDietCulture and

traditions

etc

W

rong

input escalates

up

the

purchasing process!

Needs assessment

Technical pre-specifications (e.g.

emergency items

catalogue, or WHO specifications for medicine) benefits?

What’s the situation? What kind of disaster? W

hat kin

d o

f diseases?

Slide13

Determining specifications

Quality an

d technica

l specifications

What

questions

to

ask?

Expir

y date?Product

in local climates?

Cheaper product substitutes?Quantity specificatio

n and forecasting

T

he

rig

h

t

v

eh

i

cle f

or the

setting?

Slide14

Determining specifications

Development

F

airly

stable

Forecasting

tools

E.g

.

WH

O health initiative

Epidemiological and demographic history

Disaster relief (response)

Not knowing what

and where72

hour timeframeWhat are good

ways of assessing needs?

E.g.

Purchasing for Haiti

(preparedness)

• ?

Slide15

What can go

wrong?

During

the

Cha

d

Emergency,

t

her

e

was a

need for

sanitary

towels to be distributed to

women

refugees in

the camp. Discussion

s on

the appr

opriate improvised sanitary towel went

in

circle

s for about

three months

. During

this time, women did not stop

menstruating t

o allow

the

matter to be resolved. T

he logisticians involved did not comprehend what the alternative

opt

ions

were

apart from th

e manufactured product they may

have bee

n familiar with b

ack in a modern society.(Source: WISE, 2009:6)

Slide16

What can go

wrong?

The

secon

d

was

a

case

from t

he 2004

Tsunami. This

was wher

e a

logistician re

ceived a

purchase

request to supply the

programm

e with wo

men s under

wear to

be di

stributed to those

aff

ected

in

Banda Aceh. This

purchaser forgot that people come in different size

s.

He pl

ac

ed an

order for one size and in

one c

olor. Eventually the

one-sized underwear had to be returned. This caused a delay in distribution an

d

additional cos

ts

.(Source:

WISE, 2009:6)

Slide17

Selecting

suppliers

Market

research /

Market anal

y

s

is

R

F

I

,

RFQ, RFB

Evaluation

and auditsSupplier selection

••

Criteria

(price, quality, lead-time, reliabilit

y) Strategie

s

Competitive bidding and tenders

Spot purchaseC

ontinue purchase from

supplierPrepositioned

Donations

Globa

l

vs

.

local sourcing (availability)

Single vs

.

multiple

sourcing

Slide18

Comparative

bid analysis

S

U

PPLY

CHAIN

DEPARTMENT

R

equest

N

o

:

Specification:

C

o

untr

y

:

P

r

o

ject

Code:

Budget:Name of suppli

er

Bidder

1 Bidde

r 2Bidder

3 Bidder 4Quotation reference and

date

Curr

e

nc

y of quote

currenc

ycurrency

currencycurrencyRate of exchangeDescriptio

n o

f i

tems

Q

uantityUnit

Price

Total priceUnit

priceTotal priceUnit priceTotal price

Unit

price

T

ot

al price

Fr

e

ight

C

P

T

I

n

s

u

ra

n

ce

estimate

I

n

s

p

ecti

o

n

estimate

GRAND

T

O

TAL

c

u

rre

n

cy

c

u

rr

en

c

y

cu

r

r

ency

c

u

rr

en

c

y

Shippin

g

te

r

m

s

C

o

un

t

r

y

of

o

rigi

n

(

i

tems)

Wei

gh

t

estimated

V

o

lu

me

e

s

t

i

m

a

ted

D

e

li

v

ery

pr

om

ise

d

(

)

Arrival

da

te

site

estimated

Terms

of

pa

yme

n

t

Bi

d

v

alidit

y

date

Meets

(

S

TATE

NA

ME

OF

ORGANISA

T

ION

)

r

e

quir

ed

sp

ec

ifica

t

i

o

ns

C

omme

n

t

s

:

Slide19

What

can go wrong?

Globa

l vs.

local

Th

e

cas

e

of

malaria nets

and h

ow by purchasing

the fi

rst batch

globally from the western c

ountries with

out realiz

ing the unavailability of loca

l producti

on; by

the sec

ond yea

r when

the nets were worn out, a huge

problem

was faced.Competitive

bidding

Due to public pr

ocurement regulations overarching all humanitarian organizations, purchas

e

of

stat

ionary

was recently sugges

ted

to be centralized

in one of the organizations. This means that suppliers are invited to submi

t

offe

rs t

o a

public tender somewhere

in E

urope, stored in a ce

ntral warehouse, and then shipped to the local offices

. A

side

fr

om

the pos

sibly quite expensive cos

t o

f transport, the

environmental consequences, the possible added transaction as opposed to local spot purchase is not

tak

en

into

accou

nt.

Slide20

What

can go wrong?

Pushin

g for

lower

pric

e

(vaccin

e

market failure)

The vac

cine market

being highly regulated experien

ced big

failures

in the beginnin

g of the

centu

ry. Buyers were only pushing

for lower pri

ce an

d hence

trying

to b

uy from single sources.

Other sup

pliers not

having t

he capacity had to exit

or merge. As a result buyers faced a monopoly market with shor

tage

of suppl

y c

apacity.

Slide21

Contracting and negotiation

Long term or short term

Detailed and hard, soft

and replaced by trust and norms

Terms and conditions

Q

uali

ty

requiremen

ts

S

peci

fic packa

gingResponsibilities

in delivery, etc.

Slide22

P

U

I

RCHASE

AGREE

M

E

NT

Goods

must

be pro,perfy packed to IJJrevent

clama

_ge of

any kind and

Pad list must aa

:ompany

the spment to "ndicate cont

ents of

eadh .s

hipment. Pacta,

g.es shou

ld be

properly labeled to indi

cate S

r's name,

Consignee

and Purchase Or-der Number.6

. PaymentTenns6.1(STATE W1M:E OF ORGANIMTION)

will pay

die

pun:ih:ase

pJic:

e Ilia e,g.bank wire transfer to S

eller'

s lb<ulk account

indicated below. Bank wire fees are for Seller'.s.acc:olDLPayment will be made in

full

o

n rec

eipt

of confirmation from (ST

ATE NAME

6 2OF ORGA

NJSATION)63All·rwoices and other necessary

doomnent5 .shall

be

se

nt

to the

attention of the folICM1ing {STA

TE NAME

Of ORGANISATl

ON) representa tive:;lli)ate _IPURClHIASE CONTRACT lfOR THE SUPPL"ii' OFIB

ETWE

EN:

{Stil

te nilllle

of O

rga.ni5atio

n) (

(STA

TE l\Wvl.E

OF

ORGAMS

A

T

I

ON

'

l

"

J

I

Name

o

f

Country

Off

i

c

e

if

ap

p

l

icable)

AND

'Jl:f

Sup

p

l

i

er

IH

e

r

·

eby

known

as

selle

r

)

1

.

Goods

Purchased

1

1

(

S

T

ATE

l\Wvl.E

OF

ORGANliSATION

)

a

_

1

,

7,fees

to

IJJUrcha!Se,

and

S

e

l

l

er

auees

to

se

l

l

,

tihef

o

l

l

olhingitem

1

2

\

/a1TC1nty:

O

n

e

ye

a

r

I

t

em

to

be

of

good

qu

a

lity

and

CD11form

to

i

ndustry

standa

r

ds

for

fik.e

it

e

m

s

.

(

STATE

1'Wv1E

OF

ORGA

N

I

SATIO

N

I

r

'

esE!f'.'es

t

h

e

r

i

ght

to

r

e

j

ect

any

Goods

whidh

a

!

"

e

d

efective

in

materi

a

l

or

workmanshi

p

,

and

ma

y

,

i

n

a

d

cfition

to

a

ny

other

l

eg

a

l

remed2

s

.

,

ratum

sudh

Gooos

to

Se

t

l

er

at

S

e

l

l

er

'

s

eic;pense

or

otherwise

cispase

of

sud!

Goods

in

a

mmmerc

i

a

ly

!

"

easona

b

l

e

manne

r

.

7

.

Dutie

s

,

.

T

axes.

Customs

Seller

is

responsiblefor all ap,plicable sates,export and import duties and taxes, whether in col.Dtry of origin ar any transit country, and ensurin,g that a ll nessary licensesor customs clearances.are obtained.

8. Termination 8.1

(STATE NAfvtE OF ORGANlSATION) may termina this Contract at any time:Should the anticipated funding for this project from it5 dooor(s) be eliminated, ar for any otihe.. reason. In the !!Wiit of sudr a tE!f"minati an, Seller will be IPiiid accordi11gto the payment tE!lilllS specified herein for any Goods ac:.tually shipped prior to the t.ermin:ation date that conform to tlhiis Contract.This Co:ntll"a.ct may be terminated immediately by either party in the event afa breach of the provisions he..ein bo,itile other party,in addition to Whatever ramediesor damages are provided under thegovemin,g·law.This Contract ma,y be t:erminated by either party in tlhe event of anyintervening ll'force majE!lmG (naliural <ftSaSter, war, etc.) recogniczed underthe governing law.

8_2

8 3

2. Price'Price iooudes freiqtrt and insurrmce fo,.delivery to (STA1iE rtAMf OF ORGAMSAROM

3. Shipment .and DeiveryTerms

3,1

Seller will arrange for shipment of the Goods, at Sel ler's eic;pense, to {State

name of Orpnisation) operations in

at theOF

foUowing delivery address: (STATE NAME ORGANISATIOl\li_ _

3233

Shipment will be vila1 _Seller w·I i:rovlde appropriate notific::atron to {STATE NAME OFOF

ORGANISATIOl\I) prior to sh"pment to enable (STATE NAME ORGANISATION), or a thi:rd party i ion company of fState name of

Organisation) dioice,to inspeot the goods prior toshipment.H required Seller will arraqge for insur:a nee on the g.oods, at SEiiers eic;pense,up to the point of deli:ver,i to {STATE. NAME OF ORGANISATION.I,using a duly licensed and !"eputable·nsurance company.Seller will l"etain title to, and risik of loss for, the Go<ids until they are

3.4

3..5

delivered to (STATE NAME Of ORGAMSATIONI in

91. Miscellaneous

9.1

Seller shall nCJt assign it:s ri,gnts or obligations wuler this Contf'ilct, in whole or in part, nor enter into any subrontract t.o perform any portian af tlhis Contract, without the written consent af {STA1E NAM E OFORGANlSATIOl\I)_ This Contract S11persedM any and a I CJther agreements, oral or written,!between (STA1E NAME Of ORGANliSAllOO ) and Seller with respect to the subject matter hereof,and oo agreement, statement, or IJJKlfllise relating to the 5Ubject matter of this Contract other than llhat which is contained herein Shall be binding pcm the parties. lhis Contract may not be amended t bo,i written agreement of both parties.Seller rees to indemnify and lhoJd harmless {STATE NAME OF ORGANISATION) from any and all dairns otr lrablUties inc:ur!"ed by (STA1E NAME OF ORGANlSATIOlll) as a result of Seller's actions or amissians in perfonn ing tlhis Contract.Seller warrants 1hat it:s 1performanc:e of this Contract, and the Gxlds sup,plied 1under this Co:ntract:, will comply witlh al applicable laws and ragulatiDns.This C:Ontract .shall be go'lemed by the laws of the State of (or name co11ntry)_ unless otherwise aueed lby thep;ilties hereto, any controverrsy or daim ari:sing out of or relating to this Contract whidl remains l!nresolved afte.. negotiation shall be settiled bo,i binding arbitration before the State ArbitratiDn Association a c:amlin,g: to it:s

92

93

9.4

9..5

4. Delivery schedule 4.1 Tiirne is of the essence in perfonning this Contract, ,and Seller will ensurethat the GooclS are delill'ered to the delivery address no later tl\an the

42 A penalty of l:'.16 will be oharged for every week delayed

Slide23

What

can go wrong?

Poo

r packaging

specifications

Not

givin

g

s

pecific

specification

s and

requirements of packaging,

resulted i

n boxes

and packages that c

ould not be

stored p

roperly. (see pictu

re)

Slide24

Contracting and negotiation

Who drives

the negotiation?

What

safeguards?

M

easures

to

increase

leverage in negotiations

Group

purchasingIncreased share

of informat

ion

Future contracts

Diversification

Slide25

Ordering

Spot purchas

e o

r order

from contracted

suppliers

Trus

t

in

delivery

How muc

h to order and when

to order

Slide26

OR

GA

NI

S

A

T

I

O

N

S

N

A

ME

AND

L

OGO

ORGA

NISATIONS ADDRESS

To: Attention:

Date: Fax

No.Our

File Ref.

CC: C

ountry office: Regional Office: For I

nformation:

Total No.

of p

agesFrom:T

el direct.: Email:Fax direct:Re: PURCHASE ORDERGOODS –

DESTINA

TION

You

r offer,

Our Ref. Reg. No………………Dear Sir/Madam,

Tha

nk you for your ab

ove mentioned offer. We are pleased to confirm our order as follows: -SellerSupplier Name

Supplie

rs Add

ress

Name of

buying Organisation+

Address

BuyerGood

sDescribe goodsDescribe goodsTransported by ………………………….

Tran

sport

T

ime of

Delivery:

ETD (Estimated time of departure +

place) ETA

(Estimated time of arrival + place)

PackingDescription of type of packing desired ( Strong export Packing suitable for transportation meth

od

an

d rou

gh Handli

ng u

p to fin

al d

estination

Purchas

e

order

sample

Va

l

u

e

:

C

PT

TOWN

+

TOWN

C

O

UN

TRY

total

cost

c

u

r

I

n

sur

a

n

ce

T

o

b

e

c

o

v

ere

d

b

y

(B

u

y

er

?)

Slide27

Purchas

e order

sample

LOCA

L

PURCHAS

E

ORDER

DELE

G

ATIO

N

ADDRESS

NO:prenumbered

TO BE

QUOTED IN ALL

CORRESPONDENCE

(a

rappeler dans toute correspondance)

DATE

T

HIS PURCHASE

ORDER

IS ONLY V

ALID DULY AUTHORISED SIGNATURE and

STAMP

CE BON

DE COMMANDE N

'EST VALABLE qu'AVEC

UNE SIGNATURE et UN TAMPON AUTORISESTO (a):

ATTEN

TION:

FRO

M

:FINANCIAL

CODES

Account

ActivityDonorProjectQUANTITYDESCRIPTIONUNIT P

RICE

TOTAL

SPECIA

L

I

NSTRUCTION:(instructions

speciales:)PAYMENT TERMS: WITHIN 30

DAYS

OF

I

NVOICE

(condit

ions de paiement: 30 jours à réception de

facture)

NAME &

TITLE: SIGNATURE IN BLOCK LETTER:(nom & position:) (signature:)ORIGINAL: SUPPLIER / GREEN: RET

URN T

O FINAN

CE WI

TH INVOIC

E /

BLUE: LO

GISTIC

DEPARTMENT /

YELLOW:

FILE ONLY

WI

T

H

Q

U

O

T

ES

or

igi

na

l

:

f

ourn

i

ss

e

ur

/

v

e

rt:

d

é

part

me

nt

fi

nan

c

e

a

v

e

c

l

a

f

a

c

ture

/

Ble

u: d

é

part

me

nt

l

o

gi

s

t

i

que / jaun

e

:

cl

a

ss

eme

nt

s

e

u

leme

nt

e

n

c

as

de

d

e

v

i

s

Slide28

Ordering

D

evelopment

Part of

an

ongoing contract?

P

redetermined

terms

Spe

c

ifi

c time

frame

Disaster reliefOne-time order

or contracts?E.g. Framework

agreements

What would the terms look like?

Time and place

not clear

Slide29

What

can go wrong?Delaye

d ordering

One

of

th

e

to

p

reasons

of stock-out.

Time

NGO

order placement with supplier accordin

g to contract

Countries

order placement with NGO according to

contract

Janua

ryDece

mber

Supplier delivery to countries

Count

ry

X, Y,

and Z, "late" order placement

with NGO

Slide30

Expedition, follow

up and evaluationSupplie

r evaluation?

Based

on

wha

t

criteria?

How to measure

? Where to

get information?

Quality control (medicine,

nets, blankets, food)

Loca

l supplier developments (why?)

Slide31

Reason

F

o

r

R

a

tin

g

:

Annu

a

l

Revi

e

w:

YES

/

NO

Prob

l

e

m

f

Service

Issue:

Y

E

S/ NO

New

Supplier:YES/ NOOtfler•:

YE

S/ NO(Otfler) Pt e

ase Specify:Pricing Policy:Fixed for the period of the contractFixed period

Annual

review

Variable

-"-Pricing Po

licy R

eview Date:

)Date of Last Review:--0Next Review Dat

e:

Ann

ual

Spend

(New Suppl

i.er Show As An Estimate) :

Contract

Terms and Conditions:

Tear Fund f SupplierContractual Status:Preferred Supplier {Tender)1

Pre

ferred Sup

pl

i.er

(Quotation) F

°IXe

d Q

uantity Contract

Non-Compe

titive

A

r

r

angement

D

e

l

ete

as

Appropriat

e

R

a

ting

K

e

y:

1

=

Po

o

r

2

=

Fair

3

=

Acce

ptable

4

=

Good

-

N

o

t

acceptable

-

Not

consiste

n

t

,

needs

improving

-

Some

i

nconsistency

-

Reliabl

e

&

consiste

n

t

:sG1un'.e:

Tearfund

Sup

p

l

i

er

Ra

t

i

ng

T

o

o

l

S

u

p

plier

Nam

e

:

Produ

c

t

/

Service

P

r

o

v

i

ded:

T

o

t

a

l

R

atin

,

g

:

Total score

,,

Number

of

Asse

s

s

ed

Me

a

s

ures

Status:

V

ery

Good

(

4.5+

"

)

/

Good

(

3

.

J

-

4.

4

)

/

Avera

g

e

1

f3

.

&-

2.

9

)

/

P

oor

(2.8-

2.

1

)

/

V

e

r

y

P

oor

(

W

(

2

.

0-0

.

0

)

P

erf

orman

c

e

I

mpro

v

e

m

e

n

t

Act

i

o

n

s

:

-

-

-

-----

-

-

-----

-

-

Rating:

·

com

p

le

t

e

d

by

(

N

ame

):

-

-

-

-----

-

-

-----

-

-

-

-

Sig

n

e

d

:

Date

:

_

M

e

a

S\l

r

e

Rating:

Co

m

m

e

n

t

s

F

i

nanci

a

l

St

a

b

ility:

Eth

ic

a

l

Standa

r

d

s:

A

ccount

Manage

m

e

nt:

Customer

Service Support:····,·····,··

·.,.'Pricing

Policy:Paperwork:lnvoi.oes /deliverv notesQuality -Product or Service:,Capacity and Stock Availability:·,\Order fill rate or service 'level:Quality -Padcaging:Delivery Pertormance (on time):ReturnsPolicy or Service Support:Repairs I Warrantie.sI Backup:

Slide32

What

can go wrong?

Supplie

r evaluation

Not

tha

t

commo

n

in th

e purchase pro

cess in

the humanitarian sector. WHO pre-qualifie

d list of

medicine

and vaccine suppliers.

Slide33

Purchasing

(Source:

van

Weele,

2005 p 13

[2010,

p.

9])

Pu

rchasing StrategyPur

chasing Organiza

tion Purchasing process

D

eter

mining specification

Selecting s

u

pplier

Ne

gotiate a

nd contract

De

v

elop ordering process&

order

Expediting a

n

devaluat

ionFollow-up and evaluatio

n

Su

ppli

er

Internal custo

mer

Slide34

Case discussion

Your task: Set up an action plan for sourcing and procurementAnswer the following questions for each stage of the purchasing process:What kind of information do you need?

Where do you need to find the information from?What strategies and practices should you carry out?

D

eter

m

ining specification

Selecting s

u

pplier

Ne

go

t

ia

te

a

n

d contract

De

v

elop order

ing process

& or

der

Expediting a

nd

evaluation

F

ollo

w-up and eval

uation

Q1Q2Q3