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MTTN45 Humanitarian Logistics MTTN45 Humanitarian Logistics

MTTN45 Humanitarian Logistics - PowerPoint Presentation

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MTTN45 Humanitarian Logistics - PPT Presentation

Sourcing and Procurement Nonprofit Organizations shaping the Market of Supplies 12 April 2013 Content Purchasing power in the humanitarian sector Impact of purchasing power on purchasing strategies ID: 562281

purchasing power market humanitarian power purchasing humanitarian market suppliers vaccine based procurement organizations high data supply strategies collaboration sector supplies developing local

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Slide1

MTTN45 Humanitarian Logistics

Sourcing and Procurement Nonprofit Organizations shaping the Market of Supplies 12 April 2013Slide2

Content

Purchasing power in the humanitarian sectorImpact of purchasing power on purchasing strategiesThe case of vaccine procurement Nonprofit organizations shaping their supply market Slide3

Who has the power to shape the market? Slide4

Nonprofit-for profit relationship

The disdain history

The mutual need of collaboration

More relationships, collaboration, and dependenciesSlide5

Distribution of Power: Resource Dependency Theory

Resource dependency theory (RDT)Focus on core competencies  outsourcingExchange relationships  dependencePower as relative dependence 

more influence

All

organizations strive to maximize their power through reformulating these dependencies.Slide6

Issue of power dominance in procurement

Understand its power positionMove toward more favorable position

Buyer power attributes relative to supplier

Supplier power attributes relative to buyer

Buyer dominance

Supplier dominance

Interdependence

Independence

(Cox et al. 2000: 18)Slide7

What are drivers of purchasing power? Substitutability

Interconnections Demand shareInformation symmetry Reputation Slide8

Humanitarian logistics

Added stakeholders with conflicting incentivesShared management and need for collaborationLack of fundingLack of infrastructure and local capacities

Based on OECD (2011) data

Based on WEF(2010) data

Based on pre-study data

What does the humanitarian sector look like? Slide9

What does the humanitarian sector look like?

The disdain nature of nonprofit (NPO)-for profit relationshipScarcity of supplies“The products may not always be commercially attractive, nor the market transparent. Manufacturers are often not aware of the needs, or may consider the risks associated with entering the market too high.” (UNICEF, 2008) The essentiality of suppliesThe limited buying powerSlide10

Purchasing power’s impact on purchasing How do you think low purchasing power impacts purchasing decisions and strategies?

Accept the situation and be weakFew suppliers with high prices in country X. Gather funds and buy fromAccept the situation and safeguardFew suppliers with high prices in country X. Have a detailed and strict contract so terms are set for a longer timeUnderstand the situation and try to change itFew suppliers with high prices in country X

. Insource, invest in developing more suppliers maybe local Slide11

the case of vaccine procurement in the sectorSlide12

Delivery of health in humanitarian aid supply

chainsGlobal health SCMHealth a reflection of development and poverty reduction (UN, 2011)Nature of disease: geographical, weather, culture, social, educational, economicThe public good nature of the related productsHigher weight of qualityHigh donor dependency (viewed as a global good)

Different purchase profiles among countries

Based on WEF(2010) dataSlide13

Overview of vaccine SCs for developing countries

Subset of global health SCsWillingness of governments to payEpidemiological justificationsUnder valued by governments and marketSome differences between industrial and emergingConcentrated supply marketEmerging economy producers increasingProcurement being considered a main issue in shortage Slide14

A schematic view of the positioning of different actors along the vaccine chain in humanitarian networksSlide15

So power is shifted to the suppliersWhat are different ways buyers (e.g. different governments and organizations) can

buy vaccines the best way in this situation? Slide16

Cases based on their sample group and purchase strategy

Sample group

Developing countries

Humanitarian orgs

Industrial country

Cases

Iran

Latvia

Oman (GCC)

Zambia

UNICEF

IFRC

Skane region (Sweden)

Purchasing strategies

Self-purchasing

with

local production

Self-purchasing

without

local production

Cooperative

purchasing

Purchasing through humanitarian organization

Humanitarian organization

focusing

on vaccine purchase

Humanitarian organization

not focusing

on vaccine purchase

Self-purchasing Outside of the context sample

Based on WEF (2010) dataSlide17
Slide18

Several countries which have completely outsourced their purchase to humanitarian organizations (process and funding) Slide19

Initiator NPO/NPOs

Initiative

Initiative objective

Result in the market

1

PAHO & UNICEF

Aggregating demand in high volume purchase

Achieving noticeable discounts

Lower prices

Development of product in the market

2

GAVI

Securing long term funding

Increase production capacity

New suppliers to the market

3

GAVI

UNIVEF & PAHO

Aggregating demand

Economies of scale

Attract new suppliers

Increase production capacity

New suppliers

Build up competition

Reduce prices

4

WHO, GAVI, UNICEF

Enabling manufacturers from developing countries

Securing supply

Enabling developing countries

Better availability

Lower prices

5

WHO

National strategies for all

Deeper relationships and collaboration between all players including NGOs and business sector

Developed industry incentives

Healthier markets

6

WHO

Providing better forecast

Improve corporate image and industry incentives

Healthier markets

7

GAVI

Collaboration with business sector

Bringing a fresh view to the board

Increase production

Better availability

8

IAVI

International collaboration between public private sector

Share risks, cost, and benefits

Develop research and product development

New resources in the market

9

UNICEF

Long term arrangements with current & potential suppliers

Introduce and develop new suppliers in the market

New suppliers

Better availability

Lower prices

Higher quality products

GAVI’s consolidation of demand for vaccines secure supply (

Gavi

, 2009: 16)

Price drop of

Pentavalent

(GAVI, 2009: 16)

NPO initiatives in shaping the market of supplies

Slide20

Questions?Thank you!