Aung Kyaw Moe / Task 7 - Humanitarian Aid and Supply Chain

Memo
To: From: Date: RE:

Francois Damba Aung Kyaw Moe

28 May 2013

TASK 7 HUMANITARIAN AID SUPPLY CHAIN

Dear Francois, I would like to present my task in two portion: The first portion is describing the mapping of supply chain currently working in SCILaid Betaland. In this part, I will mostly refer to my previous reports and analysis. The second part is more elaborative since it is concerned with how SCILaid Betaland supply chain can be improved in different steps of information flow and goods flow. In this part, I my presentation will mainly depend upon the Study manual I received and some of my past experiences in the logistics business. MAPPING OF SUPPLY CHAIN IN SCILaid Betaland Target Beneficiaries Betaland has a long border shared with Alphaland in the southern part of country. There had been arm conflicts in Alphaland and as a result, influx of refugees from Alphaland come into Betaland and Betalands government accommodated refugees by opening some refugee camps near the border. Previously, SCILaid was providing shelters for refugees but it is finished now. I started to distribute food rations 6 months ago to the following camps along the border. 1. 12,000 refugees in Bagor Camp 2. 13,000 refugee in Nator Camp 3. 35,000 refugees in Parna Camp Therefore, SCILaid provided food to 60,000 beneficiaries in the camps. There are other 40,000 refugees in 2 other camps in Kohrna. SCILaid requires 1000 metric

tonnes food per month for distribution and now ration are distributed biweekly. SCILaid is now considering moving to a monthly distribution schedule soon. SCILaid received the demand information mainly from the target beneficiaries and Programme Section made a baseline survey and need assessment of these beneficiaries before implementing its aids programmes. Procurement in Betaland Although UNFA provides rice, bean, and oil, SCILaid needs to buys salt and sugar to add for ration. A local contractor, Ralem Company based in Mugla, a sea port town, is providing supplies. The contract between Ralem and SCILaid is near to end and the process of re-tendering is on the way. SCILaid expect to have a new supplier with a cheaper price for food. Materials/Goods and In-Kind Donation Sometimes, SCILaid received in kind donation from governments and organizations. UNFA provides rice, bean, and oil but SCILaid buys salt and sugar to add for ration. SCILaid also receives 25 USD per tonne for ITSH (Internal Transportation, Storage and Handling) cost from UNFA. SCILaid received 4 trucks donated by Xrayland and they also received some charges for the running cost of these trucks. Epsilonland government is going to donate 2 generators and I learn that the government of Xrayland also want to donate Wheat Soya Blend (WSB) to SCILaid Betaland. Commercial Sourcing The commercial organizations are not only providing donations and funding to the Humanitarian Organizations but they are the main sources of materials and supplies needed for the humanitarian aid operations. To identify and select the appropriate suppliers and placing Purchase Orders to them are the most important things a Humanitarian Organization should do. A local contractor, Ralem Company based in Mugla, a sea port town, is the major supplier who is providing supplies to SCILaid in Betaland . The contract between Ralem and SCILaid is near to end and the process of re-tendering is on the way. SCILaid expect to have a new supplier with a cheaper price for food. Customs Clearing Since SCILaid makes local procurement in a small scale, most of the supplies were imported from the other countries. In this sense, Customs clearing becomes a big part of SCILaids Supply Chain in Betaland . The Importation rules are strict in Betaland but SCILaid has tax exemption status for all emergency supplies. Recently, 2 generators donated by Epsilonland government are coming soon and the government of Xrayland also want to donate Wheat Soya Blend (WSB) to SCILaid Betaland.

Warehousing After clearing the cargo from the sea port and airport, they must be put in the warehouses. SCILaid has 2 warehouses for storage of food: one is a big store of 2000 Sq. meter and situated at Mugla Port. In Chagong there is another warehouse which has space of 500 Sq. meters but it is sufficient to store food temporarily before sending them to the camps. SCILaid also intended to increase stock in Epsilonland for emergency use. One of its partner organization, UNIRP, is also building some stock piles in Betaland Stock Piling Most of the humanitarian organisations are holding their own stocks in order for responding a given emergency situation as soon as possible. These stocks will have been donated or sourced from commercial sources. A clear-cut definition of stock piling strategy will have been put into place to determine what goods are to be held, where they will be held and what quantities will be held. Transportation In terms of transportation, SCILaid Betaland has a vehicle fleet of 14 vehicles in which most are 4 x 4 trucks. Only 10 trucks are running in Chagong, whereas the remaining 4 are in the Capital, Dhetra. The government of Xrayland donated 4 Isuzu FS33 trucks to SCILaid Betaland but these trucks consume fuel so high. But fuel price in Betaland is just 0.5 $ per litre and SCILaid has a contract with Betagaz for fuel supply. Xrayland government also subsides the expenses of fuel and maintenance cost of these car. General road conditions in Betaland are quite workable and it needs just 2 days roundtrip between Mugla and Chagong and from Chagong to Camps we need only 1 day for roundtrip. It is difficult to reach to the camps in wet season if there are torrential downpours. Air transport is possible but there is only one international airport in Dhetra and one domestic airport in Chagong. It is supposed to be 3 flights per day between Dhetra and Chagong but it is not very regular. Telecommunication As far as I know, telecommunication is accessible in Betaland and both HF and VHF systems are working well in the area. But internet access is not 100% available here. Human Resources Most humanitarian organisations usually have two types of employees, viz., full time employees and volunteers (reservists) that they can call on when needed. There can be not only international staff but there are also national staff recruited locally. Sourcing of human resources may be from various ways, something like by advertising the post in public media and newspapers or by requesting governments and international donor organization to provide the required technical experts. Following is a checklist for a Humanitarian Organization when responding to a disaster situation To identify the specific skills/knowledge/experience that is needed

To identify the number of people required. To identify the place to find these human resources, local or international To put in place specific mechanisms to get access to trained experts. For example, to have an agreement with a hospital to release immediately already trained staff for a short period of time

OPPORTUNITIES OF IMPROVEMENT IN SUPPLY CHAIN OF SCILaid 1. Planning Supply Requirements To establish a good supply chain in SCILaid, we should start with a good supply planning. The objective of Supply planning is to define and schedule supply requirements to meet the needs of the programme and internal operations. A supply chain without a well-defined supply plan is like a blind man walking on a dark lane in the moonless night. The major problems in Supply planning are the Limited use of planning process to define objectives, activities and needed inputs and Weak identification of supply needs in the programme. Limited involvement of staff responsible for supplies in programme planning is another factor of risk in supply planning. Lack of awareness of supply procedures, estimated costs, and procurement lead times to realistically budget and specify supply requirements are also hindering the smooth supply planning. The following points of Control should be established for a good supply planning. 1. Define need for supply assistance within the context of overall activity planning for both programme and operations activities. 2. Define supply input requirements in adequate time to allow for procurement and delivery before implementation of the activity 3. Supply and Programme staff to effectively interact during work planning with the awareness of procurement procedures, lead times, need for clear specifications and clear understanding of supply input requirements. 2. Defining Supply Specifications Sometimes, a smooth flow in the supply chain is delayed because of the lack of detail definition of Supply specifications. The flow of information concerning the detail supply specifications is also a crucial aspect of any supply chain. This information may include the following aspects: WHAT kind of goods/products we need to supply for beneficiaries? WHAT is the number of total available beneficiaries/end-users? HOW MANY (quantity) of supplies needed for supply of goods? WHEN these goods must be supplied? WHERE these goods must be supplied? HOW these goods should be supplied? (means of transportation)

Better we know about these kinds of information, clearer our vision of what we need to do become. This information is going to determine the entire supply chain process. All the activities involved in the supply chain process are to be implemented in accordance with this information. Therefore, the Objective of obtaining detail supply specification and information is to provide accurate technical specifications, estimated costs, and required TADs to facilitate proper identification and sourcing of planned supplies and provide adequate information to enable procurement authorization. Potential Causes in not getting detail information are: Weak technical supply knowledge of programme/office staff & partners Limited involvement of supply staff in defining specifications Limited availability of proper specifications for commonly used supplies Limited awareness or use of existing sources of supply information Weak awareness of need for significant specification detail for international procurement, particularly for printing Lack of awareness of the many authorization limits that affect an office Delays in release of local/regional procurement authorization Weak monitoring of requests for local/regional procurement authorization. The following points of Control should be established for a good supply specification and information. 1. As a result of planning process raise timely requisitions which include adequate specifications and realistic target delivery dates. 2. Use standard specifications for frequently purchased supplies based on knowledge of the end-users' standards, needs, preferences and maintenance capacities. Use reference materials for developing specifications and estimating costs. 3. The staff to be fully aware of the procurement lead-times, importance of clarity of specifications and authorization limits for local procurement and use this information during supplies planning. 4. Programme and supply staffs effectively coordinate on timely and accurate specification development. 5. Select appropriate sources of supplies, mode of shipment and apply adequate controls to approve high-price source and shipment options. 6. The exact location of supplies in the chain, the status of movement and inventory level kept in, and the amount of supplies to move in transit should be carefully monitored. 7. The estimated time of departure and arrival of supplies and important instructions in the process of receiving and clearance of supplies (i.e., dangerous/hazardous cargo, highly perishable foods and vaccines which must be kept under certain range of temperature) When goods will arrive at different points in the chain, e.g. goods arriving at ports that will need unloading and goods arriving that will need storing in a warehouse. 8. The volume of goods to arrive and making calculations of resources are needed to move and unload them must be properly checked.

9. Keep eyes wide open to any problems there are which are affecting the flow of goods down the supply chain. 3. Selecting and Contracting Suppliers The next step in the supply chain is to identify the potential suppliers/contractors who are capable of supplying goods in accordance with the supply planning and specifications. Therefore, the Objective of identifying and selecting suppliers is to ensure the selection of the most appropriate supplier in terms of quality, cost, and delivery time resulting in the issue and recording of purchase orders. Basically procurement is an activity or a process that exchanges/transforms cash or financial resources into appropriate goods or services required and a good procurement needs the five Rights as mentioned below: Right Price Right Quality Right Quantity Right Packaging Right Delivery Time

By fulfilling these Rights, the procurement and order management component can manage to source the goods that are needed to meet the needs of the beneficiaries. Weakness for SCILaid in terms of selecting and contracting the potential suppliers might be due to the following reasons: Limited market research to identify potential local suppliers Limited capacity to assess & qualify potential suppliers Weak evaluation practices to assess actual performance of selected suppliers Weak specifications & requests for bids reduces quality of returned bids Weak segregation of duties for receipt of bids and awarding of contracts Inappropriate staff/counterpart interference in the supplier selection process Weak knowledge/capacity of staff members to assess submissions Inadequate or inappropriate contractual terms & conditions in purchase orders

These weaknesses can be corrected by using the following tools of Control: 1. Assess potential suppliers and maintain/use the list of qualified suppliers in the issue of requests for bids and quotations. 2. Evaluate the performance of suppliers in the fulfillment of Purchase Orders and use the findings to modify the list of qualified suppliers. 3. Use well-prepared bid/quotation request documents (appropriate specifications, delivery dates, and contract terms) to invite qualified suppliers

to competitively bid and appropriately assess the suppliers' proposals before issuing a PO. 4. Establish procedures for submission and safeguarding bid documents, bid opening, evaluating and selecting winning bidders. 5. Establish standard terms and conditions to be included in local POs and ensure that these terms and conditions are verified during the drafting, authorization and signature process. 4. Pre-Delivery Quality Control, Shipment Monitoring, and Receipt of Goods After the Purchase Orders are put into place and the supplier is ready to deliver the ordered goods, we need to do a pre-delivery inspection of goods. So the main Objective of pre-delivery quality control is to ensure that delivered supplies meet the specified quantity, quality, packing, delivery date and location terms and the final cost as per calculations done by SCILaid. The factors that make an inspection of goods ineffective are due to Limited knowledge of pre-delivery inspection procedures. Vague specifications, packing and delivery instructions in POs. Unrealistic TADs requested by SCILaid & accepted by suppliers. Failure to confirm delivery of supplies at final destination. Inadequate planning leading to rushed/weak verification of quality & quantity. Improper segregation of duties for delivery verification, invoice certification and payment request approval. Weak enforcement of contract terms and penalty clauses. Weak controls to identify duplicate invoices. These weaknesses can be corrected by using the following tools of Control: 1. Ensure that pre-delivery inspections of locally-produced supplies are conducted to meet the quality specifications before completing the order. 2. Maintain regular contact with contracted suppliers, monitor their progress to meet specified TADs and provide timely feedback to relevant staff of any deviations in expected delivery dates 3. Verify supply deliveries and record (by authorized staff/partners) against specifications, quantities, packing & delivery instructions etc, and assess the fulfillment of the supplier's obligations. Accurately report all deviations. 5. Shipment Monitoring and Port Clearance Process What is not available locally must be ordered from other countries and in this case shipment monitoring and port clearance process may become the main part of supply chain. In this process, the following steps must be carefully carried out. PO Delivery Date and Shipment Tracking:

PO delivery date is an agreement between SCILaid and the supplier about the estimate date of the delivery of goods to the destination. Any PO which is approaching to the delivery date or which is still outstanding after that date must be closely followed up and checked with the supplier. Shipment Pre-Advice and Shipping Documents: Suppliers used to send shipment pre-advice before sending actual original shipping documents. In this regard, when we receive a pre-advice of a shipment, we have to start running documentation and trying to get necessary authorizations from the respective government bodies. Check shipping documents very carefully because any discrepancies in terms of BL Nos. quantity of packing and prices on the invoices may cause unwanted delay in the supply chain process. Duty Free Exemption & Customs Clearance: SCILaid is a humanitarian/non-profit organization and it must have a tax-exempted status for all shipments and importations for her programme. Liaison with the related line ministries and authorities concerned in timely manner is the most important task before customs clearing. Lack of information sharing with the government authorities about the nature of goods may cause some delay in getting tax exemptions. SCILaid is mainly importing some food items and medicines and in this case the timely approval of FDA in Betaland is necessary. Without FDA approval, the process of importation of food items and drugs is impossible and cause some hindrances in the smooth flow of supply chain. 6. Receipt & Warehousing Process Sometimes, Warehousing is the most neglected part of a supply chain although it is a very important for supplies and goods to be safely stored at transit or final destination warehouses. To make warehousing and storage management of SCILaid, the following checklist should be done regularly and properly. 1. Quarterly Inventory Report by age and value obtained jointly by programme and supply staff 2. Bi-Annual or Annual physical stock count to be done 3. Principle of First In First Out (FIFO) to be followed and expiry dates of foods and drugs closely monitored 4. Emergency supply storage is an issue to be considered and wellprepared.
7. Transportation and In-country Distribution Process

After procurement is done, the next step in the supply chain process is the physical movement of goods from suppliers or donors to beneficiaries. The transport component of the supply chain is the major part in providing this movement of goods.

In terms of transporting goods along the chain, different actors may be involved in the whole process, including commercial suppliers, UN organisations and NGOs. They may all take responsibility for ensuring the goods are transported along part of the physical supply chain. The following steps and sequences shows a generic humanitarian supply chain and all the different movements of goods that will need to happen for the goods to be moved from suppliers or donors, along the supply chain to the beneficiaries. 1. Supplies procured from the International Suppliers and In-kind donations of Donors come to the HQ level central warehouse 2. By means of sea freight or air freight, the supplies come to the sea port and airport of country where humanitarian activities are implemented 3. After customs clearance, the supplies are moved to the country level central warehouse 4. All supplied locally purchased are also joining to this central warehouse 5. Form central warehouse, the supplies go to the regional warehouses and local warehouses in the programmatic area 6. Supplies are distributed to the beneficiaries from local warehouses The following different factors in implementing transportation must be properly checked at first: The urgency that goods are required. The type of goods to be transported. The volume of goods to be transported. The availability of different transport routes. The place to which the goods need to be transported. The cost of transportation. The availability of different types of transport. The terrain through which the goods need to be transported.

A range of different transport methods will be used to transport goods along a humanitarian supply chain based on the information we collect about the abovementioned factors. These will include air, sea, road and rail, and may range from large sea vessels to horse drawn carts. 8. Assess the Effectiveness of Supply Assistance The Supply Chain in SCILaid is mostly complete when the goods and supplies required have been successfully distributed to the targeted beneficiaries, but being jointly responsible with the programme section for the usability of supplies, it is mandatory to assess the effectiveness and appropriateness of supply assistance after distribution. The Objective of investigating the effectiveness of supply assistance is to assess the effectiveness of procured supplies in the implementation of programme and office activities.

The reasons why we need to monitor and evaluate the supplies distribution are: To improve the design of a project or programme To improve future procurements (Feedback to improve Specs) To ascertain relevance of supplies to users and beneficiaries To provide Recommended actions for each case To obtain Data for planning supply component of Country Programme To identify risk areas in terms of supply delivery The below-mentioned factors will create the Potential Risks of monitoring: Limited attention to assessing the role of supplies during programme reviews Weak assessment of the overall effectiveness of supply supported activities Limited visits by SCILAID staff to programme-supported field locations Weak assessment of the quality & use of supplies during field visits

These weaknesses can be corrected by using the following tools of Control: 1. Review and evaluate the appropriateness and effectiveness of the supply component of the programme-supported activities. 2. Review individual project activity to include a consideration of the appropriateness and effectiveness of the supply assistance provided for the activity. Ensure supply staffs are informed of the findings and use the information in future supply planning and procurement actions. 3. SCILaid Staff maintain contact with programme-supported activities through field visits, and regularly assess the appropriateness and effectiveness of programme-provided supplies as a component of their field visits. The results of these assessments can correct future programme planning and supply procurement actions. 4. What to monitor in this assessment of supplies distribute are: Quality, Effectiveness and Appropriateness of supplies Timeliness of Delivery Whether and How the supplies are being used Accuracy of Installation Durability and Suitability of supplies Impact of a product on the users Whether an input should continue, be amended or stopped Logistics Chain (breaks, lead time etc.) 5. The following tools can be used in monitoring and evaluation of supplies distribution Receipt documents of the end-users Tabulating available data

Periodic Progress/monitoring reports Field Trip Reports (separate field for supply monitoring) Warehouse visits at central, provincial, state and/or township Joint Monitoring/Evaluation visits (programme/supply) Observing installation and condition during field visits Questioning beneficiaries through interview Supplies/equipment evaluation form

Best Regards, Aung Kyaw Moe Logistics Officer Sub-Office SCILaid Betaland .