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Ready-to-Use

Therapeutic FOOD
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Supply Chain Management


MS-491
Semester Project
Group No. 23

Group Members
Arsalan Siddique

2013058

Haider Sultan

2013113

Hamza Azhar

2013117

Maiwand Sultan

2013179

Muhammad Assad Shafique

2013232

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Acknowledgements
We would like to express our deepest acknowledgement to all those who provided us the
possibility to complete this report. A special gratitude to Sir Syed Abdullah for giving us this
project which allowed us to get more insight on the principles of supply chain and its different
models.
Furthermore we would also like to acknowledge with much appreciation the crucial role of the
staff of UNICEF in Islamabad, who gave the permission to use all required data and helped us in
providing the required information.

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Preface
UNICEF was established on 11 December 1946 by the United Nations to meet the emergency
needs of children in post-war Europe and China. Its full name was the United Nations International
Children's Emergency Fund. In 1950, its mandate was broadened to address the long-term needs
of children and women in developing countries everywhere. UNICEFs slogan 70 years for Every
Child indicates their vision. UNICEF has an extensive global health presence, and a strong
partnership with Governmental and Non-Governmental Organizations. They work in bringing
practical solutions to ensure the survival and health of children and women at risk.

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Table of Contents
Acknowledgements ....................................................................................................................................... 3
Preface .......................................................................................................................................................... 4
Table of Contents .......................................................................................................................................... 5
Introduction ................................................................................................................................................... 6
The Supply Chain Analysis .......................................................................................................................... 7
1. Forecasting ............................................................................................................................................ 7
Global Demand Forecasting.................................................................................................................. 7
2. Selection of Supplier ............................................................................................................................. 8
Long Term Agreement (LTA) with Single Supplier (2004-2008)........................................................ 8
Dual Supply (2008-Present) .................................................................................................................. 8
3. Inventory Management ....................................................................................................................... 10
Independent Demand .......................................................................................................................... 10
Single Product at Single Location ....................................................................................................... 11
4. Logistics .............................................................................................................................................. 12
Long Term Agreement (LTA) with Single Supplier (2004-2008)...................................................... 12
Dual Supply ........................................................................................................................................ 12
Comparison ......................................................................................................................................... 13
Conclusion and Recommendations ............................................................................................................. 14
Appendix ..................................................................................................................................................... 16
1. Process Map ........................................................................................................................................ 16
2. Statistics .............................................................................................................................................. 17
3. List of Acronyms ................................................................................................................................ 20
References ................................................................................................................................................... 15

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Introduction
United Nations International Childrens Fund (UNICEF) works for a world in which every child
has a fair chance in life. It works for child survival including from basic educational development
to water, sanitation and hygiene, and also has a significant role in the procurement of Ready-toUse Therapeutic Food (RUTF) for the treatment of severe acute malnutrition in children of thirdworld countries.
Ready-to-Use Therapeutic Food products were introduced to eliminate child mortality. The
important thing to know about the RUTF supply chain is that, it is not dependent on the customer
desire or cost. Contrary, the need of these products in developing countries is identified by nongovernment organizations (NGOs) such as UNICEF. The customers in this case are children
aged six months to 59 months. The childrens caretakers are usually unaware of the products
existence and they lack financial resources to purchase it. This the reason that the demand of RUTF
products is bumpy with spikes and growing. The most important thing in RUTF supply chain is
responsiveness that is, the proper availability of the RUTF product at the right place at the right
time.
In the following study, UNICEFs ready to use therapeutic food (RUTF) supply chain is the main
part of our discussion/analysis. The objectives of the study include, the documenting of the current
RUTF supply chain, identifying opportunities for supply chain improvement and recommending
key performance indicators to monitor supply chain performance to a better level.
UNICEF is a humanitarian organization, and like every supply chain it also utilizes a set of
fundamental processes to Plan, Procure, Produce and Deliver. So, the analysis of the current RUTF
supply chain mainly focuses on the study of the supply chain management building blocks of
product selection, forecasting, procurement, inventory management and distribution, and on the
design of a supply chain/process map of the RUTF, in the context of the model that we have
selected.

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The Supply Chain Analysis


1. Forecasting
Global Demand Forecasting
As said earlier, the demand for RUTF doesnt depend on the customer desire or cost but in fact,
on the global demand that arises from the lack of the food and on the number of malnourished
children.
Forecasting accuracy is an important factor and must be tracked over time as an indicator of how
well demand is estimated for the supply chain and where improvements might be most valuable.
Forecasting of RUTF has always been challenging, and tracking improvements over time will help
UNICEF identify when changes to forecasting methods are working most effectively.
To address growing demand for the ready-to-use therapeutic food, UNICEF developed an Excelbased forecasting tool to calculate the quantities and value of products needed to treat the estimated
number of children with severe malnutrition for each country of use, based on the UNICEF country
offices estimates of monthly admissions of children into feeding programs. UNICEF first
undertook global demand forecasting for RUTF in January 2009. The aggregate forecast of global
product needs informed the bidding process and allowed Supply Division to tell individual
suppliers how much product would be purchased by those countries whose demand had been
allocated to them. Accuracy of the aggregate forecast improved significantly: from 53 percent in
2009, to 81 percent in 2010, and 99 percent in 2011. However, forecast accuracy for individual
countries varied significantly. Therefore, a mid-year forecast review was introduced. All countries
ordering less than 50 percent of forecasted quantities by mid-year are contacted with a request for
explanation and possible adjustment of their forecast.
If forecasted and actual numbers do not match, country office (CO) staff should discuss this with
partners so that UNICEF can gain a better understanding of what improvements to existing
forecasting tools and methods might be most efficacious. If these improvements are successful,
UNICEF can communicate these practices to other partners and Nutrition Cluster members.
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2. Selection of Supplier
Long Term Agreement (LTA) with Single Supplier
(2004-2008)
This is a general purpose agreement for a reasonably long period during which one party agrees to
supply and the other to purchase annual quantities of products or materials. Long Term Agreement
involves establishing a yearly contract with a single supplier. The selection of supplier is based
on the technical requirements laid by UNICEF. The second thing which is taken into consideration
is the bid. Supplier having the lowest acceptable bid is preferred over the other keeping in mind
both meet the technical requirements. The agency also develops a back-up LTA with the supplier
that makes the second lowest acceptable offer. The back-up supply is taken into consideration
when the sole supplier fails to meet the demand. The first long-term supply arrangement (LTA)
for RUTF was established in 2001 with a sole qualified supplier, Nutriset, which manufactured the
product at its site in France. The supplier had quality and capacity but was located outside the
country where the products were required. Responsiveness and effectiveness of the nutrition
supply chain specifically, the ability of the United Nations Childrens Fund (UNICEF) to
quickly bring and distribute RUTF to where it is most needed is very important. Given the lumpy,
spiky growing demand for the product, it requires an extraordinarily responsive supply base and
supply chain to effectively meet that need. With only a single supplier and that too located outside
the region where the RUTF products are required was a challenging task for UNICEF. As a result,
UNICEF failed to meet the demand in Hunger Emergency take took place in 2004 in the Horn of
Africa.

Dual Supply (2008-Present)


As in case of RUTF Products, right quantity of the product at the right time is very important.
Moreover, the demand of RUTF Products is spiky and growing. As a result of this UNICEF failed
to meet the demand and supply in the 2008 Hunger emergency in Horn of Africa. Due to this spiky
demand of RUTF Products Supply Division made a key decisions to open the market for new
RUTF suppliers by conducting an open bidding exercise. Therefore, UNICEF established LTAs
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with all companies that met its technical requirements and allowed for additional suppliers later as
they demonstrated that they could meet the requirements. The suppliers were divided into two
categories; Local Suppliers and Global Suppliers. The agency follows a variation of the dual
supply sourcing strategy. UNICEF uses local suppliers to meet a portion of demand in their own
countries, producing at a steady rate. It also uses global suppliers. Local Suppliers were located
in countries where the RUTF product was in use. Today there are 11 qualified suppliers located in
countries where the product is used (Democratic Republic of the Congo, Ethiopia, Haiti, Kenya,
Madagascar, Malawi, Mozambique, Niger, Sudan, Tanzania, and Zimbabwe). Fostering supply
from suppliers located in countries of use would stimulate growth in local agriculture and food
production and avoid cumbersome customs clearance processes. UNICEF typically sets an order
level and orders regularly, so the local supplier can run at a steady rate and fill its capacity. Local
manufacturers, however, faced multiple challenges, including poor infrastructure, cost and
timeliness of imported inputs, maintaining product quality, availability of working capital and
foreign exchange. While much of the demand is concentrated in Africa, nutritional emergencies
may occur anywhere. To meet the demand in these countries UNICEF had Global Suppliers.
Global suppliers are more responsive, flexible and meet the remainder of the demand needed in
those countries where there are no Local Suppliers. These Global Suppliers also come to play a
major role in respond handling sudden spikes in demand caused by immediate responses to
emergencies. Global suppliers have better access to working capital, and have demonstrated that
they can very quickly adjust quantities of inputs and levels of production. (There are 10 suppliers
outside the countries of use located in Dominican Republic, France, Norway, India and South
Africa.) UNICEF Supply Division worked from 2008 to 2011 to ensure a diverse, sustainable, and
responsive supply base, growing from a single European supplier to a network (in 2011) of 19
suppliers located around the world. The agency accomplished this in the midst of continued rapid
demand growth and while improving supply chain responsiveness and effectiveness.

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3. Inventory Management
Inventory is a stock or store of goods or services, kept for use or sale in the future. However, there
are four types of inventories but for UNICEF (as it is a humanitarian organization), it mainly
involves the finished-goods and goods-in-transit to RUTF warehouses. The main motive for doing
that s entirely the precautionary motive, to meet the uncertain increase in the amount of the childmalnourished areas.
An inventory model is determined by three key variables; demand, cost, and physical aspect of the
system but in the case of RUTF supply chain our main focus is primarily on the demand/need of
the product in the malnourished areas.
Inventory models come in many different shapes but there are two models for such an inventory
management which we can apply on UNICEFs RUTF supply chain. The discussion is below:

Independent Demand
UNICEF is frustrated with the shortage of communication back from the field to country officers
(COs), regional officers (ROs), or supply division (SD) and logistics suppliers. There is little data
visibility into inventory below the country-level warehouse, and it was reported that field officers
often do not communicate stock and consumption data to CO program officers. When an order is
placed by an NGO or a District Nutrition Officer, the UNICEF CO nutrition program office may
not know whether there is any stock remaining at the local warehouse unless it specifically requests
the information. Therefore such a situation causes lack of data visibility and communication which
makes it hard to place accurate orders as the officers do not know the inventory at that time.
To eliminate such an event Independent demand system was encouraged as such systems tend to
be managed through one of two processes: periodic review or perpetual inventory management.
Periodic Review: This process involves regular review of usage and reorder to a carrying point.
Perpetual Inventory: This process revolves around reorders when an item reaches a pre-set
minimum stocking level, or reorder point.

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So a RapidSMS system was implemented which allows each feeding site to instantly transmit
information to UNICEF on quantities of RUTF received, in stock, and dispensed. This approach
is one way to resolve the lack of data transparency between UNICEF offices and partners. It
introduces new information flows into the supply chain, thereby improving projections of need,
increasing quality of data on program coverage and impact, and facilitating the ordering process,
as a result of the exact information of the present inventory in the Local WH.

Single Product at Single Location


Such a problem discussed in the above case can also be eliminated by managing the inventory of
a single product at a single location gives an answer to the main questions about the product that;
how much to order? And when to order?

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4. Logistics
Long Term Agreement (LTA) with Single Supplier
(2004-2008)
As RUTF products are delivered to over 47 developing countries in the world and right quantity
of delivery at the right time is very necessary in case of RUTF products hence the LTA with Single
Supplier Model didnt turn out to be an effective one. Talking about The Hunger Emergency which
took place in 2008 affecting 8.4 million people in the Horn of Africa, which includes Ethiopia,
Kenya, and Somalia, the 11,000 metric tons3 a total of 72,000 cartonsordered by UNICEF,
still largely from Nutriset, was postponed by three months, on average. Furthermore, during the
summer of 2008, UNICEF had to ship two-thirds of ordered product to the Horn of Africa by air,
spending $8.2 million to do so. (Air shipment cost $36.92 per carton vs. $4.58 per carton for sea
shipment.). These results indicate the extra cost which UNICEF had to spend to meet the Hunger
Emergency in 2008. Transportation costs is significantly increased when you are sourcing from a
country far away from where the product is required. There are significant variations between the
weighted average landed price of RUTF per MT shipped by sea from global suppliers to
beneficiary countries and the weighted average price of locally purchased RUTF. (See Exhibit 2.)
While in 2008, locally purchased RUTF was cheaper compared to imported product due to
exceptionally high fuel prices and a strong euro-dollar exchange rate.8 However with increasing
purchase volumes the local price is decreasing slowly. The one more thing to consider here is the
Lead time of the product. RUTF products sourced from outside Africa have a greater lead time.
In the 2008 Hunger Emergency in Africa, only 27 percent of orders for the Horn of Africa arrived
on time, while the remaining 73 percent arrived with an average delay of 37 days.

Dual Supply
The most important thing in case of a RUTF product Supply Chain is to ensure that the product is
available to the children in need at the right time. If the supply chain fails to do so it would lead to
loss of lives and the main purpose of the RUTF product. Cost and lead time is an important factor
in products like these. Therefore, UNICEF changed its approach to ensure an effective, responsive
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and low cost logistic Process. As discussed above in a dual supply approach the suppliers are
divided into local and global suppliers. The advantage of having local suppliers is that the RUTF
products are produced in countries where they are in need. This decreases the transportation cost
and the lead time. Refer to the Appendix UNICEF has 11 Suppliers in the African Countries.
However, there are possibilities that Hunger Emergency could occur in countries outside Africa.
Not to forget that spikes can occur in the supply chain of this humanitarian product. Hence to
overcome these two factors UNICEF has a set of global suppliers. These Global Suppliers come
into action when the local suppliers are unable to match the demand and in case of Emergency
situations outside Africa. Although with Global Suppliers the transportation cost and the lead time
is increased but they are necessary to match the demand of the RUTF products throughout the
word.

Comparison
With a sole global supplier the capacity increases but greatly reduces responsiveness but increases
the lead time and transportation cost. With local suppliers comes responsiveness but they lack
production capacity. By using the dual supply approach we are able to extract the advantages of
both global and local suppliers in our supply chain.

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Conclusion and Recommendations


A supply chain can be made an efficient, responsive and cost effective supply chain by making
both the global and local suppliers to be in hands with the company/organization.
However, the local suppliers lack in foreign exchange and capacity. Therefore UNICEF should
play a role to facilitate the local suppliers by investment, local suppliers training and capital. With
this, the entire local need will be satisfied by these local suppliers and UNICEF wont have to
import its supplies from the European suppliers.
The next common issue is of the inaccurate forecasting. Forecasting accuracy is important factor
and must be tracked over time, in order to estimate the demand and to decide whether new
improvements are needed to make in the supply chain. RUTF is a challenging type of supply chain
and to make its forecasting as accurate as possible its necessary for UNICEF to develop softwarebased forecasting tools. Such an activity has been done by UNICEF, as it developed an Excelbased forecasting tool and undertook global demand forecasting for RUTF in January 2009 and
also further work is being done for more forecasting accuracy.
Inventory and logistics are inter-related, because the goods move from the supplier to a local
warehouse on the basis of the need of the goods in it. Therefore its very necessary for a supply
chain to have the complete knowledge of the required amount of goods in a warehouse, considering
the precautions of over-ordering which can cause a lot of transportation cost as well as a lot of
man-work etc. UNICEF has had lack of communication from field officers, who often do not
communicate the stock and consumption data to CO program officers which has made it hard to
place accurate orders. To eliminate such an event the independent demand system is encouraged
which is one way to resolve the lack of data transparency between UNICEF offices and partners.
It introduces new information flows into the supply chain.
To solve such problems resolving such warehouse system challenges, implementing structured
warehouse demand planning process and defining a global strategy can make any supply chain an
ideal one. Because United Nations International Childrens Fund (UNICEF) works for a world in
which every child deserves to have a fair chance in life and to make that happen its necessary that
the means used to obtain such a goal should be properly managed, accurate, efficient and united
for children!
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References
1.

Nutriset.fr. (2016). Nutriset : Bienvenue sur le site Nutriset. [online] Available at:

http://www.nutriset.fr/fr/espacepresse/nutriset-reseau- plumpyfield/united-nations--
standing-committee-on-nutrition-new-yorknutrition-and-business-how-to-
engage.html. [Accessed 6 Dec. 2016].
2.

Anon, (2013). A Pocket-Size Famine Fighter. [online] Available at:

http://www.businessweek.com/stories/2005-09-13/a-pocket-size-famine-fighter.
[Accessed 6 Dec. 2016].
3.

Komrska,, J., Kopczak, L. and M. Swaminathan, J. (2013). When Supply Chains Save

Lives. 1st ed.


4.

Supplychainsforchildren.org. (2015). Assessment of nutrition supply chain studies to

inform nutrition supply chain strategies. [online] Available at:


http://supplychainsforchildren.org/en/supply-chain-stories/assessment-of-rutf-supply-chainstudies-to-inform-nutrition-supply-chain-strategies [Accessed 3 Dec. 2016].
5.

UNICEF. (2013). The UNICEF Supply Chain. [online] Available at:

https://www.unicef.org/supply/index_54257.html [Accessed 1 Dec. 2016].


6.

Komrska, J. (2011). Increasing Access to Ready-to-use Therapeutic Foods (RUTF).

[online] Available at: http://www.nutriset.fr/Downloads/PFE-RUTF-Increasing-access.pdf


[Accessed 3 Dec. 2016].
7.

Supplychainsforchildren.org. (2015). UNICEF Nutritional Supply Chain Integration

Study. [online] Available at:


http://supplychainsforchildren.org/~/media/files/scc/nutritional%20supply%20chain%20integrati
on%20study%20volume%202%20%20guidelines.ashx [Accessed 2 Dec. 2016].

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Appendix
1. Process Map

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2. Statistics
List of current UNICEFs RUTF current suppliers

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3. List of Acronyms
APICS

American Production and Inventory Control Society

ARV

Antiretroviral

BMGF

Bill and Melinda Gates Foundation

BU

Business Unit

CCE

Cold Chain Equipment

CHAI

Clinton Health Access Initiative

CMAM

Community Management of Acute Malnutrition

CO

Country Office

CoV

Coefficient of Variation

DP

Divisional Procedure

ECU

Emergency Coordination Unit

EPI

Extended Program on Immunization

ERP

Enterprise Resource Planning

ESARO

East and Southern Africa Regional Office

ESL

Emergency Stock List

EVM

Effective Vaccine Management

FTE

Full Time Equivalent

Gavi

Global Alliance for Vaccines and Immunization

Gavi SDF

Gavi Strategic Demand Forecast

HIV PoC

HIV Point-of-Care (Rapid testing)

HTC

Health Technologies Centre

IAEH kit

Inter-Agency Emergency Health Kit

ITU

International Transport Unit

LLIN

Long Lasting Insecticide Net

LTA

Long-term Agreement

MENA

Middle East and North Africa

MFSDU

Market Analysis, Finance & Data Unit

MNC

Medicines and Nutrition Centre

MoH

Ministry of Health

MRP

Material Requirements Planning


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NGO

Non-Governmental Organization

OMP

Office Management Plan

PATH

Program for Appropriate Technology in Health

PC

Procurement Centre

PD

Program Division

PO

Purchase Order

PSC

Procurement Services Centre

PS

Procurement Services

RDT

Rapid Diagnostic Test

RFP

Request for Proposal

RO

Regional Office

RUTF

Ready-to-use Therapeutic Food

SAM

Severe Acute Malnutrition

SIA

Supplementary Immunization Activities

SCOR

Supply Chain Operations Reference

SD

Supply Division

SKU

Stock Keeping Unit

SO

Sales Order

TAD

Target Arrival Date

UNDP

United Nations Development Program

UNICEF

United Nations International Childrens Fund

VC

Vaccine Centre

WSEC

Water, Sanitation, Education Centre

WB

World Bank

WCARO

West and Central Africa Regional Office

WHO

World Health Organization

WH

Warehouse Unit

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Ready-to-Use
Therapeutic
FOOD

Unite for Children

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