By Sean Delaney | Manager, Supply Chain Operations | Chainalytics |
Our collective conscience in recent months has been fraught by the news of natural disasters hitting the US and our neighboring country of Mexico. Providing swift relief to those in need, in the form of aid and donations, is of utmost importance. From a supply chain perspective, achieving velocity in relief support with dynamic mobilization and a short-ramp up period provides a unique challenge. Humanitarian Warehousing, as highlighted by the Supply Chain & Logistics Institute at the Georgia Institute of Technology must be simple, flexible, robust, and quickly scalable (Bartholdi 2010)1. Below are four factors to consider when evaluating process design:
- Speed of Entry Processing with Accurate Information
The speed versus accuracy balance presents a challenge for any process with transactional data management. In humanitarian operations there is often an increased need for materials and the temptation to cut corners might be appealing for both inbound donations and outbound gift-in-kind. However, not accurately capturing the correct information can have devastating consequences. For example, Country of Origin is often required for, or at a minimum expedites, the process when importing into a country. Both accuracy and speed are increased if captured in the receiving process correctly by using a drop down selection limited to known material production countries. By utilizing a process discipline, required fields options, and cross validation through a systematic solution designed with user friendliness, adherence to standards can be merged with ease of use.
- Dynamic/Flexible Storage
Inbound donations and outbound shipment quantities and frequencies can vary greatly, making dynamic storage a top priority in humanitarian warehousing. This flexibility can be achieved through a mixture of both racking and floor storage. Quick turn loads formatted as units (pallets, crates, large containers, etc.) can be stacked on the floor in designated locations to best utilize space and allow for ease of access. Cartons and “Eaches” should be separated into racks or shelves for future picking and higher cube utilization. These tactics enable both picking efficiency and accuracy. Additionally, and often overlooked, by utilizing a simple location naming convention for both inbound and outbound locations, one can flex both storage space and labor (often volunteer staff) from picking to packing then over to staging and loading with limited training and ease of understanding.
- Unique Valuation
Valuation of donations presents a unique challenge to humanitarian relief organizations. As outlined in Partnership of Quality Medical Donations’ Guideline version 5, section II Item 13, an organization’s valuation process should be consistent, concise, well documented, audited and reasonable, as well as align with generally accepted accounting principles (PQMD 2016)2. These guidelines can be achieved without a high degree of difficulty when done with an internal system using reportable equations. Understanding of valuation should be clearly communicated throughout the organization and subject matter ownership should be shared between finance and operations. External source databases like RED BOOK from Truven Health Analytics provides Average Wholesale Price (AWP) and Wholesale Acquisition Cost (WAC) for brand and generic drugs with a simple data connection making valuation consistent and concise.
- Metric Tracking
Metrics for humanitarian warehousing need to speak to a different stakeholder. The consignee and the donor, along with charity watchdog groups, have a different perspective of measurements and require a specialized conveyance in the message. As in any organization, metrics should be transparent and concise. However, in humanitarian supply chain, they require convertibility, and if possible, variance between stakeholders. Total tonnage and quantities shipped must be tied back to health impact. For the consignee, realistic lead-times need to be set, achieved and continuously improved. On time and in full delivery can often mean the difference between life and death in rural areas. By operating systematically and cross functionally, precise and demonstrative metrics can not only increase healthcare impacts but also boost donations.
Every supply chain process design or process improvement project can be difficult in its own right. Many organizations, from non-profits to Fortune 500 companies, often struggle to find solutions for their supply chains’ unique challenges. Some may lack the knowledge or resources, while others require a structured project management methodology. By partnering with individuals cross-functionally, which often means going outside the organization, better solutions can occur more quickly, which in turn can lead to better return on investment.
Sean Delaney is a manager in Chainalytics’ Supply Chain Operation group. In addition to years of progressive supply chain management experience within the for-profit industry, he has also consulted for multiple healthcare nonprofits and NGOs. Sean specializes in warehouse and distribution process design and improvement.
1 Bartholdi, John J. III. MedShare. Supply Chain & Logistics Institute at the Georgia Institute of Technology.
2 Partnership for Quality Medical Donations, PQMD Guidelines for Quality Medical Donations. Version V. 2016.
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