Like the private sector, many not-for-profit organizations are involved in supply chain logistics, aiming to get needed products to their clients as efficiently as possible.  In emerging markets such as Tanzania, streamlining in-country supply chain can be a complicated undertaking. Many not-for profit organizations are acknowledging that their supply chain capability and capacity, while a key undertaking for their operations, is not where it should be.   In February and March I spent six weeks on the ground in Tanzania assessing supply chains in the not-for-profit sector, ranging from medical supplies to social products (e.g. water tablets and condoms). I was trying to answer the key questions:  Where are the key supply chain challenges and how can the private sector assists?

The “last mile of logistics” – In the emerging markets where I work, I often hear the central excuse of poor infrastructure to describe sub-optimal performance. In reality the situation is far more complex. Far too often a lack of systems and routines are the main culprits for programs failing to deliver.  Systems are visible up to certain level (e.g. distribution to a district warehouse) with the “last mile of logistics” not clear or often ad hoc. Effective distribution of medical supplies to dispensaries and health clinics, for example, requires detailed planning, territory design and mapping. Too often, distribution to service points (e.g. dispensaries) is plagued by bottlenecks and poor product and information flow. The private sector is by no means perfect, but it can play a major part in assisting organizations in the design and implementation of the required systems in this “last mile of logistics”.

Transportation challenges – working with Third Party (3PL) and Fourth Party (4PL) logistics companies are increasingly becoming an important business strategy for success. Many public sector companies are still in the early stages of 3PL and some are ignoring 3PL and 4PL completely, to their peril. The private sector can play an important part in this regard. During my visit it became apparent that some organizations need to look “beyond the Landcruiser” as a delivery vehicle. Vehicle configuration is critical part of cost effective distribution and the increased availability of other more cost effective means of distribution (e.g. motorbikes) in Africa makes alternatives a viable option.

Assessments –The not-for-profit sector sometimes lacks the require resources, capacity and capability required to conduct detailed assessments of their operations.  Companies often use internal assessments and audits that could be adapted with little effort to evaluate the public sector’s route-to-market and supply chain systems.  Such a technical exchange need not just be viewed as corporate social responsibility.  Private sector project teams can gain valuable insight and learnings from the market that can be used in their operations and industry.

Technology challenges – The private sector can also be a vital technology partner. A good example in Tanzania is the “SMS for Life” project. Novartis has teamed up with Roll Back Malaria, Vodafone and IBM to design and implement a system focused on everyday SMS technology.  The system aims to eliminate stock-outs, improve ordering and to increase visibility in the supply chain.

Procurement challenges – Large multinationals have the required expertise in the system to draw on when it comes to equipment (e.g. forklift) purchases.  Not-for-profit organizations are often isolated from such knowledge and sometimes procure the wrong equipment for the job.  During my site visits I noted such challenges (e.g. the need for narrow aisle forklifts) and a number of interviewees stated that they would like to receive input from the private sector regarding the procurement of operational equipment.

Channel & dealer insights –Deciding on the right distribution strategy for social products such as condoms can be a challenging undertaking. For instance, not all distributors will distribute to all channels (e.g. nightclubs) and some might make use of a multi-channel strategy (purchasing from more than one channel or distributor) because of relationship and category mix (e.g. other products).  For not-for-profit organizations, conducting detailed research can be an expensive undertaking and often their operations are more geared for social marketing than logistics and Route-to-Market. In such cases, some consumer goods companies that already conduct detailed consumer and dealer research might assist with vital channel and market insight using data that are already available in their system.

Capability training – Consumer goods companies have invested heavily in business skills training for their distributors and outlet base. The same business skills training can benefit the public sector’s partners such as health clinic and dispensary workers who also require basic business skills to conduct their business effectively.

Supply chain council– The private sector can also take a leading role in establishing an in-country supply chain council. Councils are great ways to share knowledge and learn from fellow council members. Council events can includes site visits, workshops and key note speakers from industry leaders. During my visit in Tanzania a number of private and public partners expressed an interest in a supply chain council.

The role of public-private partnerships is evolving and there are a number of areas where companies can contribute, make an impact and at the same time gain valuable market and operational insight for their own operations.

I guess that it will be clear how important the public sector is for health logistics in developing countries. But how about the public sector? What could be its role?

Combine the words “logistics” and “private sector” in one sentence, and obviously third party logistics (or 3PL) will jump immediately to mind. However, there are very few logistics companies (or, for that matter, health ministries or health NGOs) in developing countries who would be able to implement the necessary visibility; so I am afraid 3PL lies rather further in the future than one might wish.

An existing example of more or less successful inclusion of the private sector in the health system, are the private retail pharmacies you can find almost everywhere in developing and middle-income countries. In many of those countries, it would be (almost) impossible to get the necessary medical supplies to the patients without this private initiative.

For example:

* There are serious questions about the quality of the supplied medications by private retail pharmacies in developing countries. Not only can this be extremely harmful for the patients themselves, but it can also contribute to the further spread of resistant strains of viruses, bacteria, and parasites.
* Likewise, the quality of advice given by private pharmacists is not always the best. Research shows that not only is this advice not always up to par due to a lack of knowledge, but there is the obvious problem that the pharmacist wants to sell items on which he can make a (larger) profit; and so they would be clearly tempted to advice e.g. anti-diarrheals instead of ORS.
* Private pharmacies will go where there is profit to make. This means that sparsely populated areas or especially poor populations are more likely not be served by any pharmacy.
* Likewise, private pharmacies will not give away their goods to their poorest customers either. This would mean that the poorest parts of a population that is served exclusively by private pharmacies might not be able to access the necessary medicines.

None of these issues are insurmountable; e.g., quality of supplies and advice can be increased by better supervision and training, incentives can be given to pharmacies to establish themselves in sparsely populated areas, and a voucher system can be instituted to safeguard the needs of the poorest. However, all this costs money too, and in the end it might actually be more effective to have a public (government-owned or sponsored) pharmacy than a public one. This is not something that can be decided on a system-wide level; more likely, the most effective and efficient solution is a mix of private and public pharmacies, supplemented with adequate supervision, training, and financial incentives. Finding the right mix is not an easy task, and probably finding this right mix will include a number of painful mistakes. Don’t forget that the most successful systems in developed countries are the result of many years (and sometimes centuries) of ‘tinkering’.

Mobile phone networks have proven to be a vital piece of technology for Africa. The technology is playing an important part in bridging the infrastructure divide and assisting entrepreneurs and businesses to improve efficiency. The mobile revolution is still in its infancy and organizations are slowly adopting new tools and technology to conduct business.  The not-for-profit sector has been on the forefront of adopting and piloting a number of projects and there are some interesting learnings for the business world.

Communication for the mobile age

One of the major challenges for any operation is keeping customers informed. When conducting customer service surveys in Africa, outlets often complain about the lack of communication about product offerings and promotions.  Many customers are also frustrated about a lack of timely information.  As one retailer put it to me in Guinea, “by the time we get to understand the mechanics of the promotion, the promotion has ended.”  Most managers and supervisors are using SMS extensively to communicate with customers and increasingly companies are adopting it as an enterprise application strategy. FrontlineSMS created a text messaging system for not-for-profit organizations to address poor communication, which is seen as a major barrier for many organizations. The system leverages tools already available to most organizations, namely computers and mobile phones. The same system is being adopted by companies. For example, companies can use the system to send out mass SMS messages. Companies can categorize their databases and tailor messages according to trade channels and profiles.  Companies can also use the system to collaborate more effectively with trade partners and share information.

Mobile learning

In Africa, as in many parts of the world, people are spending more time reading text on mobile phones and mobile learning has seen some interesting developments. Projects such as the Imfundo Yami/Imfundo Yethu in South Africa is currently piloting a project to teach kids mathematics on the mobile phone.  The Shuttleworth Foundation in South Africa has also taken the initiative with the M4lit (Mobiles for literacy) project to get children to read. In Africa, where corporate training budgets are often overstretched, mlearning can be viable blended learning option.

Mobile Search

With limited cash flow, many retailers run out of stock on a regular basis and delivery frequency does not always satisfy demand.  With low drop sizes (low purchases) increasing delivery frequency is not always a viable option. Outlets are sometimes unaware where to purchase stock when they run out. Mobile search, such as applied by Google’s Application Laboratory  (AppLab) in partnership with the Grameen Foundation, models interesting possibilities for business.  AppLab builds on the success of another earlier project, Village Phone, in which local entrepreneurs rent cell phone use to villagers. AppLab includes Farmer’s Friend, a searchable database with agricultural advice and weather forecasts, Clinic Finder, to locate nearby health clinics, and Google Trader, which matches buyers and sellers of agricultural produce, commodities and other products. Companies can adopt mobile search to provide important information regarding location and product offering to consumers. It can also be used to assist shop owners in locating the nearest supply point.  Users can text a query to a short code and the service will text back the result.

Mapping stock-outs

Most companies in Africa will tell you that visibility in the supply chain is one of the biggest challenges they face. With a lack of IT infrastructure it is difficult to keep track of stock levels and sales data; real time data is just a dream for most.  However, organizations are increasingly starting to use mobile phones for data collection. Stopstockouts.org currently uses the Ushahidi website mashup, online mapping technology,  to track stock-outs of medical supplies with text messages in Kenya, Malawi, Uganda and Zambia, all in near real time. Ushahidi  was initially developed to map reports of violence in Kenya after the post-election fallout in 2008. Text messages are connected with mashups, and create a picture of medical out of stocks.  Businesses can use the same technology to track sales and stock levels and identify problem areas and regions.  Online mapping can also be used to collect outlet base information and create route maps for distributors and salesmen.

SMS for counterfeit

Most African consumers can testify that purchasing medication can be a risky undertaking.  International Medical Products Anti-Counterfeiting Taskforce (IMPACT) estimates counterfeits comprise around 1% of sales in developed countries and more than 10% in developing countries. However, in parts of Africa, more that 30% of the medicines on sale can be counterfeit.  MPedigree, a non-profit based in Ghana fights counterfeiting with SMS technology. Consumers can SMS a scratch off panel code to determine if medicine is counterfeit. The same technology can also be used by companies in the textile and beverage sectors, where counterfeit is rampant and a major barrier for market entry.

Banking for the unbanked

With very low banking penetration in Africa, mobile banking provides great opportunities for organizations.  Many distributors run out of stock because, as one distributor explained in Zambia, “to go to the bank is half a day out of my trading day. But no cash, no delivery”. Mobile banking (M-Banking) schemes such as M-PESA in Kenya and Wizzit in South Africa are receiving increased attention. As most mobile phone users make use of prepaid cards, prepaid calling credit has emerged as a viable mobile paying system in some countries, notably Kenya. Customers can use M-Banking to pay bills and transfer money. M-PESA is also being used as a savings account even though the scheme does not pay interest. Olga Morawszynski’s excellent research on M-Pesa found that it saves people time that they would otherwise spend traveling between their home and city to deliver money.  M-banking holds real potential for organizations in Africa where cash flow and a reliable banking infrastructure remains a constant headache.

Mobile phones have had an enormous impact on peoples’ lives in Africa and can be counted an unparalleled success when compared to any other technology. As a cheap available technology, mobile technology presents a great opportunity and companies should seize the opportunity.

Aquatabs – the Hybrid Social Distribution Model

Last month I spoke to Michael Gately, Marketing Director of Medentech.  The company is well known for its Aquatabs brand of rapidly dissolving tablets. It is one of the best known and most respected names in point-of-use water purification globally and is used to disinfect billions of litres of water every year.

TN: What is the public private partnership?

MG: It is a collaborative model that involves WHO (World Health Organization), UNICEF (The United Nations Children’s Fund) and at country level it also includes central, local governments and NGOs (Non-Governmental Organizations).

TN: Your Route-to-market strategy revolves around a hybrid model. Can you elaborate on this?

MG: The hybrid model includes three legs:  Emergency preparedness, retail sales supported by above the line advertising and door to door social marketing.  At the retail level we normally work with local importers. However , in a number of countries, NGOs such as PSI (Population Services International) can also fulfill the role of importer and distributor at the retail level.

TN: Can you explain the door to door distribution?

MG: In some countries NGOs are organizing a door to door sales person. This person fulfills the role of a community based distributor and also an outreach worker. They derive their income from the sales of Aquatabs and other products. Door to door distribution is very important as the sales person finds himself right there where the child might be sick today. The sales person also has the opportunity to hand them a behaviour change message and handle any objections they might have. This is very hard to do with above the line advertising.

TN: What is your pricing strategy?

MG: We don’t arrive in a country with a price point and we normally work backwards to make sure everybody in the sales channel earns a livable wage. We also want to make sure that our prices are in line with what people are willing to pay for our products. The margins that people can earn are very attractive and Medentech has a long term commitment to keep their prices affordable.

TN: How do you forecast demand?

MG: Pre-positioning is a big part of what we do and we have stock pre-positioned all over the world. The businesses we are in have enormous search capacity. You don’t know when another Tsunami might happen.  We normally plan five years ahead and are currently constructing a new factory in India. Our capacity is way beyond what any urgent search might require. However, having products available in local shops is the ultimate in crisis preparedness.

TN: Do you provide any training to partners?

MG: We have developed a comprehensive training program for emergency water treatment. It is a day long training program that we provide to all of our distributors. The training program covers key issues such as water treatment options and what to do in an emergency.

TN: What does the future hold for water purification?

MG: The water sector is going to become more and more stressed and the need is growing.  There are 5,000 children a day dying due to diarrhea and we can have a substantial impact. Hybrid social marketing is still a relatively new science and we are learning all the time.  However, there are organizations with expertise in the area, in particular, PSI, AED and Path. The mood among our network is that we just need to get on with it and do it.

TN: Who is GiG?
GiG is a horticultural sales and marketing business conceived as a partnership between Haygrove (a private UK business) and Concern Universal (an international NGO)

TN: How does GiG tap into Gambia’s important tourist sector?
GiG supplies high quality locally grown produce to Gambia’s hotels and restaurants.

TN: How does it work?
GiG contracts local farmers to grow vegetables and enables farmers to move from subsistence to commercial farming. GiG has worked with over 1000 Gambian producers (indirectly benefiting 5000 people), 90 percent of whom are women. GiG also provides assistance to  farmers to compete in the market place through increased marketing and business skills training and development.

• In Ethiopia 75% of owners are new business owners
• 80% of the owners rely on the MDC for their sole income
• 80% of the staff and 95% of the owners indicate they make more money now
• On average, 3.9 people are employed by each MDC
• 19% of owners and 8% of staff are female
• 80% of owners and 90% of pushcart operators report receiving training

Kudos to the Ethiopian team for making it such a success!

“The concept involves putting up a network of rural billboards around Kenya, using them as a way to gather and create a nexus point for community information. Anyone in the village can put up a notice, news or advertisement on a village billboard by going through a site manager. There is an opportunity to sell message space on billboards in other towns, using the mobile information pathways open by these operators. Billboard operators can be connected locally, regionally and nationally. End users will have the ability to find goods and services available via digital format. The concept marries the worlds of non-technical rural Africa with that of modernized urban Africa.”

This concept holds real potential for companies and non governmental organizations (NGOs) from a supply chain perspective as the need for increased visibility is one of they key challenges in emerging markets.

Reduce out of stock – visibility will allow distributors and suppliers to determine product availability and potential demand.  Mobile information can provide an important inventory management system for companies struggling to understand the demand in their rural outlet base.

Load consolidation – many companies do not deliver to rural areas as companies normally struggle to make the financial numbers work with less than truck load (LTL) deliveries.  With increased visibility, logistics companies can consolidate loads from various suppliers and reduce distribution cost in the process. A central location can also be used as a cross-docking site serving a network of villages in the area.

Sharing of information – this will hold real benefits to farmers  in the various villages as they can share knowledge about market prices and carrier costs (distribution). Companies and NGOs also will have an improved way to communicate with villagers on the ground.

Market days – African village trade revolves around market days. Many suppliers and service providers are unaware of market day schedules and the billboard(s) will make it easier for buyers and sellers to find each other.