Food security - food transfers standard 4: Supply chain management (SCM)
Commodities and associated costs are well-managed using impartial, transparent and responsive systems.
Key actions (to be read in conjunction with the guidance notes)
Establish a coordinated, efficient SCM system using local capacity where feasible (see guidance notes 1–3).
Ensure a transparent, fair and open procedure for awarding contracts (see guidance notes 1–2,4).
Build sound relationships with suppliers and service providers and enforce ethical practices (see guidance notes 1–2, 4–5).
Train and supervise staff at all levels of the SCM system to observe food quality and safety procedures (see guidance note 5).
Establish appropriate accountability procedures including inventory, reporting and financial systems (see guidance notes 6–8).
Minimise losses, including theft, and account for all losses (see guidance notes 9–11).
Monitor and manage the food pipeline so that all possible actions are taken to avoid illegal diversions and interruption to distributions and all stakeholders are regularly informed on the performance of the supply chain (see guidance notes 12–13).
Key indicators (to be read in conjunction with the guidance notes)
Food reaches intended distribution points (see guidance notes 1 and 7).
Commodity tracking systems, inventory accounting and reporting systems are in place from the beginning of the intervention (see guidance notes 7–8, 11–13).
- SCM assessment reports show evidence of assessment and inventory of local SCM capacities, local food availability and local logistics infrastructure (see guidance notes 2–3).
- SCM reporting shows:
evidence of transparent, fair and open systems for awarding contracts
evidence of supplier/service provider performance management and reporting
number and proportion of SCM staff trained
completeness and accuracy of documentation
losses are minimised and maintained at less than 2 per cent and all food is accounted for
regular pipeline analysis and relevant stakeholders informed of food pipeline and supply chain.
- evidence of transparent, fair and open systems for awarding contracts
- Supply chain management is an integrated approach to logistics. Starting with the choice of commodity, it includes sourcing, procurement, quality assurance, packaging, shipping, transportation, warehousing, inventory management and insurance. SCM involves many different partners, and it is important that activities are coordinated (see Core Standard 2). Management and monitoring practices should ensure commodities are safeguarded to distribution points. However, humanitarian agencies are also responsible for the food reaching the targeted beneficiaries (see Food security–food transfers standard 5 and standard 6 ).
- Using local services: An assessment should be made of the availability and reliability of local capability before sourcing from outside the area. Care must be taken to ensure that sourcing locally does not cause or exacerbate hostilities and do more harm in the community. Reputable local or regional transporters and freight forwarders have valuable knowledge of local regulations, procedures and facilities, and can help to ensure compliance with the laws of the host country and to expedite deliveries. In a conflict environment, the vetting of service providers should be especially rigorous.
- Local sourcing versus importation: The local availability ofgoods, and the implications for local production and market systems of food being either sourced locally or imported, should be assessed, including environmental sustainability (see Food security and nutrition assessment standard 1 and Food security – livelihoods standard 1 and standard 3). Markets are stimulated and supported through buying food locally or regionally; this may give farmers an incentive to produce more and help boost the local economy. Where several organisations are involved, local sourcing should be coordinated as far as possible. Other in-country sources of commodities may include loans or reallocations from existing food programmes (donor agreement may be necessary) or national grain reserves, or loans from, or swaps with, commercial suppliers.
- Impartiality: Fair and transparent contracting procedures are essential to avoid suspicion of favouritism or corruption. Service provider performance should be evaluated and shortlists updated.
- Skills and training: Experienced SCM practitioners and programme managers should be mobilised to set up the SCM system and train staff. Particular types of relevant expertise include contracts management, transportation and warehouse management, inventory management, pipeline analysis and information management, shipment tracking and import management. When training is carried out, it should include staff of partner organisations and service providers and be in the local language.
- Food is not used for payment: The use of food to pay for logistics operations, such as unloading at warehouses and distribution points, should be avoided. If cash payments are not possible and food is used, adjustments should be made on the food amounts sent to distribution points so that originally planned amounts still reach targeted recipients.
- Reporting (including logistics cluster and inter-agency): Most food donors have specific reporting requirements and supply chain managers should be aware of these requirements and establish systems that meet them.Day-to-day management needs include reporting promptly any delays or deviations in the supply chain. Pipeline information and other SCM reports should be shared in a transparent manner.
- Documentation: Sufficient documentation and forms (waybills, stock ledgers, reporting forms, etc.) should be available in the local language at all locations where goods are received, stored and/or dispatched, in order to maintain a documented audit trail of transactions.
- Warehousing: Dedicated warehouses for food are preferable to shared facilities but good management can minimize risks in the latter. When selecting a warehouse, it should be established that no hazardous goods have previously been stored there and there is no danger of contamination. Factors to consider include security, capacity, ease of access, structural solidity (of roof, walls, doors and floor) and absence of any threat of flooding.
- Disposal of commodities unfit for human consumption: Damaged commodities should be inspected by qualified inspectors (such as food safety experts and public health laboratories) to certify them as fit or unfit for human consumption. Disposal should be executed quickly before food becomes a health hazard. Methods of disposal of unfit commodities include sale for animal feed and burial/incineration authorisedand witnessed by relevant authorities. For disposal as animal feed, certification must be obtained for fitness for this purpose. In all cases, unfit commodities must not re-enter the human or animal food supply chain and disposal must not harm the environment or contaminate water sources.
- Threats to the supply chain: In situations of armed conflict or general insecurity, there is a danger of food being looted or requisitioned by warring parties, and the risks to security of transport routes and warehouses must be managed. There is potential for theft at all stages of the supply chain: control systems must be established and supervised at all storage, hand-over and distribution points to minimise this risk. Internal control systems should ensure division of responsibilities to reduce the risk of collusion. Stocks should be regularly checked to detect illegal diversion of food. Measures should be taken not only to ensure the integrity of the supply chain but also to analyse and address broader political and security implications, such as the possibility of diverted stocks fuelling an armed conflict (see Protection Principle 1).
- Pipeline analysis should be regularly performed and relevant information on stock levels, expected arrivals and distributions shared among stakeholders involved in the supply chain. Tracking and forecasting of stock levels should highlight anticipated shortfalls and problems in time for solutions to be found. Information-sharing among partners may facilitate loans to prevent pipeline breaks. Pipeline breaks may be unavoidable if resources are inadequate. In such cases, prioritisation of items in the food basket may be necessary when programming resources (i.e. choosing what to buy) with available funds. Stakeholders must be consulted and solutions may include reducing overall ration size or reducing or excluding the food types which beneficiaries have more access to (physically and economically).
- Providing information: Relevant information should be provided to appropriate stakeholders rather than to all stakeholders to avoid misunderstandings. The use of local media, traditional methods of news dissemination and current technologies (mobile phone text messages, e-mail) should be considered as a way of keeping local officials and recipients informed about deliveries and reinforcing transparency.