Issues related to procurement of nutrition products
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1 Issues related to procurement of nutrition products Jan Komrska Nutrition Unit Medicines and Nutrition Centre Suppliers Meeting, 3 & 4 October 2011, Copenhagen
2 OUTLINE Major developments since last meeting (2009) What do we purchase? How do we purchase? What is market shaping? What challenges we face? Tips
3 Major developments Nutrition is on a top of agenda
4 Medicine and Nutrition Center Procurement * NUTRITION ESSENTIAL MEDICINES HIV and MALARIA MEDICINES TOTAL MNC procurement in M USD NUTRITION ESSENTIAL MEDICINES HIV and MALARIA MEDICINES * September 2011
5 Major developments (1) Nutrition unit was established in Supply Division Objective: Providing products that enable better programme implementation Focus to streamlining procurement and supply of strategic products SD participate at Global Nutrition Cluster
6 Major developments (2) Introduction of annual forecast Establishing Target Value LTAs for RUTF Sharing results/prices among LTA holders Outsourcing procurement to GAIN Premix Facility Collaboration with Academia (DTU and MUCC) Reduction of pack sizes for F-75, F-100 and Resomal
7 Annual Forecast (1) Information on products needed for implementation of CMAM: RUTF F75 and F100 Resomal Essential medicines Quantities are calculated based on forecasted targets for children coverage Reviewed mid-year Feedback provided to countries
8 Annual Forecast (2) Forecast Orders Accuracy ,100, ,018 53% ,845,979 1,499,296 81% ,959,971 1,658,410 85% Challenge: How to share forecast with the suppliers?
9 Annual Forecast (3) 300,000 RUTF Orders Annual Trend Analysis 250, , , ,000 50,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec average
10 What do we buy? Anthropometric equipment Minerals and Vitamins Food fortification Salt iodization Supplementary Food Therapeutic Food
11 Potassium iodate N* countries ,000 Procurement of Potassium iodate (MT) 300, , , , ,000 50, Potassium iodate (MT)
12 Anthropometric equipment Height measurement Weight measurement Arm circumference measurement Identification Nutrition kits Measuring boards orders Baby/infant boards Baby/infant adults boards - wooden Baby/infant adults boards - plastic
13 How do we purchase? All purchases shall be carried out by means of competitive tenders UNICEF financial rules and regulations The following products may only be procured through Supply Division. Exceptions may be granted on a case-by-case basis but these must be authorised by Supply Division: (h) pharmaceuticals; (i) therapeutic food; (j) supplementary food; Book G: Supply Manual, Chapter: 7
14 Procurement - Nutrition Unit LTAs issued Products purchased Vendors Orders issued
15 Market shaping (1) How to make product available? How to assure competition on the market with the limited sources? What products? RUTF, Zinc tablets, Micronutrient Powder, Measuring boards
16 Market shaping (2) Do procurement mechanisms used by UNICEF enable market shaping? Is there any disadvantage in managing procurement through LTAs? Pass/fail criteria LTA duration is months
17 Market shaping (3) Recommended product Product with potential to meet UNICEF requirements Failed Micronutrient Powder Result of the bid: 2 suppliers LTAs established 1 supplier recommended but needs QAC inspection 1 supplier recommended for local purchase 5 suppliers potential to meet UNICEF requirement 5 suppliers not recommended
18 Market shaping (4) Through allocations of quantities (target value LTAs) Forecasted quantities shared among recommended suppliers RUTF 2008: 2009: 2010: 2011: 1 LTA 5 LTAs 6 LTAs 13 LTAs
19 Market shaping (5) Through solicitation methods Recommended product Product with potential to meet UNICEF requirements Failed Micronutrient Powder Result of the bid: 2 suppliers LTAs established 1 supplier recommended but needs QAC inspection 1 supplier recommended for local purchase 5 suppliers potential to meet UNICEF requirement 5 suppliers not recommended
20 Monitoring Allocated Targets 200,000 Monthly Purchases and Target Adjustments 180, , , , ,000 80,000 60,000 40,000 20,000 - Vitaset Diva Tabatchnick Insta Compact Challenge TARGET
21 MUAC tapes Quantity (pieces) 1,029, ,000 2,715,000 3,565,600 4,700,000 Average unit price (USD) Pieces 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Evolution of Ordered Quantities and Price USD MUAC tapes quantity Average price
22 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Results of Market Shaping 300,000 Monthly RUTF Orders 250, , , ,000 50,000 - Quantity in cartons
23 Challenges (1) Response to large scale emergencies Demand for products UNICEF has limited/no experience with (CSB+, rice, maize flour, pulses, oil) 60,000 50,000 40,000 30,000 20,000 10,000 Orders of Corn Soya Blends by UNICEF in MT UNIMIX CSB plus
24 Challenges (2) Increased interest of industry Increased interest of media Funding constrains
25 Challenges (3) Beneficiary expectations increased Requirements for import tightened (product registration required) Missing documents needed for import
26 Performance measurement Key Performance Indicators (KPIs) KPI 3 (on time delivery) KPI 4 (supplier performance) Agreed Target Arrival date (TAD) constitutes Supply Division commitment to Country Office
27 KPI Calculation Country Office Agreed TAD Supply Division Supplier Requisition Requested TAD Purchase Order Agreed Delivery Date Goods Notification KPI 3 KPI 4
28 Suppliers performance KPI 4 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% on time small delay delay
29 New development New warehouse Roll out of ERP (SAP)
30 Ways forward Continue to look for products that impact child mortality and make them available at affordable price (improve product specifications, fit-for-purpose, competitive prices, labeling requirements, publish prices) Improve performance of the supply chain (capacity of suppliers to answer increasing demand; timely deliveries) Decrease transactions/make LTAs available to country offices
31 Focus Areas
32 PROCUREMENT WORKFLOW for STANDARD ITEMS Bid Plan Expression of Interest Vendor NEW EXISTING Request for additional information Vendor Master Approval/ Rejection Source list/ Invitee list Preparation of Bid document Floating of bid Receipt of offers Preliminary evaluation of offers Technical evaluation of offers Commercial evaluation of offers Adjudication PO Value >100,000 USD CRC Submission Issuing LTA/PO ARD < 100,000 USD
33 Procurement Documents Flow Supplier Purchase Order Acknowledgement form 3 days Goods Notification 5 days Freight Forwarder Purchase Order (Copy) Freight Forwarder
34 Tips (1)
35 Preliminary evaluation of offers Tips (2)
36 Tips (3) PO is issued to company that submitted the bid Payment is done to company that PO was issued to If company changed name official document must be provided
37 Tips (4) Payment terms: 30 days net, % discount for early payment (20 days, 10 days) Applicable from receipt of invoice at Supply Division Certificates of analysis MUST accompany invoice Bottleneck Payment cannot be processed unless ALL supporting documents are not received
38 Thank you!
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