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MTTN45 Humanitarian Logistics Sourcing and Procurement Nonprofit Organizations shaping the Market of Supplies 12 April

MTTN45 Humanitarian Logistics Sourcing and Procurement Nonprofit Organizations shaping the Market of Supplies 12 April 2013. Content. Purchasing power in the humanitarian sector Impact of purchasing power on purchasing strategies The case of vaccine procurement

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MTTN45 Humanitarian Logistics Sourcing and Procurement Nonprofit Organizations shaping the Market of Supplies 12 April

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  1. MTTN45 Humanitarian Logistics Sourcing and Procurement Nonprofit Organizations shaping the Market of Supplies12 April 2013

  2. Content • Purchasing power in the humanitarian sector • Impact of purchasing power on purchasing strategies • The case of vaccine procurement • Nonprofit organizations shaping their supply market

  3. Who has the power to shape the market?

  4. Nonprofit-for profit relationship • The disdain history • The mutual need of collaboration More relationships, collaboration, and dependencies

  5. Distribution of Power: Resource Dependency Theory Resource dependency theory (RDT) • Focus on core competencies  outsourcing • Exchange relationships  dependence • Power as relative dependence more influence All organizations strive to maximize their power through reformulating these dependencies.

  6. Issue of power dominance in procurement • Understand its power position • Move toward more favorable position Buyer power attributes relative to supplier Buyer dominance Interdependence Supplier dominance Independence Supplier power attributes relative to buyer (Cox et al. 2000: 18)

  7. What are drivers of purchasing power? • Substitutability • Interconnections • Demand share • Information symmetry • Reputation

  8. What does the humanitarian sector look like? Humanitarian logistics • Added stakeholders with conflicting incentives • Shared management and need for collaboration • Lack of funding • Lack of infrastructure and local capacities Based on pre-study data Based on OECD (2011) data Based on WEF(2010) data

  9. What does the humanitarian sector look like? • The disdain nature of nonprofit (NPO)-for profit relationship • Scarcity of supplies “The products may not always be commercially attractive, nor the market transparent. Manufacturers are often not aware of the needs, or may consider the risks associated with entering the market too high.” (UNICEF, 2008) • The essentiality of supplies • The limited buying power

  10. Purchasing power’s impact on purchasing • How do you think low purchasing power impacts purchasing decisions and strategies? • Accept the situation and be weak • Few suppliers with high prices in country X. Gather funds and buy from • Accept the situation and safeguard • Few suppliers with high prices in country X. Have a detailed and strict contract so terms are set for a longer time • Understand the situation and try to change it • Few suppliers with high prices in country X. Insource, invest in developing more suppliers maybe local

  11. the case of vaccine procurement in the sector

  12. Delivery of health in humanitarian aid supply chains Global health SCM • Health a reflection of development and poverty reduction (UN, 2011) • Nature of disease: geographical, weather, culture, social, educational, economic • The public good nature of the related products • Higher weight of quality • High donor dependency (viewed as a global good) • Different purchase profiles among countries Based on WEF(2010) data

  13. Overview of vaccine SCs for developing countries • Subset of global health SCs • Willingness of governments to pay • Epidemiological justifications • Under valued by governments and market • Some differences between industrial and emerging • Concentrated supply market • Emerging economy producers increasing • Procurement being considered a main issue in shortage

  14. A schematic view of the positioning of different actors along the vaccine chain in humanitarian networks

  15. So power is shifted to the suppliers • What are different ways buyers (e.g. different governments and organizations) can buy vaccines the best way in this situation?

  16. Cases based on their sample group and purchase strategy Based on WEF (2010) data

  17. Several countries which have completely outsourced their purchase to humanitarian organizations (process and funding)

  18. NPO initiatives in shaping the market of supplies GAVI’s consolidation of demand for vaccines secure supply (Gavi, 2009: 16) Price drop of Pentavalent (GAVI, 2009: 16)

  19. Thank you! Questions?

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