CHSCM 3.0 - Unit 1 - SCM in the Humanitarian World

Within the supply chain there are three types of flow:
• Physical goods flow • Information flow • Financial flow
The physical goods flow consists of two different flows. The primary goods flow, from the supply end
of the supply chain to the beneficiaries, consists of the functional activities through which the
product proceeds to get to the beneficiaries: purchasing, production, and distribution. Not all of
these functions will be seen as supply chain activity, but they all have a fundamental impact on how
the supply chain works.
As product flows down the supply chain, it may be necessary for inventory to be held in different
places. This inventory will be in different formats at different stages in the chain, for example raw
material, work-in-progress, or finished goods. At the start of the journey it will be held as raw
materials, then as work-in-progress, before it finally becomes a finished product, in the form the
beneficiaries can use.
The primary flow is not the only goods flow. Increasingly, it is important to consider return flows.
This might be because needs were incorrectly anticipated and product has to be transferred from
one location to another. It may be that the product is not within specification and it has to be
returned to suppliers, or to a different location for controlled destruction. Another example
concerns the removal of waste created by the supply chain operation. In some geographical
locations, this could be essential to minimize the operation’s environmental impact.
Certain organizations are very skilled at moving materials from left to right, or downstream. They
have systems and processes in place that allow this activity to be managed very well. Often the
process from right to left, the upstream activity, is less well-managed and inventory becomes lost or
damaged during the process. For example, the ability to export assets, such as vehicles and
communications equipment, for use elsewhere is dependent upon the rigorous management of
documentation and compliance. Where quality issues exist, as with food supplies, the issues
involved in exporting or destroying food in food insecure areas can become both political and
complex. This type of flow is often referred to as reverse logistics.
The supply chain is not only about product flow; it also encompasses the flow of information.
Initially, the crucial piece of information is in the form of the beneficiaries’ needs, whether this is
actual or anticipated. This acts like a trigger for the entire supply chain activity. Without it, there is
little use in performing the related supply chain activity. This need will travel up the supply chain,
conveying different requirements to the different parties involved. The need will be transformed
into a series of other signals that will initiate the physical activity. As product is moved downstream
in response to the trigger, information takes on a new role of monitoring and control, providing
visibility to what is happening in the supply chain. This ability to track and trace product movement
is increasingly becoming a requirement to ensure the security of goods on their journey.
The third flow, the financial flow, provides the reward for ensuring that the other flows work well.
Since a humanitarian supply chain will have interfaces with commercial supply chains, the financial
flow must also be managed. As product flows down the supply chain from one participant to the
next, a financial transaction might be involved, and this is repeated at each stage of the chain. One