Saturday 25th Nov 2017 - Logistics & Supply Chain

Winner: NHS Logistics Authority

As usual, a very disparate set of entries in this category makes comparisons invidious. The International Federation of the Red Cross and Red Crescent (IFRC) entered specifically to gain recognition for the efforts of their team co-ordinating the initial responses to last year’s tsunami disaster. The task which the IFRC tackled (you can’t say ‘succeeded in’ because however effective disaster relief is, people still die before aid gets to them) was awesome – around a million survivors constitute the customer base. The initial response is always the most critical, the first three to five days are what makes the difference.

What IFRC attempt to do is to co-ordinate ‘field’ requests, match them to actual and potential donors, and monitor and measure the ongoing process. In the first three weeks of the crisis, the IFRC team mobilised 26 specialist response teams, moved 2000 tonnes of equipment and over 8000 tonnes of relief supplies through three newly created forward logistics hubs and deployed a heavy lift air freight capacity. Remarkably, in the first eight days of the crisis 40 per cent of all consignments had reached their intended beneficiaries which with the widespread destruction of infrastructure is quite remarkable. Birgitte Stalder-Olsen, head of the Logistics & Resource Mobilisation Department, says ‘The biggest power of our organisation’s logistics capacity is in its worldwide logistics network – it is due to this network that we are able to obtain quick information about mobilisation needs, available resources and delivery means to any disaster affected area’. The judges couldn’t fail to be impressed, but at the same time, even on IFRC’s own admission, there are lacunae – particularly in the planning systems which are not yet fully integrated. IFRC does an impressive job, especially in terms of movement of goods under conditions that ‘normal’ companies would consider impracticable. Further improvement is in many ways more dependent on sponsors and donors rather than being within IFRC’s power.

Magyar Telekom is the ex-public sector (now owned by Deutsche Telecom) Hungarian phone service, and has been shortlisted before. Procurement is a particularly strong element in Magyar’s submission – procurement director Zoltan Werle is justly proud of the initiation and operation of group co-operation in a lead buyer structure based on
harmonised commodity groups which, he says, have achieved more effective workflow, and motivated procurement staff to take on a higher role in process re-engineering and simplification. The judges noted sound progress in demand aggregation and supplier consolidation, and were particularly interested in Magyar’s use of reverse auctions – some 450 in the last year which have contributed significantly to an overall five per cent purchase spend reduction despite a relatively high inflation rate in Hungary.

Roll-out of vendor portals, which will offer suppliers much greater visibility and also a lot of automated processes including supplier registration, is on-going. Service levels are 97 per cent or better, and these have been maintained or improved over the past few years despite company acquisitions and a dramatically reduced headcount in key supply chain functions. The other finalist in this category was NHS Logistics Authority – again, no stranger to the competition and one of those firms that actively uses the Awards as a form of Benchmarking. Chief executive Barry Mellor says ‘The great thing [about the ESCE Awards] is that they provide us with an international benchmark
against which we can challenge ourselves against the “best in business”.’

Mellor gives an example which did not form part of the judges’ deliberations – response to the July bombings on London Transport. He says ‘Our supply chain resilience was tested as we rose to the challenge of supplying 642 different products to the 18 hospitals affected all within our guaranteed emergency response time of five hours. It’s not every day that you see NHS Logistics’ vehicles delivering under a police blue light escort!’ More prosaically, the judges continue to be impressed by the Authority’s steady application of technology where it is appropriate – their supplier portals have contributed to a 15 per cent improvement in OTIF delivery and a lead time from suppliers compressed from seven to five days. Unsurprisingly, suppliers using the portals have seen sales rise – the others haven’t. Their push of PDAs into hospitals for
basic stock management has been noted in previous years, as has their successful promotion of on-line ordering.

The judges were acutely aware that in this sector category they were trying to compare organisations in fundamentally different worlds – for example, IFRC’s team is by definition ‘adaptive’ since it cannot predict the next crisis; NHS Logistics is by law not allowed to be adaptive, in the sense that it is required to offer the same service standards to all its customers. Nonetheless, and after much hard argument, the Award goes to NHS Logistics for its sound grasp of technology and for solid end-to-end supply chain performance.

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