July 2010 | Case Studies | Casebook

Humanitarian Aid: The Logistics of Doing Good

Tags: Reverse Logistics, Distribution, Supply Chain Management, Health Care Logistics, Humanitarian Logistics

 

Nonprofit organization MedShare distributes recovered medical supplies to the places of greatest need.

Imagine receiving thousands of different products and pieces of equipment from hundreds of sources around the United States, and not knowing what each shipment will contain until it arrives at your facility.

It may sound like a supply chain nightmare, but it is business as usual for MedShare, a Decatur, Ga.-based nonprofit organization that recovers and redistributes surplus medical supplies and equipment.

MedShare’s inbound shipments can include up to 25,000 different product codes. Volunteers and staff sort the products delivered each day, enter them in inventory, and allocate warehouse space to hold the items. Then they pick and pack the items into custom orders, load them into containers, and ship them to any one of 80 developing countries, where recipients may have limited knowledge of customs clearance.

Adding to the complexity is the urgent need to ship supplies in response to life-and-death situations, such as the January 2010 earthquake in Haiti.

“Our biggest challenge is that we don’t know what products we will get or when we will get them,” says Rob Oviatt, MedShare’s operations manager. “It’s like standing under a waterfall and trying to direct the water into different buckets.”

REcovery time

Founders A.B. Short and Bob Freeman organized MedShare in 1998 to address the critical healthcare needs of underserved populations throughout the world, and the environmental threat posed by medical waste. The organization aimed to recover perfectly good discarded medical supplies and used medical equipment that would otherwise be sent to a landfill, and recycle it to lifesaving ends.

To date, MedShare has donated more than $70 million worth of medical supplies and equipment, and shipped more than 560 40-foot containers to hospitals and clinics in the developing world. In addition, MedShare has outfitted more than 1,000 international medical teams with $2.3 million worth of supplies. Ninety-six percent of MedShare’s revenue goes to program services—only the balance is spent on administration and fundraising. This kind of output is possible only because of a lean, hard-working staff supplemented by many volunteers and generous donations.

From humble beginnings as a one-person operation in donated warehouse space, MedShare has grown into a national organization that has inspired a number of similar initiatives. Today, the organization operates two distribution centers: a 50,000-square-foot office and warehouse in Decatur, outside Atlanta, and a 34,000-square-foot center in San Leandro, Calif., near San Francisco.

MedShare works with hospitals, clinics, manufacturers, distributors, non-government organizations (NGOs), and individuals to recover and recycle supplies such as gloves, medical-surgical kits, surgical instruments, stethoscopes, wheelchairs, hospital beds, patient monitors, and sterilizers—virtually every kind of patient care product except prescription drugs.

collection agency

MedShare pioneered the concept of collection bins when it began partnering with Atlanta-area hospitals. Hospitals generate a huge amount of medical waste, much of it unused supplies. When a medical supply enters a patient’s room, the patient is charged for it, and by law it cannot be used again. For many procedures, hospital personnel use medical-surgical kits that contain several separately packaged items, some of which may not get used. Before MedShare, these valuable supplies were dumped in the trash.

Hospitals recognized that in addition to wasting supplies, the practice was hurting them financially because of the rising costs of medical waste disposal. The discarded supplies are treated as a segregated stream and must be destroyed by incineration to ensure the greatest liability protection.

By working with hospital administrators and staff, MedShare has helped develop a culture of recycling into strategically located bins, which a MedShare driver empties weekly.

Some hospitals in California are even beginning to pay MedShare for the recycling service. “In the beginning, we collected for free to get the supply, but after the success of the paid California collections, we are trying to replicate that process in Georgia,” says Oviatt.

In addition to collecting materials from hospitals, MedShare relies heavily on the support of medical supply manufacturers, distributors, and other NGOs. The bulk of materials collected from these donors are products with cosmetic or packaging damage, discontinued items, and overstocks.

Inventory Management

MedShare required a specialized software solution to serve its unique logistics model. “We’ve had our current inventory system since 2006—the Primarius medical supply recovery, inventory, and accounting management tool from ECCA Payroll and Business Solutions,” Oviatt explains. “ECCA designed a custom program for us, because we manage inventory on a box level, not pallet level.”

Donations from hospital bins come to MedShare warehouses, while package, truckload, and less-than-truckload shipments arrive via common carriers and corporate donor fleets.

“Usually, the shippers pay the freight charges, unless it’s a product we urgently need and they can’t pay,” says Oviatt. “Then we draw on our small shipping budget.”

MedShare’s 1,000 to 1,200 monthly volunteers work in a large, temperature-controlled office area separated from the warehouse, sorting items by box-level categories.

After sorting, data entry staff enters product codes and box numbers into the Primarius system and boxes move to inventory. MedShare uses bar codes on box labels only, but has recently budgeted to buy handheld scanners.

Primarius features a Web-based application that lists available medical supplies. Qualified recipients use the system to place orders and put biomedical equipment, which is not listed on the site, on their wishlists. MedShare adds as many wishlist items as it can to each shipment.

all in order

At the Decatur headquarters, Amanda Paniagua, MedShare’s shipments manager, ensures that consignees have tax exoneration and that container documentation is in order. All containers are classified as humanitarian aid, so consignees should be able to import into their country duty-free.

But humanitarian shipping is different from commercial logistics, where consignees are experienced at clearing customs and picking up containers.

“We work with people who have little or no experience with customs or logistics,” says Paniagua. “Their priority is saving patients’ lives, and they often don’t have the time or understanding to work with customs agents and bureaucratic formalities.

“Despite all our efforts to prevent it, the worst-case scenario is having a container arrive at port and finding the consignee has missed an important government requirement,” she adds.

MedShare, however, has the support of logistics companies such as Missionary Expediters, a freight forwarding company with more than 50 years of specialized experience working with a large number of private volunteer organizations to expedite cargo to the far corners of the world.

“Our freight forwarders specialize in humanitarian aid shipments,” says Paniagua. “They have connections and can negotiate attractive rates with ocean carriers. Every container we ship has some kind of sponsor to cover the transport costs. A few kind ocean carriers even donate free transport.”

Usually, MedShare ships 40-foot containers, and wastes no space. Consignees are often responsible for trucking the shipment from the port to the point of distribution, but sometimes sponsors cover the costs.

MedShare’s primary mission is long-term provision of container shipments to sustain supply, but over the past several years it has been increasingly called upon for emergencies, which occasionally require air freight.

“We sent 19 containers to Haiti, and they were all custom loads,” Oviatt says. “It was a need we could help with, so we dove in.”

MedShare’s model of giving has helped save countless lives, alleviate pain, and prevent diseases in developing countries. It is a shining example of the logistics effort at its finest.n