A new way to increase supply

During the first phase of Sanitation Marketing Scale-up efforts in Cambodia, iDE learned three things that we now apply to supply chain management:

1. Latrine producers’ businesses suffer from volatility of demand.
2. Permanently assigning sales agents to specific latrine businesses creates systemic supply chain volatility.
3. While market seasonality of demand is unavoidable, systematic volatility in the supply chain can be greatly reduced by pooling and balancing demand, a technique developed in the industry known as “lean supply chain management” or queue management.

With these guiding principles in mind, the iDE team envisioned a supply chain management tool that would match demand (orders) with available supply (production, delivery, and installation) to minimize customer wait times.

We call this “Load Balancing.”

The Problem: Market Volatility

In the beginning of the program, the rate of orders that latrine businesses received was highly inconsistent. Some businesses were over-burdened and unable to manufacture quickly enough to keep up with sales while other businesses had components in stock and were waiting for sales to happen.. Business retention in the sanitation market suffered, as business owners will generally prefer to invest in a stable source of income. In order to stabilize latrine business workloads and help mitigate some of this volatility in the supply chain, the program developed a supply chain management tool that would match demand (orders) with available supply (production, delivery, and installation).

The Solution: Load Balancing

As part of our ongoing evidence and analytics efforts, iDE had started to implement a Salesforce database to gauge the effectiveness and efficiency of our programs. This integrated, cloud-based management information system provided the iDE team in Cambodia the perfect tool to capture data on orders and deliveries. Using a customized input tool developed with TaroWorks, iDE sales agents entered orders into their smartphones in the field, uploading them to the cloud-based Salesforce database when they had internet access. Simultaneously, other iDE staff used TaroWorks to record regular check-ins with latrine producers to review their current workloads and availability (e.g., some latrine producers would shut their business down for weeks at a time to address family needs, vacations, etc.). During these check-ins, iDE staff updated the outstanding number of latrines ordered but not yet delivered by the latrine producer , also known as the backlog. When an order was made, iDE staff would consider the available latrine producers’ backlogs and proximities from the customer, then decide upon which was most capable of delivering the product most quickly. iDE calls this system “load balancing.”

The Results: Faster Turnaround Time

As part of our effort to measure the performance of the supply chain, the program added “Days from Order to Delivery” as a key indicator to track. However, time from order to delivery is sometimes out of the control of the supply team, as households themselves postpone their deliveries, often for financial reasons. In order to better distinguish supply chain performance from cases where delivery was postponed at the request of the client, we have tracked independently the “Days of Order to Delivery” for orders that had not been subject to a “client postponement.”

It is important to note that the reduction in time from order to delivery is not solely attributable to Load Balancing. Other interventions have combined with Load Balancing to produce the increase in supply chain efficiency described above. The fact that iDE’s latrine business network has decreased in size, with the highest-performing businesses representing a larger share of iDE-affiliated latrine businesses, has also likely contributed to the improvement in overall fulfillment efficiency. These factors together have significantly contributed to the program’s reduction in order cancellation rate from a six-month average peak of 36% in 2016 to approximately 19% in 2018.

Load Balancing system is expected to continue to be a strong asset for management of delivery for newer products including shelters and Alternating Dual Pits. By ensuring that latrine producers have a steady, predictable entry into the market, the program hopes to more effectively, equitably, and sustainably engage latrine businesses to adopt new iDE products.