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Stock management principles
Stock management with the IFRC
Each charges a monthly fee to the British Red Cross for holding and managing pre-positioned stocks. Additionally, stock movements initiated by the British Red Cross are charged through pre-agreed logistics services requests (LSR), which provide an indication of the cost of moving the stock, allow the logistics lead ( or ) to raise a against the estimated costs and eventually pay the ’s invoice. It should be noted that real costs can be far from the quoted costs, not least because VAT is not included in Agresso POs. A variance of more than 10 per cent between a PO and an invoice will require additional approvals in Agresso.
Annual storage costs are budgeted in the British Red Cross logistics team budget, and logistics issue an annual PO for those services to each OLPSCM, against which monthly invoices sent to are reconciled. This process is managed through the logistics team and SSC, with support from the international finance team. All costs related to the storage of pre-positioned stocks are charged to the logistics budget.
Note: invoices for storage fees and services agreed through LSRs are sent from Geneva, usually with a delay of a month or two. For more details on this, see the British Red Cross management of stocks section below.
In exchange for the costs charged to the British Red Cross, IFRC provides storage space and manages the storing, rotating, shipping, receiving and quality assurance of British Red Cross stocks. IFRC also sends monthly and year-end stock reports. In addition, British Red Cross logistics visit two OLPSCMs each year and conduct a stock and warehouse audit. Reports are available from the logistics team. The audit consists of a spot check on stocks and a standard warehouse audit, focusing on the storage conditions and systems in place in the OLPSCM.
Note: some of the OLPSCM warehouses (including Kuala Lumpur and Dubai) offer quality assurance services and have facilities to perform quality tests on specific items delivered to their warehouse. This needs to be arranged and comes at a cost – for more details, contact the in the logistics team.
British Red Cross management of stocks
The British Red Cross manages the pre-positioned stocks with the operational support of the . Within the logistics team, the is tasked with managing the stocks that are pre-positioned at the .
The management of pre-positioned stocks by logistics is described in the standard operating procedure, while the financial management is done in collaboration with logistics’ finance business partner. The financial aspects of managing those stocks are captured in the balance sheet guidance document.
In case of any questions, contact the in the international logistics team.
Requesting for stocks from the
There are various ways of accessing the British Red Cross pre-positioned stocks. Agreements and standard operating procedures are in place to cover both issuing mechanisms.
Pledging stocks
When a disaster occurs, the usually issues a mobilisation table (a ‘mob table’). The mob table is designed to list all in-kind requirements to fulfil the IFRC’s emergency plan of action (EPoA) and emergency appeal (EA) and is issued to Partner National Societies who can choose to pledge items against the listed needs.
In this case, the pledge must be agreed with the emergencies team and with the regional team (usually the disaster management coordinator) during an emergency task force (ETF) meeting. Ultimately, the decision to pledge stocks against a mob table lies with the operational lead (this would be the head of region or the global response manager, depending on the context of the emergency). The must be informed ahead of the ETF so they can provide the relevant logistics coordinator with sufficient stock information to share in the ETF. This information will include, but may not be limited to:
- list of items in stock and quantities
- indicative cost of items and shipping costs to deliver them to the operation
- indicative delivery lead time to country of response for all items
- indicative replenishment lead time for all items.
It is an ETF-made decision to pledge any of the available items to the IFRC-led response. When stocks are pledged, they are essentially donated to the IFRC. All costs associated with the stock and its movement will be charged to the budget codes, as advised by the operational lead nominated in the ETF. It is worth noting that pledges can be made against British Red Cross pre-positioned stocks in the but other items can also be pledged, in which case the UK-based logistics team will source the pledged items through a procurement process. The decision to pledge items beyond those in stock is made based on cost, lead time and the specific needs of the operation (where they are not fulfilled by standard items).
Following the decision to pledge, the LOGE and/or the logistics coordinator manage the release of the pledged stocks from the relevant OLPSCM into the operation, initially through an (see the RFA guidance note). It is important that this is done with the input of the LOGE for the following reasons:
- The LOGE holds the relationship with the OLPSCM.
- The LOGE maintains records of pre-positioned stocks together with logistics’ business partner and is best placed to know the cost of stocks and how to allocate them in the stock balance sheet.
- The LOGE will be tasked with the replenishment of the stock in the OLPSCM. To avoid any loss of information or time, it is preferable that they are the lead on any stock movements in or out of the OLPSCM.
Selling stocks
Any Movement partner can request stocks from the . External organisations can also access Red Cross stocks through the , who will contact the most appropriate stock owner to arrange the terms of the donation/sale.
In this case, they would reach out to the OLPSCM teams, who would determine which stock is most appropriate (for information about different stock sources in the OLPSCMs, see the IFRC’s OLPSCM offer and system). They may then contact the best-placed stock owner to ask to buy some of their stocks.
When the request comes to the British Red Cross, it will be sent to the LOGE, who will seek approval from the emergencies team (usually the global response manager, as owner of the pre-positioned stocks). If approval is granted, the will get back to the OLPSCM with the details of the cost of the items, and the OLPSCM will issue a purchase order for the items.
After confirmation that the stocks have left the OLPSCM is received (a signed waybill), the LOGE commences the replenishment process, using a REP form (see the Replenishing stocks in the OLPSCMs section below).
Note: for more information on the stock balance sheet, see the balance sheet guidance note.
It is also possible for the British Red Cross to access other stocks (through pledges or purchases), or indeed Federation stocks through the mechanism that applies to all other National Societies: a request must be placed to the IFRC via the LOGE, detailing items, quantities and country of delivery. In this case, stocks will be sold to the British Red Cross.
Replenishing stocks in the
After stock items are released from an warehouse, they need to be replaced by new stock – this is called replenishment. If the agreed stock target for a specific item is lower than what was previously in stock, the items that were released will not be replaced.
Ideally the stock should be replaced like-for-like (in terms of quality and quantity, with specifications matching the standard product catalogue), but there may be a decision to postpone or adjust the replenishment for one or more of the below reasons:
- Minimum order quantity: some suppliers only accept orders above an agreed quantity.
- Procurement optimisation: where other stock movements are planned or being arranged, the will compile all quantities before placing the replenishment order.
- Specification reviews: specialised items may require a review of specifications before the British Red Cross decides to replenish them into the stocks.
To replenish stocks, the LOGE will raise a and have it signed off by logistics, emergencies and finance. For more details about the REP process, refer to the OLPSCM standard operating procedure (contact the British Red Cross international logistics team).
The process to follow is slightly different when a new item needs to be added to the pre-positioned stocks. This must be done through a request for action (RFA) which must be approved by logistics (the head of logistics or senior logistics manager, depending on the amount), budget holder and finance business partner.
The LOGE will manage the order and arrange freight to the relevant OLPSCM, using the shipping instructions shared by the OLPSCM. The LOGE will communicate order details with the OLPSCM, so they are informed ahead of the delivery.
The LOGE provides updates on ongoing replenishments in the logistics status report on a weekly basis.
For more detailed step-by-step guidance, refer to the OLPSCM standard operating procedures.
Read the next chapter on Emergency Response Units here.
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