We all have demanding jobs. But it's all relative.
If one of your shipments is lost, diverted, or delayed, you might have an angry customer or a ticked-off boss, but that's about it. If one of Stephen Cahill's shipments goes awry, people could die.
Cahill's official title is head of contracting, ocean transportation services, for the Rome-based World Food Programme (WFP). Each year, the group coordinates the distribution of more than 4 million tons of relief supplies to over 100 million people who might otherwise go hungry. Half of the food distributed by WFP is transported by ocean to 78 world ports; the rest is sourced in either the country or region where it is needed.
Cahill's role is to ensure that WFP—an arm of the United Nations—is getting the most bang for its food investment buck, and that the food supply chain functions as predictably as possible given the enormous obstacles in its way. The stakes are high: Each night, nearly 1 billion people go to sleep malnourished, according to estimates.
His challenging job is bound to get more so. Global food prices hit record highs in January, the U.N. reported, and are expected to climb 30 percent this year from already-elevated levels. The global population is expected to reach 9 billion people by the year 2050. And a host of issues from geopolitical unrest to climate change to natural disasters show no signs of receding from the world landscape.
The Irish-born Cahill spoke recently with DC Velocity Senior Editor Mark B. Solomon about the myriad challenges facing WFP, and how he manages the enormous, and often life-saving, task in front of him.
Q: In a nutshell, can you describe your mission statement?
A: To feed the hungry poor by getting the right commodity to the right place, at the right time, and at the lowest cost.
Q: Do you ever wake up and say to yourself, "The lives of thousands of people—even the fate of governments and nations—may depend on how I do my job today"?
A: In some ways, yes. Fortunately, we usually keep three months of in-country stock at any one time to provide a safety net for emergencies. We also have, on average, 30 vessels afloat on any given day that can be used as "floating stock" and can be diverted quickly. I focus more on the fact that, for every dollar saved, we can feed four additional children, and with our annual shipping budget of $250 million, there is a lot of scope to push for additional savings and efficiencies. I also want to ensure that we're getting the best possible value for our money. The difficulty, on a personal level, is measuring the potential cost savings against risks of delays that can directly impact people's lives.
Q: Grain commodity prices have spiked in recent months, and few expect pressures to abate any time soon. How much of this increase is due to traditional supply-demand factors—the needs of a growing global population outpacing production levels—and how much is related to supply chain and logistics challenges?
A: I think there are a number of reasons for this. Demand is certainly a factor, with the increased buying power of emerging countries like India and China. However, increased commodity speculation is also a factor. Also, since 2008, financial markets have been very much on edge, so even relatively minor climatic or political events can have a dramatic effect on prices. Further, export restrictions have made the flow of food supplies erratic and unpredictable. This has also impacted prices.
From a supply chain perspective, the market volatility is difficult to deal with, and it has been a negative for the cargo owners and the transporters. Long-term rate stability is essential for owners to invest with confidence and at the same time give shippers the ability to plan properly.
Q: What are the biggest problems you face in getting foodstuffs to market? And how does the tight supply situation make your work more difficult?
A: We do not think in terms of "markets." Our focus is on our beneficiaries and the difficulties in reaching them. We work in some of the most remote and difficult places in the world. We are very visible in countries like Somalia, Afghanistan, Haiti, and Democratic Republic of the Congo. In many of those countries, the infrastructure is very poor, and the security situation is often unstable. Bureaucratic red tape is an obstacle, especially as it concerns cargo clearance.
Also, more than 70 countries impose some form of export restrictions that hamper our supply chain. For example, last year when Ukraine imposed an informal export ban, we suddenly had to change our preferred area of supply for Sudan and the Horn of Africa by sourcing from Northern Europe. This increased our lead times considerably.
Q: What steps is your organization taking to mitigate the problems, especially in light of the growing scope of your responsibilities?
A: We are involved in a number of initiatives, from local and regional procurement, to rainfall-based insurance in Ethiopia. WFP purchases more than 2 million metric tons of food every year. At least three-quarters of it comes from developing countries. This is because it is WFP's policy, whenever possible, to buy locally produced food. It's close to where we want the cargo, and it provides the local economy with much needed funding.
Q: In 2009, WFP began using a global visibility system from GT Nexus to monitor your network and match supplies with need. How effective has the system been, and what do you see as information technology's role in supporting your work?
A: We saw that the platform could offer us a much better insight into our pipeline, and by having that insight, we could adapt our supply chain quickly to the ever-changing environment we work in. An example would be the recent events in Libya, which we use as a corridor to Chad when the corridor through Cameroon is not reliable due to the rainy season. We needed to be able to quickly divert cargo to alternative ports; GT Nexus gives us the visibility to do that.
IT is essential for us. We operate in more than 70 countries, many of which have poor infrastructures and communication systems. We are always looking for better ways to gather and distribute information on our supply chain. Cloud technology certainly seems to me to be the way forward.
Q: Would it be accurate to say that, due to climate change, political unrest, and other factors, nations or regions that were once self-sufficient in food must now import their foodstuffs? If that is true, what additional pressure does this place on the supply chain?
A: Climate change is forecast to have a dramatic effect on "rain" irrigated crops. And it's not only about lack of rain, it is also changes in rainy season patterns. Piracy is also affecting our supply chain, especially to countries such as Somalia and Ethiopia, and to one of the ports that we use as a main entry point to Democratic Republic of the Congo, Burundi, Rwanda, Uganda, and Kenya.
We are prepared to work in politically unstable and underdeveloped countries, and our supply chains are designed accordingly. Climate change and food price instability will stress them, but to what extent is difficult to predict.
Q: The U.S. Food Safety Modernization Act signed into law in January imposes new requirements on the food supply chain and gives the Food and Drug Administration more powers to develop a system that will minimize the risk of food-borne illnesses. Do you see, over time, similar programs being implemented globally, and how does this complicate your life?
A: As someone involved in food aid, I do not see this as an issue. That said, though, recipient countries have become stricter in the cargo certification process. In some countries, we have to run up to six tests, everything from radiation to bacteriological screening.
Q: If you look at global food needs five years out, what do you expect will be the biggest problem facing the supply chain?
A: I look more toward opportunity at the moment. I think "cloud" technology will have a major influence on the supply chain by improving visibility and highlighting actionable bottlenecks. Of course, there will be challenges, most obviously as it concerns the price of oil and petroleum products. In addition, elevated food prices, in and of themselves, have political and commercial consequences. The recent events in Egypt highlight this; the effects on the worldwide food supply chain were negligible. However, had the Suez Canal been closed, the situation would have changed dramatically.
Gartner, Inc.