Procurement and logistics remain the backbone of humanitarian operations. But this crucial aspect of humanitarian action doesn’t always get the attention it deserves. We spend a lot of time in the humanitarian sector speaking about issues like localization, decolonizing, aid, how to engage with the diaspora, how to change the coordination system, protection. All of these are really important and valuable discussions. But 65% of the humanitarian budget, namely on procurement and the implications of how procurement is done.
This weeks guest is Claire Barnhoorn who is the founder of Solvoz a new project that is focused on transforming the way we do procurement in the humanitarian sector not only for the big established organisations but also for local NGOs. It’s an interesting project with the potential to have a significant impact on the humanitarian sector.
Transcript
Welcome to Trumanitarian, I'm your host, Lars Peter Nissen. This week's episode is about procurement and logistics. And before you turn off, because you think it's boring, just wait a second, it's actually very interesting. We spend a lot of time in the humanitarian sector speaking about issues like localization, decolonizing aid, how to engage with the diaspora, how to change the coordination system, protection. All of these are really important and valuable discussions. But we spent much less time discussing how we spent 65% of the humanitarian budget, namely on procurement. And the implications of how procurement is done, for example, the ability of local organisations to meet the requirements of the last back donors, are actually quite profound. That's why I'm really happy to welcome Claire Barnhoorn to the podcast. She has come up with a great solution to make procurement more efficient than at the same time more accessible for small organisation. It's called Solvoz and it's a relatively new project but it's also really interesting, and it has the potential to make a real impact on the sector. So please listen to the conversation. And let us know what you think. Ping us on social media, like us, review us wherever you listen, and to recommend us to your colleagues who might like to show. Enjoy the conversation.
Claire Barnhoorn, welcome to Trumanitarian.
Claire Barnhoorn:Thank you very much for the invitation.
Lars Peter Nissen:We're here to talk about Solvoz, the social enterprise that you are the founder and CEO of, but before we jump in, could you tell us a bit about your background?
Claire Barnhoorn:Yeah, so I started humanitarian assistance afterwards in Dublin. And from the day one after graduation, I realised if I really would like to make a change possible, because that's why I want to study and make our sector, add something valuable to the sector, I thought, we have to start in logistics. If I don't understand how things happen on the ground, we can never make a change possible. So that's why I started as a logistician within the MSF and I stayed around within MSF for a couple of years. So that's how I started in the sector. And in 2O10, something happened in the DRC so I was in the Congo. We were running a MUAC screening and I just came into a village where people said, Yeah, Action Contre la Faim was doing this seven years ago, or UNICEF was doing this five years ago and then it occurred to me that we humanitarian should be more responsible with how we're dealing with our data. And that's... when I got back from that mission, I switched from operations to data driven technology and data driven innovation to make change possible. Because technology is a game changer.
Lars Peter Nissen:It's interesting that you choose logistics and procurement as a place to make a difference. A lot of people I meet who study humanitarian action, are interested in almost anything but that. So it's great that you actually have this passion. Now tell us about the data driven innovation that you speak of? What what is that to you?
Claire Barnhoorn:So after a couple of years, I saw so many innovation passing by, specifically in the early 2O10, up to 2O15 16, data became a very sexy subject so data driven innovation became became a very hot topic. They saw a lot of repetition. But I also saw a lot of things happening without a proper use case. So with a sector that was in dire need of funding, I saw at the same time, a lot of innovation and a lot of involvement of private sector that wanted to support the sector. So there was a lot of money in innovation. But then I saw all of this innovation without a proper request. So if we'd like to innovate, we have to make sure it's context specific, that it's new, that is better than what's out there already. And it has a fit. And that's where we started developing an idea. And I started with it with a group of ex-colleagues and others in my network to think about Why are we not changing? Why don't we make this knowledge open access and start to search differently. If we need a clean cooking stove, we don't need to raise another challenge for a clean cooking stove. We have to make it specific, we need something that works in a very dusty environment, that can operate in minus 20 or above 30 plus, maybe there's no wood, and we do want to use it indoors: So search differently.
Lars Peter Nissen:So on one hand, you see repetitive mistakes being made in the field. And the innovation that's supposed to save us and transform us is more about happy clapping and tech fetishism, rather than true transformation. So where do you go from there?
Claire Barnhoorn:So when we'd like to change something, and we want to bring innovation to the market, and maybe we don't even need innovation, we have to look at procurement. Because that's where the request is coming or where the operations are placing their request. So that's why we started to develop a catalogue where we search differently and integrate a catalogue, a technical back office on your shoulder, so that Solvoz. Your technical back office on your left shoulder, and your procurement department on your other shoulder. And that's where we can create different markets, open up markets, procure more locally, and give this capacity to roll because the big NGOs, they have procurement departments, but not all NGOs have those. And it's about bringing procurement capacity to everybody. And that's what we develop Solvoz.
Lars Peter Nissen:So let's say that I run a Ugandan NGO. I get some money from a donor and I have to buy some stuff. What can Solvoz do for me?
Claire Barnhoorn:So we have an online platform, it's called solvoz.com, people can go, you can browse through the catalogue or create your own products if it's not yet in, or develop your service and then with one press of the button, you're entering a procurement workflow. It's a tender portal, request for quotation requests for information, and you can immediately send out your tender to the connected suppliers, which are in our network, which are currently over 340,000. So we're making also this as an open access platform. So the catalogue is open access, we share the capacity with everybody, but also on the supplier catalogue. Everybody of us is doing market assessments in Uganda, or if we are to run a solar project in Bidibidi, all of us have to search on which service provider are out there. So it's about making use of all of it together in one entity.
Lars Peter Nissen:That's a tremendous amount of suppliers. 340,000. Who does the vetting for you? Or do you simply just scrape it off the internet?
Claire Barnhoorn:Yeah, it depends. We are an ecosystem. So the whole Solvoz ecosystem consists of over 200 people, but the majority of us are on call. So if there is an agency who wish to do something on clean cooking stove, we have somebody in our network, if it's not yet in the catalogue, to support you with the technical specifications. And then the procurement workflow, it's an existing procurement workflow, it works. So it's out there, it's usable. And we run a assessment for security cameras in a East African country for one organisation. The suppliers are now in the catalogue so any other future user have access to those so they don't need to run another market assessment. The vetting of suppliers can always be run individually, because every organisation has different criteria, but at least you have access to the suppliers that are already out there. And then it's up to you as an entity which supplier to go to. We're not involved in the whole decision making process. It's just a marketplace to connect a request with potential providers.
Lars Peter Nissen:So essentially, there's no quality control of suppliers?
Claire Barnhoorn:No, that's not true. So we do more assessment, so we do have people in various countries doing the market assessments with us, we do get the vetted list of current users, so the NGOs that are using Solvoz, we integrate their supplier lists, so also others have access to it, but you will never know which entity has contributed the supply to the network because of liability issues. And that's also what NGOs don't want.
Lars Peter Nissen:So for all 340,000 Somebody had an opinion about?
Claire Barnhoorn:Yeah, they have been through a due diligence process.
Lars Peter Nissen:What kind of engagement have you had with donors in terms of getting them to approve the way you do business at Solvoz.
Claire Barnhoorn:So what we have done, we have some procurement specialists in our team and we have incorporated World Bank procurement guidelines, the UN procurement guidelines, the Eco procurement guidelines, so they are baked into the procurement workflow and that's where we base our whole flow on. So that's the way that, if an organisation starts using Solvoz, we use a mechanism that is approved and it's following the guidelines of the donors. We also have a philanthropist in America is now using Solvoz. It's not a classical donor, but it's a donor that is supporting charities in low and middle income countries. They are using Solvoz. They take a subscription, and they give it to all their grantees. So their grantees instead of requesting a check of 10k, they placed their bid on Solvoz. They create their baskets, and they launch, and then the outcome, so the contract as a result, and their supplies, is much funded by this philanthropist. So we're supporting both the classical NGOs, as well as the charities and the philanthropists. We're also working on a project with International Office of Migration and that what the session were... in the event where we also met at HMPW, where we presented our work with International Office Migration. They run together with Innovation Norway, a programme on reducing electronic waste and greening our humanitarian responses. That's where we developed different solution packages. If you want to buy a solar lantern we can make that more sustainable. Everybody is afraid of sustainability being 100% game, but any simple improvements, just if it's 1% more sustainable, it has a huge impact. So we developed together with it with IOM and Innovation Norway and other partners, a framework for sustainability criteria. And we made them operational. Instead of another policy paper, we developed different sustainability criteria, starting from the UN sustainability criteria, which are three, and we make them more into circular criteria. And then it's repairability recyclability are two components. And you cannot make 100% recyclable solar lantern for a camp in Bidibidi, because there's no recycled component. There's no full recycling, and there's no subsidies for the waste management, but you can make a simple step. You can ask... if you want to procure another 10,000 solar lanterns, that at least it should be a repairable one. And that's the work we do with agencies like IOM in Uganda, on creating these criteria. And it's a system change that's needed in our sector--a different way of thinking.
Lars Peter Nissen:So you have 340,000 suppliers, you have more than 200 experts working with you. That's not free. What's your business model? Do you pay a percentage? How does it work?
Claire Barnhoorn:So we are social enterprise. And we have a... I call myself now a humanitarian with a business plan. So that's how I explain Solvoz. And Solvoz has a free open access catalogue, including and dynamic kit builder, which is all free for everybody because we think that knowledge that been baked, bought and paid by with charitable money, sorry, should be open access. And then our business model is to integrate a procurement workflow. So the ability to build your tender and launch your tender, so it's a SaaS model.
Lars Peter Nissen:So if I'm the guy buying 10,000 solar panels, do you take a percentage or is it a fixed price?
Claire Barnhoorn:Yeah, so the charge depends on the size of the agency, and then how many country offices so there's no price fits all. So it's about the ability to tender, we're not taking a percentage, it's just a yearly or half year or quarterly subscription of the organisation, and depending on their size, and then how many country offices, they will use Solvoz. Also, for local NGOs, it's something very different than a headquarter Geneva based organisation because they will run in various markets.
Lars Peter Nissen:Okay, so I take out a subscription, and then the platform's functionality is open to me. And what is there then a help desk? A focal point to speak to? How does it work?
Claire Barnhoorn:Yeah, so we have, we have a SaaS model and a PaaS model, as we call it, procurement as a service. So we have both have a technical back office, at your disposal, so if you are to build in an NFI kit for Ukraine, it might not fit your standard NFI kits, which you used to use in Dadaab or in any other camp. So we do have the technical experts you can rely on, you can give us a call, we help you build technical specifications, so the majority of these 200 people, and we pay them when there's a request coming in so it's not all volunteers, so they are the open access consultants collaborating in the Solvoz ecosystem. And same, if you are to run a market assessment, you can also request us to run that market assessment for you. And if you allow us we make that market assessment open access to have the suppliers also be available for others. So we don't pay in the secto... For for example, a procurement officer often... average NGO, 50% of their time, they scan the market on which suppliers are out there. And all of these agencies are doing that individually and we don't share our suppliers list. I don't ask them to open up their supplier list until this agency has this 50 suppliers, but if at least we enable these mechanisms that take have access to other suppliers, we can reduce the cost significantly in our sector,
Lars Peter Nissen:You start solvers in 2O19, and have been operational a bit more than a year now. And you're beginning to get the first clients on board among the big NGO, some of the smaller ones. But what's your scaling strategy? Where are you going to be in five years?
Claire Barnhoorn:In five years, I hope that people will say instead of We need to Google something, that We need to Solvoz something. But we're still a long way ahead of it. Because procurement has always been such a black box. And what we're trying to do is a change of how we operate. And that's always very complicated, specifically in humanitarian assistance.
Lars Peter Nissen:Let's take the Google thing first. Google tends to be really really good at search. Why do you think you can compete with them.
Claire Barnhoorn:We won't out compete Google because we're in such a niche and it's really about giving informations and to people that are operational. So if we know... if you know you need to expand your maternity ward, that's what from an operational perspective you might know. And then your maternal nurse might tell you, We need seven more incubators. We need seven more spaces because we see X amount of raise in birth and we need to expand. But then what we often forget is that our whole sector is operating in verticals. So the seven beds might mean also an increase in your clean water. So what we have and building up this body of knowledge is if you are to procure an incubator, it needs to come with service and maintenance contract. But there's also a prerequisite in clean water. The most important thing in the maternal health facility is clean water. And that's what we all link. So it's a very different group than the ones that are Googling, you won't Google, and then it's about integrating the quality specs, the technical specifications, with the humanitarian principles and standards like Sphere.
Lars Peter Nissen:So what you're saying is that the combination of the humanitarian industry being quite small compared to other industries, and your expert knowledge gives you a competitive edge over Google.
Claire Barnhoorn:Yeah, and that's another big change is that we don't do marketing. So you cannot get... none of the suppliers that can actually provide something. So it's a neutral way of presenting information. Now our whole catalogue, there's no makes and brands. It's just generic technical specifications and requirements for responsible responses. So there's no marketing, there's no advertisements, you cannot pay to get a higher rating.
Lars Peter Nissen:Okay, I buy that. I believe that solos will out compete Google. Now, here comes a really difficult question. How are you going to out compete, or rather convince a bunch of NGOs who seem to be very determined to work in silos, and who already have built up and expertise of doing procurement themselves? What's your value proposition to them? Why should they outsource to you rather than doing it themselves?
Claire Barnhoorn:Yes, if I know the trick, then there will be a... will be easy. I know... I think it's about the value that we can create. And I think, first and foremost, we as a sector have to realise that procurement is the drive... is the key to drive the change required in the sector. And that's the reason why we developed Solvoz in the first place. I think we have to change the needle. We have to change if we are really to improve efficiency and effectiveness, that's the no brainer where we should look at. We have to look at how we spend the money. The 65%... That's good... How to do it yeah, it's, I think building a... and we have to do marketing. We're very bad in marketing (tell the world that we're out there) and I think having a conversation with you today might help us already. We don't have to convince procurement but what we need to convince is operations to explain that procurement is the key to increase the efficiency and effectiveness. And as soon as organisations realise that, if you look at the 65% general spending on procurement activities of humanitarian organisations, and nobody's looking at it, even if we look at the Grand Bargain, we all look at 2... of the 25% of local respondents. We always immediately frame them that they should be NGO. Why not local businesses? As soon as we look from a more market market kind of perspective, into our sector, and address procurement as a critical component, then it's a no brainer that we can support to make it more efficient.
Lars Peter Nissen:Yeah, I mean, you had me at hello, so you don't need to convince me. But how are you going to do it?
Claire Barnhoorn:So the first analysis of the case studies that we have run over the last year, we could see that, by the use of Solvoz, we can lower... we can reduce the spending in procurement by 16 to 20%, just because of the time that is required on the specification of the competitive nature. The majority of NGOs, and almost all, none of them use a digital e-procurement platform. We all still work paper based. It's either by email, of glorified email, I would almost call it, and tender dashboards. None of them have actually an integrated e-procurement platform. And I think that is the change that's needed. And that's what we offer. We have dedicated unitary e-procurement platform. And I've learned in some of the conversations over the last couple of months that more and more donors are looking into having NGOs using e-procurement. And that's what we offer. And we've been developed by and for humanitarians and have a dedicated e-procurement platform.
Lars Peter Nissen:Great. So the pitch to the big ones is that you actually can cut almost a fifth of the personnel cost in procurement, because you do the market research into procurement more effectively.
Claire Barnhoorn:So yeah, 50% of their time on market assessment, but still, there's work to do because they have to validate their own suppliers. But the other big thing that we are trying to solve here is the communication between your technical specialist, your lobbies, your operations and procurement. We can all request a blue Lamborghini, but maybe you need to transport service to drive you from A to B in Nairobi. So it's about handing over the right file from your request to your procurement department, and this is the most, most and foremost, where we can help organisations with: getting your specs, right, getting your request, right, and getting them in the right format that really supports procurement departments to do a better job. Because they can only do such a good job on what you request them. And if you request a blue Lamborghini, they will get you a blue Lamborghini, but by the time you get it, that's not what you needed. You needed maybe a taxi service for five days a week to drive you through Nairobi. And that's where we can support. And that's, I think, more crucial than ever, is nailing down your technical specifications, and also incorporates the humanitarian principles, and also technical standards and quality standards. How many solar home kits have we procured or ten this being developed with the the inverter not matching the panel because we forgot the cable. And that's where the real value will be.
Lars Peter Nissen:You mentioned before that it is easier for us to convince the logisticians and the procurement guys than the rest of the organisation. How can you position this issue so that is not just a technical loggie issue, but something bigger than?
Claire Barnhoorn:I think that we as a sector often don't look at procurement as an enabler for all the big commitments we have made in the sector and I think specifically, I'd like to focus on the Grand Bargain. The Grand Bargain, we say that getting more means in the hands of the people in need, and also that we should act as local as possible and as international as necessary. But do we seem not to get this into our procurement system. And procurement is 65% of our expenditure. So we really need to change our thinking, and having procurement at the centre of operationalizing the grand bargain. And there's one more step beyond because then there's also the commitment that we have to fund the 25% of the funding should go to local and national responders. We seem not to crack the nuts because we stuck at 2% for so long. And it doesn't change. But we're measuring and requesting the wrong thing. Why are we looking at the local responders to be a humanitarian or a NGO recuperating and keeping constructs going, which will not have a business case. If you're really, really true and if you'd really like to chase and empower national responders and strengthen local economies and alleviate suffering, we have to look at the local partners to enable them to be a business. And if we then start procuring more locally, and ask for service provision with it, so we no longer dump materials. But it always need to come with a serve as a maintenance contract. If we keep on dumping products, and let's give the example of the solar lanterns we discussed earlier. In procurement rules and regulations, there's a checkbox, Does it come with a warranty? And if you don't say, as a supplier, yes, you will not be able to make it. However, our current rules or regulations only stop there. They don't ask you, how will you execute this in Dadaab? Are we really going to ship that that lantern that's broken back to Germany or back to the US? That's never going to happen. So we as a sector should be more responsible what we're buying, and also enable the local businesses to thrive. The supplier or the UN agency that's procuring that solar lantern for Dadaab should request one, is there a service and warranty, and how is it executed? And if the supplier cannot do it, the buyer, us as a UN or an NGO, we have to make sure that it can be repaired locally, otherwise, we contribute to growing waste streams, and we're never going to be more sustainable.
Lars Peter Nissen:And when it comes to the smaller organisations, what do you offer them?
Claire Barnhoorn:So a lot of small organisations specifically, if we look at national and local NGOs, it's very hard for them to access funding, and why they don't get funding is either they are invisible, or there is a myth, there's a lack of trust of giving a 5 million grants to a small or local NGOs. They might have a very good bookkeeping system, but they might not have SOPs, or they might not have other systems. And our current donor rules and regulations are so strict, that almost forces them to go through the international aid agencies because they can comply to the donor rules and regulations. So we give a mechanism that small organisations can comply, can be compliant, don't have rules and regulations, and also have a reporting mechanism, for their whole procurement, which is the largest cost component of organisations.
Lars Peter Nissen:So small organisations could tell their donors that they will use Solvoz for procurement and then that takes care of part of their due diligence?
Claire Barnhoorn:Yeah, that's what we helped these organisations with, that it can help them in their funding appeals, that it's a reliable system: trackable, accountable and transparent. And that's the second thing that we offer these local NGOs is having access to this full back office. The big organisations, they have an expert on wash, and they might have a gazillion of sanitation experts, but not every local or national NGO has the capacity to have a back office with an NFI specialist or with shelter experts with... but they know the local context. So instead of hiring them as a consultant, we should have access to this knowledge as open access and thereby truly empower local and national NGOs.
Lars Peter Nissen:I think Solvoz is a really powerful idea. But I also think it's important that it's based on a sustainable business model. I think you do, too, since you set it up as a social enterprise. Right now, you're still running on grants to get the company off the ground, when to expect to break even?
Claire Barnhoorn:Yeah, so we need another round of funding and donations. And we're actively looking for it at the moment. But within two years, were completely self subsistence. So then it's really the system itself is supporting. And there's no more need for grants or donor money to step in.
Lars Peter Nissen:And when you reach that point in time, what are you thinking in terms of scaling? How big will solve us actually be?
Claire Barnhoorn:Yeah, the sky's the limit, I think, but also the platform itself, that runs, it's a technical capacity that we can keep on offering. And we also have the ability for all the consultants or all the experts that are working with this, to make their knowledge available. And we're accredit all the users and all the contributors by it, so it's not Solvoz. It's we work, for example, with the IDA Foundation, and we opened up a few of their kits in the platform. So we give the credits to the ones that have contributed to that body of knowledge. So Solvoz itself is... we don't aim to be massive. It's an ecosystem that should enhance collaboration in our sector.
Lars Peter Nissen:Okay, let me ask this way. What does success look like to you in terms of the percentage of humanitarian procurement that goes through Solvoz? Is it 5% 10% 50% of the overall expenditure?
Claire Barnhoorn:I hope that we reach 50% in five years. That's what we're hoping for. But I exclude the UN of course. Because the UN has the UNGM, and it's a different tender system, it's a different portal. And it's also about how you phrase the NGOs. My CFO will probably go for 10%. And then we'll be very happy.
Lars Peter Nissen:Well Claire, I hope to have your back in a couple of years and then you can tell us whether it was 10% or 50%. And I want to thank you for doing this work. I think Solvoz is a great idea. I hope it works out for you. Thank you for coming on Trumanitarian and all the best in kicking shoulders forward.
Claire Barnhoorn:Great. Thank you very, very much Larson. It was really nice having this discussion with you. Thank you for your time.