Philanthropy Is Good Business

As a captain involved in military logistics automation in the late 1990s, Jason Rushton was always looking for innovative ways to improve the military supply chain. Because no military operation happens where and when you plan for it to happen, many different players must come together to make the military supply chain work.

Humanitarian assistance is like a military operation, but without the large national investment and centralized management. This idea ran through Rushton's mind as he sat next to a missionary on a plane ride shortly after joining i2 Technologies.

The challenge

"I was excited about starting a new job at i2, and thinking of all the potential applications for its supply chain technology in the public sector," he recalls. "I started thinking about the challenges this missionary was facing and that related back to all the non-governmental organizations I'd seen working under disaster relief scenarios. The chaos of the decentralized, ad hoc humanitarian assistance supply chain is the perfect application of supply chain management technology."

The technology Rushton had in mind was an Internet-based supply chain solution i2 was just starting to roll out. The package had been adopted by many industry-leading corporate manufacturers and retailers in sharing supply and demand information with their various suppliers and distributors. Rushton's vision was to adapt this technology to non-profit charity organizations facing the following challenges:

• In the United States alone, more than 96 billion pounds of food goes to waste, yet 31 million people still go hungry;

• Limited availability of tools for planning, daily operations or crisis response;

• Limited funds for the necessary information technology to establish effective channels of supply;

• Limited information exchange between donors, non-profit agencies and people in need.

"With non-profits, if you're trying to get your one commodity or one area of interest served, it's very difficult to negotiate the resources to get that to happen and still be efficient," Rushton continues. "A lot of well-meaning people may have something to contribute, but the synchronization is not there. i2 had good software and a lot of people who had done very well during the dot-com era. They wanted to contribute something, and employees of the company had set up a foundation looking for a more challenging mission. That's when I put together the concept that they could donate i2's software and some of their time to a non-governmental relief effort."

In October 2000, the i2Foundation launched Aidmatrix. Today AidMatrix has grown to become an independent non-profit organization that uses i2's supply chain solution architecture, but has adapted it for various forms of humanitarian aid, to facilitate the donation and distribution of food, clothing, building supplies, medicine and health items and disaster relief supplies to people in need. The primary problem with delivering this aid is related to establishing a supply chain.

"There is enough food produced in the world to feed every single person a daily 2,200-calorie diet, yet we can't get that food into the hands of hungry people," says Margaret Gardner, spokesperson for Aidmatrix. "In disaster relief, during September 11, 2001, $74 million in donated items were never used. The biggest problem is there's no visibility between what is needed in humanitarian aid and what is donated. It's a push environment where donations are pushed into the system and non-profits are tasked with consuming them whether they need them or not."

The innovation

By combining proven supply chain management and Internet technology with collaborative partnerships from the commercial and not-for-profit sectors, Aidmatrix will provide a global relief network that enables participants to have more visibility to supply-and-demand information, better decision-support capabilities and more opportunities for collaboration.

With the help of a generous grant from Accenture and the Accenture Foundation, Aidmatrix is currently working on three global relief network components:

• Phase One -- Food Relief: Extend and enhance Aidmatrix's existing food relief efforts to Europe, Latin America and up to 30 cities in the United States. By linking corporate food donors, individual donors and non-profit agencies to regional and national food banks, it is hoped that the program will help bring 60 million pounds of food to five million Europeans each year, and more than 280 million pounds of food to 20 million Americans annually.

• Phase Two -- Medical Relief: Build and deploy a basic medical supply chain solution (piloted in India and Africa) that will quickly increase access to medical supplies for 1.5 million people in the pilot phase alone.

• Phase Three -- Disaster Relief: Work with disaster agencies to develop enhanced "first-in" disaster evaluation team capabilities. The objective of this phase will be to identify and build appropriate solutions for evaluation teams, enabling them to better document the type and amount of aid needed immediately from the disaster site, and empowering donors to more easily and quickly fulfill those needs.

"We took the software and asked how we could increase efficiency and reduce waste in humanitarian aid delivery both by better supporting the existing push environment and by creating a pull environment where non-profits could share their needs with donors," Gardner explains.

Disaster relief is slotted as phase three for a good reason, according to Gardner.

"While disaster relief was originally a wonderful vision for Aidmatrix, we recognized that disaster environments are very volatile and changeable -- a bad combination when you are trying to create a stable and accurate software solution for the supply chain. So we stepped back from disaster relief at first and looked for a humanitarian aid delivery crisis that was day-to-day and already had a network of some sort in place, and that was hunger relief. We started working with food banks."

Food banks have a basic material handling challenge shared by many in private industry: limited warehouse space and resources that might have to accommodate huge volumes of product at any given time in the fastest way possible. Aidmatrix started to address this problem with the North Texas Food Bank in Dallas. It implemented a system where the food bank could provide its inventory online to agencies (350 soup kitchens, shelters and day care centers).

These agencies now go through Aidmatrix to order online from the food bank 24 hours a day seven days a week. This is done against an actual warehouse inventory list.

"The North Texas Food Bank had just implemented an inventory management system," Gardner says. "Each agency that uses the food bank is given a user name and password. When workers log in, they can see the inventory and order from it. The items automatically start coming off the inventory as seen on the system. Then once the order is received by the food bank, it reviews the orders, accepts them, makes adjustments if needed, then sends back a confirmation to that agency saying this is what it will get, this is the cost associated with it, and this is when it will be ready for pickup. Previously these agencies were working with faxes and phone calls, so the chance was limited that they'd get what they ordered."

Aidmatrix then established a partnership with America's Second Harvest in 2002, which has 215 affiliated food banks across the U.S. Aidmatrix's work includes providing two systems. One is AgencyExpress, which enables food banks to interface with their agencies, and the second is DonorExpress, which helps America's Second Harvest manage its large national donors. Donors include big companies like Kraft and Conagra, which make massive donations but can't afford the time it would take to split the donation into bite-size chunks for each individual food bank. In 200w, Aidmatrix was awarded the America's Second Harvest Technology Donor of the Year award for its work.

The results

Since its launch in 2000, Aidmatrix has facilitated the delivery of more than 230 million pounds of food through more than 150 food banks to more than 23 million people in need in the United States alone. It has also facilitated the delivery of clothing, medical supplies, building supplies, household appliances and computer technology. Today there are more than 1,000 organizations in both the non-profit and for-profit worlds using Aidmatrix technology. This year, Aidmatrix will continue to grow with advanced work on its Disaster Relief Exchange and its Medical and Health Exchange.

Aidmatrix benefits from alliances with corporations that provide the following assets:

• Hardware donations;

• Software donations;

• Database services;

• Hosting services;

• Access services;

• Content and translation services.

Service donations include:

• Technical consulting;

• Business process and education;

• Legal and accounting services;

• Strategic planning and product strategy;

• Donor recruitment.

"Aidmatrix not only lets people donate, but donate wisely," concludes Gardner, "getting the right items in the hands of the right people at the right time."

In fact, there's a new financial model that's sure to get the attention of CFOs at companies worldwide. It's called "manufacture for donation." The idea is that if you're a manufacturer with a line that you're about to take down, this model suggests that instead of taking it down, keep it going and manufacture product specifically for donation. As stated in a white paper co-authored by Aidmatrix and its alliance partners, the combination of regulatory changes and run strategy (capacity and mix) optimization may help drive corporate profitability, market efficiency and market image while at the same time addressing the needs of contemporary society.

Jason Rushton has since left i2 and now works for Savi Technology as a solutions consultant. He still follows the progress of his brainchild, however. Having been recalled to active duty for Operation Iraqi Freedom, he's glad to see his idea gaining momentum and on track to address even greater challenges. MHM