Unit 6 - Cash Transfer Programming

UNIT 6:
Cash Transfer Programming
AO/HLCP/0190 V3.0
Introduction .......................................................................................................................................... 4
6.1. Assessments, Analyses, & Building to Modality Decision................................................... 5

6.1.1. The Modality Decision ................................................................................................................. 6
6.1.2. Accountability for Assessments & Analyses ........................................................................... 7
6.1.3. Assessments .................................................................................................................................. 8
6.1.4. Analyses ........................................................................................................................................11
6.1.5. Preparedness ..............................................................................................................................12
6.2. The Retail Market Assessment ............................................................................................ 14

6.2.1. About the Retail Market Assessment.....................................................................................14
6.2.2. The Retail Market Assessment: Macro Assessment ..............................................................18
6.2.3. The Retail Market Assessment: Micro Assessment ...............................................................24
6.2.4. Retail Market Assessment: Inclusion ......................................................................................26
6.2.5. Retail Market Assessment: Internal ........................................................................................27
6.2.6. Retail Market Assessment: Risk Identification .......................................................................28
6.2.7. Other Market-Based Responses .............................................................................................28
6.3. The Procurement Options Analysis .................................................................................... 30

6.3.1. About the Procurement Options Analysis ............................................................................30
6.3.2. Import Parity Price Analysis .....................................................................................................32
6.3.3. Comparative Analysis of Contracting Options .....................................................................34
6.3.4. Risk Identification .......................................................................................................................37
6.4. The Operational Design Options Analysis .......................................................................... 38

6.4.1. About the Operational Design Options Analysis .................................................................38
6.4.2. Risk Identification .......................................................................................................................40
6.5. Feeding into Program’s Analyses ........................................................................................ 41

6.5.1. Value-for-Money (VfM) Analysis ..............................................................................................41
6.5.2. Risk Analysis .................................................................................................................................43
6.5.3. Response Analysis ......................................................................................................................44
6.6. CTP & Competitive Procurement......................................................................................... 46

6.6.1. Procurement Principles & Ethics ............................................................................................46
6.6.2. Roles, Responsibilities, & Types of Suppliers .......................................................................53
6.6.3. Complexities of Contracting FSPs & PSPs ............................................................................56
6.6.4. Complexities of Contracting Retail Agents ...........................................................................57
6.7. Monitoring ............................................................................................................................. 60

6.7.1. Types of Monitoring ...................................................................................................................60
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6.7.2. Planning & Preparing for Monitoring .....................................................................................62
6.7.3. Retail Market Monitoring ..........................................................................................................63
6.7.4. Supplier Monitoring ...................................................................................................................64
6.8. Working Together.................................................................................................................. 66

6.8.1. Delineating Accountability & Responsibility .........................................................................66
6.8.2. Relationship-Building Skills.......................................................................................................67
6.8.3. Working with Others in a Dysfunctional Situation ..............................................................69
AO/HLCP/0190 V3.0
Welcome to the Cash Transfer Programming (CTP) Unit of the Certification in
Humanitarian Logistics course.
In Unit 1, we learned how the world of humanitarian aid is changing and how
humanitarian organizations are using innovative approaches to meet beneficiaries’
needs. These new approaches, however, require different expertise, skills, and
resources for effective and efficient implementation.
This unit focuses on how Supply Chain effectively contributes to CTP and supports
the organization in achieving its objectives.
AO/HLCP/0190 V3.0
The assessments gather essential information about beneficiary needs and the
operational context in order to inform program objectives and design. The information
compiled feeds into analyses on feasible options, to confirm viability and compare the
relative effectiveness of implementation options. This information culminates with the
Response Analysis.
The goal is to provide Management a recommendation, and relevant supporting

information, so that a decision on the modality can be made.
ASSESSMENTS
ANALYSES
RESPONSE ANALYSIS
MODALITY DECISION
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In Unit 1: Supply Chain in Humanitarian Aid, we defined ‘transfer modality’ as the form used to
provide assistance to a beneficiary. We considered the three primary modalities – in-kind, cash, and
vouchers – and that cash and vouchers are often referred to in combination as cash transfer
programming (CTP).
We also explored the benefits of CTP, specifically that cash and voucher programs can support local
markets and host community in addition to, for example, feeding refugees. These additional
benefits mean that how the project is delivered (i.e. its transfer modality), contributes to the
achievement of the program’s objectives.
IN-KIND PROJECT CASH PROJECT
The private sector delivers the needed items

The humanitarian organization obtains and
Delivery through the retail supply chain. Beneficiaries
delivers the needed items to the beneficiaries.
buy needs from retailers.
Payment for The humanitarian organization manages The humanitarian organization pays for
Delivery supply chain activities in-house. delivery, indirectly, as part of the retail price.
Economic Benefit
LESS MORE
for Host Community
As a result, more so than with in-kind projects, achievement of program objectives is

intrinsically linked with operations activities and resource requirements.
Internally, this intrinsic link has a significant impact on organizations’ decision making, and unilateral
decisions or choices previously considered only by one function must now be viewed from an
organization-wide perspective. This requires more communication and coordination among
different players.
Most importantly, the decision of which modality to use is made by Management because the
implications of the selection will have a large impact on both achievement of program objectives, as
well as organization structure, activities, and resource requirements.
Management chooses the best modality to

achieve the organization’s objective(s).
Understanding how and why to gather and analyze information to support an informed modality
decision by Management is key to effective support of CTP. (It will also be the focus of the first five
sections of this unit.)
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Accountability for assessments must ultimately lie with functions or individuals with the expertise to
make the relevant determinations. Sometimes questions arise about why certain functions may be
involved in assessing markets or analyzing options for program design, and/or why assessment isn’t
the sole domain of Program. As we learn about the various assessments and analyses conducted,
consider the knowledge and skills of the Operations functions and the value they may contribute:
When conducting assessments and performing analysis, in particular with respect to markets, the
same data are often used by different functions to answer different questions. Their respective
expertise produces different perspectives.
Coordination is ultimately Management’s responsibility, but all team members should proactively
identify opportunities to coordinate research and assessment activities, and share data and analysis.
This should also be done with humanitarian agencies, working groups/clusters, and other
stakeholders working locally. By working together, staff can benefit from each other’s respective
expertise.
A few important areas of potential overlap that Supply Chain must be aware of are:
 Beneficiary Needs & Markets: Program leads on the Beneficiary Needs Assessment and
Program and Operations lead on portions of the assessments of the markets. Both
assessments are accessing distribution outlets, and consider beneficiaries’ access and
usage. Coordination will limit duplication of efforts.
 Finance & ICT: Financial service providers (FSPs) and payment service providers overlap
significantly in terms of technology and services. In fact, some humanitarian organizations
only have one assessment. As such, it is important to coordinate to limit overlaps in efforts,
as well as ensure that other non-finance perspectives are also considered.
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It is also vital that both functions remain fully engaged with the assessment, as each has
essential expertise. Finance cannot be expected to effectively evaluate technology platforms
and solutions. Similarly, ICT cannot be expected to understand financial regulatory systems
and risk exposure.
Supply Chain must be aware that expertise from both of these functions may be required to
appropriate assess potential service providers during a competitive procurement process.
 Implementing Partners: Program leads the Implementing Partner Assessment, but it is
essential that all Operations functions are involved to assess the partners’ internal capacities
with respect to their functional areas.
When team members do not coordinate internally, and humanitarian organizations do not
coordinate with partners and stakeholders, then efforts are often duplicated, which may result in
wasted time and money.
Common areas assessed when considering a cash transfer program (CTP) are listed below. Supply
Chain may not lead, or even be involved with, all of the assessments required, but it is important to
know what needs to be done and why, so that you know when it is appropriate to contribute.
Beneficiary Lead: Program

Needs Objective: Determine beneficiary needs and define program objectives
Implementing Lead: Program

Partner Objective: Assess viability of using implementing partners and identify potential
partners to deliver services
Markets Lead: Multiple

See detail below.
Security Lead: Security

Objective: Assess security of operational context, and specific project
implementation location(s)
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Markets are the most complex of the common areas
assessed, and require expertise from multiple functions in
order to create a comprehensive picture. Program looks at
the markets – all of them – to understand what is possible
and best for the beneficiaries. Operations looks at the
same markets, but to understand what is feasible, where
the risks are, and how it would work.
Market Lead: Program
Situation Objective: Identify the strengths and weaknesses of the existing retail market in the
Program’s scope and operational area
Financial Lead: Finance

Market Objective: Assess financial market, infrastructure, players, and beneficiary access for
viable project approaches
ICT Lead: ICT

Objective: Assess technology market, infrastructure, players, and beneficiary access
for viable project approaches
Retail Lead: Supply Chain

Market Objective: Assess retail market (including upstream), infrastructure, players, and
beneficiary access for viable project approaches
Some projects require additional assessments which are focused on specific program objectives.
The lead and supporting functions should be assigned as appropriate for the content and
objective(s) of the assessment.
Examples:
 A rental market assessment may be required for a shelter/housing project
 A labor market assessment may be required for a cash-for-work project
Each assessment area (retail market, financial sector, etc.) should be considered from multiple
perspectives. The appropriate perspectives for each assessment area should be decided by the
implementation team, based on operational context, project requirements, and the organization’s
policies.
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We suggest using these perspectives when approaching each assessment area. Note – we’ll define
and explain ‘inclusion’ in more detail as well as provide a little additional information about the
internal perspective.
MACRO MICRO INCLUSION INTERNAL

Review the overall Review the capabilities of Review the services and Review of the country
operational context: individual potential technologies used by operations/
infrastructure, regulatory partners and/or beneficiaries currently: implementation team:
environment, competitive suppliers: governance, ATMs, cell phones, etc. skills, experience,
environment, financial controls, services, systems, controls,
KEY QUESTION:
inclusion, etc. customer support, resources, etc.
Can beneficiaries
experience, etc.
KEY QUESTION: access the services KEY QUESTION:
Is the operational KEY QUESTION: used to deliver CTP? Do we have what it
environment Is the company or takes to effectively and
appropriate for CTP? partner worth being efficiently execute CTP?
short-listed?
A state in which all people who can use them have access to a suite of quality services,
provided at affordable prices, in a convenient manner, and with dignity for the clients.
The services are delivered by a range of providers, most of them private, and reach
everyone who can use them, including disabled, poor, rural, and other excluded
populations.
Adapted from the definition of financial inclusion
by the Center for Financial Inclusion
The purpose of the inclusion portion is to confirm beneficiary access to the respective services
(banks, financial service providers, payment service providers, retailers, traders, markets, etc.) which
may be used to implement CTP. Initial data gathered during the macro assessments may indicate
that the country’s population has access to the services, but do the target beneficiaries have the
same access? This must be confirmed and included in the response analysis. Further, data
gathered on specific service providers should feed into the micro portion of the assessments, as well
as into the vendor rosters of potential suppliers.
The market systems in which CTP projects are implemented are extremely complex. The staff
designing and implementing these projects must have the necessary analytical skills and flexibility,
which may differ significantly from their traditional roles.
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As explained in Unit 1, the impact of CTP to the organization is that their staff need different skills
and operational structures and processes must be more flexible than in the past. Management is
being pushed to resource the added capacity as well as to realign internal systems and processes to
support the changing operational needs.
While Management is accountable for ensuring each function has the resources and capacities
required to perform its required tasks, each function is responsible for identifying and
communicating its needs. It is therefore essential for functions to include and consider this
perspective when considering whether or not CTP is feasible.
Later in the Assessment and Analysis phase, risks will need to be consolidated and analyzed, prior to
making a recommendation to Management about the modality. It is useful to record identified risks
as assessments are conducted.
A simple way to tabulate identified risks, and to ensure that all angles are considered, is to use a
table where the perspectives are listed across the top and each assessment has a line.
FINANCIAL MARKET
ICT
RETAIL MARKET
SECURITY
As with assessments and, in fact, all activities, every organization arranges their analyses differently.
In the end, how an organization chooses to group and manage activities is not important, as long as
Management has the information they need to make an informed modality decision.
There are five areas of analysis which we will review, each with specific objectives. They build to a
final analysis – the Response Analysis – which consolidates the findings of the assessments and
analyses. Although Supply Chain leads only two of these, they have significant contributions to all.
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Procurement Lead: Supply Chain
Options Analysis Objective: Compare procurement options per commodity/aid item to be
offered as well as implications of contracting approaches to cost
of project inputs
Operational Design Lead: Supply Chain

Options Analysis Objective: Compare potential project approaches and their respective
implications to operations, including capacity requirements, costs,
flexibility, and reliability
Value-for-Money Lead: Program

Analysis Objective: Compare value across potential project approaches and their
respective operational requirements
Risk Analysis Lead: Program

Objective: Assess ultimate risk exposure with each potential project
approach and its respective operational requirements
Response Analysis Lead: Program

Objective: Program, in consultation with Operations, makes
recommendation for modality to management
Just as risk identification is important during the assessment phase, it is equally important to
continue to record risks that are identified during analyses. The Risk Analysis is generally one of the
last tasks completed before Response Analysis, as it relies on input from all of the other
assessments and analyses.
Procurement
Options Analysis
Operational Design
Options Analysis
Value-for-Money
Analysis
Baselines are an important aspect of any process to measure change in the lives of
women, men, and children. They can be used by humanitarian teams to understand the
situation before the disaster, the change in entitlements of the affected population and
size of the gap in needs.
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In crisis prone countries the pattern of disaster suggests that particular geographical
areas affected by crisis on a periodic basis. This should be the starting point for baseline
information collection. While some information can be collected soon after the disaster,
most information is best captured before the crisis, especially information related to
social relations and market supply chains.
Source: Oxfam: Working with Markets & Cash –
Standard Operating Procedures & Guidance Notes
Baseline evaluations are an important way to effectively prepare, and should be performed for all
assessments and analyses, if possible. They should be updated regularly to ensure relevance.
Completing a comprehensive baseline assessment is extremely valuable, but in some cases it is not
feasible. Internal coordination is tremendously important, and a discussion should take place with
your counterparts (other operations functions, Program, Management, and external, if appropriate)
to determine:
 How deep the baseline assessment should be
 How often the assessment should be updated
In many countries with ongoing interventions, inter-agency working groups conduct joint missions,
especially for baseline assessments. They should be contacted to understand:
 What has already been done?
 What are the gaps?
 Who else might need to do a baseline?
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Essentially, a CTP project outsources the majority of the organization’s supply chain
activities to the private sector which, in turn, economically benefits the host community.
The downside is that, by outsourcing these tasks, the humanitarian organization is
increasing its risk exposure by limiting its ability to control and assure delivery.
Furthermore, if anything does go wrong, the potential impact is high, not only because
beneficiaries’ lives are at stake, but because re-establishing a physical goods supply chain
may take months and/or enormous resources.
Supply Chain leads the Retail Market Assessment because Supply Chain understands
supply chains. Supply Chain has the expertise to determine if the retail market’s supply
chain can be relied upon to deliver on behalf of the humanitarian organization.
Many aspects of the Retail Market Assessment overlap with Program’s efforts to assess
the potential benefits to the host community’s economy, so it is important to coordinate
activities.
OB JE C T IV E Assess retail market (including upstream), infrastructure, players, and

beneficiary access for viable project approaches
RAC I Responsible: Supply Chain

Accountable: Supply Chain
Consulted: Program
Informed: Management
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AC T IV IT I ES PR E PA R ED NE SS
 Macro retail market assessment  Baseline assessment
 Micro assessment of retail agents in  Baseline risk identification
anticipated project area
 Map markets
 Initial identification of potential retail agents
 Risk identification
RE T AIL The retail market includes all physical items that may be purchased by a
M AR K E T beneficiary in a retail environment, for example:
 Food  Blankets
 Soap  Nutritional supplements
 Clothing  Cooking sets
RETAIL MARKET The retail market supply chain refers to the end-to-end chain, from production
SUPPLY CHAIN to retail outlet, where the physical items listed above may be purchased by
beneficiaries.
RE T AIL A GE N T The term ‘Retail Agent’ is used, for this course, to refer to any actor in the retail
market supply chain with whom an organization may do business in order to
deliver items to beneficiaries through retail outlets. This includes, but is not
limited to:
 Retailers  Traders
 Wholesalers  Importers
 Distributors  Producers
 Retail chains  Farmers’ markets
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Both Program and Supply Chain assess the retail market, but the types of questions they are trying
to answer are different.
QUESTIONS TO BE ANSWERED…
by Program by Supply Chain

 What should the program objectives be?  Are the retail market and its supply chain
 Are beneficiaries’ needs (and reliable? What are the constraints?
preferences) available in the market?  Are there sufficient qualified retail agents?
 Do beneficiaries have access to the  Can gaps in the supply chain be supported
qualified outlets? effectively?
 What is the anticipated impact to the  How will contracting and operational design
host community’s economy? impact cost and program objectives?
Before the assessment can begin, basic information is required from Program and/or Management:
 Anticipated areas of project implementation
 Anticipated project duration and whether there will be repetitive distributions (e.g. monthly)
 Approximate number of beneficiaries, preferably by district or locality
 Desired goods and services, including quantities, for beneficiaries to receive, in as much
detail as possible
 What information and/or work has already been gathered/done
 Any known constraints or concerns that warrant special care or attention
It is important to remember that the parameters provided are likely to change several times prior to
implementation, and may even be adjusted between distribution cycles. We recommend starting
the process using the best information available, but with the understanding of the likelihood that,
and how, the information may change in order to adapt quickly. Demonstrating a willingness to be
flexible to Program’s needs and an understanding of their constraints will help both of you!
The four perspectives for assessment were presented in the previous section. Here we will look at
how they will be used for the Retail Market Assessment.
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Key Questions: Can the retail market and its supply chain reliably deliver on the
agency’s behalf? Will the added volume from the beneficiary
caseload negatively impact the economy?
Output: A report reviewing the strength of the country’s retail supply chain
and market maps for key items
Feeds Into:  Micro Retail Assessment

 Procurement Options Analysis
 Risk Analysis
Opportunities for HIGH: information may overlap with research being done by
Collaboration: Program to understand beneficiaries’ needs as well as potential
benefits or impacts to markets of a cash or voucher program.
Program’s goals are different, but sharing data can reduce work.
Key Questions Are there sufficient qualified retail agents to support a cash or
voucher project? Are there sufficient qualified retail agents to
contract for a voucher project?
Output: A list of retail agents that meet initial qualifications

- and –
Key details on the geographic area(s) of implementation to guide
operational design
Feeds Into:  Assessment of Retail Inclusion

 Risk Analysis
 Operational Design Options Analysis
Opportunities for MEDIUM: Program may visit retail outlets during the Beneficiary
Collaboration: Needs Assessment and questions may overlap, although the
ultimate goals are different. Collaboration here may reduce
multiple visits to the same locations/outlets.
Key Questions: Do beneficiaries have access to the markets? Are there any
mechanisms or circumstances for which beneficiaries do not?
Output: An understanding of beneficiaries’ access, which may or may not be

written up, but the information is required to support key analyses.
Feeds Into:  Risk Analysis

 Operational Design Options Analysis
 Response Analysis
Opportunities for VERY HIGH: It is very important to collaborate with Program and/or
Collaboration: Program may even lead this part of the Retail Market Assessment,
given its overlap with the Beneficiary Needs Assessment.
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Key Questions: Does the organization have the supply chain resources and
capacities required to effectively evaluate, design, and implement
CTP projects? Are there any mechanisms for which the agency
does not have the resources?
Output: A list of resources and capacities, if any, that the supply chain
function does not currently have, but requires, in order to
effectively support a cash or voucher program
Feeds Into:  Operational Design Options Analysis

 Risk Analysis
 Value-for-Money Analysis
Opportunities for HIGH & LOW! High if Management conducts (or delegates) this to
Collaboration: be done organization-wide. Low if the functions assess their
requirements in isolation.
Key Questions: What risks should be included in the risk registry with respect to the
retail market and/or working with retail agents?
Output: A list of identified risks related to the retail market to be included in

the Risk Analysis later
Feeds Into:  Risk Analysis & Risk Registry

Opportunities for LOW: Program may have insight from their efforts to understand
Collaboration: the benefits for the markets and anticipated outcomes of the cash
or voucher program. Risks will be consolidated, however, later
during the Risk Analysis, so extra effort here may be unnecessary.
The Macro Retail Supply Chain Assessment determines the commercial supply chain’s
capacity to assure supply on WFP’s behalf, i.e. to absorb increased demand and reliably
transfer large quantities of food supply resulting from WFP cash and/or voucher transfers
at scale. It measures the reliability of a region’s commercial retail supply chain – from
source/port to distributors, wholesalers, retailers, and markets – against three indicators:
 Volumes and flows (from sources to markets, diversity of supply, competition);
 Enabling environment (Supply Chain infrastructure and services, regulatory
restrictions);
 Agility (ability to respond to shocks and sudden changes in demand).
Source: WFP – Cash & Vouchers Manual, 2nd Edition
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As previously mentioned, a CTP project essentially outsources the majority of the organization’s
supply chain activities to the private sector which, in turn, economically benefits the host community.
The downside is that by outsourcing these tasks, the humanitarian organization is increasing its risk
exposure by limiting its ability to control and assure delivery. Furthermore, if anything does go
wrong, the potential impact is high, not only because beneficiaries’ lives are at stake, but because
reestablishing a physical goods supply chain may take months and/or enormous resources.
Supply Chain leads the Retail Market Assessment because Supply Chain understands supply chains.
Supply Chain has the expertise to determine if the retail market’s supply chain can be relied upon to
deliver, and if the market systems are sufficiently elastic to support the beneficiary caseload without
adversely affecting the host community’s economy. The Macro Retail Market Assessment provides
the insight necessary to make this determination.
The output of the macro assessment is a report summarizing the strength of the country’s retail
market and its supply infrastructure. If the sector is strong enough to ensure reliable delivery, and
the anticipated project will not adversely affect the market, it is possible to begin identifying potential
retail suppliers in the micro assessment, as well as proceed with the Procurement Options Analysis.
More than with other macro assessments, the Retail Market Macro Assessment requires a
significant amount of field work, and discussion with market actors, to support desk research. Some
of the topics and data points to consider are shown below. Determine which are relevant for your
context and focus accordingly.
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Logistics  Logistics Cluster Digital Logistics Capacity Assessments Archive:
Capacity & http://dlca.logcluster.org/display/public/DLCA/LCA+Homepage
Infrastructure
 World Bank Indicators (in particular see portions on infrastructure, trade, and private
Development
sector): http://data.worldbank.org/indicator?tab=all
Commodity  IMF Primary Commodity Prices: http://www.imf.org/external/np/res/commod/index.aspx

Price Indices  World Bank Commodity Markets: http://www.worldbank.org/en/research/commodity-
markets
 World Bank Global Economic Market (GEM) Commodities:
http://databank.worldbank.org/data/reports.aspx?source=Global-Economic-Monitor-
(GEM)-Commodities
Shock & Price  Alert for Price Spikes (ALPS): http://foodprices.vam.wfp.org/ALPS-at-a-glance.aspx

Predicting  Famine Early Warning Systems Network (FEWSNet): http://www.fews.net/
- Regional & Market Supply Outlook Reports: https://www.fews.net/sectors/markets-trade
 WFP VAM Seasonal Monitor: http://vam.wfp.org/sites/seasonal_monitor/
Shock  Shock Impact Simulation Model (SISMod): http://faowfpmodel.wixsite.com/sismod

Estimation
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Maps  Map Action: http://mapaction.org/
 International Trade Centre (ITC): Trade Maps
International  ITC Market Access Map: http://www.macmap.org/

Trade – Flows  ITC Trade Map: http://www.trademap.org/Index.aspx
& Regulations
 ITC Trade Competitiveness Country Maps:
http://legacy.intracen.org/marketanalysis/TradeCompetitivenessMap.aspx
 ITC Standards Map: http://www.standardsmap.org/
A market map is a visual snapshot of the complex market system, at a given point in time, and for a
particular commodity or group of commodities. Market maps are not required, but they are
extremely useful for understanding the mechanics of the market system and whether the market
will be accepting of your cash project.
In the Emergency Market Mapping and Analysis (EMMA) Toolkit (website: http://www.emma-
toolkit.org/), the uses of market maps are defined as:
 To collate and represent information about market systems during the study
 To assist comparisons of pre-emergency (baseline) and emergency-affected situations
 To facilitate discussion, interpretation, and analysis of data within the EMMA team
 To communicate findings about market systems to others
The EMMA Toolkit graphically represents markets in three linear components:

1. The market chain: shown in the middle
2. Supporting infrastructure and services: on the bottom, being supportive
3. The external environment: reigning terror from above
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SOURCE: Market Analysis Guidance (MAG)
The following steps have been adapted from ICRC’s Market Analysis Guidance (MAG), Chapter 1:
Assessments (available here: http://webviz.redcross.org/ctp/docs/en/3.%20resources/1.%20
Guidance/1.%20Key%20documents/RCRCM%20MAG_EN.pdf). If the project was delivering in-kind,
mapping must be performed for major items, or groups of items, included in the basket of aid to be
provided to beneficiaries. Items can be grouped together if they come from similar sources, are
traded through similar channels, and have similar characteristics (e.g. temperature requirements or
fragility). Produce and dairy are good examples of such groups.
Ideally, a baseline map would have been completed which would have resulted in a smaller amount
of required, than to start from scratch, and the impact of the shock could have been seen more
clearly.
Starting Point: Anticipated localities for distribution
1. Identify where local retailers source their goods and work up the chain to identify the
ultimate producers and/or sources
- How much is produced locally?
- How much is produced nationally?
- How much is imported?
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2. Break down the intermediaries between the sources and the end markets
- How many layers of intermediaries are there?
- Approximately how many are there of each type of intermediary? 1, 3, 5, 10, 25,
100, 500+
3. Estimate volumes through the paths

- Can you identify which players, if any, control large volumes?
- Is there excess capacity in the chain? How much?
4. Add selling prices for the product at each level of intermediary

- Can you estimate margins made at each level? Consider the value the player adds
to the product (e.g. transport from the port to the wholesaler)
- Which player(s) have the largest margins?
5. Identify the types of relationships between actors

- Are there long-term relationships?
- Do any of the actors support others with credit?
6. Show key support infrastructure and services, such as access to financial services
- What does the market rely on?
7. Consider and note the context’s externalities

- What external influences constrain the market (e.g. government regulations and
tariffs on imports)?
- Are there seasonal changes?
8. Identify changes that occurred after the emergency

- Has availability changed?
- Has the balance of power shifted at all?
There are many market assessment tools available; each with its own strengths and weaknesses.
CaLP maintains a useful comparison of market assessment tools on their website
(http://www.cashlearning.org/markets/humanitarian-market-analysis-tools). You should determine
which one best meets your needs, but we’ve identified a few which we recommend as possible
starting points. Remember, you do not have to take the tool ‘as is’. Adapt it for your context and
make it work for you.
RETAIL  Red Cross Cash in Emergencies Toolkit: 2.3.2.2.: Discussion with Traders -
AGENTS http://rcmcash.org/toolkit/
 WFP: How to Conduct a Trader Survey – Generic Trader Survey:
http://www.wfp.org/content/market-analysis-tool-how-conduct-trader-
survey
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KEY MARKET  Red Cross Cash in Emergencies Toolkit: 2.3.2.1.: Discussion with Market
INFORMANTS Representatives: http://rcmcash.org/toolkit/
MARKET GUIDANCE:
MAPPING  ICRC’s Market Analysis Guidelines (MAG): Chapter 1 – Assessment
- http://www.cashlearning.org/resources/library/541-market-analysis-
guidance-mag/
TOOLS:
 Emergency Market Mapping and Analysis (EMMA) Toolkit
- Online Tool:
http://www.emma-toolkit.org/market-system-mapping-tool
 CaLP’s CTP in Urban Emergencies Toolkit
- PowerPoint Template:
http://www.cashlearning.org/downloads/annex-tool-4template-for-
labor-market-mappingdraft-dec-13-2011.pptx
SEASONAL  Emergency Market Mapping and Analysis (EMMA) Toolkit:

CALENDARS http://www.emma-toolkit.org/documents/emma-forms-templates
The Micro Retailer Capacity Assessment is a detailed analysis of retailer capacity and their
dependencies in a specific area of intervention. It draws from official registers and
statistics of relevant authorities of the country or area, as well as the retailer capacity
questionnaires and VAM market assessments.
Source: WFP – Cash & Vouchers Manual, 2nd Edition
The purpose of the Micro Retail Market Assessment is to assess individual retail agents as potential
suppliers, in preparation for a possible voucher project. Furthermore, it is an opportunity to gauge
their interest in participation.
As part of evaluating potential service providers, field visits are required to check the retail spaces,
storage capacity, the quality of product, hygiene, and safety of the environment.
The major output of the Micro Retail Market Assessment is a list of potential suppliers that meet
initial qualifications with services sufficient to warrant their inclusion in the roster (or short list), to be
invited to bid during the competitive procurement process. Furthermore, the quality and quantity of
potential suppliers available will be a factor when considering potential contracting options during
the Procurement Options Analysis.
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The Red Cross Cash in Emergencies Toolkit has a very simple checklist to confirm traders’ (or retail
agents’) willingness to participate in, and capacity to adhere to, voucher projects (Red Cross Cash in
Emergencies Toolkit – 2.3.2.4. – Traders in Voucher Programs Checklist – http://rcmcash.org/toolkit/).
The 7 items in their checklist are:
 Are the traders willing to take part in a voucher project (considering beneficiary profile,
timeframe, and other relevant issues)?
 Do traders meet the minimum financial, supply, and stock capacities required for a voucher
project?
 Do traders offer comparative prices (compared to relevant markets)?
 Do traders possess bank accounts?
 Do traders possess valid trading licenses?
 Do traders provide cold storage for perishable products?
 Do traders possess accurate weights and measures equipment?
The Logistics Cluster has a useful compilation of performance indicators for retailers to use during
monitoring (Key Performance Indicators – Assessment of Retailers – http://www.logcluster.org/
document/wfp-example-retailer-performance-indicators-2013). Performance indicators for
monitoring a supplier are effectively the same as the indicators needed to qualify them; as such, this
tool works for both tasks. It is in a matrix format effective for comparing retailers’ results at the end.
Furthermore, it can be adapted for any retail agent, not just retailers.
Where the Cash in Emergencies Checklist covers the basic questions, the Logistics Cluster
Assessment Form will help collect quantitative feedback. Combined, the two tools will effectively
assess and present potential retailers.
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Source: Logistics Cluster
As previously mentioned, the purpose of the inclusion portion of the assessment is to confirm
beneficiary access to the respective services. For retail markets, this includes:
 Where do the target beneficiaries currently shop? Small shops? Farmers’ markets?
 Are there any retail locations or retail agents that do not welcome the target beneficiaries?
Are these locations where the beneficiaries would prefer to shop, if they had access?
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During the Beneficiary Needs Assessment, Program may interview individual beneficiaries, or hold
focus groups, to determine both their needs as well as their preferences. Since Program is already
interacting with the beneficiaries, which is required to confirm inclusion, this is often the best time to
assess inclusion as well.
The Red Cross Cash in Emergencies Toolkit has a useful template to assess retail market inclusion –
2.2.2.1 – Community Access to Markets Template (available here: http://rcmcash.org/toolkit/).
In the previous section, we mentioned that Management is accountable for ensuring that each
function has the resources and capacities required to perform its assigned tasks; however, it is the
responsibility of the function to identify and communicate its needs. It is, therefore, Supply Chain’s
responsibility to look at its internal resources and assess its capacity to effectively 1) conduct retail
market assessments and 2) support implementation of a cash or voucher program.
With these challenges in mind, the M4P Operational Guide (link: https://beamexchange.org/
resources/167/) proposes a practical way of evaluating organizational capacity:
Assess whether systems are Ensure staff are empowered and Equip project teams with the
ready and fit for purpose: willing to manage market ability to manage market
Understand where organizational systems interventions: systems development effectively:
processes and procedures may Establish conditions that encourage Assemble project teams that offer
inhibit implementation of the market flexibility and innovation amongst leadership as well as technical
systems development approach; staff, reflecting the dynamic nature expertise, supported by a strategy
develop strategies to mitigate these of market systems interventions and resources for building team
constraints capacity
In Unit 2: Warehousing & Inventory Management, we learned how to identify resource requirements
to support the needs of a functioning warehouse. This drove at the heart of the ‘Ready’ portion.
In Unit 5: Fleet Management, we learned how to identify needs for personnel, including both the
number/types of staff required as well as training needs to help them be successful in their roles –
the ‘Able’ portion.
In this unit, we are focusing on Supply Chain’s responsibilities for supporting CTP. By building
understanding of CTP, we hope Supply Chain staff will naturally achieve the ‘Willing’.
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Risks should be noted when they are identified in order to ensure that they are included in the risk
analysis. Any of the aspects assessed may have risks associated, but areas of particular concern
include:
 Supply constraints and/or possibility of future shocks to the market
 Fluctuations in retail market prices
 Potential for unethical treatment of the beneficiaries/fraudulent behavior on the part of the
retail agents (e.g. price discrimination, commodity swapping)
 Socio-political influences
Market based responses work through local markets and aim to give greater flexibility
and choice to program participants are any programmatic responses that employ
existing market places to meet the needs of an affected population.
Source: CRS
Market-based responses work through local markets to meet beneficiary needs. In most cases, the
market-based responses are cash-transfer programs (either cash or voucher) and the markets are
relied upon to provide the aid. This is only possible, however, if the market supply chains are
functioning normally.
The below diagram is a simplified example of a normal-functioning supply chain, from producer to
distributor to retail locations.
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After a disaster occurs, there may be circumstances during which a component of the supply chain
disappears or no longer functions, such as the distributor:
If the retail market assessment reveals that the remaining portions of the chain are still functioning,
then there is an opportunity to support the gap in the chain. The result of such a project would
mean that the market could successfully meet beneficiaries’ needs.
These types of interventions are only possible if assessment teams are aware that they are possible,
and if they are considering such options when evaluating the retail market chain.
NOTE: If a private sector actor, such as the distributor in the above example, is supported as
part of a market-based response, they are a beneficiary of the project. In such
scenarios it is important to involve Procurement staff early on, in order to manage
any waivers of competition required to accompany the contract with the actor.
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In Unit 3: Procurement, we learned about the ‘Six Rights’:
 Right quality  Right place
 Right quantity  Right cost
 Right time  Right source
These ‘Rights’ still apply with Cash Transfer Programming, perhaps with even more
emphasis on the ‘Right Source’ now. The challenge is that Supply Chain no longer makes
sourcing decisions in isolation, as the sourcing decision impacts the achievement of
program objectives.
Examples of such sourcing decisions include:

 Whether to source locally, regionally, or internationally
 Whether to issue a ‘request for proposal’ (RFP) or a ‘request for quote’
 Whether to tender or rely on an existing framework agreement
The objectives of the Procurement Options Analysis are to look at the variables and to
provide information to Management about how the sourcing different decisions may
impact the ‘Rights’ and, most importantly, achievement of the program objectives.
OB JE C T IV E Compare procurement options per commodity/aid item to be offered, and

implications of contracting approaches to cost of project inputs
RAC I Responsible: Supply Chain (Procurement)

Accountable: Supply Chain (Procurement)
Consulted: Program
Informed: –
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 Import Parity Analysis  Baseline commodity tracking
 Comparative analysis of contracting options  Baseline risk identification
 Voucher contracting options
 Cash contracting options
The same information required as prerequisite for the Retail Market Assessment is also required for
the Procurement Options Analysis:
 Anticipated areas of project implementation
 Anticipated duration of the project and if there will be repetitive distributions (e.g. one per
month)
 Approximate number of beneficiaries, preferably by district or locality
 Desired goods and services, including quantities, for beneficiaries to receive, in as much
detail as possible
 What information and/or work has already been gathered/done
 Any known constraints or concerns that warrant special care or attention
The Procurement Options Analysis is designed to answer these questions:
IMPORT PARITY Are the markets integrated? Is there sufficiently open competition that
PRICE ANALYSIS traders will respond to increases in demand?
VOUCHER What are the resource requirements for contracting the required number of
CONTRACTING retail shops? Would contracting through a wholesaler be possible, and what
OPTIONS would be the benefits/risks?
CASH What are the specific complexities of the local technologies that will have an
CONTRACTING impact on contracting for an effective digital platform? How long would an
OPTIONS effective contracting process take, where all nuances of the delivery
mechanism are negotiated and agreed?
RISK What risks should be included in the risk registry with respect to the
IDENTIFICATION procurement and contracting?
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Import Parity Price
A local price which is equivalent to the international market price for a commodity, but
converted into local currency, plus any transport, tariff, and other costs that the buyer
would bear if importing.
Source: EMMA Toolkit
Parity means equal or equivalent. Parity price analysis is a comparison of prices from other
locations to the local price, after adjusting for costs associated with moving them. Import parity price
(IPP) analysis means making this comparison between imports and local sources.
The import parity price analysis will answer:

 Are the markets integrated, and is there competition?
 Is there a significant price difference between purchasing in the local market and the cost of
importing the items as a humanitarian agency for the anticipated duration of the project? If
yes, how much?
 Would there be an advantage to using a hybrid model?
Management may choose one modality over another because of the desired intervention outcomes.
In order to make an effective and informed decision, however, they need to know all of the
implications, of which cost is a major factor.
In a world of perfect competition, with no barriers to entry and no transaction costs, the price of a
particular commodity on the local market should be equal to that of the import price plus transport
costs.
If local demand increased and local prices responded by rising slightly, then traders would have an
incentive to import additional supply to meet the demand until the prices return to equilibrium. The
same concept applies to exporting.
This is a simplified example, but it shows how markets would react under the circumstances.
In reality, many more factors contribute to driving prices than just distance and transport costs.
Here are a few examples of items that could impact prices:
 Tariffs & duties  Cost of setting up/doing business
 Trade quotas  Customer preferences
 Limits in supply  Black markets
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Perfect competition does not exist and it is impossible to account for every factor, therefore, a
practical application of IPP analysis lies somewhere in the middle.
 Account for known constraints with large implications as much as possible, and use logic to
understand relevance
Minimum standard: Comparison should be done for the largest commodities which would be
distributed if in-kind were the transfer modality.
Best practice: Comparison of prices over time for more than one import location, and comparison
of import vs. wholesale vs. retail.
Below are information requirements, as well as a few ideas for potential sources:
LOCAL MARKET  Check the market for current spot prices

PRICES  Logistics Cluster and/or other humanitarian partners may track prices
WHOLESALE  Check the market for current spot prices

PRICES  Logistics Cluster and/or other humanitarian partners may track prices
IMPORT PARITY  Global commodity prices: USAID

PRICES  Transport: USAID
 Exchange Rates: IMF
 Tariffs: Ministry of Trade
The output price analysis does not need to be complex. It can be as simple as the chart below:
RI C E $651/MT $600/MT $400/MT
S U G AR $878/MT $800/MT $792/MT
BLA NK E TS $55/100 blankets $54/100 blankets $51/100 blankets
It is important to be able to clearly show the price differences. If any of the prices are distinct
outliers, such as the IPP for rice, then there may be a significant cost savings opportunity by using a
hybrid model: part in-kind, part CTP. In this case, the organization might choose to import rice but
distribute cash to pay for other items.
If the results show a large difference between the local and/or wholesale against the import parity
price, then there may be significant reasons not to implement CTP. Large price discrepancies (both
AO/HLCP/0190 V3.0
positive and negative) show that markets are not integrated and competitive, and that outside forces
(such as regulations or political interest) are affecting the prices. It is essential to better understand
the prices prior to moving forward to CTP.
The objective of doing the Import Parity Price Analysis is not to determine how to source for a
project. The objective is to understand the options for sourcing for a project.
Purchasing from the local market has economic benefits for the host community, which is one of the
chief benefits of using cash or vouchers as a delivery modality. The decision about which modality
will be used is made by Management, and the Import Parity Price Analysis and Procurement Options
Analysis helps to provide Management with the best, most comprehensive information possible as
basis for their decision.
The objective of the Comparative Analysis of Contracting Approaches is to understand the

implications – positive and negative – of procurement on the cost-efficiency of CTP projects.
Some approaches of contracting for vouchers have the potential of saving significant expense for
the agency, such as capitalizing on the VAT-exempt status or cost savings through bulk or
competitive purchasing. Other approaches may appear to be simple, yet they require a significant
amount of resources to execute which is, in turn, resources required of the humanitarian agency. In
order to make an effective choice about whether or not to use vouchers and, if yes, which approach
to use, it is essential to first understand the potential costs and benefits of the available approaches.
Unlike with retail agents, there is only one approach to contracting for service providers (finance,
payment, technology, inclusive) to implement cash projects: competitive procurement with technical
and financial bid components. While there is only one approach, it is essential to understand its
costs and benefits in order to compare it with vouchers, and feed the results into the overall value-
for-money analysis, risk analysis, and response analysis.
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WFP’s table below is a summary of approaches to contracting retail agents for voucher projects. Additional information on the ‘pass/fail’ and ‘B2B’ methodologies
will be shared in section 6.6. on competitive procurement for CTP.
WFP establishes and advertises selection criteria  Simple and fast to execute operationally  Selection criteria must be concrete and clear
through a widely publicized expression of interest (EOI). (especially in case of emergencies)  Socialization of the process and selection criteria
All suppliers meeting the pre-established criteria are  If many more shops, a lot more access for is essential
PASS / FAIL AWARD
awarded contracts. beneficiaries and increased competition  Must be appropriately publicized to give a fair
 May favor secondary objective of strengthening chance to all potential retailers that may want to
local economy participate
 System for receiving supplier applications must
be able to handle volume of applications
 If many suppliers meet criteria, resources
required to monitor qualifying suppliers
 Potential for unbalanced distribution of
contracted suppliers (geographically/socio-
politically)
WFP selects and contracts the best suppliers that apply,  Ability to target supplier groups through  Potential high resource requirements with
TRADITIONAL TENDERING
based on the evaluation of the technical proposals evaluation/selection monitoring and contract management of all the
received. The number of suppliers contracted is based  Ability to balance contracted suppliers on retailers
on program needs. specific variables (geographic/sociopolitical)  Less transparent for external stakeholders
Technical Only
WFP reimburses the supplier for the voucher contents at  Number of suppliers contracted limited to should the EOI fail to be widely publicized
the retail market prices and applies when prices are program needs  Potential of being more expensive than with
fixed at the retail level of the food merchant value chain.  Simple contractual arrangement financial competition as prices are fixed and
 May favor secondary objective of strengthening achieving economies of scale is not feasible
local economy
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WFP selects and contracts the best suppliers that apply,  Suppliers compete financially for the contract,  Potential high resource requirements with
TRADOTIONAL TENDERING
With Financial Evaluation
based on the technical and financial evaluation of resulting in financial opportunities for WFP while monitoring and contract management of all the
proposals received. The number of suppliers contracted also fostering competition among suppliers retailers. Relatively long process (compared to
is based on program needs.  Plus all advantages listed under ‘technical only’ options above)
WFP pays the supplier(s) per the prices established  Concept of value for money can be defended, as
during contracting (there might be a need to curtail to contracting will result from technically
potential fluctuations in prices at the retail sector). acceptable proposals that also have ‘market’
based prices
 Allows the possibility to enter into discussions
with the potential suppliers prior to entering into
a contract (Best And Final Offer – BAFO)
WFP contracts with a supplier(s) to deliver the required  Suppliers compete financially for the contract,  Risk of support problems from distributing retail
voucher items, with the express requirement of resulting in financial opportunities for WFP while locations. If communications and sensitization
subcontracting distribution through retail locations in also fostering competition among suppliers are not effectively managed with the electronic
the beneficiaries’ localities. WFP contracts the best  Food quality verification may be facilitated by value voucher, then a strong inventory
‘B2B APPROACH’
supplier(s) that apply, based on technical and financial having fewer suppliers contracted management system is required for this contract
evaluation of proposals.  Potential to achieve economies of scale structure
WFP pays the supplier(s) per the prices established  Potential to obtain outright tax exemptions or  Not possible to implement with paper value
during contracting (there might be a need to curtail to facilitate identification and quantification of taxes vouchers (e-vouchers and paper commodity
potential fluctuations in prices at the retail sector). in support of a claim for reimbursement vouchers are possible)
 Dependency on only one supplier rather than
diffusing risk of commodity availability across
many suppliers
 Reputational risk in sensitive contexts, where
supplier’s socio-political/religious affiliation may
create hostilities
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Comparing the contracting approaches involves a simple review of available approaches and the
implications of each. As a reminder, the objective is to inform Management about the implications
of each approach, so that they can select the best modality for the program.
The following is an example of such a comparison:
Cash Program via Mobile Money Voucher Program via Local Shops
Service Providers Required: Service Providers Required:
 1 Mobile Money Service  Local Shops (as many as possible)
Contracting Approach: Contracting Approach:

 Traditional tendering with both financial and  Pass/fail contracting
technical bid components
Implications:
Implications:  Potentially faster to contract and get project
 Potentially slower/longer process – detailed started
bids and negotiations required to  Requires system to receive all potential bids –
understand technology potentially large number of applicants
 May be limited number of potential suppliers  Requires system / resources to confirm
 Only 1 contract to manage applicants meet criteria
 Potentially many contracts to manage
Risks should be noted at the time they are identified so that they may be included later, in the risk
analysis. Any of the aspects assessed may have risks associated, but areas of particular concern
include:
 Potential challenges of effectively contracting sufficient retail agents to implement vouchers
 Potential complications with contracting retail agents to deliver
 Potential complications of contracting for financial or payment service providers given the
complexity of technologies and pricing schemes
 Competence and ability of the service providers to meet the evolving requirements
 Market integration constraints
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If plan A doesn’t work, don’t worry – there are 25 more letters in the alphabet, 204 if
you are in Japan!
- Claire Cook
Similar to the dynamic market systems that were just assessed, a humanitarian
organization is a dynamic system where the activity of each actor – or in this case,
function – affects the others. For example, if cash-in-envelopes is selected as the
mechanism, the agency may have to hire 20 new Finance Assistants to count cash and
reconcile the distributions, but it may no longer need its warehouse for in-kind aid and
warehouse staff.
This step was developed by the CTP Core Operations Course, based on WFP’s Supply
Chain Options Analysis, during which the Procurement and Logistics functions come
together to determine the overall implications of each feasible delivery mechanism to
Supply Chain. The purpose is to understand how the codependent pieces of the supply
chain come together, so that the combined state can be used to support value-for-
money, risk, and response analyses.
During the working group meetings for the CTP Operations Core, WFP’s Supply Chain
Options Analysis was discussed. It was proposed and agreed upon that this useful
consolidation should be expanded to include all of Operations, thus creating the
Operational Design Options Analysis.
OB JE C T IV E Compare potential project approaches and their respective implications to

operations, including capacity requirements, costs, flexibility, and reliability
AO/HLCP/0190 V3.0
Consulted: Finance, ICT, Security
Informed: Program, Management
 Comparative analysis of operations - none identified -
requirements for each feasible delivery
mechanism
The purpose of the Operational Design Options Analysis is to bring all Operations implementation
team members together to review the potential delivery mechanisms, their respective implications
to each component of Operations, and the implications to Operations as a whole.
Ultimately, the analysis is trying to answer:

 How will each mechanism affect Operations’ activities?
 What are the implications to Operations’ resource requirements for each mechanism?
The output of the Operational Design Options Analysis is a report, summarizing the impacts to the
organization’s operations for each delivery mechanism. It supports the Value-for-Money (VFM)
Analysis along with the Response Analysis.
A template for this analysis is presented later under ‘Framework for Comparison’.
The Operational Design Options Analysis involves all Operations functions involved in supporting
implementation of a cash or voucher program: Finance, ICT, Supply Chain (including Logistics and
Procurement), and Security.
Who leads this analysis will vary among organizations; however, the working groups for the
development of CTP Operations Core Course designated Supply Chain as the lead because the
implications to Supply Chain have bigger impact.
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The following is an example only, but it shows the implications of the resource requirements of
different Operations functions, based on the specifics of the delivery mechanism:
Direct Cash in Envelopes Paper Commodity Voucher

Mechanism Specifics: Mechanism Specifics:
Cash to be distributed by agency directly to Voucher with beneficiary’s name printed on it
beneficiaries in envelopes
Service Providers Required:
Service Providers Required:  Printer for paper vouchers
 Cash-in-transit insurance provider  Retailers to accept vouchers for
reimbursement at retail market prices,
Implications for Operations:
contracted on a pass/fail basis
 Cash security implications
- Secure store/safes required Implications for Operations:
- Planning for obtaining and moving cash  Planning and contracting for, as well as cost of,
- Additional security required at distribution secure voucher printing services
site(s)  Contracting of sufficient retailers to accept
 Cash-in-transit insurance required vouchers
 Three Finance Assistance required, full-time, to  One Finance Assistant required, full-time, to
count cash and place in envelopes for each manage retailers’ voucher remittances
distribution  Eight Logistics Assistants required, for one
 Two Security Officers required, full-time, to month prior to start of project, to contract and
oversee distribution train retailers
 Two Logistics Assistants required, permanently,
to manage relationships with retailers
Most risks associated with each delivery mechanism will have already been identified through the
assessments and analyses that were previously completed. We, therefore, recommend focusing on:
 Possible risks of components not working well together
 How risks may accentuate other risks
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The Operational Design Options Analysis is the last Operations-led step that supports the
decision by Management on the modality. There are, however, three more analyses
required before the decision can be made, and these are all led by Program:
1. Value-for-Money (VfM) Analysis
2. Risk Analysis
3. Response Analysis
Supply Chain’s input into these analyses is critical for creating a comprehensive picture
of the available options.
The National Audit Office (NAO) defines VfM as being, ‘the optimal use of resources to
achieve intended outcomes’. It’s useful to contextualize this when we consider VfM in our
aid program.
Value for Money in DFID’s program means:

We maximize the impact of each pound spent to improve poor people’s lives.
Source: DFID – DFID’s Approach to Value for Money (VFM)
OB JE C T IV E Compare value across potential project approaches and their respective

operational requirements
RAC I Responsible: Program

Accountable: Program
Consulted: Finance, ICT, Supply Chain, Security
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 Compare relative value of each potential - none identified -
project approach in terms of cost for achieving
project objectives
The primary focus of VfM Analysis is on efficiency and economy, where an optimal balance of
benefits and costs are weighed, as the basis of total cost of ownership and not necessarily the
lowest cost.
Specifically for Operations contributions, one needs to examine the ‘Es’:
ECONOMY Minimizing the cost of resources used or required (inputs), e.g. spending
less
EFFICIENCY The relationship between the output from goods or services and the
resources to produce them, e.g. spending well.
EFFECTIVENESS The relationship between the intended and actual results of public spending
(outcomes), e.g. spending wisely.
Besides these three Es, a fourth E is applied in some cases:
EQUITY The extent to which services are available and reach all people to whom they
are intended, e.g. spending fairly. Some people may receive differing levels
of service for reasons other than differences in their levels of need.
Program leads the Value-for-Money (VfM) Analysis with consultation and input from all
implementation team members and Operations functions. The output of the analysis feeds into,
and supports, the overall response analysis.
No individual or function is in a position to conduct the value-for-money analysis alone, because no

individual or function has the full spectrum of perspectives or detailed inputs that are required.
Each organization weighs cost against outcomes differently. It is important to support Management
in making the modality and mechanism decisions by providing them with information that is as
comprehensive as possible.
The Operational Design Options Analysis is the direct input from Operations to Program for the VfM
Analysis, as well as for the Response Analysis.
Ideally, if the Operational Design Options Analysis is jointly developed with all members involved,
then the data input for the VfM Analysis will already be compiled and ready to share.
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As with all other assessments and analyses, risks flagged during the VfM Analysis should be
identified to feed into the Risk Analysis. This is the last risk identification step, prior to the Risk
Analysis.
Chance favors the prepared mind.

- Louis Pasteur
OB JE C T IV E Assess ultimate risk associated with each potential project approach and its
respective operational requirements

 Consolidate risks identified by each function  Baseline Risk Analysis based on
into singular registry Baseline Assessments and Risk
 Identify mitigating measures and residual risk Identification
post mitigation
As with the VfM Analysis, Program leads the risk analysis, but it does so with consultation and input
from all implementation team members and Operations functions. The output of the risk analysis
feeds into, and supports, the overall response analysis.
Some organizations assign the Risk Analysis to a particular function or individual. The hazard
with this approach is that no individual or function has the full spectrum of perspectives. Just
as assessments are conducted by individuals with the relevant expertise and insight into a particular
market, risks should be identified and analyzed by individuals with the expertise and insight to
appropriately predict the impact and probability, as well as the effectiveness of mitigating measures.
All implementation team members have an obligation to their organizations, and to the
beneficiaries, to raise any risks they identify and make sure the exposure is accounted for and
mitigated, if possible.
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During each of the assessments and analyses, we recommended that you raise any risks you
encounter for entry on your organization’s risk register. Now it is time to revisit your notes.
Examples of potential risks identified are shown below, in the chart formats previously suggested:
ASSESSMENTS MACRO MICRO INCLUSION INTERNAL

Retail Market  Oligopoly resulting  Lack of vendor  Lack of supplier  Fraud
Assessment in higher prices capacity capacity
ANALYSES RISKS
Procurement  Inflation rate increase
Options Analysis  Staff turnover
Operational Design  Lack of coordination across functions
Options Analysis
Value-for-Money  Government rules and regulations
Analysis  Organization policies & procedures?
Once Program consolidates all risks, including the inputs from all relevant parties, then the process
of identifying potential mitigating measures and contingency plans will begin. The process for
analyzing risks was explained in greater detail in Unit 1.
Response Analysis is the link between situational analysis (broadly speaking, needs
assessment and other contextual information) and project design. It involves the selection
of project response options, modalities, and target groups; and should be informed by
considerations of appropriateness and feasibility, and should simultaneously address
needs while analyzing and minimizing potential harmful side-effects.
Source: CaLP – Glossary
OB JE C T IV E Program, in consultation with Operations, makes a recommendation for the

modality to Management

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 Consolidate and compare available options - none identified -
with input from all functions
 Program leads discussion with all functions and
agreement of recommendation for modality to
Management
The purpose of the response analysis step in the project cycle is to bring all the pieces together that
have been completed up to that point, and make an informed recommendation to Management
about the best modality for delivery, distribution mechanism, and key details required to start
designing and setting up for project implementation.
While Program is identified as the lead for this step, it is critical to involve all Operations functions
and perspectives. How a project is delivered has an impact on both achievement of the program’s
objectives, and on Operations’ resource requirements and structures. Because the two are linked,
the delivery modality and mechanism cannot be selected by either Program or Operations
individually. The decision must come from Management and must be based on joint analysis and
recommendations.
As for the VfM Analysis, Supply Chain’s relevant input for the Response Analysis should already have
been consolidated through the Operational Design Options Analysis. While the core information is
consolidated and ready it is still, however, very important that Supply Chain take part in meetings
and discussions on the topic, to ensure implications and perspective are appropriately represented
and reflected.
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Procurement is the focus of Unit 3 of the Certification in Humanitarian Logistics and this
section does not repeat the concepts previously presented. Instead, we will look at how
and why procurement activities and responsibilities change (or do not change) when they
are in support of goods and services required for Cash Transfer Programming (CTP).
We will also spend extra time on ethics and compliance for Procurement. Since program
outcomes are affected by how the project is implemented, sometimes assessments and
research on program design can inadvertently have an impact on open and fair
procurement. It is important for Supply Chain staff to be aware of potential pitfalls so
that they may be avoided.
CTP requires complex services for delivery and close coordination with the providers of those
services: financial institutions, technology companies, and retailers included. As a result, there is
increased complexity in the procurement process (in comparison to the more straight-forward
sourcing of commodities or transport) as well as managing the suppliers through the duration of the
contract.
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In Unit 1, we looked at the Project Cycle when a modality decision exists. In this process, the
contracting process falls, for the most part, in the ‘Design & Implementation Set-Up’ phase. There
may be occasions when an Expression of Interest (EOI) or Request for Information (RFI) is used to
gather information about suppliers in the ‘Assessment & Analysis’ phase, but the more rigorous
tendering process can only start after the modality decision.
The Procurement Process falls, for the most part,

in the ‘Design & Implementation Set-Up’ phase.
It is critical that Procurement staff are involved early on when identifying and considering potential
suppliers, to ensure that the ethics and the principles of public procurement are upheld.
Involvement of Procurement staff should start during the ‘Assessment & Analysis’
phase, when potential suppliers and service providers begin to be identified.
In Unit 3: Procurement, we learned about suppliers and the different types of relationships between
them and humanitarian organizations. Specifically, three types were presented:
DISTANT This is a simple order/supply relationship, where orders will be placed and
RELATIONSHIPS the supplier will then provide. There is nothing to be gained in spending
time building a closer relationship with these suppliers; all parties are acting
for the interests of their own organizations. This relationship is appropriate
where there are a number of suppliers who can supply the same goods or
services and are in competition with each other, or where orders are placed
infrequently.
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COOPERATIVE This is a closer relationship where there are likely to be fewer sources of
RELATIONSHIPS supply, and where it is important to work closely and share information for
the benefit of both parties. Suppliers are recognized as important players
and communication is more than simply placing orders. Often with these
suppliers frame agreements are developed, between Procurement and the
supplier, that define a framework (covering prices, quality, and lead times) in
which orders can be placed.
COLLABORATIVE This is a very close relationship which may be a single-source supplier, and
/PARTNERSHIP one where a long-term relationship is needed. In these relationships, the
RELATIONSHIPS supplier is willing to put time and money into developing specific goods or
services for an organization, because they know the relationship is a long-
term one and they will not suddenly be ‘dropped’ as a supplier.
As previously stated, CTP requires complex services for delivery and close coordination with the
providers of those services: financial institutions, technology companies, and retailers included.
Strong, long-term collaborative/partnership relationships are required to achieve delivery.
It is very important to make sure that the nature of the relationship does not confuse the fact that
these service providers and suppliers are not partners. The dangers of confusing suppliers with
partners are lack of diligence in the contracting process and compromises to compliance
requirements.
The European Commission’s Humanitarian Aid Guidelines for Procurement has a very simple and
clear chart explaining the difference:
CONTRACTORS IMPLEMENTING PARTNERS
Purpose To acquire goods, services, or works To secure the necessary local support and
required for the implementation of the cooperation in the implementation of the
Action humanitarian Action
Selection Competitive or negotiated tendering Relations based on sharing of common values and
Procedures procedures should always be used objectives; tendering procedure not required
Delegation of Contractors do not enjoy a Implementing Partners may enjoy a delegation of

Power discretionary margin for the execution power from the Partner
of their contract; the Partner cannot Implementing Partners may implement key activities of
delegate the execution of key elements the Action. The Partner, however, remains responsible
of the Action to contractors to DG ECHO for the actions of its Implementing
Partner, and has to put the appropriate supervision
and monitoring systems into place
Legal The result of a procurement procedure The rights and obligations of Implementing Partners
Instrument is a contract are established in an agreement or in an
MoU.(Memorandum of Understanding)
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CONTRACTORS IMPLEMENTING PARTNERS
Profit The contractor’s remuneration normally The agreements signed between the Partner and its
includes an element of profit Implementing Partner must not have the purpose or
effect of producing a profit for either party
The key is suppliers

are motivated by profit.
Each organization has its own complex policies, systems, and processes to manage procurement
activities, about which Supply Chain staff must be thoroughly knowledgeable, in order to ensure
compliance. Institutional donors also require that procurement activities for the grants they fund
meet certain ethical standards, thus requiring organizations to be able to demonstrate compliance.
Finally, when governments invite humanitarian organizations into their country, humanitarian
organizations make a commitment to the host government to operate in an open, fair, ethical
manner.
Exact standards, and how they are applied, may vary among organizations, but all reflect common
themes of accountability, transparency, impartiality, and ethics. Below is the Chartered Institute of
Purchasing & Supply (CIPS)’s ‘Values & Guiding Principles of Procurement’, which reflects best
practice on this topic (source: http://www.globalpublicprocurement.org/Resources/Values-and-
Guiding-Principles/).
ACCOUNTABILITY | Taking ownership and responsibility to stakeholders for our actions

 Apply sound business judgment
 Be knowledgeable of, and abide by, all applicable laws and regulations
 Be accountable for achieving best value for the organizations spend
 Maximize competition to the greatest extent practicable
 Practice due diligence
 Promote effective, economic, and efficient acquisition
 Support economic, social, and sustainable communities
 Use procurement strategies to optimize value to stakeholders
ETHICS | Acting in a manner true to these values

 Act and conduct business with honesty and integrity, avoiding even the appearance of impropriety
 Maintain consistency in all processes and actions
 Meet the ethical standards of the profession.
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IMPARTIALITY | Unbiased decision-making and action
 Be open, fair, impartial, and non-discriminatory in all processes
 Treat suppliers equally, without discrimination, and without imposing unnecessary constraints on the
competitive market
 Use sound professional judgment, within established legal frameworks, to balance competing interests
among stakeholders
PROFESSIONALISM | Upholding high standards of job performance and ethical behavior

 Leaders have education, experience and qualifications in procurement
 Continually contribute value to the organization
 Continually develop as a profession through education, mentorship, innovation, and partnerships
 Develop, support, and promote the highest professional standards
 Seek continuous improvement through ongoing training, education, and skill enhancement.
SERVICE | Obligation to assist stakeholders

 Be a crucial resource and strategic partner within the organization and the community
 Develop and maintain relationships with stakeholders
 Develop collaborative partnerships
 Maintain a customer-service focus while meeting the needs, and protecting the interests, of the
organization and the public.
TRANSPARENCY | Easily accessible and understandable policies and procedures

 Exercise discretion in the release of confidential information
 Maintain current and complete policies, procedures, and records
 Provide open access to competitive opportunities
 Provide timely access to procurement policies, procedures, and records.
SOURCE: Chartered Institute of Purchasing & Supply
nd
The following example is from WFP and included in their Cash & Vouchers Manual, 2 Edition.
When tendering and contracting food merchants in support of voucher-based operations, WFP does
not typically “pay” the retailers directly for the food they provide to beneficiaries in exchange for
WFP’s vouchers, but rather “reimburses” retailers for food provided to beneficiaries at the retail price
established by the market. Exceptions are commodity vouchers when WFP negotiates quantities,
qualities, and prices and pays the food merchants directly.
While WFP may not explicitly pay retailers for the “service” of accepting the voucher and providing
food to the beneficiary in exchange, the retailer makes a profit as a result of being contracted for
this service. Further, WFP is still paying for the food (albeit indirectly) and the beneficiaries are a
captive market in that they can only go to shops that are contracted by WFP to accept the vouchers.
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As a result, WFP has the following obligations to:
Donors: to conduct a fair and transparent procurement process that seeks to optimize
procurement and contracting options available in support of the programmatic objective
with the aim of achieving “value for money”.
Beneficiaries: to conduct a fair and transparent procurement process that seeks to optimize the
procurement and contracting options available with the aim of providing beneficiaries with
the maximum benefit in support of the programmatic objective.
The Host Community: to conduct a fair and transparent procurement process that seeks to
optimize the procurement and contracting options available and allows businesses to
compete to provide the service (and thus the profit made).
As previously mentioned, procurement activities must meet the definition of full and open
competition, as defined in the organization’s policies, as well as any additional requirements made
by the donors who are funding the project. If a procurement action does not or cannot meet the
requirements, then a waiver must be requested and approved. A waiver of competition, or simply a
waiver, is documented approval to circumvent the requirement for full and open competition.
In some cases waivers are essential to meet beneficiaries’ needs, but they can also raise a red flag
that policies were unjustly evaded. To ensure that compliance requirements are effectively upheld,
it is important to know what acceptable justifications are for use of waivers.
Common types of justifications for waivers include:

 Less than 3 suppliers exist for the required services
 Emergency or urgency of need
 Testing or piloting a specific technology
 Security concerns
 Best interests of the beneficiaries
 Pre-existing agreement
Data protection is the systematic application of a set of institutional, technical, and

physical safeguards that preserve the right to privacy with respect to the collection,
storage, use, disclosure, and disposal of personal data. Personal data includes all
information that can be used to identify data subjects which, in the case of a
humanitarian cash-based intervention, means program beneficiaries.
Leaks of personal data have potential to result in individuals being targeted for
violence or harassment due to ethnicity, religion, medical history, or just because they
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have received aid or worked with international organizations. This is a major concern for
aid agencies, whose mandate is to uphold the humanitarian principle of ‘do no harm’.
Risks to the protection of beneficiary data are faced at every stage.
Source: CaLP Website, ‘Data Protection’
Humanitarian agencies collect a wealth of personal data from individuals; cash transfer
programming is no exception. Plus, the use of e-transfer and digital technology is becoming an
increasingly popular mechanism for delivery of CTP. It is important to understand the associated
privacy risks that may occur during the collection, use, storage, sharing, and disposal of beneficiary
data.
With the increasingly-sophisticated methods of beneficiary registration procedures (e.g. the

introduction of biometric IDs), collection of very detailed, highly personal information is common. As
a large amount of this sensitive data is stored digitally, a single data breach can potentially expose
tens of thousands of beneficiaries to the unintended use of their personal data. This raises a
number of risk factors, and associated risks, throughout the data lifecycle, for example:
Basic understanding of the concerns and risks associated with Beneficiary Data Protection is
important for Supply Chain, specifically during the procurement process, because appropriate
questions and clauses must be included in tendering documents and/or contracts.
COLLECTION Who within the agency is collecting this  Staff are unaware of beneficiary data protection
personal information? principles and are not applying appropriate
controls and disclosure during data collection
How is it being collected?  Use of insecure data collection method(s)
Is the Know Your Customers (KYC) standard  Unintentional support of unqualified beneficiaries
being applied?
STORAGE How and where is this data being stored?  Beneficiary data is stored insecurely
 Data breach
USE Who has access to the data?  Unauthorized staff/external parties can access
beneficiary data
DISCLOSURE How is it being shared with partners and  Beneficiary data is shared without proper security
& SHARING other stakeholders? protocols
What is being shared?  More beneficiary data is being shared than

absolutely necessary
How are partners storing and using this  Partners are unaware or are unable to securely
data? handle beneficiary data
How is this information communicated to  Legal implications due to beneficiaries being

beneficiaries and, how is their consent unaware of data usage
obtained?
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DISPOSAL How long will the data be kept and what will  Beneficiary data being stored longer than
happen to it after the project closes? necessary
 Increased risk of data breach if data is not
disposed securely
SYSTEMIC Can the data management system cope with  Systems cannot cope with increased volume of
increases in project scope and maintain its data –> increased risk of data loss or data breach.
integrity?
CTP involves a large number of different supplier types (or service providers or vendors, etc.) with
whom humanitarian organizations historically have had limited interaction. Some of these types are
technically specialized in a way that aligns with the expertise of a particular function, for example,
Financial Service Providers (FSPs) would be considered Finance’s domain.
As such, it is important to review and remember responsibilities between Supply Chain (specifically,
Procurement) and the unit with the technical expertise, because adherence to these roles is critical
effective, efficient, and compliant procurement activities for CTP.
At the start of Unit 3: Procurement, the role of the ‘customer’ was defined as the person who
requires goods or services and who is asking for those goods or services to be procured. The role
of Supply Chain (or Procurement, if there is a dedicated department) is to manage the acquisition of
the required goods or services to meet the customer’s needs through an ethical and compliant
procurement process.
The procurement process does not change for cash programs in comparison with in-kind programs;
however, the services and technologies that are acquired are significantly more complex. As a
result, the process often has more rounds of communications with potential suppliers, confusion
over who determines the final roster of potential suppliers, and questions about who should be
involved at various stages of the process.
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The table below lists revisits some of the activities explained in the Procurement Unit, which are
sometimes questioned during procurement processes for goods or services for CTP.
FORECASTING Forecast and plan procurement needs and Advise the customer on lead times and information
/ PLANNING activities in advance, including assessments or required for effective procurement planning/forecasting, as
interactions with potential suppliers in which well as assessments/interactions with potential suppliers in
Procurement should be involved which Procurement should be involved
TECHNICAL Prepare technical specifications, scope of work, Advise on the information required to prepare tender
SPECIFICATIONS and cost estimate documents and prepare tender documents
SUPPLIER Initially identify potential suppliers Finalize the roster (or short-list) after checking potential
IDENTIFICATION suppliers against internal vendor management system (for
previous poor performance) and black lists (if applicable)
EVALUATION Participate in the evaluation of bids and/or review Manage the bid review and evaluation process, ensuring
OF BIDS committee(s) compliance with policies, but not voicing opinions or
influencing decisions
SUPPLIER Document and report poor supplier performance Manage supplier contracts, handle supplier claims and
PERFORMANCE disputes, and maintain records of past performance
COMMUNICATIONS Participate in communications and negotiations Manage communications to ensure adherence with
WITH POTENTIAL with potential suppliers to thoroughly understand procurement policies
SUPPLIERS available services and appropriateness for the
intended program
Since Supply Chain conducts the Retail Market Assessment and identifies potential retailers/retail
agents with which to work, Supply Chain is the ‘customer’ with respect to contracting retailers for
CTP. This means that Supply Chain may represent both sides of the ‘customer’ – ‘procurement’
relationship.
In these circumstances, it is very important that segregation of duties is established early in the
process. The separation is to ensure that compliance with procurement policies is upheld.
As previously stated, CTP requires complex services for delivery and close coordination with the
providers of those services. Deep technical knowledge and experience are required to understand
the nuances of these services and how they will work within the given context. As with the
assessments, identification of suppliers should be done by the staff or teams with the appropriate
expertise.
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Finance has the expertise to understand financial markets and institutions, plus
the risk exposure of unregulated service providers. Players include:
 Banks/financial institutions  Western Union
 Microfinance institutions  Hawaalas
 Card issuers/providers  Remittance agents
 Post office
ICT is in the best position to assess technologies and technology platforms, and
the communications infrastructure on which they rely. Players include:
 Mobile money providers  RFID technology services
 Mobile network operators  Proprietary technologies
 Mobile phone providers
Supply Chain understands supply chains and can judge the capacity of
the retail sector to deliver. Players may include:
 Retailers (large & small)  Distributors
 Retail chains  Importers
 Wholesalers  Producers
 Traders  Manufacturers
There is significant overlap between Financial Service Providers (FSPs) and Technology Service
Providers. Banks are now offering services such as mobile money, while cell phone companies offer
accounts where their customers can hold money.
Classification of a supplier as one or the other is less important than making sure potential suppliers
are evaluated by staff with the appropriate expertise. In reality, Program, Finance, and ICT may all
need to be involved in identifying appropriate FSPs and Technology Service Providers.
Examples of the types of questions either Finance or ICT would ask are shown below:
Finance ICT
 Is the financial service provider/ payment  Is the chosen technology (hardware and
service provider regulated? software) reliable?
 What is the risk exposure of deposits held by  Is data managed appropriately? Is it secure?
the service provider?  Is there sufficient network coverage/
 How do they track and report payments and connectivity to support the technology in the
financial flows? geographic areas of implementation?
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Financial, Payment, and Technology Service Providers make money by charging fees for the services
they provide. Indeed, service providers can’t stay in business if they are not making money!
However, sometimes it is not obvious to consumers how a service is profitable.
The fee structures that service providers use can be extremely complex – sometimes even made
intentionally complex by the service provider in order to make the service appear affordable.
Here are a few examples of charges that may be included:

 Transaction fees  Account fees  Insufficient funds fees
 Flat fees  Customer service fees  Interchange
 Incidental fees  Reporting fees reimbursement fees
 Terminal fees  Chargeback fees  Network fees
Procurement staff supporting contracting for CTP need to be aware of the potential complexity of
the service providers’ fee structures for the following reasons:
 To be sure to look carefully at the financial bids from potential service providers to identify
all potential charges
 To be sure to involve Finance staff with appropriate expertise when reviewing financial bids
 To manage any required negotiations with service providers about components of fees and
services
Each organization has a policy for required approvals for purchases, such as this one:
PROCUREMENT APPROVAL AUTHORITY

Head of Unit $2,000
Country Director $25,000
Regional Director $100,000
Head of Operations $250,000
Executive Director no upper limit
Procurement transactions may only be approved by individuals with authority greater than the
contract value. For example, the purchase of a new generator for $5,000 would require the
approval of the Country Director and could not be signed for only by a Head of Unit.
The contract value for financial, payment, and technology services can be calculated two different
ways and, within the humanitarian sector, it has not been agreed upon as to which approach should
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be used. Different organizations have different policies, so it is important to know which your
organization uses, as well as the concerns around each.
Different approaches:
 The fees - or - the fees + the value being transferred?
 A single distribution - or - the entire duration of the contract?
Project Type: Food Basket Frequency: Monthly

Mechanism: Mobile Money Transfer Value: $50.00
# of Beneficiaries: 850 Service Fees: 4%
Duration: 12 months
1 2 … 11 12 TOTAL
Transfer Value $ 42,500 42,500 … 42,500 42,500 $ 510,000
Service Fees $ 1,700 1,700 … 1,700 1,700 $ 20,400
Total Expenditure $ 44,200 44,200 … 44,200 44,200 $ 530,400
If valuation is based on… Then the contract value is… And approval is required by…
Service fees for a single month $1,700 Head of Unit
Service fees for entire contract $20,400 Country Director
Total expenditure for a month $44,200 Regional Director
Total expenditure for
$530,400 Executive Director
entire contract
If the contract value is based only on the fees, then approval of the service contract may go more
quickly; however, a lower approval threshold means less scrutiny of the supplier and potential risk
exposure for the organization.
Procurement staff supporting contracting for CTP need to know:

 How their organization calculates contract value so that the appropriate approval authority
can be applied
 To involve Finance staff when evaluating the risk of using various types of service providers
As a reminder, we use the term ‘Retail Agent’ to refer to any actor in the retail market supply chain
which a humanitarian organization may contract to deliver items to beneficiaries. This includes:
 Retailers  Retail chains  Producers
 Wholesalers  Traders  Farmers’ markets
 Distributors  Importers  Etc.
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Where contracting financial, payment, and technology service providers included nothing new (albeit
more complex than what Procurement is used to), contracting for retail agents includes a few new
structures and approaches. Specifically, we will look at no-cost contracts, pass/fail contracting, and
the ‘B2B Approach’.
A no-cost contract is one whereby a vendor provides goods or services (or both), but does not
charge the soliciting organization; the fees, including a profit margin, are assessed against a third
party. The soliciting organization defines the goods/services provided and controls for quality,
prices, etc.
No-cost contracts are used often to reimburse retailers for food provided to beneficiaries in
exchange for their vouchers. This relationship with the retailer is not a partnership; it is considered
a concession. The retailer is making a profit from the business resulting from this relationship.
Further, the beneficiaries are captive markets for these retailers: they have to go to a shop which the
humanitarian agency has contracted to accept the voucher. As a result, the humanitarian agency
has an obligation to the beneficiaries to ensure that the best possible services are provided.
The retailers make a profit and the humanitarian agency is obligated to control the quality of the
service provided, therefore, no-cost contracts are still subject to the requirement of competition.
Pass-fail contracting is a process whereby the humanitarian agency sets criteria and contracts all
interested retailers who meet the defined criteria.
ADV AN TA G ES :
 Fully transparent  Broader dispersion of cash into the economy
 Simplest and fastest to execute  Increased competition between contracted
 Selection of awardees is simple shops
 Many more shops = more access  Simplest to explain to external counterparts:
for beneficiaries shops, municipalities, etc.
C R IT IC A L S U C C E S S F A C T ORS :
 Must be appropriately publicized to be competitive, allowing sufficient time for all potentially
interested suppliers to apply
 Detailed solicitation documents
 Specific selection criteria, allowing for black-and-white evaluation for inclusion
 Socialization and agreement of selection criteria with counterparts and stakeholders
 Strong application system to handle volume of applicants
 Resources to monitor the volume of shops qualifying
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B2B means Business to Business, where two parties are involved in a financial or business
transaction.
The B2B Approach (in the context of CTP as defined by WFP) is the tactic of contracting with a
wholesaler, trader, importer, or other supplier of retail food, with the express requirement of
subcontracting distribution through small local shops in the beneficiaries’ localities.
ADV AN TA G ES :
 Reduced complexity (only 1 contract)  Can capitalize on tax/duties exemption
 Secure supply  Plus all of the benefits of vouchers
 Wholesale pricing
C R IT IC A L S U C C E S S F A C T ORS :
 Strong socialization and explanation with counterparts and stakeholders
 Items provided must be identical to current retail items
 Strong monitoring is required, including asking retailers how the supplier is treating them
 Strong communications with retailers, explaining how they will be reimbursed and what are
the benefits of participating
 If value voucher is desired, must have robust itemized receipt system and connectivity to
report in near real time
 Clearly-defined shop selection criteria to be used by supplier when sub-contracting with
retailers, including number and locations for shops
 Feedback mechanisms for shops, if problems, such as connectivity or stock outage
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Everything that can be counted does not necessarily count; everything that counts
cannot necessarily be counted.
– Albert Einstein
What should be monitored? Any information used to influence the design of the project
may be considered for monitoring, plus information to track and assess the effectiveness
and efficiency of implementation. The approach, frequency, number of data points
chosen for monitoring, and level of detail will vary by organization, project requirements,
context, and available resources.
Monitoring is the regular, systematic, and purposeful observation and reporting of all
activities taking place in a project or program.
Source: ACF – Implementing Cash-Based Interventions
Common areas of monitoring include:

Post- Lead: Program
Distribution Objective: Monitor beneficiaries for continued need for support and whether
support provided meets beneficiary needs
Markets Lead: Multiple

See detail below.
Supplier Lead: Supply Chain

Objective: Monitor suppliers to ensure effective delivery and performance of their
duties, as per their contracted terms
Security Lead: Security

Objective: Monitor the security situation continuously, keeping all parties informed
of status
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As with assessments, markets are the most complex
and require expertise from multiple functions in order
to maintain a comprehensive picture. Program looks
at the markets – all of them – to understand how
beneficiaries are accessing the markets and meeting
their needs. Operations looks at the same markets,
but they do so in order to understand whether the
markets can continue to be relied upon to deliver.
Supply Chain specifically looks at the retail market.
Market Lead: Program

Situation Objective: Monitor whether the market is delivering program objectives as
anticipated
Financial Lead: Finance

Market Objective: Monitor the financial market, infrastructure, players, and beneficiary for
access for all viable project approaches
ICT Lead: ICT

Objective: Monitor the technology market, infrastructure, players, and beneficiary
for access for all viable project approaches
Retail Lead: Supply Chain

Market Objective: Monitor the retail market (including upstream), infrastructure, players,
and beneficiary access for all viable project approaches
As with the markets, any factor deemed appropriate for assessing suppliers should also be
considered for monitoring. The micro frameworks used during the assessments in Unit 3 provide a
practical starting point for supplier monitoring.
Supply Chain is accountable for the procurement process, including the establishment of contracts
with the winning suppliers and ensuring compensation for under- or non-performance. As such,
Supply Chain is accountable for supplier monitoring and supplier relationship management, even if
the functions responsible for managing the relationships during implementation differ.
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Financial Service Providers (FSPs): How is the contracted FSP doing?
Do we need to make any changes to the processes they are involved in
or tasks they perform?
Technology Service Providers: How is the contracted technology

service provider doing? Do we need to make any changes to the
processes they are involved in or tasks they perform?
Retail Agents: How is the contracted retailer or retail agent doing? Do

we need to make any changes to the processes they are involved in or
tasks they perform?
Anything important enough to be considered in the modality decision and program design should
be considered for possible monitoring. As such, the frameworks and tools from the assessments
and analyses studied earlier in this unit provide excellent starting points for market monitoring.
The Red Cross and Red Crescent Movement’s Guidelines for Cash Transfer Programming includes a
useful list of principles to guide monitoring activities. The list was adapted to focus on points
relevant to Supply Chain:
 Set up simple, practical monitoring systems
 Ensure that the information can be realistically collected
 Keep in mind that data needs to be interpreted
 Focus on key questions such as, “Is cash being delivered, “and, “Who received what?”
 Collect only relevant information that will be used for analysis and decision making
 Discuss the results of monitoring systematically with recipients and have them validate
results
 Include recipients and staff in setting monitoring indicators, and collecting and analyzing
data
 All information gathered needs to be compiled, analyzed, and interpreted for its relevance
to the project impact and its closure
 Gathering information at various times in the life of the project
AO/HLCP/0190 V3.0
Market Monitoring: The process of collecting information on pre identified indicators on
the functioning of the market system based on a time schedule i.e. weekly, bi monthly,
monthly etc.
Market monitoring is key for us knowing the average price of the basket of goods that
people are expected to be able to buy, and whether or not the grant is still adequate. It
also allows ensuring that the CTP is not causing inflation and to monitor the price of a
day’s labor to assess the wider impact of the project on the local economy.
Source: Oxfam – Working with Markets & Cash
Market Monitoring should be done for all markets which may impact the program and operation,
but the retail market is the only one for which Supply Chain is accountable.
OB JE C T IV E Monitor the retail market for changes in availability and prices, as well as the
interaction of suppliers with beneficiaries, if required

Consulted: Program
Informed: -
 Monitor commodity/service prices in the retail - none identified -
market against the established program basket
 Monitor the availability of supply and stability
of the retail supply chain to deliver
As previously mentioned, the macro assessment framework provides an effective starting point for
determining what to monitor. Given the large number of factors included in the graphic, it is
essential to prioritize issues in order of importance. Priority, as previously mentioned, should be
given based on: 1) probability of change and 2) impact if changes occur.
AO/HLCP/0190 V3.0
Ultimately, monitoring for the retail market is conducted to answer questions, such as the following:
PROCESS  How effectively and efficiently is the project being implemented?

 Are beneficiaries able to access the services?
 Is the market effectively bringing the required supply to the demand
locatation?
PERFORMANCE  How many recipients have we served?

 How many disbursements or distributions have we made?
IMPACTS  What impacts have we had?

- Intended and unintended?
- Positive and negative?
- Beneficiaries and host communities?
Here are a few examples of retail market monitoring tools and templates, for reference:
 Mercy Corps – E-Transfer Implementation Guide for Cash Transfer Programming:
Annex 12: Vendor Survey for Post-Distribution Monitoring
LINK: http://www.cashlearning.org/downloads/12-e-transfer-m-and-e-tools-final.xls
 Red Cross and Red Crescent Cash in Emergencies Toolkit (http://rcmcash.org/toolkit/):
- 5.3.2.2. Tool: How to Collect Market Price Data Checklist
- 5.3.2.3. Tool: Retail Price Collection Form Template
- 5.3.2.6. Tool: Analyzing Price Changes
Monitoring suppliers (or service providers) allows you to detect any problems on their upstream
supply, as well as any challenges in implementing contracted services.
The information should not only feed into project design, but it should also identify any appropriate
changes in project-level SOPs and ongoing implementation.
AO/HLCP/0190 V3.0
As previously mentioned, Supply Chain is accountable for the procurement process, including
establishment of contracts with the winning suppliers and ensuring compensation for under- and
non-performance. As such, Supply Chain is accountable for supplier monitoring and supplier
relationship management, even if the functions responsible for managing the relationships during
implementation differ.
OB JE C T IV E Manage relationships with suppliers

Consulted: Program, Finance, ICT
Informed: -
 Ensure suppliers and/or partners know their - none identified -
roles in project implementation
 Train suppliers/partners, if required
 Ensure all suppliers/partners have necessary
equipment, such as POS for retailers
 Set up ID verification systems, if required.
There should be a system to verify vouchers at
retailers or with implementing partner
conducting distribution.
For reference, here are a few examples of supplier monitoring tools and templates:
For Financial and Payment Service Providers:

 USAID/NetHope’s Key Tool: Service Provider Capacity Assessment
(http://solutionscenter.nethope.org/assets/collaterals/Service_Provider_Capacity_Assessment.docx)
For Retail Agents:

 Logistics Cluster: Assessment of Retailers – Key Performance Indicators
(http://www.logcluster.org/document/wfp-example-retailer-performance-indicators-2013)
 ACF: Implementing Cash-Based Interventions – Annex 22: Example of Market Post-
Distribution Monitoring (http://www.actionagainsthunger.org/publication
/2007/10/implementing-cash-based-interventions-guideline-aid-workers)
AO/HLCP/0190 V3.0
Experience has shown, on many occasions, that humanitarian organizations working in
the same operation or emergency find it hard to share. In fact, experience has shown
that humanitarians within the same organization also find it hard to share. And when
humanitarians do not work together, internally or externally, resources are wasted.
The development of Cash Transfer Programming (CTP) as a mainstream modality has

exacerbated these natural confrontational tendencies. The work is different. The
mechanisms, technologies, and services are complex. Roles and responsibilities are not
consistent among organizations and, for many, not clearly defined. These challenges
make disagreement common.
Lives depend on the work we do and there are many, many people in need. In 2016,
according to the UN OCHA Financial Tracking System, humanitarian organizations
requested US$19.7 billion in funding. Less than half was funded.
Building trust, working together, and defusing confrontation do not come naturally to
humanitarians, but they are essential to helping the sector, as a whole, stretch its limited
resources farther.
One of the most common areas of conflict, for CTP in particular, is roles and responsibilities. It is
helpful, when questions arise, to try to focus on the objectives and expertise of the parties involved
and not to get into a ‘turf war’.
If your organization has one, it is helpful to refer to a ‘Responsibility Assignment Matrix’ – often
included in standard operating procedures. In Unit 1: Supply Chain in Humanitarian Aid, we defined
a ‘Responsibility Assignment Matrix’ (a.k.a. RACI) as a useful tool to indicate assignment of
responsibility in activities performed, particularly in cross-functional scenarios.
F ro m Wi ki pe di a:
RESPONSIBLE
Those who do the work to achieve the task. There is at least one role with a
participation type of responsible, although others can be delegated to
assist in the work required.
AO/HLCP/0190 V3.0
ACCOUNTABLE
The one ultimately answerable for the correct and thorough completion of
the deliverable or task, and the one who delegates the work to those
responsible. In other words, an accountable must sign off (approve) work
that responsible provides. There must be only one accountable specified
for each task or deliverable.
CONSULTED
Those whose opinions are sought, typically subject matter experts, and with
whom there is two-way communication.
INFORMED
Those who are kept up-to-date on progress, often only on completion of
the task or deliverable, and with whom there is just one-way
communication.
SOURCE: Wikipedia – (https://en.wikipedia.org/wiki/Responsibility_assignment_matrix)
It is important to remember that there can only be one accountable party, and the accountable party
is not necessarily the party responsible for implementing or performing a particular task. For
example, Management is ultimately accountable for preparedness, but the implementation of
preparedness lies with each function within the organization.
The RACI approach has been used throughout this unit and the Project Cycle Chart included in the
annexes uses the ‘RACI’ approach to assign responsibility to every step shown.
To build effective relationships, you will need to develop good relationship-building skills, built on the
principle of ‘win/win’. We will look at:
 Why build relationships?  Communication style
 Preparing for successful discussions  Successfully conclude discussions
Relationship-building skills often help you to resolve situations where what you want conflicts with
what someone else wants. The aim of relationship-building is to explore the situation to find a
solution that is acceptable to both parties, resulting in a win-win situation.
 There are different styles of relationship-building, depending on circumstances. Where you
do not expect to deal with people ever again and you do not need their goodwill, then it may
be appropriate to ‘play hardball’, seeking to win while the other person loses out.
AO/HLCP/0190 V3.0
 This approach is usually wrong for resolving disputes with people with whom you have, or
wish to develop, an ongoing relationship: if one person plays hardball, then this
disadvantages the other person; this may, quite fairly, lead to reprisal later. Similarly, using
tricks and manipulation during relationship-building can severely undermine trust and can
damage teamwork. While a manipulative person may not get caught out if negotiation is
infrequent, this is not the case when people work together on a frequent basis. Honesty
and openness in discussions are the best policies in this case.
Depending upon the scale of the discussions, a level of preparation may be appropriate for
conducting them successfully.
For small disagreements, excessive preparation can be counter-productive because it takes time
that is better used elsewhere. It can also be seen as manipulative because, just as it strengthens
your position, it can weaken the other person’s position.
If a major disagreement needs to be resolved, then it can be worth preparing thoroughly. Think
through the following points before you start discussions:
GOALS What do you want to get out of the relationship? What do you expect the
other person to want?
TRADE-OFFS What do you and the other person have that you can trade? What do you
each have that the other might want? What might you each be prepared to
give away?
ALTERNATIVES If you don’t reach an agreement with the other person, what alternatives do
you have? Are these good or bad? How much does it matter if you do not
reach an agreement? Does failure to reach an agreement cut you out of
future opportunities? What alternatives might the other person have?
EXPECTED What outcome will people expect from this relationship? What has the
OUTCOMES outcome been in the past, and what precedents have been set?
POWER Who has what power in the relationship? Who controls resources? Who
stands to lose the most if an agreement isn’t reached? What power does the
other person have to deliver what you hope for?
POSSIBLE Based on all of the considerations, what possible compromises might there
SOLUTIONS be?
AO/HLCP/0190 V3.0
For discussions to be ‘win-win’, both parties should feel positive about the situation when the
discussions are concluded. This helps to maintain a good working relationship afterward. This
governs the style of the discussion: attention-seeking and displays of emotion are clearly
inappropriate because they undermine the rational basis of the negotiation, and because they bring
a manipulative aspect to them.
Despite this, emotion can be an important subject of discussion because people’s emotional needs
must fairly be met. If emotion is not discussed when necessary, then the agreement reached can be
unsatisfactory and temporary. Be as detached as possible when discussing your own emotions;
perhaps discuss them as if they belong to someone else.
The discussions themselves are a careful exploration of your position and the other person’s
position, with the goal of finding a mutually acceptable compromise that gives you both as much of
what you want as possible. People’s positions are rarely as fundamentally opposed as they may
initially appear: the other person may, quite often, have very different goals from the ones you
expect!
In an ideal situation, you will find that the other person wants what you are prepared to trade, and
that you are prepared to give what the other person wants.
If this is not the case and one person must give way, then it is fair for this person to try to discuss
some form of compensation for doing so; the scale of this compensation will often depend upon
many of the factors we discussed above. Ultimately, both sides should feel comfortable with the
final solution if the relationship is to be considered win-win.
Dysfunctional: “Not behaving or working normally.”
When the normal rules, process, and status are disrupted, we enter into a dysfunctional state. It can
occur in any phase of emergency response, from preparedness to development; not just in actual
emergencies. A dysfunctional situation will disrupt normal patterns of operations. It is therefore
important to consider:
 Indicators of a dysfunctional situation
 Changes in the operating environment
 Who should know?
AO/HLCP/0190 V3.0
Where there is a breakdown of the normal activities established as part of the provision of
humanitarian aid, then we will typically have a dysfunctional situation. The normal rules and
disciplines of management still apply, but you will need to develop techniques that will allow you to
think quickly through the new issues and to decide on the best course of action.
Frequently a disaster or crisis will trigger this event, and if it did not exist before, a complex
emergency situation might well now exist.
Like the original emergency relief situation, the dysfunctional situation may have come about as the
result of either a natural disaster or due to a man-made disaster.
The signs that a dysfunctional situation exists will include a breakdown of law and order locally,
including possible looting and sabotage of the humanitarian operations. Whether from a natural
disaster perspective, or if the new situation is man-made, the signs will most commonly manifest
themselves through:
 Breakdown in the infrastructure, it could be the loss of facilities, for example, ports, roads
and warehouses
 Commandeering of vehicles
 Restrictions imposed by governments or other bodies, lawful and unlawful, because of the
disaster. The effects would be on both the humanitarian aid operation and also on the
civilian population.
 Incidences of theft from humanitarian aid facilities and transport. This could also be
associated with the appearance of humanitarian aid agencies’ own property and also the
appearance of donor supplies on the local economy.
Sabotage of the humanitarian operation can

be in two forms; either of the facilities and
infrastructure, or sabotage of the people
managing and running the humanitarian
mission.
While sabotage of the physical side of the

supply chain is easily recognizable, it is also
becoming common for disaffected parties
to target the providers of humanitarian aid,
either for the global publicity that it will
produce, or in order to apply political
pressure to other parties by deliberately By Fatoe Inc. (http://creativecommons.org/licenses/by-nc-nd/2.0/)
denying humanitarian aid to those most in
need.
AO/HLCP/0190 V3.0
This puts the providers of such humanitarian aid at particular risk, with less risk to the indigenous
population. For example, in 2007, Iraq was an outward manifestation of a dysfunctional situation.
Although, arguably no longer in the emergency relief phase, assassinations, kidnappings and the
exploitation of aid agencies as a means to gain publicity for the organization is becoming a well-used
tool.
In 2010, violence occurred in Haiti against UN and other aid agencies during the response to that
country’s massive earthquake.
When we have recognized that the situation has become dysfunctional, we will need to consider the
impact that this change will have on our operating environment. We will need to consider:
 Factors to be taken into account
 Assessing the impact
 Revised objectives
The original assessment will need to be re-assessed and evaluated to consider:

 State of the supply chain and logistics in the country
 Availability of resources in the country and also resources available to you outside of the
immediate theater of operations
 In-country processes for sourcing and the local availability of goods and services
 Realistic estimate for lead times both internally and from external suppliers
 Consideration of the extent to which the beneficiary requirements have changed so that the
proper supply chain priorities can be set
 Security situation and the feasibility of safely maintaining the humanitarian supply chain in
the current circumstances
Having reviewed the factors above, we will then need to assess the impact of the changes on our
ability to meet the original objectives. For each area, we would need to produce a revised supply
chain map that would allow us to show the effects of the situation against each element.
You would need to include details such as:

 Availability of infrastructure
 Availability of resources
 Security situation for personnel
 Capacities of airports, ports, warehouses, different types of transport
AO/HLCP/0190 V3.0
The first decision to be made will be the level of support that can be given to meet the beneficiary
program: can we still meet the need 100% or do we need to scale down the beneficiary program?
This is not a decision that can be made by the logistician alone, and it will need to be made in
conjunction with the senior management responsible for the operation/program.
The senior management responsible for the operation/program, however, will need to know all of
the information about the capability of the supply chain in order to determine which of the
objectives can be met.
Once the overall revised mission objective has been agreed upon, then the revised supply chain
objective can be formulated. We can then begin to identify the new objectives within each functional
area of the supply chain that will enable us to deliver the new program.
Having then identified the revised objectives, these will need to be turned into plans that allocate
resources to actions.
Equally important at this stage is the need to call on the relationships that we have developed with
logisticians in other agencies building on the trust, as well as the mutual respect, which we have
developed within these relationships.
As we saw in the last section, you will not be working alone in making these decisions. In the
dysfunctional situation, you will need to work closely with all of the people within your organization,
both those working locally and those in Regional and Head Offices. Among the principle barriers to
creating an effective supply chain are ineffective communication and functional thinking. In the
AO/HLCP/0190 V3.0
dysfunctional situation we can have neither. Lines of communication have to be clear both up and
down the chain, and also across the different functions and organizations operating in the area.
As we discussed earlier in this module, if we have established trust in our dealings with others, then
we will have established good communication:
 Internally, between company teams, activities and functions
 Externally, between supply chain partners, beneficiaries and suppliers
No single department or agency will have all of the answers, and it is imperative that we work across
both functional and organizational boundaries at all times. The senior management responsible for
the operation/program will want to know that, when he is looking at what can be achieved in a
particular set of circumstances, it has been agreed upon with all those concerned and is also
achievable.
Equally, it is important that, up and down the logistics functional areas, the plan is agreed upon as a
workable solution to the practical circumstances on the ground and that it can be supported.
Once the action plan has been agreed upon by all parties, the execution of this plan will need to be
in accordance with your own agency’s policies and procedures, and all of the necessary
documentation will need to be completed.
AO/HLCP/0190 V3.0

Unit 6 - Cash Transfer Programming

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UNIT 6:

Cash Transfer Programming

6.1. Assessments, Analyses, & Building to Modality Decision................................................... 5

6.2. The Retail Market Assessment ............................................................................................ 14

6.3. The Procurement Options Analysis .................................................................................... 30

6.4. The Operational Design Options Analysis .......................................................................... 38

6.5. Feeding into Program’s Analyses ........................................................................................ 41

6.6. CTP & Competitive Procurement......................................................................................... 46

6.7. Monitoring ............................................................................................................................. 60

6.8. Working Together.................................................................................................................. 66

The goal is to provide Management a recommendation, and relevant supporting

IN-KIND PROJECT CASH PROJECT

The private sector delivers the needed items

As a result, more so than with in-kind projects, achievement of program objectives is

Management chooses the best modality to

Beneficiary Lead: Program

Implementing Lead: Program

Markets Lead: Multiple

Security Lead: Security

Financial Lead: Finance

ICT Lead: ICT

Retail Lead: Supply Chain

MACRO MICRO INCLUSION INTERNAL

Operational Design Lead: Supply Chain

Value-for-Money Lead: Program

Risk Analysis Lead: Program

Response Analysis Lead: Program

OB JE C T IV E Assess retail market (including upstream), infrastructure, players, and

RAC I Responsible: Supply Chain

by Program by Supply Chain

Feeds Into:  Micro Retail Assessment

Output: A list of retail agents that meet initial qualifications

Feeds Into:  Assessment of Retail Inclusion

Output: An understanding of beneficiaries’ access, which may or may not be

Feeds Into:  Risk Analysis

Feeds Into:  Operational Design Options Analysis

Output: A list of identified risks related to the retail market to be included in

Feeds Into:  Risk Analysis & Risk Registry

Source: WFP – Cash & Vouchers Manual, 2nd Edition

Commodity  IMF Primary Commodity Prices: http://www.imf.org/external/np/res/commod/index.aspx

Shock & Price  Alert for Price Spikes (ALPS): http://foodprices.vam.wfp.org/ALPS-at-a-glance.aspx

Shock  Shock Impact Simulation Model (SISMod): http://faowfpmodel.wixsite.com/sismod

International  ITC Market Access Map: http://www.macmap.org/

The EMMA Toolkit graphically represents markets in three linear components:

Starting Point: Anticipated localities for distribution

3. Estimate volumes through the paths

4. Add selling prices for the product at each level of intermediary

5. Identify the types of relationships between actors

7. Consider and note the context’s externalities

8. Identify changes that occurred after the emergency

SEASONAL  Emergency Market Mapping and Analysis (EMMA) Toolkit:

Examples of such sourcing decisions include:

OB JE C T IV E Compare procurement options per commodity/aid item to be offered, and

RAC I Responsible: Supply Chain (Procurement)

The Procurement Options Analysis is designed to answer these questions:

The import parity price analysis will answer:

LOCAL MARKET  Check the market for current spot prices

WHOLESALE  Check the market for current spot prices