This report compares and contrasts relief SCs providing long-term aid and emergency response SCs that are used in the initial stages of large, sudden-onset disasters. The report will be divided into three parts: introduction to humanitarian logistics, the importance of aid agencies as well as a comparison of both SC types.
Table of Content
List of figures and tables
1. Introduction
2. Humanitarian Logistics
3. Importance of aid agencies in Humanitarian Logistics
4. Supply chain types in Humanitarian Logistics
4.1 Disaster relief
4.2 Continuous aid work
5. Conclusion
List of references
List of figures and tables
Figure 1: Actors in the humanitarian aid network
Figure 2: Taxonomy of major disasters
Figure 3: Humanitarian space
Figure 4: Supply Chain Types
Figure 5: Supply Chain Types in disaster relief
Figure 6: Relief operations phases
Figure 7: Elements of a health care drug supply chain
Table 1: World's leading humanitarian organisations
Table 2: Comparison of Humanitarian Supply Chain types
1. Introduction
The process of globalisation in recent years has led to an increased complexity of supply chains (SCs) including interconnectedness and interdependency across global networks. Therefore, an event taking place in one part of the network will often have unforeseen impacts somewhere else in the network (Christopher 2011). As 35% of all SCs are impacted by natural disasters, this phenomenon is of paramount interest as it influences global SC performance (Chopra and Meindl 2013). Over the last 30 years, the frequency and severity of disasters has increased. In the future, the occurrence and impact will further strongly rise (EM-DAT 2014). By 2015, there will be 350 million people affected each year by disasters (CSIS 2012) which can have enormous social and economic impacts through SCs across the globe (Day et al. 2012).
A disaster can be defined as “a serious disruption of the functioning of a community or a society involving widespread human, material, economic or environmental losses and impacts, which exceeds the ability of the affected community or society to cope using its own resources” (UNISDR 2009, p.9). The increasing amount of disasters and the fact that “each crisis is unique and may require a tailor-made response” (Ilhan 2011, p.49) enhances the necessity of adequate humanitarian logistics, which is an important tool in today’s disaster relief operations (Foster 2013). Logistics accounts for 80% of disaster relief operations (Buatsi 2011).
This report compares and contrasts relief SCs providing long-term aid and emergency response SCs that are used in the initial stages of large, sudden-onset disasters. The report will be divided into three parts: introduction to humanitarian logistics, the importance of aid agencies as well as a comparison of both SC types.
2. Humanitarian Logistics
Due to the latest catastrophes caused by both man and nature, more academics, practitioners and specialists focus on humanitarian logistics. These interests are increased by an expanding market of disaster relief and by the fact that disaster relief SCs are complex and dynamic including a lot of uncertainties that make operations very complicated (Larson 2011). Thomas and Kopczak (2005, p.2) define humanitarian logistics as follows:
The process of planning, implementing and controlling the efficient, cost-effective flow and storage of goods and materials, as well as related information, from the point of origin to the point of consumption for the purpose of alleviating the suffering of vulnerable people. The function encompasses a range of activities, including preparedness, planning, procurement, transport, warehousing, tracking and tracing, and customs clearance.
This definition states the complexity of humanitarian SCs as discussed by Hughes (2009). Due to the fact that a variety of activities are covered, Day et al. (2012) suggest to better define the field as humanitarian supply chain management to capture its extensive scope. The complexity is further emphasized by the number of actors in the humanitarian aid network (Figure 1).
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Figure 1: Actors in the humanitarian aid network (extracted from Kovács and Spens 2008, p.223)
In order to provide adequate support, it is necessary to define the type of disaster. Van Wassenhove (2006) differentiates not only between natural and man-made disasters but also between sudden- onset and slow-onset disasters. Figure 2 explains this segmentation and gives examples for each case.
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Figure 2: Taxonomy of major disasters (extracted from van Wassenhove 2006, p.476)
3. Importance of aid agencies in Humanitarian Logistics
Aid agencies are one of the important actors in the humanitarian aid network (Kovács and Spens 2007). Worldwide exist many agencies mainly supported by the government such as the United Nations (UN) or the World Food Programme (WFP). Moreover, there is a wide range of international organisations such as the International Federation Red Cross and Red Crescent Societies (IFRC) and non-governmental organisations such as World Vision, Oxfam and CARE (Oloruntoba and Gray 2006). They receive donations from the government, individuals, foundations and the private sector and coordinate high amounts of money in relief to victims of disasters (Thomas 2003). Table 1 shows several leading aid agencies and compares the total contribution to disasters in 2001 to more recent data of received donations in 2012 (annual reports aid agencies 2012/2013). It further emphasizes the increasing importance of aid agencies as the frequency and severity of disasters has increased.
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Table 1: World's leading humanitarian organisations (adapted to Thomas 2003, p.2 under consideration of the annual reports of the listed aid agencies from 2012)
In 2012, 40% of IFRC’s expenditures accounted for development aid. Another 48% accounted for disaster response programmes. These amounts underpin the crucial role of aid agencies (IFRC 2012). However, all humanitarian organisations work for the same principles of humanity, impartiality and neutrality (Figure 3). They are obliged to help everyone in need without favouring groups and influencing the result of a conflict with their intervention, independent from the type of humanitarian operation (van Wassenhove 2009).
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Figure 3: Humanitarian space (extracted from van Wassenhove 2006, p.478)
In disasters many aid agencies from across the globe are included in the operations with the aim of providing assistance. All differ in their organisational structure, their background and their focus regards the products and services they supply (Kovács and Tatham 2009), thus often resulting in coordination difficulties (Maon et al. 2009). However, both collaboration and coordination provide crucial tools for operations in disaster relief such as material and financial support, technical expertise and cost efficiencies (van Wassenhove 2006). Therefore, the UN implemented an ‘UN Joint Logistics Centre’. The centre provides several logistics coordination services in disasters, serves as an information hub for logistics processes in on-going operations and uses resources efficiently (Kaartrud et al. 2003).
4. Supply chain types in Humanitarian Logistics
McLachlin et al. (2009) announced that SC types are influenced by motivation and environment and can thus be divided into business and humanitarian SCs (Figure 4). As there are many types of disasters, there is not just one single humanitarian SC setup, but many different unique ones. Therefore, humanitarian logistics can be defined as an “umbrella term” (Kovács and Spens 2007, p.99) that covers disaster relief and continuous aid work (Thomas and Kopczak 2005) as shown in Figure 4.
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Figure 4: Supply Chain Types (adapted to McLachlin et al. 2009)
Comparing both humanitarian SC types, there exist general differences which will be discussed in this chapter. According to Oloruntoba and Gray (2006), sudden-onset disasters require an agile SC while the focus should be on response times as “quick response and fast delivery are of vital importance to the success of operations” and time delays may cause deaths (Zheng and Ling 2012, p.1301).
However, for slow-onset disasters the planning horizon is longer. This enables to focus on cost efficiencies comparable to a lean SC (Figure 5).
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Figure 5: Supply Chain Types in disaster relief
(extracted from Kovács and Tatham 2009, p.217)
4.1 Disaster relief
Sudden-onset disasters require immediate interventions of rescue and aid focusing on providing goods, services, food and shelter to minimize risks to human health (Ilhan 2011). Time is a distinctive element in disaster response as there is usually restricted warning before a disaster hits. However, quick response in the first 72 hours is necessary since suffering can increase rapidly when first aid is not rendered accordingly (Apte 2009). A structured literature review showed that different classification models of humanitarian SC phases exist (Cozzolino 2012). Kovács and Spens (2007) identified three phases in a relief operation (Figure 6).
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Figure 6: Relief operations phases (extracted from Kovács and Spens 2007, p.101)
In the preparation phase, a contingency plan is installed, the situation is monitored regularly and prearrangements with stakeholders such as suppliers and donors can be made. However, a disaster often occurs suddenly, so that preparation often cannot be fulfilled.
The response phase takes place in the aftermath of a disaster and is characterized by the immediate mobilisation of resources. During the reconstruction phase, the effort is concentrated in rehabilitation of local structures (Kovács and Spens 2007). These phases cannot be declared as generally valid as every disaster is unique and requires particular setups (Leach 2011).
However, the first step after a disaster hits is the assessment of the damage. The appropriate severity assessment in the early stage is a crucial factor for an efficient relief operation (Doerner et al. 2011) that often have to be fulfilled in environments with destroyed infrastructure extending to lacking electricity as well as limited transport and communication infrastructure (Buatsi 2011). After the assessment, a formal appeal is issued specifying the needs for financial assistance or the delivery of food or non-food items. It is at this point that the core logistics mobilisation of aid agencies takes place, through the procurement and shipping of required items (Kovács and Spens 2007).
The following example emphasizes this process: After the occurrence of the Asian tsunami in December 2004, the IFRC has sent a field assessment and coordination team to Sri Lanka accordingly. Several response units were on standby to be sent to the affected regions when needed. Directly after the disaster hit, the IFRC has launched an appeal to help people and support relief operations. In the affected areas, IFRC teams rendered first aid, helped with evacuations and provided emergency materials, such as water, food, blankets, tents and medical supplies (IFRC 2004).
Usually, the supplies are shipped to a port and then moved to sites in the affected regions which are mostly unknown to aid agencies. This makes the distribution more difficult and often extend the lead times that should be minimized ideally as needs are concurrent (Maon et al. 2009). The demand for services and goods after a disaster is mostly unpredictable and cannot be anticipated regarding timing, location and scale (Buatsi 2011). Therefore, the supplies are pushed to the affected regions in the direct aftermath of a disaster, i.e. they are provided without having accurately determined real demand data. The supplier choice is often limited, and sometimes the agencies need to work with even unwanted suppliers (Kovács and Spens 2007).
Disasters often require different types of SC operations at the different response phases. Directly after the disaster, an operation needs to be focussed on speed as well as immediate and innovative results (Ellis 2010). The focus on speed is emphasized of the immediate response that was provided by World Vision (WVI) after the Haiti earthquake in 2010. The staff reacted accordingly and distributed bottled water they had on hand. This response shifted with time to reconstruction and long-term development as WVI helped communities rebuilding their areas (WVI 2012). In this phase of a disaster, the focus is on a reduction of cost, sustainable and reliable results as well as building long-term relationships in order to support the local community (Ellis 2010).
When a disaster strikes, multiple agencies are involved. For example, over 100 organisations were present within two weeks of the 2005 earthquake in Pakistan. This makes it much harder to work efficiently as there exist no common regulations (Maon et al. 2009). Most disaster relief networks are rapidly formed as opposed to collaboration with long-term orientation in business environments.
This complicates the development of trust and collaboration in the field and often affects the operational success as both criteria are crucial factors (Tatham and Kovács 2010). However, there is the necessity for increasing levels of coordination between the involved participants in order to reduce duplications, improve visibility and optimise the use of resources and time. In the emergency response stage, aid agencies often compete for resources and infrastructures in the affected regions (Ellis 2010).
Furthermore, commodities are often sent in without coordination with teams on the ground. Thus, inventory and quantity management is challenging and often not possible according to fluctuations in demand, unpredictable locations and lead times (Maon et al. 2009). The receiving of randomly sent goods and supplies is directly linked to a lack of information. To achieve better results in disaster response, information technology and systems including the implementation of up-to-date information or tracking systems are very important. For example, on the web portal of the American Logistics Aid Network (ALAN), relief organisations post urgent needs such as requests for local warehouse space, material handling equipment or other goods and services (Foster 2013). This reduces complexity and increases visibility (Tomasini and van Wassenhove 2009). Especially available resources, such as transportation capability and warehouse facilities are often very limited and cannot meet the demands of the operations (Zheng and Ling 2012).
According to Lee (2004), the three factors of agility, adaptability and alignment have to be met in disaster relief SCs. These abilities are necessary as the environment of the SC may change frequently and emergency operations need to be flexible enough to cope with changes (van Wassenhove 2006). Sudden-onset disaster operations focus on short-term aid. Thus, “once a crisis is dealt with, aid workers are immediately assigned to the next mission” (Thomas and Kopczak 2005, p.6). ‘Just get the job done’ is the mantra in these operations rather than spending time on resource planning, performance measurement and improving the collaboration and outcomes during disasters (Winter 2009).
To sum up, each sudden-onset disaster requires a tailor-made solution as no standard type of disaster relief SC can be adapted to every incident (Maon et al. 2009). Major aspects of disaster relief are high levels of uncertainty, changing organisational structures and fluctuating demand and requirements of the affected people (Day et al. 2012).
4.2 Continuous aid work
In 2000, the UN started to develop goals in order to reduce global poverty including the eradication of hunger, the implementation of primary education and the combat against diseases such as HIV/AIDS or malaria (UN 2013). These goals are in line with continuous aid work, that aims at the creation of sustainability and self-sufficiency of a community on a long-term basis and includes activities to establish and provide reliable infrastructure, healthcare, accommodation and nutrition (Ilhan 2011) in order to prevent “the everyday disasters of poverty and disadvantage” (Ellis 2011).
Oxfam, for example, is engaged to enable girls in Pakistan to get an education. Outdated teaching methods, lack of equipment and early marriage mean that in rural areas only one in three women have ever attended school. However, for every year a woman spends in school, the chances to escape from poverty increase dramatically. Therefore, Oxfam started to lobby the local government, helped communities to build schools and trained teachers in order to provide long-term aid (Oxfam 2014).
In contrast to operations in disaster relief, continuous aid operations do not require overall a unique solution as the environment does not change frequently. It is an ongoing process often installed when slow-onset disasters occurred. For slow-onset disasters such as HIV, AIDS, famine, drought, poverty or malnutrition, sustained long-term operations are necessary as they can affect the life conditions of people especially in poor countries (Komrska et al. 2013). In 2012, for example, a drought affected 23% of the population in Mali (Guha-Sapir et al. 2013).
As the continuous aid process lasts much longer than disaster response, aid agencies usually have enough time available to plan their response before the beginning of any relief operation. Moreover, the requirements are usually known and the pull philosophy can be applied, i.e. the supplies being provided are determined by the accurately real demand (Apte 2009). Thus, aid agencies may choose the best performing supplier as opposed to work with even unwanted ones and have the possibility to negotiate with them. UNICEF, for example, uses competitive bidding to find suitable suppliers in long-term operations. This process enables to increase the number and diversity of suppliers in order to further increase competition and enhance responsiveness. Besides, UNICEF has the possibility to pre-position buffer stock to cut lead times and improve the delivery due to a longer planning lead time (Komrska et al. 2013). In continuous aid operations, agencies have the possibility to plan resources, communicate and improve the outcomes as shown by the case of UNICEF. They use key performance indicators to monitor and manage their SC. Besides, they provide suppliers with demand forecast information to plan for raw materials purchases and better manage their production capacity. Moreover, they seek to improve inter-agency and donor collaboration to improve response to nutrition emergencies (Komrska et al. 2013) which is important to create more efficient and cost-effective operations (Gustavsson 2003).
In contrast to disaster relief, fewer agencies are involved in continuous aid work meaning that specific projects are assigned to particular aid agencies; thus, enabling to better coordinate and manage operations as no competition occurs (Kovács and Spens 2007).
The following example emphasizes the importance of logistics and supply chain management in continuous aid work. PEPFAR1is involved to implement more reliable antiretroviral drug SCs in order to prevent HIV/AIDS as well as treating patients in over 30 countries that receive a pre-determined doses of drugs per day lifelong. Uncertainty in supply or expired drugs can have huge impacts on the resistance of the patients. Therefore, the aim is to avoid wasting resources and costs while using a lean approach. In order to create a more efficient drug SC, PEPFAR implemented six key elements (Figure 7).
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Figure 7: Elements of a health care drug supply chain (extracted from GAO 2013, p.6)
PEPFAR selects drugs based on national treatment guidelines and estimates the quantity of drugs needed to ensure an interrupted supply. Due to long-term contracts with suppliers, PEPFAR obtains drugs within agreed-upon production and delivery times at lower cost. Inventory management is conducted regularly, i.e. PEPFAR monitors for shortages and waste due to expired products in order to keep accurate records of available and anticipated stock. Moreover, PEPFAR manages the flow of drugs to the end user for consumption. Due to the longer planning horizon and an anticipated demand, PEPFAR is able to use forecasting methods to determine the right amount of inventory to prevent waste as expired drugs can no longer be used (GAO 2013).
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1PEPFAR is the abbreviation for “President’s Emergency Plan for AIDS Relief”