Proceedings of the. BAIG & FOGARTY: Supply Chain Integration in Humanitarian Aid

Transcription

1 Proceedings 1st - 2nd September 2016 BAIG & FOGARTY: Supply Chain To what extent supply chain integration can contribute to a cost efficient and timely response to individual disaster by global humanitarian organizations within the context of Disaster Management Cycle Mr. MizraDanish Baig MSc Student National Institute of Transport Logistics, Dublin Institute of Technology Ms. Sheila Frances Fogarty Supervisor National Institute of Transport Logistics, Dublin Institute of Technology Abstract Every year thousands of people are killed and millions are affected and displaced due to natural disaster. These disasters test the capacity of different actors to work together and their ability to react to that particular situation which demands a well integrated and collective response. As 80% of Humanitarian Aid operations consists of Supply Chain Management activities [1]. Supply chain integration for Humanitarian Organisations (HO) has now become critical; not only to increase responsiveness but also efficiency while reducing the cost. However, to date only limited research has been carried out on Supply Chain Integration (SCI) for global humanitarian organisations. This study is undertaken to identify and analyse the areas of supply chain integration that can contribute to increased cost efficiency and timely response by global humanitarian organizations to individual disasters; within the context of disaster management cycle. A qualitative research approach is adopted and primary data has been collected through interviews with key informants working in the field; while secondary data has been collected through published reports, sector journals and conference papers. The research indicates that the performance Humanitarian Supply Chain depends on integrating both external and internal actors as part of Preparedness Strategy; designed to combat uncertainty of demand, type, size and location of individual disasters. Within the scope of Disaster Management Cycle, the Pre-Disaster Phase is shown to be the most important in terms of integrating supply chain efforts for a cost efficient and timely response. In this phase preparedness planning, purchasing, coordination and information are paramount. The following were identified as areas where global Humanitarian Organizations should focus attention to ensure enhanced performance for a timely and cost efficient response to disaster: Information technology Localized capacity building Staff retention

2 BAIG & FOGARTY: Supply Chain 1 st - 2 nd September 2016 Proceedings Background A natural disaster is defined as 'some rapid, instantaneous or profound impact natural environment upon the socio-economic system' [2]. The number of natural disasters and the population affected by such events have been increasing in the past decade, with the Asia Pacific region having 41.2% worlds reported natural disaster between ; and disaster induced deaths in the region increased by more than three-fold in the past decade [3]. Research Objectives The research will review, define and examine: - The Humanitarian Supply Chain What supply chain integration means in the context of disaster management cycle Where supply chain integration can support cost efficient timely humanitarian response for HO's The Humanitarian Supply Chain (HSC) 'the process of planning, implementation and controlling the efficient, cost effective flow and storage of goods and materials as well as related information from point of origin to point of consumption for the purpose of alleviating the suffering of vulnerable people. [4] This function carries a range of activities including preparedness, planning, implementation, procurement, warehousing, transportation, customs clearances, tracking and tracing while seeking a balance in between speed i.e. responsiveness and cost i.e. efficiency in the supply chain. [4] According to Howden HSC s usually have different functions depending on the organization and even on the disasters, these are defined as: Procurement; Warehousing; Fleet management; Transport management (both people and supplies); Asset management; Building management; Security; Information technology; Radio communications. Expressed in Fig. 1 logistics stream represents physical flow in the relief chain process i.e resource mobilization, procurement, transportation, asset/stock management and delivery point whereas in the supply chain stream it adds up information, funds and personnel for preparedness, assessment and appeal, monitoring and evaluation, reporting and evaluation [5]. Fig 1: Source: Humanitarian supply chain and logistics flow - Source: (Howden, 2009)

3 Proceedings 1st - 2nd September 2016 BAIG & FOGARTY: Supply Chain Smith and Dowell defined Humanitarian Supply Chains in the case of a natural disaster as 'incident organizations' and Fitzgerald named them as 'collaborative entities [6]. Michael Howden has revealed that in HO's there is no clear distinction in between logistics and SC. While Kovacs and Spens [7] summarizes critical characteristics of humanitarian SC as: Demand unpredictability - in terms of timing, scale, location and type Suddenness of occurrence of demand Shorter lead time with wide variety of supplies High stakes associated with timeliness of delivery Lack of resources in terms of supply, people, technology, transportation and funds Humanitarian Supply chain problems and challenges Supply Chain's plays a critical role in humanitarian aid and recent events have shown that problems occur in the following areas, as also expressed in figure 2 [5]. Supply chain structures Distribution network Configuration Inventory control Disaster assessment Cooperation and coordination Procurement uncertainties Limitations on performance measurements Fig. 2 Sangiamkul & Hillegersberg, 2011

4 BAIG & FOGARTY: Supply Chain 1 st - 2 nd September 2016 Proceedings Ergen [8] identified the challenges that almost all the humanitarian supply chains face as : High uncertainty in demand High uncertainty in timing High uncertainty in location High uncertainty in supplies The Disaster Management Cycle Disaster Management Cycle (DMC) is a key element in humanitarian sector which drives relief effort. Most literature concurs there are three stages Disaster Management Cycle: Pre-disaster - which includes preparedness, prevention and mitigation Response - which includes emergency response Post disaster - which includes recovery and rehabilitation Fig 3: Disaster management cycle - Source adapted: [9] The aim DMC is to reduce the potential losses by ensuring prompt and appropriate assistance to victims of disaster in order to achieve rapid and effective recovery (Resilience, 2015). DMC is a continuous process in which governments, civil and social societies plan to reduce the impact disaster by reacting immediately after the disaster strikes and by taking appropriate steps in order to recover [10]. Appropriate actions at each and every step DMC will result in a high level of preparedness better warning systems reduced vulnerability Disaster Management Cycle and Supply chain: In all the phases Disaster Management Cycle (DMC) as explained above in Humanitarian Supply Chain is mainly concerned with the preparation, response and recovery whereas mitigation phase refers to the mechanisms which reduces communities vulnerability level and is directly related to the responsibilities government [9].

5 Proceedings 1st - 2nd September 2016 BAIG & FOGARTY: Supply Chain Supply Chain and Pre-disaster phase: In this phase Supply Chain strategies are put into place which allows the implementation of a successful operational response and involves [9]. physical network design e.g. stock piling and stock pre-positioning information and communication systems base for collaboration The objective is to avoid the possible consequences of a disaster by learning and adapting from the past experience so as to meet new challenges. Purchasing In the Humanitarian Supply Chain, purchasing is a vital element as it can considerably influence the performance of any humanitarian response and in the process humanitarian organizations procure goods and services of US$50 billion both from local and global sources [11] as also explained in the Fig. 5; procurement represents 65% overall expenditures [12]. Humanitarian organizations often prepare themselves against any disaster by pre-positioning the emergency relief items and by placing them strategically around the globe [13]. Field Personnel Transportation Procurement Administration Fig 4: Expenditure in humanitarian relief logistics - Source [12] Supply Chain and Emergency response phase: In the emergency response phase, SC has two objectives [9] 1. to immediately respond by activating temporary networks e.g. Emergency response units (ERU's) 2. provision of basic services and delivery of goods to the highest possible number of beneficiaries Coordination and collaboration or integration among all the actors involved in humanitarian response is the key. Connection to potential and feasible donors, suppliers, NGO's, civil and social partners which are made in the first phase all act together as quickly as possible: 'at the start, speed at any cost is essence, and the first 72 hrs are crucial' [9]

6 BAIG & FOGARTY: Supply Chain 1 st - 2 nd September 2016 Proceedings The Pre-disaster phase is the key and when it comes to the supply chain it is the predisaster phase where you design your supply chain and cost savings; on time delivery is the integral part. Humanitarian Supply Chain activities are more transitional in nature and flow from Pre-disaster to Response to Post disaster. It is a cycle you plan - you execute- you monitor and you plan again The Preparedness strategy is a measure of preparing and reducing the impact of a disaster (IFRC, 2000). The aim is to predict where possible and prevent to the extent you can efficiently and effectively. It s a continuous process which requires well-coordinated and integrated activities and processes at all levels and in all functions. It is important to identify activities and processes both internal and external because the scope response can vary widely and requires contribution from different areas/actors as expressed below in fig 5. Fig 5: Integration of internal and external actors into purchasing 4. Data Analysis Data Analysis for the study consisted of three separate sections based on the three phases Disaster Management Cycle: Pre-disaster, Response and Post-disaster. Within each phase key supply chain and relief activities were analyzed in order to examine how supply chain integration supports a more cost efficient and effective response to crisis. Recognizing that there are many actors/players involved in the Humanitarian Supply Chain, all with their own mandates and capacity, the study focuses on the most common supply chain functions, mechanism and practices. Unanimously all the respondents mentioned the importance of planning in the pre- disaster phase. Plan your organizational efforts so that you can channel them when the time comes (respondent) Every single activity that log will carry must be planned;; abrupt decisions have direct impact on allocated budget especially when there is one donor for a specific project. These kinds of projects have limitations in terms of time and cost (budget), any deviation will directly result into project delays (response) and additional cost from organizations own funds (respondent)

7 Proceedings 1st - 2nd September 2016 BAIG & FOGARTY: Supply Chain Particularly with reference to Supply Chain, respondents highlighted the following areas that plays critical role in the execution preparedness planning when the disaster strikes: Supplier base and supplier relationship both at regional and local level. Development logistics and Supply Chain emergency units at regional level Human resource base most humanitarian workers are on short-term contracts Respondents mentioned that a clear set of guidelines should be prepared, as per the regional requirements, under the umbrella of preparedness planning; not only for purchasing but for all the functional units. Emphasize must be given on purchasing; considering the percentage overall expenditure that it carries as expressed in fig 6. HO* Knowledge management Planning Planning Donor and funding sources Partnerships Logistics and SC Trainings & lesson learned Knowing the environment Resource mobilization Sourcing Distribution People Goods General charities Donor agencies e.g. ECHO Equipment e.g. communication devices Transportation and fleet management Stock prepositioning Contingency projects IP s/cbo s*, civil/social bodies Suppliers Media (coverage and fund raising) 3 PL s Military & govt. bodies support for resource mobilization, security and need assessment Fig 6 Integrating external/internal actors for disaster response al al

8 BAIG & FOGARTY: Supply Chain Organisational Structure 1 st - 2 nd September 2016 Proceedings In 2005 IFRC redesigned its Supply Chain into decentralized structure with tighter integration in between donors/suppliers/national societies by establishing regional logistics units (RLU s) which is supported by central strategic management team in Geneva (as expressed in fig 7) allowing them to [14] Avoid bottlenecks in receiving and storing goods at local airports Quicker response in emergency phase from regional units Cheaper response for follow up replenishments by using cheaper mode of transportation Fig 7: IFRC s cost and time savings within the context of DMC Source: [14]

9 Proceedings 1st - 2nd September 2016 BAIG & FOGARTY: Supply Chain 4. Conclusion The Humanitarian Supply Chain is complex, and needs to be dynamic to combat uncertainties inherent in the vastly complex and individual crisis situations. In the Pre disaster Phase, purchasing, preparedness planning, coordination and information management are paramount. In the Emergency phase, coordination teams and ERU take center stage. In the Post Disaster Phase capacity building of local actors is the most important focus and can contribute to cost efficiency and timely response for a global HO; based on the opinion of respondents. In terms of integrating humanitarian relief efforts within the scope of Disaster Management Cycle (DMC), it is similar to a funnel which is broad at the initial phase and then gets narrow as it move towards the last phase as explained in fig 8. The extent of integration within the scope of Disaster Management Cycle in terms of cost efficiency and responsiveness is broad at initial stage because disaster knows no boundaries and you prepare yourself to every level against the uncertain environment and uncertain demand. Fig 8 Humanitarian relief efforts within the scope of DMC

10 BAIG & FOGARTY: Supply Chain 1 st - 2 nd September 2016 Proceedings Survey Response Fig 9.1: Summary of areas of integration in pre disaster phase for cost savings and timely response Fig 9.2: Summary of areas of integration in emergency phase for cost savings and timely response Fig 9.3: Summary of areas of integration in post disaster phase for cost savings and timely response

11 Proceedings 1st - 2nd September 2016 BAIG & FOGARTY: Supply Chain Recommendations Information technology Information technology is the backbone of today s sophisticated and high performance supply chains as it eases the complexities of situations and communications. HSC s, marked with the characteristics of complexities and uncertainty in extremely complex operations, need to realize the importance of using information technology (IT) as an integrating factor. Only one respondent's organization use IT databases for their SC operations; the rest use simple Excel Spread Sheets to record and analyze data. Even for other functional units such as finance, monitoring and evaluation, data is been recorded and analyzed in Excel SS Capacity building Humanitarian organizations should focus more on capacity building and knowledge transformation at local level, with local NGO s. Local NGO s are more aware of local environment and are in better position to form long term partnerships with both internal/ external actors such as government bodies, local suppliers and local communities. In this case, it will provide HO s with a strategic advantage in terms of cost and response time. Integrating a capacity building program through the localised standard practices that global HO s follows, will serve following agendas as per their mandate: Shorter response time Greater acceptability/integration at local community level Greater support for local economy through all operations managed at local level All humanitarian SC activities such as purchasing, pre-positioning, storage, transportation and distribution managed at local level, will cut costs on managing all SC activities at regional logistics units because well-established local NGO s already manage such activities at local level. Less intervention resulting in less mobilization cost in terms of relief goods, equipment s and other aid. Staff Retention The Knowledge Base and Core Competencies are some most critical resources for any organization. Most humanitarian workers are on short term contracts and as soon as the project/response is complete valuable disaster experience and leave the organization with the employee. This case holds true both for expat staff and local staff. Some global HO s manage this information for expat staff but no such initiative is taken for local staff. The HO s performance depends a great deal on integrating efforts at local level;; mainly to have relevant information in order to have better understanding environment and conditions. The research shows that managing experienced humanitarian professionals information at local level on a regular basis can lead to cost savings and shorter response times.

12 BAIG & FOGARTY: Supply Chain 1 st - 2 nd September 2016 Proceedings References [1] Scholten, K., Scott, P. S. & Fynes, B., (Le)agility in Humanitarian Aid Supply Chains, DIT. [2] Nagurney, A., Masoumi, A. H. & Yu, M., An Integrated Disaster Relief Supply Chain Network Model with Time Targets and Demand Uncertainty, Isenberg School of Management University of Massachusetts. [3] UN, Asia-Pacific report: World s most disaster prone region experiences three-fold rise in deaths, UN Economic and Social Commission for Asia and the Pacific. [4] Tomasini, R. M. & Wassenhove, L. N. V., From preparedness to partnerships: case study research on humanitarian logistics. INSEAD Social Innovation Centre [5] Sangiamkul, E. & Hillegersberg, J. v., Research Directions in Information Systems for Humanitarian Logistics, Proceedings 8th International ISCRAM Conference Lisbon, Portugal, May [6] Awan, Z. & Rahman, Z., Supply Chain Designs for Humanitarian Relief, Jönköping International Business School. [7] Kovacs, G. & Spens, K., Identifying challenges in humanitarian logistics, Department of Marketing, HANKEN School of Economics, Helsinki, Finland [8] Ergun, O., Keskinocak, P., Swann, J. & Villarreal, M., Humanitarian Logistics Uncertainty, damaged infrastructure, politics highlight top -10 challenges facing analysts during a disaster, Analytics Magazine, Spring [9] Cozzolino, A., Humanitarian logistics and supply chain, University of Wisconsin. [10] Resilience, C. f. D., Disaster management lifecycle, Centre for Disaster Resilience, University of Salford. [11] Taupiac, C., Humanitarian and development procurement - A vast and growing market, International Trade Forum. [12] Falasca, M. & Zobel, C. W., A two-stage procurement model for humanitarian relief supply chain. Emerald Insight, 1(2), pp [13] Garyfalakis, E. & Berger, K., Procurement policies in disaster relief - Analysis of sourcing practices applied by humanitarian organizations in the field of disaster response, Jönköping International Business School. [14] Gatignon, A., Van Wassenhove, L. N. & Charles, A., The Yogyakarta Earthquake: Humanitarian relief through IFRC's Decentralized Supply Chain, International Journal of Production Economics.