SUPPLY CHAIN RELATED ISSUES IN DISASTER MANAGEMENT

Transcription

1 SUPPLY CHAIN RELATED ISSUES IN DISASTER MANAGEMENT Qiannong Gu Department of Management and Marketing, College of Business Administration Sam Houston State University, Huntsville, TX 77341, USA Tel: , John K. Visich Management Department, College of Business Administration Bryant University, Smithfield, RI 02917, USA Tel: , Huilin Yao Department of International Business, Xiamen University of Technology Xiamen, Fujian, China ABSTRACT Unexpected natural disasters cause incalculable loss of property and lives worldwide every year. In 2005, probably the two most catastrophic events in the U.S.A. were Hurricane Katrina and Hurricane Rita. The scenes of nightmarish evacuation congestion and insufficient supplies for gas and water are still fresh in public consciousness. This study investigates supply chain management (SCM) related issues in disaster management such as evacuation (transportation routing), information management, supply and disaster relief issues. The purpose of this study is to help with disaster management by applying SCM knowledge and technology in business world to improve evacuation efficiency, quick response to emergent demand etc. Several suggestions concerning the strategies to prepare and response to unexpected disasters are proposed. Keywords: Logistics, Evacuation, Disaster Management, Supply Chain Management 1. Introduction In 2005, Hurricane Katrina and Hurricane Rita attacked New Orleans, Louisiana and Houston, Texas respectively. Under the shadow of Hurricane Katrina,, three millions residents in the Houston area evacuated in a panic which caused 100 miles traffic jams on all the major leading out of Houston highways even though Hurricane Rita did not cause the severity of damaged which was influenced by Hurricane Katrina. This presented a challenge to government agencies and business leaders in terms of effectively preparing (if possible) and responding to an unexpected disaster. Disasters include chemical emergencies, dam failure, earthquake, fire or wildfire, flood, hazardous material, heat, hurricane, landslide, nuclear power plant emergency, terrorism,

2 thunderstorm, tornado, tsunami, volcano, and Winter Storm (FEMA). Appendix A lists 1037 major disasters which the U.S. experienced from 1972 to 2000 and in which state they happened. Hurricane Katrina, Biloxi, Miss., April 1, 2006 Source: Unexpected natural disasters, as the name implies, are something which are not expected to happen in normal situations. But to some degree they can be forecasted a short time prior to occurrence such as a couple of days to weeks. As we all know, forecasting is not completely accurate, but it can give us at least a narrow area with high probability of occurrence in which to concentrate our efforts. Disaster management focuses on how to prepare in a very short period before disaster and also disaster relief afterwards. In the case of an earthquake, which normally has no warning, how to implement disaster relief is the only critical issue. Disaster relief means monies or services made available to individuals and communities that have experienced losses due to disasters such as floods, hurricanes, earthquakes, drought, tornadoes, and riots (Legal Encyclopedia). Disaster relief efforts are typically conducted by local, state, and national governments on varied responsibilities. Disaster relief includes emergency medical assistance, fire rescue, and food supply etc. In a routine business setting, supply chain management (SCM) focuses on managing the processes to produce and distribute products and services along supply chain. SCM considers all internal and external operations in an organization and focuses on efficiency and effectiveness of processes. Therefore, SCM often includes substantial measurement and analysis of those processes. This study analyzes the operational issues in disaster management from a perspective of supply chain. SCM knowledge is used to propose some strategic approach to update our routine business process in order to efficiently prepare and response under the emergent situation. People can take advantage of the short period (if applicable) before some disasters, such as hurricanes, to efficiently prepare for the worst case in order to minimize the potential damage. SCM also deals with the disaster management and disaster relief strategies for both service and manufacturing. In an unexpected disaster, a set of new rules that are different from regular concerns should be developed to cope with the special requirement of quick response instead of

3 the lower cost which is the general requirement under the normal supply chain management situation. 2. Evacuation Issues Pictured by Rick Hodges, The above picture was taken by an evacuee during the evacuation of Houston, TX due to Hurricane Rita in An online survey conducted by Houston Chronicle shows the experience of evacuation. Jack Little, chairman of the Task Force on Evacuation Transportation and Logistics, pointed out four major focuses in evacuation: 1) traffic flow, 2) fuel availability, 3) evacuation of those with special needs, and 4) communication and coordination (Sallee 2005). In this section, we consider the transportation routing and scheduling problems in an evacuation. Fuel availability is considered as a logistic problem and communication is discussed in the information management section in this study. A number of mathematical models for evacuations have been developed in the literature. An extensive literature review by Hamacher and Tjandra (2001) discussed these models. Evacuation models can be divided into two categories: Macroscopic and Microscopic models. Macroscopic models do not consider individual differences and their decisions for selecting egress routes, whereas microscopic models do. Evacuation problems include different types of systems such as, buildings, cities and regions etc. In disaster management, the need for a regional evacuation schedule and plan is critical. The objective of an evacuation model is to minimize the total processing time or to minimize the risk of an evacuation plan with respect to the hazard propagation. In order for the mathematical models to mak an optimal decision on evacuation planning, they following data are required: the geographical information, population distribution, destination, safe time for evacuation, availability of emergency facilities and personnel. Hamacher and Tjandra (2001) summarized evacuation models in Table 1. In addition to using a mathematical model to give the optimal response under a given circumstances, it is also necessary to have an efficient scheduling plan in order to organize the excessive traffic. Some concerns should be considered even in the design stage for city major highways. For example, redirecting a two-way highway into one way highway in order to facilitate quick evacuation requires more interchangeable locations along the highway. Also, strategic design or scheduling policy can improve the efficiency of evacuation. For example, closing some exits of the highway on a predefined schedule can improve the traffic flow speed

4 due to less interruption. Another managerial issue relevant to traffic of evacuation is the use of public transportation system such as trains, school buses etc in order to avoid more vehicles on the roads. In 2005, three days before the expected arrival of Hurricane Rita came to Houston, the government identified evacuation zones based on information provided by the weather bureau. As Hurricane Rita approached, millions of cars blocked every major highway out of Houston. Many evacuees were stuck on the highway up to fourteen hours and returned home because they were running out of gas. Some unfortunate evacuees had to abandon their cars on highway because they had either overheated or run out of gas. These problems exacerbated the growing highway traffic jams. Can this issue be solved or avoided? Yes. A detailed schedule would mitigate this problem because most people on highway are from the areas outside of mandatory evacuation zones. Opening the highway exits to only designated evacuation zones on a phase plan would allow people in most dangerous areas to be evacuated first and the other zones released according to their relative dangerous rating. The ultimate reason for extreme heavy traffic is that millions cars surged onto highway at every exit in a short time period. The recommended solution is to close some highway exits while leaving only those major exits open. In this case, it is also easy to control the traffic at each exit. A simulation could be done to test how much faster the evacuation would complete based on the percentage of exits closed. Obviously, determining which exits should be open or closed is the result of the mathematical model and this depends on the population and geographical information in each specific zone. Therefore, a predefined evacuation schedule can be developed and tested to prepare for an unexpected disaster. This evacuation plan will be more effective, if all parties involved or at least informed in a local rehearsal. A simulation study will assist in the earlier stage of development of this scheduling evacuation plan. Table 1: Summary of Existing Evacuation Approaches. Source: Hamacher and Tjandra (2001)

5 3. Logistics Issues The major logistical issue in disaster preparation is how to meet the huge urgent need of water, gas, and food due to the fact that relatively, as to the location, direction and intensity of the hurricane is available only one week in advance. For example, all grocery stores in Houston sold out of not only water but also all brands of drinks. At this point, a quick and effective response to this surge in demand is an impossible challenge to retailers. In addition, all gas stations near all major highways were sold out because slow and stopped traffic continues burning gas while stopped on the highway. When the issue is combined with the transportation issue, then the problems become more complex because slow traffic also prevents delivery trunks from getting into the area. Pictured by Rick Hodges, Another logistics issue during disaster relief is the delivery of the right products to right person at the right time. For example, in 2005, Houston helped the evacuated residents from New Orleans with any donations sent to warehouses; meanwhile, evacuees had trouble receiving needed supplies for survival. We can learn many valuable lessons from the experiences of private or non-profit organizations. Direct Relief International (DRI) is a non-profit organization, which provides medical aid including medicines, medical supplies and equipment to strengthen incountry health efforts around the world and thereby improving the quality of life for the most impoverished people. The DRI worked through the established network of clinics in order to help on Hurricane Katrina and Hurricane Rita relief (DRI 2006). The same ideas and methods can be adopted in allocating food donations or life necessities through retailer store networks. For instance, it is not necessary for the food bank or government agencies to have food on hand for evacuees. The agency can print out purchasing certificate and can easily distribute them to qualified disaster relief organizations such as church, hospital or specific offices for distribution to evacuees. The evacuees can then go to any retailer store, which volunteers to assist in the disaster relief program, and purchase the product indicated on the certificates. Later, each retailer

6 store can be replenished from central warehouses of disaster relief based on the certificates which they collected. Another logistic issue in disaster relief is handling the enormous future demand for items such as furniture, clothes etc. For example, in 2005, when thousands New Orleans residents arrived in Houston, this created a huge demand for mattresses. Of course, no one local furniture company can handle this level of demand. Some local furniture companies used a 24/7 strategy by adding more shifts. Still, the total capacity could not meet the demand increase. The proposed solution for this logistic issue is not straightforward and should be considered case-by-case. In the long run, redesign of the supply system in a disaster-frequent area should be considered. The logistic issues are ultimately a supply chain problem. Therefore, a well coordinated supply chain can solve these issues. We will discuss the emergency supply chain in next section. 4. Information Management and Emergency Supply Chain 4.1 Information Management Many reports on disaster relief indicate that the lack of accurate information is a major issue (McEntire 1999, Anonym 2003). There are many parties involved in disaster management or disaster relief such as federal government, state government, local government, non-profit organizations, private or public donors, and the coordination of the information exchange between these different parties is critical. Some private or public business sectors would like to provide products and services. For example, grocery stores would donate food, clothes or medicines. Trunk companies would help in the delivery of donations to specified destinations. This information should be matched with the requests from victims or other parties of disaster relief organizations in a timely and efficiently manner. Figure 1 illustrates the complexity of information exchange in a disaster management process. We only use four major parties as an example. In reality, there are multiple entities following in each category. Figure 1: Information Flows between different parties Government Agency Private business sector Non profit organization Donation warehouse Figure 2 is proposed a centralized information system which capable of keeping consistent information available to the system in a timely fashion and reducing redundant information. A similar idea has been in use, i.e. DRI set up a call center to provide information on available medical and pharmaceutical services (EFI 2006)

7 Figure 2: Centralized information system Government Agency Private business sector Information exchange center Non profit organization Donation warehouse A permanent system, as opposed to a temporary one for each event, should be developed for collecting information for any potential disaster. Some computer or software company may volunteer to help on that. Each donor company indicated what order it would fill, avoiding duplication or delay. IBM got to work on a computerized job bank to help place those who'd lost work. The American Trucking Association set up a Web site to update everyone on road conditions. (The Wall Street Journal Online 2005) 4.2 Emergency Supply Chain The large supply chain issues are extensions of local logistic problems. An efficient supply chain is critical when responding to natural disasters (Hudson 2004). Joseph Bonney (2003) stated that the ultimate logistics challenge is improving the supply chains of humanitarian-relief organizations that deal with the aftermath of earthquakes, hurricanes, droughts, wars, and other natural and man-made disasters. The supply chain response to increased demand during disasters, i.e. hurricane, earthquake, can only be met with an efficient, well planned supply chain process. Day (2006) proposed an agent-based supply chain framework for disaster relief. This framework includes the following five functions: 1) classification of relief functions, 2) resource allocation of agent functions to client needs, 3) organization communication and coordination, 4) command, planning, control, and evacuation, and 5) fostering inter-organizational culture for coordination. The suggestion in this study is an Emergency Supply Chain (ESC) which is formed quickly and responds quickly. In an ESC, all parties may not be able to recognize other partners because ESC is formed randomly by private business entities, donors, non-profit organizations et al. Under a critical disaster situation, a central information system is essential as discussed previously. In disaster relief, the eventual purpose of the ESC is to deliver the right products and services to the right people or destination at the right time. Cost and information confidentiality are both secondary. This makes the quick setup and quick response of an ESC possible. The availability of and requests for information on products and services are stored in the central information system suggested earlier in this study. Two or more matching parties will be informed by the system. Day s (2006) framework has this functionality. Similarly, the International Federation in

8 Switzerland has developed new custom-built software, the Humanitarian Logistics Software (HLS), which will provide this type of information throughout the supply chain. It is the very latest in logistics technology, a web-based system that will take all the current processes and connect all steps of the logistics chain, from the launch of an emergency appeal through procurement, donations, warehousing and distribution to beneficiaries. HLS will standardize and automate the relief mobilization process, providing more control and visibility (IFRC 2004). Katrina C. Arabe (2001) also suggested building an emergency proof supply chain, which is not only for disaster relief but it has this function by orchestrating the supply chain using a webbased communication tools (Arabe 2001). In operations management, when companies design their conventional business and operation processes, the objectives are lower cost and increase benefits. Just-in-Time (JIT) manufacturing technology is normally used, in order to accomplish these objectives. In addition, lean inventory is maintained. Nevertheless, in a disaster situation, the conventional JIT methodology is completely inadequate. In addition, in the long term, redesigning the supply chain and strengthening the coordination between supply chain partners are robust methods to prevent supply chain disruption including unexpected disasters, and have drawn attention from both academia and practitioners. Quick response to demand is the major concern when one considers redesigning the supply chain in order to respond to disaster disruptions. Transportation issues are also considered as a quick response problem when the demand for major highway access increases. Obviously highway capacity cannot be increased in a short time. Moreover, it wasteful to design the highway for heavy traffic during disaster evacuation, and additionally, it is unnecessary. 5. Conclusions Unexpected disasters such as Hurricanes, earthquakes and terrorism etc have caused a huge damage to various areas of the U.S. Although we cannot predict their occurrence, we can design a more stable, responsive system from the perspective of operations management. A set of recommendations concerning transportation management strategies and logistic system design that can help during unexpected disasters are presented in this study. In addition, this study has built a framework for further research. Although some methods have been proposed, they result in only temporary solutions, because the same issues reoccurred over and over again (Pielke et al 1999). There is not a systematic methodology for efficiently organizing all efforts for disaster management. This study suggests a permanent infrastructure for disaster management. The central information exchange module is the key. Almost all the case study references mention the importance of accurate information. The advantage of a permanent system is that every resource for disaster management can be prepared in advance. The efficiency and reliability of this proposed permanent system can be tested over time to avoid the unprepared confusion which occurs during critical periods. Because of the randomness of participants to the system, flexibility is also an essential property required. A system allowing everyone plug and play would be ideal. We will leave it to IT experts to develop the detailed system. References are available upon request from Qiannong Gu

9 APPENDIX A: January 1, December 31, major disasters declared in 29 years in 50 states, the District of Columbia and nine U.S. territories. Rank State Disasters Rank State Disasters Rank State Disasters 1. Texas North Carolina Connecticut 9 2. California West Virginia U.S. Virgin Islands 9 3. Florida North Dakota Micronesia 8 4. Alabama Michigan Colorado 8 5. Louisiana Indiana Marshall Islands 7 6. New York Nebraska South Carolina 7 7. Oklahoma South Dakota American Samoa 6 8. Illinois Kansas Guam 6 8. Washington Vermont Trust Territory of the Pacific Islands 6 9. Minnesota Alaska Delaware 6 9. Tennessee New Hampshire Nevada Mississippi New Jersey Utah Pennsylvania New Mexico District of Columbia Arkansas Massachusetts Wyoming Kentucky Arizona Rhode Island Ohio Maryland Palau Missouri Hawaii Virginia Oregon Wisconsin Puerto Rico Iowa Montana Georgia Idaho Maine North Marianas