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«F RO M L O G I S T I C S T O S U P P LY C H A I N M A N A G E M E N T: T H E P AT H F O RWA R D I N T H E H U M A N I T A R I A N S E C T O R TA B L ...»

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F RO M L O G I S T I C S T O

S U P P LY C H A I N M A N A G E M E N T:

T H E P AT H F O RWA R D I N T H E H U M A N I T A R I A N S E C T O R

TA B L E O F C O N T E N T S

INTRODUCTION

The Scope, Importance and Challenge of Humanitarian Logistics 2

The Humanitarian Context

HUMANITARIAN LOGISTICS: CORE CHALLENGES

THE PATH FORWARD

CONCLUSION: LEARNING AS THE BASIS FOR STRATEGIC CONTRIBUTION

APPENDIX Case Studies on Humanitarian Logistics Articles on Humanitarian Logistics By Anisya S. Thomas, Ph.D.

Managing Director, Fritz Institute and Laura Rock Kopczak, Ph.D.

Copyright ©2005 Fritz Institute

INTRODUCTION

O n December 26, 2004, the earthquake in Sumatra and the destructive Tsunami that it unleashed riveted the attention of the entire world. Each day for the first two weeks, the toll of the dead and missing crept higher and heart-wrenching stories of devastated families beamed into the living rooms of people in every country. The response was immediate and unprecedented amounts of relief money were collected.

While the drama unfolded on television, the disaster relief infrastructure at the local, national and international levels sprang into action. Volunteers from the affected communities began to clear the dead, and relief agencies began to provide food and shelter to those made vulnerable. International relief agencies activated their assessment teams, and supplies to provide the basic necessities to large numbers of people across a broad geographic span were ordered and transported from locations around the world.

Unfortunately, disaster relief is and will continue to be a growth market. Both natural and man-made disasters are expected to increase another five-fold over the next fifty years due to environmental degradation, rapid urbanization and the spread of HIV/AIDS in the developing world. According to the Munich Reinsurance group, the real annual economic losses have been growing steadily, averaging US$75.5 billion in the 1960's, US$138.4 billion in the 1970's, US$213.9 billion in the 1980's and US$659.9 billion in the 1990's.

One of the notable aspects of the relief efforts following the 2004 Asian Tsunami was the public acknowledgement of the role of logistics in effective relief. In the immediate aftermath of the Tsunami, as relief goods flooded airports and warehouses in the affected regions, aid agencies struggled to sort through, store and distribute the piles of supplies while disposing of those that were inappropriate. In Sri Lanka, the sheer number of cargo-laden humanitarian flights overwhelmed the capacity to handle goods at the airport. Downstream, relief agencies struggled to locate warehouses to store excess inventory. In India, transportation pipelines were bottlenecked. In Indonesia, the damaged infrastructure combined with the flood of assistance from the military representatives from several countries and large numbers of foreign aid agencies created a coordination and logistical nightmare. As a European Ambassador at a post-Tsunami donor conference said, “We don't need a donors conference, we need a logistics conference.”1 Similarly, a spokesman for Doctors Without Borders, announcing their decision not to accept any more money for the relief operations, said “What is needed are supply managers without borders: people to sort goods, identify priorities, track deliveries and direct the traffic of a relief effort in full gear.”2 Humanitarian logistics, the function that is charged with ensuring the efficient and cost-effective flow and storage of goods and materials for the purpose of alleviating the suffering of vulnerable people, came of age during this Tsunami relief effort.

Our research has shown, however, that only a handful of aid agencies have prioritized the creation of high-performing logistics and supply chain operations. For most aid agencies, environmental factors, such as the unpredictability of disasters and the nature of funding, have resulted in operations with high employee-turnover rates, fragmented technology, poorly-defined manual processes, and a lack of institutional learning over time. As a result, relief operations are not as efficient and effective as they could be and relief to beneficiaries is delayed or reduced.

New York Times, January 6, 2005.

Economist.com Global Agenda, January 5, 2005.

1 Understanding Humanitarian Supply Chains This paper provides background on the current state of logistics in the humanitarian environment and the factors that have limited the evolution of knowledge and the performance of supply chains for humanitarian relief. We consider the external pressures that aid agencies are feeling from donors, local humanitarian organizations, governments and corporations, as well as the internal limitations that have impeded progress in logistics. We then recommend five strategies that together define a path forward for aid agencies with regards to logistics.3 The Scope, Importance and Challenge of Humanitarian Logistics Humanitarian Logistics is defined as 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 clearance4.





Humanitarian Logistics is central to disaster relief for several reasons. First, it is crucial to the effectiveness and speed of response for major humanitarian programs, such as health, food, shelter, water, and sanitation. Second, with procurement and transportation included in the function, it can be one of the most expensive parts of a relief effort. Third, since the logistics department handles tracking of goods through the supply chain, it is often the repository of data that can be analyzed to provide post-event learning. Logistics data reflects all aspects of execution, from the effectiveness of suppliers and transportation providers, to the cost and timeliness of response, to the appropriateness of donated goods and the management of information. Thus, it is critical to the performance of both current and future operations and programs.

The importance of logistics to humanitarian relief can be illustrated by the efforts of the International Federation of the Red Cross and Red Crescent Societies (IFRC) to provide assistance to the Indian Red Cross after the Gujarat earthquake. On January 26, 2001 a 7.9 Richter earthquake struck Gujarat, where 41 million people were preparing to celebrate Republic Day in India. Thousands of people were killed, the local airport was destroyed, the infrastructure severely damaged, and very little information was available in the early stages of the disaster. Nonetheless, within the first 30 days of the earthquake, along with the assistance of 35 partner organizations, the International Federation of the Red Cross's Logistics Emergency Unit arranged the delivery of 255,000 blankets, 34,000 tents, 120,000 plastic sheets, and large quantities of other items such as kitchen sets that were distributed to beneficiaries by the Indian Red Cross. More than 300 other global, national, regional and local NGOs and UN agencies similarly mobilized their staffs and resources.

Thus, the supply chain for relief is the ultimate sense-and-respond supply chain. Once a disaster occurs, an aid agency sends in a team of experts to complete an initial assessment of the extent of the damage and the number of people affected. The assessment forms the basis for an appeal that lists specific items and quantities needed to provide immediate relief to the affected populations. Emergency stocks of standard relief items are sent in from the nearest relief warehouses. Calls are made to traditional government donors and the public and commitments for cash and/or in-kind donations secured.

The views presented here are based on extensive research conducted by Fritz Institute over the past three years, including case studies, interviews and conferences with the leading humanitarian relief organizations, technology and process development with select aid agencies, and surveys conducted during the Tsunami relief operations in South Asia.

The definition and tasks of logistics was based on a Fritz Institute sector-wide survey of humanitarian logisticians from headquarters and the field that worked with a broad range of humanitarian organizations.

Understanding Humanitarian Supply Chains 2 Suppliers and logistics providers are lined up, and the mobilization of goods from across the globe begins. When supplies arrive, local transportation, warehousing and distribution have to be organized.

This is a tremendous feat to accomplish, given the remote places in which disasters tend to occur, the uniqueness of the requirements for each disaster in terms of both expertise and goods, and the fact that the disaster site is often in a state of chaos. Physical infrastructure such as roads, bridges and airports are often destroyed. National and local government, through which humanitarian organizations must often coordinate their activities, may be severely impacted, or even uprooted in the case of a conflict situation. Transport capacity may be extremely limited, or non-existent.

The Humanitarian Context Aid agencies are the primary vehicle through which governments channel as much as $6 billion in annual aid targeted at alleviating suffering caused by natural and manmade disasters5. Relief is, unfortunately, a growth market: the period from 1990 to 2000 saw total humanitarian aid from governments double in real terms from approximately $2.1 billion to $5.9 billion6. In the aftermath of the Tsunami, it is estimated that the aid budget might actually have grown to $12 billion. While the largest aid agencies are global in scale, there are also many smaller regional and country-specific aid agencies.

Most global aid agencies engage in a mix of development and relief activities on a large scale7. The 2004 budgets of the top 10 aid agencies exceeded $14 billion. Relief refers to the emergency food, shelter and services provided in the immediate aftermath of a natural or man-made disaster. An example of relief would be the initial 90-120 days of services provided by the various humanitarian organizations to assist the people affected by the Tsunami in December 2004. By contrast, development refers to the longer-term aid aimed at creating self-sufficiency and sustainability of a community. An example of a development program would be the Area Development Programs executed by World Vision India to feed and school children and teach women basic business skills in the slum areas outside Chennai in southern India.

Most international aid flows from the world's wealthiest countries to relief efforts in developing countries, although countries like India are now both donors and recipients of aid. Large governmental donors exert a strong influence over the sector, as they provide the bulk of the funding for major relief and development activities. Prominent among these donors are the United States and the European Union, whose contributions have represented roughly 33% and 10% of total humanitarian aid, respectively, in recent years. Other western European countries, Canada, Japan and Australia are also major donors to aid agencies in the business of responding to natural disasters and humanitarian emergencies.

In recent years, foundations such as the Bill and Melinda Gates Foundation, individual donors and the private sector have also become important sources of funds for aid agencies.

The international aid agencies receiving donations from this global community fall into three categories: entities operating under the United Nations’ umbrella such as the World Health Organization (WHO) and the United Nations High Commissioner for Refugees (UNHCR), international organizations such as the International Federation of Red Cross and Red Crescent Societies (IFRC), which operate as a federation with country offices that are auxiliary to country governments, and global nonFinancing International Humanitarian Action: A Review of Key Trends, Humanitarian Policy Group briefing paper, November 2002.

Financing International Humanitarian Action: A Review of Key Trends, Humanitarian Policy Group briefing paper, November 2002.

For purposes of this report, the focus will be on disaster relief in the aftermath of a natural disaster or humanitarian emergency. Although we acknowledge the critical importance of development, the dynamism and velocity of the relief scenario present specific exigencies which merit investigation.

3 Understanding Humanitarian Supply Chains governmental organizations (NGOs) like CARE and World Vision. NGOs also maintain country offices, but their offices are not affiliated with the country governments.

As Figure 1 indicates, the funding from donor governments to the populations affected by disasters in recipient countries flows through many different types of organizations before it reaches the end beneficiary.

Donations from each country are channeled through the international aid agencies to local partners in the affected countries. In most cases, it is these partners closest to the affected population and of the same culture that provide the relief services to the affected populations.

Two main external factors impinge on the growth and operations of international humanitarian relief organizations. First, the number of disasters and the number of simultaneous operations around the world are increasing, stretching the existing resources of the humanitarian community. It is clear that the sector as a whole has to find ways to become more efficient in order to be able to respond to the needs of ever-increasing numbers of people.



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