Last Mile Logistics for Disaster Relief Supply Chain Management: Challenges and Opportunities for Humanitarian Aid and Emergency Relief

Table of Contents

Table of Figures

List of Abbreviations

1 Introduction

2 Disaster Relief Supply Chains
2.1 Characteristics
2.2 Challenges and Problems
2.2.1 Lack of Recognition of the Importance of Logistics
2.2.2 Lack of Professional Staff
2.2.3 Inadequate Use of Technology
2.2.4 Lack of Institutional Learning
2.2.5 Limited Collaboration
2.2.6 Additional Challenges
2.3 Institutions that face the Challenges
2.3.1 Fritz Institute
2.3.2 Humanitarian Supply Management System
2.3.3 United Nations Humanitarian Response Depot

3 The Last Mile as a Part of the Disaster Relief Supply Chain
3.1 Characteristics
3.2 Problems and Challenges

4 Optimization of Last Mile Distribution in Disaster Areas through Business Approaches
4.1 Use of Intelligent Transportation Systems
4.2 Supplier – Buyer Alliances
4.3 Third Party Logistics Providers

5 Conclusion and Perspectives

References

Appendix

Table of Figures

Figure 1 Explaning disasters (Source: Van Wassenhove, 2006)

Figure 2 A typical humanitarian supply chain (Source: Oloruntoba and Gray, 2006)

Figure 3 Humanitarian Space (Source: Tomasini and Van Wassenhove, 2004)

Figure 4 Structure of the relief chain (Source: UNDP Disaster Management Training Programme modified by Balcik et. al, 2008)

Figure 5 Relief Chain (Source: Thomas modified by Mizushima, 2004)

Figure 6 Relief Operation Life Cycle (Source: Beamon, 2004)

Figure 7 Flow Chart of Information and Goods Registered into SUMA (Source: Tomasini and Van Wassenhove, 2003)

List of Abbreviations

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1 Introduction

Due to the latest catastrophes caused by both man and nature, humanitarian logistics has received increasing interest from academics, practitioners and specialists. These interests are increased as well by an expanding market of disaster relief and by the fact that disaster relief supply chains are complex and dynamic, not to mention that they have a lot of uncertainties that make operations very complicated.^[1] Especially in disaster relief, the supply chains have to be fast, agile and flexible in order to rapidly provide the appropriate amount, and type of emergency supplies, to minimize human suffering or death.

The last mile distribution is the final stage of the disaster relief supply chain, i.e. the delivery of relief supplies from local distribution centres to beneficiaries affected by disasters. The main problems for the last mile are:^[2]

- Supplies have to be carried out rapidly in an environment with destabilized infrastructures
- Limitations related to transportation resources and emergency supplies
- Lack of coordination among relief actors
- Insufficient information about demand and need for help

To solve these problems, the private sector approaches of the last mile can be conducted and innovative technologies can be implemented.

The aim of this paper is to give an overview of supply chains in disaster relief, identify the main problems of the last mile distribution in disaster relief operations, describe optimization possibilities of the private sector, and examine the applicability for disaster situations.

In the second chapter we will give an overview of the entire disaster relief supply chain and point out the problems and challenges that are faced. In chapter three we will define the last mile model as a part of the disaster relief supply chain and explain the unique characteristics of this special type of last mile distribution. In the last part of the chapter, the problems and challenges of the last mile approach in disaster relief will be discussed. Therefore, we will point out the four main problems in the fields of the infrastructure, transportation, coordination and information.

In chapter four we will then present optimization opportunities for these problems. We will introduce optimization approaches of the private sector from the last few years and innovative technologies for future optimization. To conclude we will discuss how, and if, these approaches can be implemented to the last mile distribution in disaster relief and under which circumstances they can be.

In the last chapter we will conclude the paper and give a short outlook on further improvements as well as future research possibilities.

2 Disaster Relief Supply Chains

Humanitarian logistics occur in different phases and time periods to help an affected region or affected people after a catastrophe. Even if there are a lot of different stages for a disaster response there are two main streams of humanitarian logistics. The first one has impact on the immediate response after a disaster, the actual disaster relief. This period includes the preparation for disasters to respond and react as quickly as possible and the first days or weeks after the disaster occurred. Secondly there is the continuous aid work, like the reconstruction and development of a region or management of refugee camps.^[3] This paper will focus on the preparation phase and the immediate response after a catastrophe occurred, the disaster relief. Figure 6 in the appendix gives a better demonstration of the relief life cycle.

In the last years the humanitarian aid and therefore the disaster relief has expanded a lot. This is mainly caused by the increasing number of disasters and the increasing population on earth. The average number of disasters from 2000-2004 was 55% higher compared to 1995-1999 and 33% more people were affected by these disasters in the same time span.^[4] This trend is not supposed to stop. Over the next 50 years disasters both natural and man-made, are supposed to increase five fold.^[5] To meet the increasing needs of a working disaster response, a good supply chain setup must exist.

One reason why supply chain management and logistics are getting more attention in the humanitarian sector is because benefits from it were recognised and some best practices have shown the advantages. As one part of the supply chain setup, logistics have always been an important factor in disaster relief: logistics efforts can account for up to 80% of disaster relief.^[6]

But a disaster relief supply chain has some very specific characteristics and confronts a lot of special challenges and problems. In the following we will describe the uniqueness’s of a disaster relief supply chain.

2.1 Characteristics

Before looking at the characteristics of a disaster relief supply chain we will introduce the definition of the term supply chain . “A supply chain is essentially a network consisting of suppliers, manufacturers, distributors, retailers and customers. The network supports three types of ‘flows’ that require careful design and close coordination: material flows, information flows and financial flows”.^[7]

Effective supply chains in the humanitarian as well as nowadays private sector have to “be able to respond to multiple interventions, often on a global scale, as quickly as possible and within a short time frame”.^[8] These general requirements are facing complex problems of the unknown and unpredictability in the humanitarian sector. Logisticians in disaster relief operations don’t know when, where, what, how much, where from and how many times demand is required in the early days of the post disaster response.

These information depend on the type of the disaster, which can come up in very different ways. But disasters can be characterized with the following approach. On the one side one can differentiate between natural and man-made disasters and on the other side there are sudden-onset and slow-onset disasters. Figure 1 explains this segmentation of disasters and gives examples for each case. As one can see, wars are not an example of man-made disasters, since they are a category on their own and most organizations do not get included until the fighting didn’t stop.^[9]

As there are many different types of disasters there is not just one single supply chain setup, but many different and unique setups. Figure 2 shows an approach of a sequence for a typical supply chain.^[10] As one can see, private donations are not included in this approach. Mostly these types of donations go directly to the international or local organizations. But as private donations are often just disaster and operation related, for example after the Tsunami 2004 in the Indian ocean, they are really irregular and don’t finance most long-term, administrative disaster relief systems.

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Figure 1 Explaning disasters (Source: Van Wassenhove, 2006)

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Figure 2 A typical humanitarian supply chain (Source: Oloruntoba and Gray, 2006)

Even if there are many different types of humanitarian supply chains, all humanitarian organizations work for the same principles of humanity, neutrality and impartiality.^[11] These three principles define the ‘humanitarian space’. (Figure 3) This space occurs virtually and physically. Virtually the space gives humanitarians a framework for their decisions to make sure they remain within an ethical context. Physically the space provides a “zone of tranquillity” where civilians, non-combatants and aid workers are protected from battles and fulfil their operations. But as seen in media this protection does not always exist due to misunderstandings and confusion. An example would be a UN vehicle that got shot at a petrol station in the Iraq conflict presumably by an angry civilian who thought the vehicle was queue jumping.^[12]

One of the key characteristics for the complexity of a disaster relief supply chain is the number and diversity of stakeholders. First there is the public sector with governmental agencies, emergency relief mechanism and local authorities like the military. On the other hand there is the private sector with corporations, service providers, good suppliers and individuals. In between there is the international community and the large and small aid agencies. And finally there is the society at large, which is exposed to unexpected changes with the media as a special part, because it has an important impact on the private donations and the way organizations work during their operations, as they want to be seen in the media.^[13] All these stakeholders have to be coordinated and they often don’t work in a cooperative, but a competitive way. E.g., there is a big competition between the organizations for donations or supplies, which can have a negative impact on the operations or the way donations are spend. This competition can lead to increased prices of emergency supplies, due to increasing demand of organizations at the same time and limited available amount. As a result prices of supplies will be raised and donations will not optimally be used.

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Figure 3 Humanitarian Space (Source: Tomasini and Van Wassenhove, 2004)

Looking back at the characteristics of the disaster relief supply chain most academics agree that Lee’s Triple-A framework of agility, adaptability and alignment meets the requirements for an effective supply chain setup.^[14] According to Lee, agility is the “ability to respond to short-term changes in demand or supply quickly and handle external disruptions smoothly”. Furthermore adaptability is the ability to meet structural shifts in markets and alignment relates to the creation of incentives for better performance These three factors have to be met in disaster relief supply chains, because they must be set up and changed quickly under difficult conditions with the different needs and dynamic roles of the many players involved in the operation.

2.2 Challenges and Problems

As we pointed out through the characteristics of a disaster relief supply chain there are many challenges and problems the relief organizations are facing. In this section we want to give an overview of the most common challenges and problems. In the next section institutions that found and introduced solutions for their problems over the last years will be introduced.

Thomas and Rock Kopczak defined the 5 common challenges in disaster relief supply chains^[15], which we will examine in this paper. There might be additional challenges for some disasters that we will just describe shortly at the end. These have to be reviewed in other papers due to the limited length of this one.

2.2.1 Lack of Recognition of the Importance of Logistics

Logistics is the major part of disaster relief and therefore accounts for the most expenses of the operations. Accordingly, an effective supply chain setup could reduce expenses and improve the relief operations by far.^[16] This improvement would need investments in the infrastructure, systems and processes, such as information systems, that would have long-term improving impacts.

Still most funding is used for short-term, direct relief and front-line activities and just a small percentage is allowed for administration. This is not only a mistake by the organizations itself. The donors, private and governmental, want “their money” to have a direct impact on the disaster and not on a long-term help.

But also within the organization, logistics have to be more recognized. Still logisticians are excluded from a lot of decisions, which are done by the front-line staff that controls the budget. E.g., the assessment team, who determines the demand right after a disaster has occurred, often doesn’t include a logistician, who could anticipate and plan bottlenecks that are often necessary for delays in delivery of relief items.^[17]

2.2.2 Lack of Professional Staff

Many members and leaders of relief organizations begin their career with a background of social sciences, development studies or law, they want to resolve and do good in the world. They see themselves more as activists than professionals.^[18] Within the logistical staff, very few have corporate experience or professional training in logistics, even the staff with higher responsibilities. Their experience and position is achieved by trial and error in multiple disasters they have worked at. A survey revealed that 80% of the responding organizations had staff specializing in logistics and transportation duties, but only 45% had someone with formal qualifications in logistics, transport or related areas.^[19]

But expertise from the corporate world and “professionalization” is getting even more important as the humanitarian environment is getting more complex and organizations are struggling to find people who can manage the complex disaster relief supply chains.

While large organizations realized this need and changed towards a professional logistical department, in general this adaption is going really slow and field experience is still considered much more valuable for logistical experience. But standardized training is slowly implemented in organizations and seen by logisticians as directly linked to the performance on their job.^[20]

2.2.3 Inadequate Use of Technology

In the private sector use of technology has been implemented in nearly every category. IT systems are a key factor for global operations inside and in between companies and they helped decision makers to create new ways of efficiencies. In the humanitarian sector, the use of technology is still not common for most relief organizations and their operations.

A survey of the Fritz Institute showed that during the Tsunami in the Indian ocean 2004 just about one out of four logisticians had access to any tracking and tracing software and the majority was still working with manual processes or excel spreadsheets for updates and tracking of goods.^[21] In result, nearly half of the respondents stated that they received accurate and timely information about the supply flow.

Also communication systems and the use of the Internet could have a big impact, as the information flow inside an organization and the information flow to other organizations, donors, media and the outside world could be accelerated. This could have a big impact for the front-line workers, who would have on-time data that improves operations in nearly every aspect.^[22]

2.2.4 Lack of Institutional Learning

Reflection and the exchange of knowledge is one key factor for the improvement of supply chains and personal improvement. However, in the humanitarian sector this reflection is most of the times not done because aid workers are assigned to the next mission immediately after a crisis is dealt with.

Therefore lessons learned are commonly lost or remain just as a personal experience, which is not given to colleagues or the next generation. Additionally the humanitarian sector has an extreme high turnover rate of field staff. About 33% in average^[23] and up to 80% for field logistics leave their job after just one year^[24]. This high turnover rate, mostly caused by burnout, lets most experiences be lost, because leaving staff isn’t transferring their experience at all.

2.2.5 Limited Collaboration

Already in the 1990s relief organizations realized that multi-agency collaboration is of big importance for the common goal of aiding the relief community as a whole, even if each organization has it’s unique goal.^[25] But with the emerging competition for funding between relief organizations there is still little collaboration between them.

Even though organizations work hand in hand at some points during an actual disaster response operation, at the strategic level you will find less collaboration. E.g., at the Tsunami 2004 just over half of logisticians reported working with other agencies in setting up their supply chains.^[26]

Collaboration could be in form of sharing resources, equipments, knowledge, information or contacts. Additionally organizations could have partnerships in procurement to reach better prices for the supplies or in pre-positioning to share the costs of warehousing.

2.2.6 Additional Challenges

The five common challenges Thomas and Rock Kopczak defined can be extended by a variety of other problems. Here we will just point out a few.

Big problems for organizations are the characteristics of donations. Beside financial donations, that also can cause problems as mentioned before, there are often in-kind donations. When these donations are not handled with care and with fix set criteria, these goods can cause big problems and bottlenecks at the point of arrival or at the warehouses.

A second major challenge is the one of procurement and pre-positioning. According to the unpredictable demand and high costs pre-positioning can just be done in a small dimension. However, multi-national agencies are using pre-positioning at some strategic locations for being faster in disaster response.

Another big problem is caused by political and cultural reasons. Depending on the situation in a region, which might be affected by political or cultural conflicts, or the governmental structure, “foreign” organizations can face problems because they are subjects to the law of the country and bound to the governmental restrictions and willingness to accept aid. E.g., some governments may refuse aid, disallow relief workers to entry the country^[27] or the relief workers could face safety problems when battles in the disaster region occur.^[28]

2.3 Institutions that face the Challenges

There are many approaches to solve the problems and challenges we just described. Still the best approaches are not just from single relief organizations, they come from institutions that are aiming for single or multiple goals. Here we will present a short look at three institutions and their approaches.

2.3.1 Fritz Institute

From 2003 to 2008, the Fritz Institute hosted the annual Humanitarian Logistics Conference to create a community for professional logistics. The conference gave them the opportunity to share their knowledge and experiences with the aim to increase the recognition of logistics in the humanitarian sector. This conference was the first, and for a long time the only community of it’s kind and has now been followed by other conferences.

To take a look at the described challenges this conference helped logistics to get recognition by the entire humanitarian sector as the professional logisticians communicated their needs and thoughts with one voice. Another outcome was the “humanitarian logistics certification program” which teaches and trains principles of supply chain management in different stages to humanitarian logisticians and increases proficiency and expertise. Resulting there were a couple of initiatives and outcomes of this conference that are still running, which can be reviewed on their website.^[29]

Anyway, this example shows that professional communities can help to solve the challenges and foster collaboration between agencies, professionals and academics.

2.3.2 Humanitarian Supply Management System

The Humanitarian Supply Management System (SUMA) is a user friendly, easy to install and adaptable computer program that tracks and reports all goods from all parties. Designed as a small management system for medicines in Latin America and the Caribbean, SUMA has been enlarged and designed with inputs from practitioners, governments and emergency management specialists.

The software registers and tracks supplies through all stages of the disaster relief supply chain, from donation to storage and distribution. Through data collection and processing and the exchange over the Internet, SUMA generates reports to inform organizations, donors, media and beneficiaries.

Beside the software SUMA delivers a methodology that helps to label, prioritize, store and distribute goods. The use of this methodology and the software are managed and deployed by FUNDESUMA, an organization that assists in emergencies and trains local teams to be prepared and independent in the event of an emergency.^[30] The success of this system was seen in many disasters and was the basis for a international software, the “Logistics Support System”.^[31]

This example shows that adequate use of technology can support and help organizations and logisticians during disaster relief.

2.3.3 United Nations Humanitarian Response Depot

The United Nations Humanitarian Response Depot (UNHRD) is a network of five hubs around the world in strategic locations. These hubs hold stock reserves of emergency relief goods to support authorized relief organizations to respond to emergencies. Managed by the World Food Programme, the UNHRD provides the “use of the emergency response facilities and associated support services at a no-cost or cost-recovery basis”.^[32]

Through the positioning of the hubs the UNHRD is able to send relief items anywhere in the world within 24-48 hours. With joint procurement, special arrangements with suppliers guarantee the 41 authorized organizations preferential rates for a defined period of time. Other benefits can be seen on the UNHRD website.^[33]

This example shows how collaboration and a global umbrella organization can reduce costs and accelerate and improve operations on a global scale. The UNHRD helps in pre-positioning and procurement for relief organizations, which can rely on this partnership and help in emergencies way faster and more cost efficient.

[...]

^[1] Thomas and Rock Kopczak (2005)

^[2] Balcik et. al (2008)

^[3] Kovacs and Spens (2007)

^[4] IFRC (2005)

^[5] Thomas and Rock Kopczak (2005)

^[6] Trunick (2005b)

^[7] Van Wassenhove (2006)

^[8] ibid

^[9] Van Wassehove (2006)

^[10] Oloruntoba and Gray (2006)

^[11] Van Wassenhove (2006)

^[12] ibid

^[13] Tomasini and Van Wassenhove (2004)

^[14] Stapleton et. al (2009)

^[15] Thomas and Rock Kopczak (2005)

^[16] Thomas and Rock Kopczak (2005)

^[17] ibid

^[18] Gustavsson (2003)

^[19] Oloruntoba and Gray (2003)

^[20] Thomas and Rock Kopczak (2005)

^[21] Thomas and Rock Kopczack (2005)

^[22] Balcik et. al (2008)

^[23] Gustavsson (2003)

^[24] Thomas and Rock Kopczak (2005)

^[25] Beamon and Kotleba (2006)

^[26] Thomas and Rock Kopczak (2005)

^[27] Russell (2005)

^[28] Balcik et. al (2008)

^[29] Fritz Institute (2012)

^[30] Tomasini and Van Wassenhove (2004)

^[31] Logistics Support System (2012)

^[32] UNHRD (2012)

^[33] UNHRD (2012)