Earthquakes on multiple continents. Famine in drought-ridden countries. Hurricanes and typhoons in coastal regions, and flooding in remote, land-locked areas. When disaster strikes, any number of groups – from government agencies to non-government and voluntary organizations – respond.
But responding with financial aid is only one part – some would say the easy part – of the effort. Distribution and logistics of physical goods is where the true challenge lies, and those same organizations delivering that aid need their own form of it: managing a supply chain under desperate conditions.
Enter the American Logistics Aid Network and other logistics providers that are banding together to help. In the process, they’re utilizing new technologies to transform a once-grueling, labor-intensive process into something resembling a modern-day global supply chain.
The guiding principles for logistics deployed in disaster relief are similar to best practices in day-to-day supply chain management, said David Chinn, principal with McKinsey & Co.
After the January 2010, earthquake in Haiti that killed more than 230,000 people and left more than 1 million homeless, rescuers and volunteers set up an entire supply chain infrastructure within days.
Based on its work in Haiti and elsewhere, McKinsey identified seven key principles for managing logistics in disaster relief:
— Setting up a war room with a clear command and control structure.
— Focusing on reducing complexity.
— Investing heavily in last-mile logistics.
— Establishing structured processes to synchronize supply and demand.
— Proactively managing offers and donations.
— Establishing a system to gather and disseminate intelligence.
— Keeping an eye on emerging talent.
A clear organizational structure is critical for making decisions such as which donations to accept or reject, given extreme constraints. Non-government organizations, or NGOs, must manage relationships with any number of donors, their most important resource.
The biggest logistics challenge in disaster relief is the last mile. Streets can be flooded and roads and distribution centers destroyed. Critical medicine can be shipped thousands of miles only to be spoiled sitting in the sun as relief workers tend to victims.
In Haiti, storage, inventory and transportation capacity were overwhelmed by a tenfold increase in shipments. Volunteers who might not know a distribution center from a business park had to build warehouses. Storage depots were chaotic, with essential medical supplies buried behind low-priority items. Inventory management didn’t exist because all efforts focused on saving lives, leaving no one to track medication and supplies.
To synchronize supply and demand, staffers in Haiti triaged requests for aid. Clinic managers at remote sites sent in daily requests that were routed to designated staffers, who in turn sent daily flight reports listing the movement of planes and supplies.
Relationships are the pillar on which humanitarian aid rests. Conflicting NGO agendas, different interpretation of policies, and competition for donors and funding all can complicate relief efforts. Effective disaster responses rely on coordinated planning, actions and communications between NGOs, government agencies, logistics providers and other parties.
“The ability to leverage those skills and relationships to pull diverse elements together helps in disaster response,” said Kathy Fulton, director of operations for the American Logistics Aid Network, a consortium of more than 20 supply chain associations formed in the wake of Hurricane Katrina to encourage the supply chain community to support humanitarian relief efforts.
In many cases, contracts are based on who worked with whom the last time something happened, ALAN President Jock Menzies said. “The only way to know what is going on and to participate is to invest time with NGOs and the government agencies that interface with them,” he said
It’s a humbling experience for logistics providers to participate in disaster relief, said Frank Clary, project director for GCA transformation at global logistics provider Agility.
Aid groups always need more resources than their partners can provide. 3PLs are just one resource in the disaster relief tool kit, and far from the most important one. Clary has seen NGOs and voluntary organizations active in disaster, or VOADs, perform feats that hardly seem possible, such as setting up logistics, medical and food relief infrastructure within days, under the worst possible conditions.
“We couldn’t do it, but humanitarian aid groups do it all the time,” Clary said. “We learn a lot from them.”
Agility and express companies UPS and TNT participate in rapid response Logistics Emergency Teams, or LETS. The teams, developed in 2008 under the auspices of the World Economic Forum, work under the direction of humanitarian partners to deliver goods and services to disaster-stricken areas.
Through Agility’s Humanitarian & Emergency Logistics Program, the company has provided logistics support to organizations in 22 emergency response operations over the last five years. In 2009, the company donated warehouse space, seven trucks and 35 people to assist the United Nations in providing logistics services after devastating floods in Pakistan. After an earthquake in Indonesia in 2009, Agility dispatched volunteers to assist the World Food Program in establishing transport operations and a centralized, multi-use warehouse.
Agility trains its disaster-relief teams at various times throughout the year and is in close contact with its NGO and VOAD partners.
The UPS Foundation provides its four main NGO partners — Red Cross USA, CARE USA, UNICEF and the World Food Program — with support for capacity building and emergency response. It also works with many smaller partners.
Following the March 2011 earthquake in Japan, the foundation pledged $1 million in relief aid and another $1 million in cash and in-kind shipping for victims of the Haiti earthquake. Goods included high-energy biscuits, tents, water, personal hygiene kits, ready-to-eat meals, tarps, water purification systems, medical supplies and plastic containers.
In 2007, CARE approached the UPS Foundation for logistics help. Like many NGOs, CARE doesn’t have a core competency in logistics. When UPS got involved, a single person, a non-logistician, handled logistics.
UPS quickly determined that CARE needed not just more people, but an entire logistics group. Controlling logistics costs proved a challenge. In some instances, as many as 150 in-country offices operated worldwide, each managing its own procurement activities.
“It was a logistical nightmare,” said Dale Herzog, UPS director of humanitarian logistics.
At the program’s peak, at least 15 people worked in logistics. Progress was steady, but donations plummeted when the economy tanked. The program was terminated last July.
The UPS Foundation is researching a platform for aggregating procurement and logistics functions and standardizing processes and IT systems for NGOs involved in disaster aid and development. SUSTAIN Global Partnership would be the primary supplier of supply chain and logistics services to aid/development NGOs, allowing them to focus on their core missions and helping them avoid duplication of equipment and personnel, thereby extending donor resources through economies of scale.
Sustain GP employs a hybrid business model that seeks donations and investment capital as a nonprofit NGO and a for-profit contract organization. It has the backing of UPS, TNT, Booz Allen Hamilton, Accenture, the Georgia Institute of Technology and multiple NGOs. It’s basically a 3PL or 4PL model,” Herzog said.
Chinn is skeptical a 4PL-type model can work in the complex, competitive world of NGOs, which compete with each other for funding and donations, have different constituencies, support different things and often operate their own hospitals. “It’s hard to imagine a long-term coordinated approach,” Chinn said. “The whole operating model is to be independent from other NGOs.”
The growth of mobile technologies could change the face of disaster relief. Cellular networks are robust and tend to recover quickly after disasters. A combination of smartphones, GPS, bar codes and cameras adapted for disaster relief could provide a much clearer picture of inventories.
Chinn believes a handful of NGOs will emerge as dominant players in global disaster relief based on their ability to deploy technology. “The industry is preparing itself for a higher level of technology,” he said.
The recent challenge IMEC, a North Andover, Mass.-based nonprofit, faced provides a textbook example of the role logistics plays in aid efforts. The organization, which provides donated equipment to health care, agriculture and education projects in developing countries, was expanding the scope of its collection efforts to New York and New Jersey.
The challenge was to get the equipment from hospitals to IMEC’s 150,000-square-foot warehouse in Massachusetts, where it could be refurbished prior to shipment, at the lowest possible cost.
Relationship dynamics quickly came into play. ALAN’s Menzies referred IMEC to Welch’s, the Concord, Mass.-based food company known for its grape juice and jelly. Menzies and Dee Biggs, Welch’s director of customer logistics, were longtime friends from their days in Baltimore, where Menzies serves as chairman of The Terminal Corp.
Strategy sessions were arranged to draft an overall plan for pickups from outside the region. The meetings included Biggs and members of IMEC’s small procurement team. Challenges were plenty. The donated equipment was inside of hospitals rather than on loading docks, and much of it, including X-ray and radiation machines, had to be disassembled prior to loading. IMEC couldn’t afford to move anything less than a full truckload, Biggs said.
Today, IMEC moves thousands of tons of equipment each year. Between 2006 and 2009, it shipped four 40-foot containers carrying donated medical equipment and supplies to the 185-bed Gaspa Garcia Laciana Hospital in Rivas, Nicaragua.
As IMEC expands its humanitarian aid efforts, it has come to realize the importance of logistics. “It’s very important for us to have a well-run supply chain system to use our resources as best we can,” said Melissa Keefe, director of strategic collaboration.
Contact David Biederman at email@example.com.