For many, Logistics has been the Cinderella of the Business World; far too often seen as no more than a support function for sales, marketing and production. This view has been transformed with technology and, globalisation. As Martin Christopher makes plain, supply chains compete not companies and this is an indication of the importance of the end-to-end integration of ever better, cheaper and faster flows of materials, information and cash beyond any single firm.
The Logistics and Supply Chain industry is a broadly based sector with widely fluctuating levels of investment, technology and, performance in vastly contrasting markets that are developed, developing or growing at high speed like Brazil, Russia, India and China; then, beyond commercial markets dealing in profits or more inclusive added value there are humanitarian focussed supply chains dealing in lives saved.
On December 26th 2004 an earthquake, measuring 9.2 on the Richter scale, struck 240 kms off the coast of Indonesia triggered a tsunami and waves of up to 30 metres devastated over 800 kms of coastline around the Indian Ocean. Over 230,000 people were reported dead or missing; over 500,000 were displaced and over $500 million was raised to deal with the Emergency and, build back better. In 2005, another earthquake in Pakistan wrecked an already fragile economy. An estimated 86,000 died and 33,000 buildings collapsed leaving over 4 million homeless. In Sichuan, China in 2008 another earthquake collapsed over 5 million buildings and wrecked 53,000 kms of roads and 48,000 fresh water pipes. Over 90,000 people died and over 5 million people were left homeless. And in Myanmar in the same year a cyclone that was forecast by an agency that had been set up post tsunami led to many thousands of lives that could have been saved – had the military Junta allowed Humanitarian agencies to help out. And this year we have seen an earth quake in Haiti and another in Chile that have devastated (see elsewhere on this Blog) the local economy. We can add another set of grimmer tales from war zones where all types of connectivity are ruptured and vital supplies of food and medicine are unable to reach those who need them most – without the aid of Humanitarian agencies and the logistics skills that enable them to respond to an emergency and move in to pick up the pieces.
Humanitarian Logistics is not measured by better, cheaper and faster routes to market for all manner of packaged and industrial goods; it is measured in lives saved and, increasingly, the ability to get a ravaged and dislocated economy back on its feet fast. No two emergencies are alike. For example, Afghanistan is not Iraq. Where Iraq was a modern society with significant urbanisation and a centralised state that could be reconstructed; Afghanistan had few such building blocks in place. In the same way, Chile has been a fully functioning economy for years before the earthquake struck whereas the task for the Humanitarian effort in Haiti was much more than getting the economy back on its feet. As Paul Collier pointed out – Haiti has never been on its feet in the first place. These factors are understood way before any disaster hits. Does this guide our actions and make our response any more effective and efficient?
Logistics in the Developed world costs between 5 to 8 per cent of most products; this figure rises to over 13 per cent in India and, in the case of Humanitarian efforts can be as much as 50 per cent of total cost; 70 per cent in some cases. We have established the fact that Humanitarian Logistics is measured in lives rather than straight costs but, in these increasingly uncertain times, the question remains – are we getting value for money? And, how can we improve the approach?
Considering the huge budgets that global emergencies eat up, a literature review of Humanitarian Logistics asks more questions than it answers. Peter Tatham and Karen Spens (2008) provide a useful taxonomy of the subject area and, Peter Tatham has worked with the CCHLI (Cardiff & Cranfield Humanitarian Logistics Initiative) to put together a useful Bibliography and the CCHLI itself – a group of well-seasoned Logistics and Humanitarian specialists – highlight the need to expand greatly research into this area. So much can be learned from an emergency however transient – about the level of vulnerability and resources available or proximate before anything happens; about the speed of response and impact and finally, how fast rehabilitation takes place and, the quality of recovery.
In simple terms, each Humanitarian initiative can be segmented into three generic phases: 1. Preparation 2. Response and, 3. Rehabilitation. Aside of phasing the process, we can learn more from other disciplines that deal with disaster or product recalls. For example, the military are well used to being on permanent alert and are highly effective at training throughout this phase. Many Humanitarian efforts do not have the resources to develop and sharpen response before the event. This comes down to money as, all too often, the CNN factor – the 24/7 news impact of a disaster – plays a role in generating funds to throw at the emergency. This means a donations feast or a cash famine for the lower profile event where media impact and not objective need is the key variable. Oxfam studies confirm that emergency aid arrives late and is determined more by media profile or political criteria than specific needs or, any notion of preparedness. Imagine your local fire brigade depending on donations for every intervention or dealing with those that vote in the approved way. This is not a recipe for effective and efficient response.
The Public responds to the emotional pull of an emergency and switches off at any notion of preparedness. This is where the military experience is worth learning from – operationally and from a budgetary perspective. I’d go further, few Corporations understand how much can be learned from these Emergencies and the ways in which markets are put back together or, created for the first time. As shareholders start to question any business with an overdependence on the slow growth of the developed world, the forcing house of Humanitarian logistics can be a fertile area to learn from – for branded goods in fast growing and developing markets and, bluntly, for Humanitarian Logistics itself.
It is said that there are more than 20,000 NGOs dedicated to Humanitarian efforts worldwide. In Pakistan in 2005 over 100 NGOs arrived within 2 weeks and, Couldrey & Morris (2005) suggests that 16 UN Agencies, 18 Red Cross and Red Crescent (IFRC) Federations were engaged with over 160 NGOs took a physical part in the post Tsunami effort. And Haiti witnessed over 700 interventions from assorted NGOs – a fact which Paul Collier described as a Zoo and hints at a huge challenge for Humanitarian Logistics. Too many cooks do spoil the broth and the Port au Prince airport soon became a bottleneck of unwanted goods. How much do we know about these factors and, what can be learned from each emergency that will translate into meaningful standards, policies and process procedures. For example, the plethora of forms used by different NGOs for their Needs Assessment Procedures and, the metrics used are causing increasing concerns. (Grant, 2007). As Hau Lee’s research demonstrates, we need to move from a better, cheaper and faster supply chain model to a more inclusive agenda of agility, adaptability and alignment – the three A’s. This means agility to respond to short term changes in demand or supply; adaptability to local context and, alignment with other operators or NGOs. All these factors in synchronisation can deliver improved performance.
Transformational Logistics can add significantly to this thinking and play a complementary role with Humanitarian efforts – especially in the preparedness first phase and, the rehabilitation in the third. Here’s a preliminary view on how:
1. Vulnerability and preparedness. What about developing the World Bank’s Logistics Performance Index (LPI 2010) to incorporate metrics that assess a given countries level of preparedness and, its ability to leverage regional support and, contingencies. For example, Haiti being able to avail itself of adjacent Santo Domingo. This is especially significant when we factor in conflict hotspots in Africa where 15 countries are landlocked and 20 states have more than 4 neighbours. Tanzania and Zambia have 8. Try borrowing milk from a next door neighbour whose house has just burned down or, whose inhabitants are being dealt with by social services. An expanded LPI could provide a vital insight into this area and place an emphasis on external contingency as well as internal structures, performance and monitoring. Witness the implementation of a Tsunami early warning system in the Indian Ocean post tsunami – ignored by the Junta in Myanmar as if to prove the point.
There are those who will reject this proposal in saying that you can’t predict an accident but, this is not entirely true. Risk factor analysis in other disciplines is well developed and, using geological, meteorological and governance criteria the LPI addendum – or another variation – can be adapted for purpose.
Transformational Logistics is a focus on emerging and developing markets – a halfway house between those countries on the LPI rankings with a modern logistics context and those at the other end of the scale characterised by a fragmented and traditional approach. Some markets will be opening up to global trade and need help and others will be developed but need to learn how to approach markets that are alien to their settled culture. So, an adaptation of the LPI can allow for a contingency geared to the state of logistics play going in to an emergency. This can be modelled and, management accounting can be integrated to ensure that levels of budgetary support are at least explored.
2. The Humanitarian Response. The impact of the Humanitarian effort is a function of the level of resources available and, the number of players who turn up. It has been observed above that there are fundamental differences between an Iraq and an Afghanistan; a Haiti and a Chile; a Pakistan and a New Orleans. The Edited book Rebuilding after Disasters (2010) is a valuable addition to the literature, highlighting the differences between disasters. In 2006, an earthquake rocked Pakistan leaving 73,000 dead whereas a similar scale quake had occurred in Los Angeles in 1994 and 60 people died. Earthquakes don’t kill people, houses do. And, if they are informally built on land that is not legally owned an Emergency becomes a disaster. Legal title in an Informal economy is a point raised here again by Hernando de Soto. “When nature challenges man’s ingenuity, one tool that everyone, including the poorest of the poor, should be able to reach for is legal property – essential for the creation of harmonious twons and communities capable of standing up to the forces of nature – and rebuilding afterwards, quickly, efficiently and fairly.”
“Build back better” says what it does on the tin. After an emergency, efforts deal with the immediate aftermath and then, turn to rehabilitation and sustainable growth. However, without title this cannot be done – In New Orleans, it was possible to salvage the land registry records and with this establish clearly who owned what and, where and this gave a huge lift to efforts on financing. In the Asian countries ravaged by the tsunami over 200,000 homes were washed away and, on the coastlines tycoons were able to move in and make a land grab that could not be contested – despite the fact that whole communities had lived there for decades. Then, there is the issue of skills available to achieve local regeneration.
Skills is a major concern of thinking on Transformational Logistics and, skills are a key factor in any Humanitarian effort – especially as localisation is a major factor in a sustainable solution. An emergency means giving the needy a fish to feed them for the day; we have to get ready to feed them for a lifetime. There is a major opportunity to build in to the contingency the sort of Skills Capacity Building network that has been mooted by several commercial businesses – see www.archomai.co.uk. After all, not everything associated with response and resolution has to be not-for-profit. There is room for more social enterprise in this domain and, there are many instances of trainees funding their own training – provided that the courses are fit for purpose; offer viable career paths and, carry a guaranteed global accreditation standard. The fact is that vocational training worldwide is in a mess and needs a radical overhaul. This is not the time for pilots on a small scale – this is the moment to harness technology and ramp up remote access learning; mobile phone enabled diagnostics and remote support. More of this later.
3. Rehabilitation after the Emergency. This is where Transformational Logistics comes in. As indicated above, many states that have been hit by disaster were dysfunctional before the disaster – a bit like Manchester city centre before the IRA bombings triggered a regeneration project that just had to be started. Others, like Chile, were performing well and those industries dislocated by the earthquake need to get back in the marketplace before competitors move in as viable substitutes. Consider the Chilean wineries that have built a serious export trade in an increasingly crowded global marketplace or, the alacrity with which Western Australian wineries are ready to pounce on the gap in Chinese imports of Australian wine – as South Australian competitors suffer from devastating drought.
Transformational Logistics could become a major catalyst for Humanitarian Logistics and post emergency rehabilitation perspectives. We live in uncertain times and, government budgets are under pressure. Perhaps a market led focus on the route to sustainable growth after the emergency is worth a closer look.
One area needs urgent attention – the informal economy. Elsewhere on this Blog we have made clear that more needs to be done to understand this phenomenon. It is not going away and, Haiti emphasises the point in the Humanitarian arena. Trawling the web; listening to the media and speaking to those on the ground the theme of the informal response comes over as a hugely important and much misunderstood component of the recovery effort. The response of twenty eight year old Sauveur Celestine is a case in point. Sauveur is now an unemployed accountant sleeping rough in the camps in the destroyed Presidential Palace. He lost his 3 year old son in the disaster and, these days, is re-building his life by recharging cellphones in the road using batteries from wrecked cars. He earns a few dollars a day; just enough to pay for food but, more importantly, the job keeps him focussed on his own life ahead rather than slump in despair. And yet, this job did not come from a headhunter or, from any government employment agency. It comes from a spirit of survival, vitality and ingenuity that more often than not in these situations comes from the informal economy – without which this situation would be far worse. The informal response offers local adrenalin in the humanitarian relief mix. Again, more needs to be done to understand this positive aspect of the shadow economy.
Transformational Logistics was inspired by Humanitarian Logistics and now, aspires to be part of the Humanitarian Logistics family. We have engaged with the CCHLI and already a dialogue has begun with HELP. We are hugely encouraged by the reaction to date and, will commit to being part of the push to build a more significant body of research and, sense that we can add value through greater engagement with companies seeking markets in the emerging and developing world. After all, pharmaceutical companies have products and services relevant to a market way beyond the emergency and, all manner of products need to learn how to adapt to the remote regions and less wealthy markets at the bottom of the pyramid.
We urge that the next major Conference on Humanitarian Logistics develops links with Transformational Logistics as a means to understand better post crisis recovery and, that Transformational Logistics can help in the effort to lift Humanitarian Logistics from being Cinderella’s even more obscure sister. After all, for so many communities who don’t yet know – it is five to midnight.