The worst floods in Pakistan’s history have affected at least 14 million people. Some 1,500 people have been killed to date; 1.4 million acres of crop land has been flooded; 10,000 cows killed; roads and power supply networks have been shattered and, food will be needed for 1.8 million people for the next three months at least. There is a serious threat from water-born diseases and cholera in particular. Pakistan is facing weeks, months and years of need. Sadly, major disasters like this and others such as in Niger occur frequently in the developing world where vulnerability is high, resources are limited and, all too often build back does not mean build back better. In other words, infrastructure and buildings are re-built piecemeal, cheaply and, not always to a standard resilient enough to the next calamity. To improve response to such disasters, Humanitarian agencies are developing tools to assess vulnerability and prepare regions at risk with the resources and know how to respond more effectively and efficiently to hurricanes, monsoons, droughts and volcanoes.
In Humanitarian Logistics terms each disaster has three core phases: preparation and readiness; response and, rehabilitation. Here, we look at how vulnerability is assessed and the impact this has on response. Then, we explore what happens after the weather or the rubble clears and, highlight the potential for Transformational Logistics to be a catalyst throughout the rehabilitation phase to deliver livelihoods, self-sufficiency and, sustainable growth.
Since 1993 the World Disaster Report has been published annually; bringing together the facts, trends and analysis of all sorts of global disaster with an average of more than 200 million people affected each year. After a catastrophe people are not only left without food and shelter. They lose fuel, tools, livestock, seeds and all forms of connectivity and market access – as well as clinics, schools, roads, bridges, water and power. Above all, their livelihood has been shattered and the ability to put this back together depends mostly on whether the disaster takes place in a developed or a developing economy. In a developed economy insurance is likely to be in place and resources ready to react. Elsewhere, the poor are likely to have lost everything. People who are living on less than $2 a day now face weeks with no income and, no nest egg to fall back on. If they are in rural areas can they will make their way to the cities and end up in the shanty towns and this will swell already crowded areas.
According to one UN Report, one billion people live in shanty towns; 40 of the fastest growing cities are located in earthquake zones and, 10 million people live under constant threat of floods. So, in Yokohama 1994 the UN agreed on an International strategy for Disaster reduction. Then, in 2005 in Hyogo, Japan, the UN’s International Strategy for Disaster Reduction undertook to build disaster mitigation into government. This strategy is designed to identify natural disaster risks, educate the most vulnerable, build response, capacity and, set up warning systems and embed resilience.
The fact is that those places affected by natural disasters are likely to be hit again. Mozambique is a useful example. In 2000 serious floods were featured in dramatic media coverage. History repeated itself in 2007 and 2008 but, the floods went largely unnoticed on the global media and, the death toll fell to 30 and then 6. This was due to the implementation of an EWS (Early Warning System). Every $1 invested before a disaster on preparation and mitigation strategies saves $4 afterwards. For example, China has invested an estimated $3.5 billion in flood control over the last 40 years and, saved the country $12 billion in potential losses and, disruption. Cuba and Bangladesh have developed their own EWS and Myanmar offers a tragic illustration of how hydro-meterological risks that were highlighted by International Agencies were ignored by the military junta in the recent floods.
Early warning systems are not new. The Indian Famine Codes were developed by the colonial British in the 1880s, were one of the earliest famine scales. These codes defined three levels of food security: near scarcity, scarcity and famine. Scarcity was defined as three successive years of crop failure, crop yields of one-third or one-half the normal. The Famine code monitored prices above 140 per cent of “normal” highlighting that this triggers the movement of people in search of food and, increases levels of mortality. This famine code was one of the first attempts to predict famine, and since they could predict it, they could also prevent it.
Hyogo delivered a Framework for Action 2005-15 which looks at vulnerability and offers strategic goals and priorities for action designed to improve resilience in the countries most at risk. This means an EWS that can identify, assess and monitor disaster risks and enhance the ability to respond. It is an important addition to the tool kit of Humanitarian Logistics which is made up of three core phases: 1. Readiness and Preparation 2. Response and 3. Rehabilitation and, can improve all three. In the same way as EWS improve Readiness and Response, Transformational Logistics could be developed to strengthen the third phase, Rehabilitation.
In recent posts we have identified three types of economy that logistics and supply chain thinking has to deal with:
- Transitional. Russia after the fall of Soviet Central Planning and, the disruptive impact of shock economic therapy.
- Dislocated. Iraq after the two Gulf Wars and the fall of Saddam Hussein.
- Devastated. Pakistan and Haiti after hydro-meteorological and geological disasters.
The impact of economic collapse, warfare and natural disasters differs according to specific pre-conditions. For example, as Paul Collier remarked on Haiti – the Humanitarian effort was not about getting Haiti back on it’s feet. It had never been on them in the first place. The same can be said of the Kurdish Region in Northern Iraq; Saddam’s regime having systematically destroyed the region’s capacity to thrive and so offer any threat to the Baath Party’s dominant position. And in general poor places have less resilience to these disasters.
The Irish Famine in the 1840s illustrates the point. When Mr Malone in George Bernard Shaw’s Man and Superman refers to the famine, he refuses to use the term – “when a country is full o’ food and exporting it, there can be no famine.” No recorded famine has killed a higher proportion of the population than the Irish Famine when, in four years, 25 per cent of the population of 8 million either perished or fled. The long term effects were equally catastrophic; by 1891 the population having fallen to 4.5 million. Malone’s point is well made and is valid through to the disasters of today. Food was being exported from Ireland to England because the Irish had lost the means to buy it and, on an open market, demand and higher prices could be earned elsewhere. In parallel, the means of distribution – the logistics – were in place. As the work of Amartya Sen demonstrates, the Bangladesh famine of 1974 actually occurred in a year of peak availability of food.
At the other extreme, the great famines in Post Revolutionary Russia illustrate how a Control Economy, the exact opposite of laissez –faire, can get things horribly wrong too. The Famines of 1932-3 were a failure in distribution following a drop in output not caused by a natural disaster but a man made one – the forced collectivisation of Agriculture. Using an early form of economic “shock therapy” the Bolsheviks abandoned traditional rural practice and forced through a modernisation programme based on the principles of F W Taylor’s Scientific Management (1911) – which was brilliantly satirised in Zamyatin’s novel We; a pre-cursor of Orwell’s dystopian 1984. Applying mass production techniques to agriculture ripped out the skills and human capital in place and, had the net effect of weakening permanently the Russian capacity to grow the crops, distribute and feed itself. Added to this, the drive to build up heavy industry accelerated the flight from rural areas. The lessons are clear – the Control economy can be equally destructive.
Back to Pakistan and other contemporary disasters. In Humanitarian terms, charitable donations can help with the response – the UK public raised over $80 million within days of the Pakistan floods hitting 24/7 news reports – and, the Hyogo Framework for Action can promote a culture of prevention and, reduce disaster risks through investment in mitigation strategies. However, as in the case of Russia and the shock therapy of the Washington Consensus, a government that has put its faith in open markets as a framework for sustainable growth; the rehabilitation phase of a Humanitarian effort will struggle to cope. We are not arguing that the British Government set out to starve the Irish to death but we know from various studies that there are ways to prevent famines if the Government gives due attention to potential risks. It is more effective to pay for house insurance than, have a whip round for the fire brigade as your house burns to the ground.
Transformational Logistics could be a catalyst for the third phase of the Humanitarian effort and, as an umbrella term to develop logistics relevant to emerging and developing markets.
NOTE. Much has been written about ALL of the following issues in a number of disciplines from Welfare Economics to Development Studies; Mainstream and Humanitarian Logistics to various Design groups. T L is an umbrella term and so, there is no pride of authorship. The key point is that pulling this know how in Emerging and Developing markets together can be a considerable benefit for all. For example, we champion the WB LPI as a vital piece of Base Data; Here we highlight Hyogo as another useful initiative and WIEGO on gender issues is key. We champion T L simply as a catalyst but one with an important task ahead – to focus logistics and supply chain thinking and practice on an exclusively Emerging and Developing World agenda.
There are a number of areas for enquiry. For example,
1. Top down (Policy level): This is where Global Organisations could pull together know how and examples from around Emerging and Developing markets.
- Bilateral Aid. Has this approach run its course? The last decade has seen a lot of aid but does it reach the target areas? In reality what we have now is a highly fragmented set of bilateral programmes. It is time to move away from commitments that are not linked to a coherent National Plan on the ground. A lack of accountability makes this worse. Look at what happened in Haiti: a series of country based Aid donations and, well over 700 NGOs. We have to move to a pooled donor approach that can be linked to a Plan; be transparent and, with simple metrics. At the very least this would halt the practice whereby a donor country offers Aid and then ties this to purchasing from donor country companies. Is this always the best way? In particular, does this deliver a localised solution contributing to future sustainable growth? And, this has an impact on the carbon footprint. We need to move to pooled, transparent and mutually accountable finance for ALL Aid programmes.
- Risk assessment. See the Post below: Transforming Global Risk assessment.
- Resilience and build back / build better. The ability of a community to respond and recover to a disaster is directly linked to resilient design and building standards that have been established in those areas designated as vulnerable. The UN International Strategy for Disaster Reduction has defined “resilience” as: “The capacity of a system , community or society potentially exposed to hazards to adapt … to reach and maintain an acceptable level of functioning and structure.” This includes the capacity to learn and apply lessons from previous disasters or, elsewhere. In particular, local leadership should focus “community wide” building initiatives as opposed to individuals building a shelter on an ad hoc basis that may (when aggregated with other individual initiatives) produce a built environment ill suited for any subsequent calamity. To build back should be to build better and, a community based approach builds scale and aggregate demand helps with discounted materials.
- Land grab. A Thai senator after the (Tsunami 2004) observed that many communities had spent years in disputes with developers. “Now, the tsunami has done their job for them”. The lack of legal title makes any authentification of ownership a virtual impossibility. What can be done to improve this situation? Can a form of land census be developed on an agreed frequency use satellite technology to establish a base and reduce unscrupulous transactions?
- Commodity pricing. Any region hit by disaster needs to be ready with food, medicine and shelter. However, there is disturbing evidence that commodity futures are becoming the new sub prime financial innovation and this carries serious risks. Volatility in food as well as fuel prices are significant and, potentially even more disruptive – with riots taking place in Italy when pasta prices increased and significant risks associated with rising wheat prices currently building momentum. We should not lose sight of the relative percentage of income spent on food by the poor versus the rest and, the impact of a fall in nutrition levels is serious in terms of health. We have seen the damage caused by a Bank crisis triggered by “value innovation” ignoring values. Commodities could be more calamitous than sub prime mortgages. It would be naïve to suppose that lightening does not strike twice and this needs to be understood better.
- Diversification of industrial base. This is especially significant for those economies with high dependence on oil and minerals. There is clear evidence highlighting the distortions that these resources can cause. First, there is the price volatility and, the potential for corruption. However, to diversify the industrial base is to work on sectors that may not have such huge returns. For example, Agriculture may have low added value but it will offer work and livelihoods to greater numbers and often in remote rural areas. Transformational Logistics could be the catalyst to develop inclusive value networks.
- Infrastructure. An infrastructure model that is based on what works in developed economies will not be fit for purpose or even affordable in the majority of developing markets. For example, there are a number of applications that can be used to make adequate road surfaces out of mud and binding solutions. Coca Cola use manual distribution systems in many African markets; refridgerated containers can be used as an interim cold chain and, mobile telephony solutions are used for connectivity where conventional landlines are too costly or, a legacy technology. More research is needed to explore what works in multiple market conditions.
- Retail banking services. Micro finance can raise the money for small loans but it is not a universal panacea. Given the rise in global population from 6 to 9 billion by 2050; the increase in urban dwelling to 70 per cent of this figure and, the dependency of most economies on entrepreneurship and
- Fit for purpose legal services. Legal title has been identified by many as a major constraint. Equally, legal process in these markets is lengthy and cumbersome – even corrupt. In India, arbitration practices developed in the UK are being used to speed up the process. What more can be done to tackle this serious constraint and, incentive for people and small firms to operate in the shadow economy.
- Skills training. India needs 500 million skilled workers by 2022. The current training capacity is no more than 3.1 million people per year and this will have to rise to over 40 million to meet the target.
- Investment in the market. The military and nation building effort in Afghanistan costs $5 billion per month. What price to set up and maintain sustainable markets elsewhere. Have we run the numbers?
2. Bottom up. (Supply Chain thinking and practice). This is where research and on the ground case studies can be collated and learnings help to shape a toolbox relevant to other Emerging and Developing markets.
- Asymmetrical supply chains. Few supply chains involve the latest technology and best practice from end-to-end. Typically, in Emerging and Developing markets product will be sourced from small scale farmers or, home based enterprises; aggregated by agents with value addition taking place far from source. Take coffee. In the 1980’s over 20 per cent of the price of coffee on a European High Street would be given to the farmer but, this has fallen to roughly 7 per cent now – value addition takes place in the developed world.
- Inclusive and ethical value chains. This is where more attention is paid to value addition closer to source and, a reduction in the role of agents leads to higher prices for the producers. Equally, an ethical dimension means that livelihoods are respected as well as the lifestyle of developed world consumers.
- Capacity building on the ground. The recent Haiti earthquake became a magnet for what Paul Collier called, a zoo of NGOs – with over 700 agencies shipping in materials and personnel. Moving from Emergency to sustainability will involve an emphasis on local skills capacity building.
- Aggregation of demand and market access information. Market access has been in the hands of local agents for centuries. Things are changing. Take the Kerala fishermen who use mobile phones to “auction” their catch whilst at sea. The price agree decides where they land their catch and this increases their margin; reduces waste and, reduces the price to the consumer. TVS, an Indian moped manufacturer has used the eChoupal network to sell their products into remote rural areas. This rules out the need for an expensive sales force that has to cover the territory. More to the point, this opens up a market that conventional supply chain logic would rule out. This is the market at the bottom of the pyramid.
- Green supply chains. Behaviour change on recycling is a serious challenge for the developed world. What is often ignored is just how effective recycling is in the emerging and developing world. For example, Dhravi, Mumbai’s well known slum generates business of up to $1 billion per year and recycles everything from plastic to oil drums. There is considerable scope to research how favelhas, slums and shanty towns operate. Many architects are using them as inspiration to combine living with working spaces and, reduce the need for commuting, carbon footprint and urban sprawl.
- Reverse innovation and design. Many companies are starting to understand that not only are there markets at the bottom of the pyramid but that creativity and design ability is thriving there too. The developed world can learn much more from emerging and developing world markets.
3. Impact: The Benefits Case. There is a need to measure impact beyond the better, cheaper and faster model. The triple bottom line of economic, social and environmental is more relevant to emerging and developing markets and each focus can generate hugely beneficial results. Economic impacts can include revenue generation for fresh markets and, a payback on innovative product design applied in the developed world. Social impacts can be measured in terms of skills and opportunities for females in the labour force. And environmental issues can be explored and deployed as part of the process. More research and pilot tests are needed to make this work.
The above is not an exhaustive list. However, it is clear that there is a huge gap in knowledge of asymmetrical supply chains and, the logistics and supply chain agenda in emerging and developing markets. Equally, there is much research needed to explore what happens to these markets as their fragility is further exposed by a natural disaster. We have seen how the Hyogo Framework for Action (2005) has acted as a catalyst to develop guidance on reducing disaster risk and, the impacts of disasters. It is time to develop a more coherent approach to transforming logistics when the floods and the rubble clear. The faster a functioning market and connectivity can be put in place the more assured sustainable growth will be. It seems short sighted to apply organisation and method to preparation and response in vulnerable markets and then, leave the future to the invisible hand. After all, even Adam Smith saw the need for an ethical and a prescriptive dimension in his earlier work – The Theory of Moral Sentiments.