Exclusive: To do nothing is no longer an option

Three year old Pascaline lives in a village in Rwanda.

She was diagnosed with Type 1 Diabetes when she was 12 months old, and spent a year in hospital.

She is now cared for by a local health centre, but without the supply chain providing her with insulin and monitoring, she will die.

President of the International Diabetes Federation (IDF) professor Martin Silink told the 2008 Supply Chain Business Forum that Diabetes is becoming an epidemic, with global cases expected to hit 380 million in 2025. This is up from 246 million in 2007.

The worldwide expenditure on Diabetes in 2007 was US $232 billion. In 2025 it’s predicted to reach US $302 billion.

With 70 per cent of cases in developing countries, Silink told the invitation-only panel addressing the rise of the humanitarian supply chain, that Diabetes is more than ever a disease of poverty.

Despite this, over 70 per cent of the world’s Diabetes related health care costs are spent in the more advantaged nations.

“In many developing countries the most common acute complication of Diabetes in childhood is death,” Silink says. “These deaths are all preventable. To do nothing is no longer an option.”

According to international humanitarian logistics consultant and panellist Michael Whiting, the Indian Ocean Tsunami of December 2004 proved beyond doubt that logistics is a vital component of humanitarian aid.

“Every year 250 million people are affected by natural disasters and a further 45 million people by the devastating effects of armed conflict,” Whiting says.

“The 21st Century has brought with it earthquakes, tsunamis and volcanic eruptions and the indication are that disasters are happening more frequently and often several at once.”

“In general, however, humanitarian organisations are probably about 15 years behind their private sector counterparts, who realised a long time ago the importance of efficient supply chains, particularly given the increasing opportunities to ‘go global’.”

A challenge facing both commerce and humanitarian agencies is identifying, recruiting, training and retaining logistics personnel of the right calibre.

“For most agencies high employee-turnover rates, fragmented technology, poorly-defined manual processes, and lack of institutional learning over time result in relief operations that are not as efficient or effective as they could be,” Whiting admits.

“The bottom line is that relief to the vulnerable is then either delayed or delivered with reduced effectiveness.” Michael Whiting believes that as a result of its perceived lack of importance, humanitarian logisticians in many organisations do not have the competence required to handle complex emergency situations.

“Humanitarian logistics fails to attract the required level of funding and support to provide adequate relief efforts around the world,” he says.

“In some organisations such as IFRC, WVI, UNHCR, UNICEF and WFP there are several excellent, formally trained logisticians who happen to work with organisations that offer them job security, good pay and recognition. But this is not the norm.”

“All too often humanitarian operators have no option but to work with essential staff only, offering, in most cases, employment packages that fail to attract suitably qualified staff to support services roles.

They are forced to work without any rolling stock and the information management systems they desire.” Whiting points to the focus on short-term direct relief as a pattern that discourages investment in the very systems and processes needed to reduce expenses and make relief more efficient in the long run.

“This often results in logistics and other support services not having adequate funding for strategic preparedness and infrastructure investment such as information systems,” he says.

“In this context donors are the problem. The fact is that donors generally do not fund planning activities, they fund programmes. This situation shows sign of changing, but the change is slow.”

“Until donors are prepared to contribute funds to logistics contingency planning and infrastructure there will be little change.”

Whiting argues that improvements to logistics and supply chain management performance will enable the significant savings required to fund logistics infrastructure improvements, which in turn will enable further efficiencies.

“It is an accepted fact that in emergencies, supply chain costs can represent up to 35-45 per cent of the total cost of business operations,” he explains.

“Normative state operations however are in the order of 15 — 20 per cent with indications in 2007 that the average cost in Europe came closer to 10 per cent of the total cost of business operations.

This represents a huge spread of between 20 — 25 per cent of the total cost of business.”

In 2005, an estimated US $18 billion was raised by the international community and public donations for humanitarian assistance against an estimated US $10 billion raised in 2000.

Allowing for the Iraq/Afghanistan (2003) and Indian Ocean Tsunami (2005) spikes, humanitarian aid levels reveal a steady upward trend.

“Judicious use of best-practice and cutting-edge supply chain management practices presents a potential cost saving by closing the gap between emergency response supply chain costs and normative-state supply chain costs,” Whiting says.

“The margin is 20-25 per cent of total business costs which in the case of humanitarian aid is US $ 7 billion; 20-25 per cent of this figure is US $1.4 -1.75 billion per annum.”

“A determined drive to affect even 1 per cent saving across the board would yield between US $140 and $175 million per annum; figures that should galvanise the most jaundiced donor or aid agency official.”

World Vision is one aid organisation that in 2006, served more than 100 million people in 97 nations including 3 million children.

A respected non government organisation (NGO), World Vision raised US $2.1 billion in cash and goods for its work in that year.

“World Vision director of Global Supply Chain Management and panellist Gerard de Villiers agrees the lack of supply chain management skills within the organisation presents a considerable challenge.”

“In 2006, World Vision’s Tsunami response was definitely hampered by inadequate supply chain management expertise at all levels,” he says.

“The organisation needs to develop better supply chain structures with defined roles and responsibilities.”

“Problems were also caused by communication difficulties and lack of visibility,” he adds.

“The lack of a Non-Food Item tracking system led to the adoption of the Commodity tracking system with less than ideal results.”

“Inadequate understanding of WV policies resulted in some inappropriate procurement decisions and a failure to take advantage of outsourcing opportunities.”

Despite this, de Villiers points to successful partnerships with local merchants and air and sea freight carriers that ensured supplies were available, and that prices were fixed.

“Having supply chain management expertise on the ground was a big positive,” he says.

“The establishment of a central warehouse helped ease local supply chain delivery issues, enabling us to make good use of food commodities, gifts in kind and non-food items.”

Gerard de Villiers asserts the involvement of numerous parties in emergency response poses one of the most significant challenges to the coordination and efficiency of aid.

The experience of Logistics Recruitment’s group managing director and panel chair Kim Winter attests to this observation.

Winter, who took it upon himself to play an active role in the private sector response to the 2005 Tsunami has been recognised by the UN and the Sri Lankan government for teaming up with DHL, Dexion and Toll Holdings to deploy a team of logistics specialists during the Columbo airport heavy-lift operation, which enabled essential supplies to reach victims of the disaster.

While he approached the project with hard-edged capability, Winter says humanitarian supply chain management comes down to either saving lives or counting bodies.

“I contacted 42 NGOs to offer my services in recruiting logistics and supply chain expertise to the region,” he says.

“Not one of them responded.”

Winter was eventually contacted by the World Economic Forum Disaster Recovery Team who asked him to lead Australia’s Tsunami response.

He’s recently been invited to represent the Australian supply chain sector to establish enhanced protocols for best practice operations during sudden onset humanitarian disasters.

Michael Whiting argues collaboration and coordination has improved since the tsunami crisis and the subsequent recovery and rehabilitation program.

Implementation of the findings of the Humanitarian Response Review (HRR) in August 2005 led to the introduction of a new approach: the cluster concept.

In the cluster concept, individuals from a variety of organisations work together as a group to share information rather than functioning as ‘silos’ through their organisations alone.

“The very introduction of the clusters at field and headquarters level has brought about closer coordination and collaboration between UN agencies themselves, between UN agencies and NGOs, and between NGOs,” Whiting says.

In 2005 recently published studies show that between 48 and 58 per cent of all known humanitarian funding flowed through NGOs.

“However, the HRR, from which the cluster concept evolved, is still seen by many as a creature of the UN,” Whiting says.

“Cooperation between organisations in a meaningful way exists and is increasing, but without the substantial buy-in of a larger number of NGOs and inter-government organisations the efficacy of the cluster approach will be limited.”

“A major issue that arises again and again is the seeming inability of the humanitarian world to learn from past experience,” Whiting observes.

“The intensity of relief efforts, high staff turnover (as much as 80 per cent during the response to the Indian Ocean Tsunami 2004) and the crisis-orientated nature of disaster response creates an environment in which there is endemically a lack of institutional learning.”

“Post-crisis, aid workers are immediately assigned to the next mission, leaving no time to reflect or focus on possible improvement.”

“There’s also a reluctance to collaborate and share information, which results in the inability to systematically learn from mistakes from one disaster to the next.”

While there’s no silver bullet, panellists believe dynamic alignment is an essential first step to bring about an improvement in the delivery of appropriate and timely humanitarian aid.

“Dynamic alignment is vital to aid effectiveness,” Whiting says.

“Beneficiaries, the United Nations, NGOs, development and implementing partners, together with other stakeholders must embrace the same humanitarian relief principles and objectives and agree to work together to effectively assist in emergency and humanitarian disasters.”

Held at the Sofitel Hotel in Werribee, Victoria, the 2008 Supply Chain Business Forum was hosted jointly by the Institute for Logistics and Supply Chain Management at Victoria University and Macquarie University.

The next Forum is scheduled for 2010.

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