CSCMP's Supply Chain Quarterly
June 18, 2019
Forward Thinking

Why should you become involved in the humanitarian supply chain?

Forward Thinking
In addition to the satisfaction and pride of being a good citizen, companies that participate in relief efforts can improve their own supply chain resiliency and discover new commercial opportunities.

It's easy to think of humanitarian relief organizations and private industry as different realms with different goals. To put it simply: One is focused on providing aid to those in need—no matter what the cost—and the other is focused on making money. But, as evidenced by a recent report presented at the World Humanitarian Summit in May, there's a growing awareness among relief organizations that the success of their supply chains depends on long-term partnerships with companies in private industry.

Private companies need to recognize that the reverse is also true. There is great value for them in participating in relief efforts both locally and on a global scale—and not just in terms of meeting their corporate social-responsibility goals or in being perceived as a good global citizen.

Greater resiliency

Time and again, research has shown that resilient supply chains and a robust risk management program can have a significant impact on a company's bottom line. (See, for example, Massachusetts Institute of Technology Professor Yossi Sheffi's work on the power of resilience in the supply chain.)

Many of the efforts that improve the success rate of humanitarian relief efforts, such as a strengthening transportation infrastructure and creating effective local emergency-response plans, also improve the resiliency of both local businesses and international ones that reach into that market.

"When disasters occur, it is the company's employees and markets that are disrupted. Supporting relief and recovery for their employees and communities (which are made up of their employees and customers) supports their own sustainability," said Kathy Fulton, executive director of the American Logistics Aid Network (ALAN), in an e-mail interview. ALAN helps private companies coordinate with nongovernmental organizations (NGOs) and government agencies to provide logistics services for relief efforts.

Stephen Cahill, Global Logistics Cluster coordinator for the World Food Programme, points to the examples of Hurricane Katrina and Superstorm Sandy, which disrupted the supply chains of hundreds of major companies in the United States. "Also think how a major pandemic could completely disrupt your supply chain if airports and ports started to restrict movement," he wrote in an email interview. "That is what happened in certain countries during the Ebola emergency, and it could be much worse if the pandemic had occurred in a country that is a major source of manufacturers' goods."

Some experts argue that it will become increasing important for supply chain professionals to be able to anticipate and mitigate these kinds of risks. For example, a recent report from the commercial insurer FM Global forecasts that climate change will cause an increase in natural disasters like extreme rainfall and urged companies to prepare for related supply chain disruptions.

Who better to teach private supply chain organizations how to prepare for and respond to disruptions than those who work on these issues every day? "The humanitarian community can help the private sector prepare, deal with, and react to emergencies better than anyone else," Cahill said.

ALAN, for example, has a disaster-simulation game that it presents regularly to supply chain operations as well as to government and nonprofit organizations. "The preparedness concepts are universal," Fulton said, "and the information-sharing issues that cause supply chains to break down play a big role in the game."

Indeed, employees who are involved in emergency-preparedness efforts will learn skills that can also be applied in the workplace, according to Fulton. "The coordination and collaboration skills inherent in any humanitarian operation are skills that make better employees and business leaders," she said.

Humanitarian relief organizations have a vested interest in working with local companies to strengthen their supply chain operations. "Risk management and operational continuity are important for the private sector but it's equally as important for humanitarian actors to ensure that we are ready to respond," said Cahill. "We also know that the longer the private sector stays operational in-country, the quicker the recovery and the lower the impact."

Fulton also believes in the symbiotic relationship between the private sector and the relief agency world. "If your business—and especially your employees—are able to withstand a crisis then you are first, reducing the volume of services that need to be provided by government and humanitarian agencies, and second, ensuring you'll have a workforce to keep your business operating," she said.

If these "softer" benefits are not convincing enough, there are also commercial opportunities to be found in the humanitarian realm. According to Cahill, humanitarian aid represented US $28 billion in 2015. Typically supply chain costs equal 60 to 80 percent of that amount, he says.

Companies that are involved in humanitarian relief efforts also have a chance to discover new market opportunities, according to Kathy Fulton. "Participating in humanitarian supply chain activities often reveals new challenges that require innovative solutions, which may spark additional creativity for a company's commercial activities," she said.

Where to start

For companies that are looking to take the first steps, there are several places to start. Fulton recommends attending emergency-preparedness events that are put on by local, regional, and national emergency management agencies as well as organizations that foster public-private partnerships. According to Fulton, by participating in such exercises and discussions, companies can learn about resources that are available to them as well as how they can help these organizations.

A few organizations and programs to consider include:

  • American Logistics Aid Network. This organization, which is based in the United States and has deep roots in the trucking and warehousing communities, supports disaster recovery by engaging industry to address the unmet supply chain needs of relief organizations, communities, and people.
  • Airlink. This nonprofit disaster-relief organization links airlines with NGOs and focuses mostly on air cargo and personnel movement.
  • The Connecting Business Initiative. Launched at the World Humanitarian Summit in May 2016, this program helps to get the private sector involved in a coordinated manner with the United Nations system, national governments, and civil society on crisis risk reduction and emergency preparedness, response, and recovery.
  • Lift. This not-for-profit logistics provider for NGOs responding to disasters has a network of freight forwarders, general aviation aircraft, and ocean vessels. Supporters include companies such as Damco, Kuehne + Nagel, and UPS.
Susan Lacefield is Executive Editor of CSCMP’s Supply Chain Quarterly.

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