In humanitarian organizations, the terms supply chain is basically used to describe the process of getting relief items from the source to the beneficiaries in a timely manner. The source could be suppliers as well as donors. And in some organizations, they used the terms supply chain and logistics both together to describe above mentioned process. Usually logistics also used to describe the function or division who is responsible for managing the process.
Basically, the nature of supply chain and logistics in business or commercial are essentially the same with humanitarian supply chain and logistics, the following are the significant differences:
- Unpredictable demand in terms of timing, geographic location, type of commodity, quantity of commodity.
- Short lead time and suddenness of demand for large amounts of a wide variety of products and services.
- High humanitarian stakes regarding timelines in the face of sophisticated global media and the high anticipatory attention of the donors.
- Lack of initial resources in terms of supply, human resource, technology, capacity and funding. (Source: Balcik and Beamon, 2008)
- Warehousing and inventory
Procurement is a key activity in the supply chain. The procurement involves the sourcing, purchasing and covers all activities from identifying potential suppliers of relief items and services that are needed to meet the needs of the beneficiaries. There are three important principles of humanitarian procurement:
- Transparency: all phases in the procurement process are fair and accurately documented.
- Accountability: accountability to donors who may require certain rules to be followed when using the fund/money that they have provided.
- Efficiency and cost effectiveness: meeting the six rights of supply: right price, right time, right quantity, right quality, delivery to the required places and from the most cost effective source.
The procurement function must guard and mitigate against risk, understand the market, build a trust relationship with suppliers, meet the needs in a timely manner, and constantly monitor performance to improve service provision.
In the humanitarian context, transport can be defined as the physical movement of relief items/goods from suppliers or point of origin to internal customers (in this case mainly is warehouse of humanitarian organization) or directly to the beneficiaries. The transport component in the supply chain therefore is critical in connecting supply to demand. The aim of transport in humanitarian context is to physically move the relief items/goods in a reliable and safe manner, on time, cost effectively and efficiently to its destination.
Transport mode will depend on several factors including:
- The type and volume of items/goods to be transported.
- The urgency that items/goods are required.
- The availability of different transport routes as well as different types of transport.
- The destination to which the items/goods to be transported.
- The cost of transportation.
- The terrain through which the items/goods need to be transported.
Warehousing and Inventory
The third main component is warehousing and inventory. Recently, some of the experts said that in the perfect supply chain we do not need warehouses in order to reduce costs. In the humanitarian context, clearly there are reasons why items/goods have to be stored and why we need warehouses. In the humanitarian supply chain, there are types of responsibility to manage warehouses, e.g. supplier warehouses, donor warehouses, humanitarian organizations warehouses.
Types of warehouse space:
- Transit warehouse
- Bonded warehouses
- Open storage
- Pre-fabricated warehouses – non permanent structure
The role of inventory management in humanitarian context is to ensure that stock is available to meet the needs of beneficiaries when required.
In addition to those three main components, there are several subsidiary activities in the humanitarian supply chain, e.g. assessment and planning, fleet management, customs etc.