SETTING THE STAGE
October 22-23, 2004
Hilton Sonoma County , Santa Rosa, California
The operations of many humanitarian relief organizations around the world are inadequate and poorly resourced. Fritz Institute seeks to leverage private and academic sector expertise to strengthen humanitarian logistics. One way to do this is through the annual Crossroads Conference. Crossroads 2004 provided a round table setting to facilitate a discussion among leaders in supply chain management of corporations and humanitarian organizations, as well as representatives of academia. Participants of this year's Crossroads Conference, held in Santa Rosa on October 22-23, looked at the question "how can the private sector share some of its expertise and lessons learned with the humanitarian sector in a non-intrusive manner?" They analyzed the challenges and opportunities the international humanitarian relief community faces today in disaster response. Further, the participants explored ways to apply logistics and supply chain expertise from the business community to help strengthen the capabilities of humanitarian organizations. Acting in a proactive fashion is especially crucial if it is considered that the number of annual natural disasters and humanitarian crises worldwide has tripled since 1970. In 2002 alone, 602 million people were affected by disasters. These events disrupt lives, destroy infrastructures, put the health and welfare of entire communities at risk, and cost the world billions of dollars. Humanitarian relief organizations are the primary vehicle for disaster relief in the aftermath of a catastrophic event.
The welcoming address by Lynn Fritz set the parameters for the conference proceedings. The purpose of the meeting was to first "set the stage of where we are in the world of humanitarian development." Then Lynn Fritz challenged the group to look at specific ways of how the business community can support the efforts of humanitarian organizations.
The goals for the annual Crossroads meetings are developed based on the expressed expectations and desires of the participants.
THE CONTEXT OF HUMANITARIAN ASSISTANCE
- The business representatives sought to learn more about disaster relief and how they can assist in improving the process.
- The representatives from the humanitarian sector wished to explore ways in which they could access the problem solving approaches and expertise of the private sector.
- The academics wished to explore how each of these sectors could benefit from the other.
Trends and Facts
Alan Court of UNICEF provided the group with a presentation and discussion of how the humanitarian sector evolved over the years. The major recent developments in the humanitarian environment are:
- The absolute increase in the number of natural disasters and the people affected by disasters.
- The increase of civil conflicts and the spread of civil conflict around the world resulting in increased numbers of refugees and internally displaced people.
- The shrinking of the humanitarian space due to the politicization of humanitarian assistance. As a consequence, security is a major factor as aid workers are targeted.
- The lack of capacity to transition from relief to development. The withdrawal of aid after a conflict or disaster often creates new problems in the communities affected.
In recent years, the community started to recognize the need to increase collaboration among relief organizations. The Inter-Agency Standing Committee was established in 1992 as a forum for coordination, policy development and decision-making. Members include the key UN and non-UN humanitarian partners. The UN Office for the Coordination of Humanitarian Affairs (OCHA) is another example of an organization established to increase cooperation. OCHA's role is to mobilize resources, assess the situation in an emergency and convene coordination forums. The UN Joint Logistics Council has been developed to optimize and complement the logistics capabilities of cooperating agencies within a well-defined crisis area for the benefit of ongoing humanitarian operation. In addition, there are a variety of information tools and services, such as ReliefWeb and the Integrated Regional Information Network.
Martijn Blansjaar of M�decins Sans Fronti�res Holland and Mark Haselkorn of the University of Washington led a discussion about the logistics challenges over the last years and the critical issues that are common in a disaster. Looking at humanitarian assistance, Martijn Blansjaar maintained that there is a "large underestimation of its complexity". In reality, disaster relief is highly complex and there are many obstructions that need to be overcome. In an emergency, there is oftentimes a total breakdown of infrastructure and society. Also, emergency relief as an "industry" is fairly young and only started in the mid-80s. Therefore, what is needed, are problem solving approaches and skills from the private sector and theories of humanitarian assistance management from the academic sector.
Mark Haselkorn stressed that a logistics person's function within an organization can be described as "the engine in a car." It is a good thing to think on one's feet, but at the same time it is also crucial to keep track of one's activities and foster coordination. He then noted that unfortunately very little has been done to measure the positive and negative impacts of an operation.
A possible way of addressing this is to apply the model of Fritz Institute, which has been used successfully:
HOW CAN EACH SECTOR COLLABORATE?
Application of Relief Practices for Business Community
Professors Hau Lee of Stanford University and Jo Van Nunen of Erasmus University provided an animated and engaged discussion on the things business corporations can learn from the humanitarian sector. For example, they illustrated how the flexibility and boundary scanning of relief organizations can be replicated in the business context to enhance supply chain security in the private sector.
Models of Engagement by Different Organizations
Crossroads addressed this by looking at various examples of public/private partnerships. Jon Olson of Intel, John Molzon of Solectron, and John Rickard of the International Rescue Committee provided the audience with an example of how "impartial and affordable advice" from business can make a difference within a clearly defined project. As Jon Olson put it: "We did not go in to tell them what to do. We helped them with problem solving skills." The objective was to achieve a significant reduction of procurement lead times. As a result, the IRC saves $200,000 in 2004 on rebates on vehicles alone. The IRC example showed how problem solving was at the forefront of the project.
Ludo Oelrich of TNT and David Morton of the United Nations World Food Programme discussed their successful partnership, which also uses expertise from the private sector to supplement specific operational aspects. The "Moving the World" partnership focuses on capacity building and hands on operational support, which currently includes 25 projects around the globe in five areas.
Similarly, Chris Weeks of DHL shared with the group information about the Disaster Resource Network (DRN). The DRN is an initiative of the World Economic Forum, created after the Gujarat earthquake in 2001. Its vision is to make it easier for businesses to offer talent or in-kind donations of goods or services for the emergency response phase of disaster relief and to ensure that corporate donations are delivered in a coordinated and effective manner.
Based on feedback from the last conference, Fritz Institute worked on a variety of initiatives to get better insight into disaster relief chains and to explore how they differ from commercial supply chains.
- Projects in two key topics, metrics and training, were launched in the form of supply chain assessments such as the IRC project and a training-certification survey and study for humanitarian logisticians.
- Public-private collaboration to create synergies and mutual goods: Fritz Institute is currently launching the "Corporations for Humanity". The program provides corporations the opportunity to fulfill their commitment to global corporate citizenship by supporting systemic change in humanitarian assistance while still minimizing costly corporate investments in time, relationship building and project management. Corporations contribute to a "project fund" managed by Fritz Institute, enabling corporations to effectively leverage their investment and receive maximum return on donation.
SPECIFIC IDEAS FOR ENGAGEMENT
Plan of Action
During the break out sessions, participants addressed the question of "How can corporations get engaged in mobilizing Corporations for Humanity?"
Corporations for Humanity offers corporations the opportunity to develop and fund critical humanitarian assistance projects while avoiding bureaucratic obstacles and excessive paperwork. Fritz Institute provides the staffing and expertise to guide the projects, and ensures measurable outcomes.
There was agreement that the groundwork has to be laid first in order to ensure a good fit between the humanitarian organization and the corporation. A corporation has to look at the following:
- What are the company's mission and charter?
- Is there a potential for mutual gain, for a win-win situation?
- What is the time commitment and what are the expected outcomes?
- Financial commitment versus resource commitment
- Risks of success (corporations have to provide human capital for extended periods)
A humanitarian organization, on the other hand, has to ask itself the following questions in order to maximize the benefit from a partnership:
- Is this project in line with our mission?
- Who else participates and where do we draw the line? For example, are tobacco companies to be excluded?
- What are the benefits for us?
As a result of Friday's discussions, key themes emerged that were addressed during Saturday's break out sessions:
The first topic was standardization. The recommendation was to identify the steps necessary in creating common specifications for a few basic items used in humanitarian relief efforts. The challenge is to set up a common database of supplies that can be used by different actors where the items have a minimum variability, such as water containers, polyester sheeting, and having wide guard-bands. One idea is to use the catalogue created by the International Federation of the Red Cross and Red Crescent Societies for the approximately 10-20 emergency items for standardization before moving on to address the larger group of items, including water, shelter and pharmaceuticals.
The second topic was Vendor Managed Inventory (VMI) in the humanitarian context. VMI is generally defined as the process by which the vendor manages the inventory of its products in its distribution center. The vendor receives stock information from the customer and then calculates what should be shipped to maintain adequate inventory levels at the retailer's facility.
Participants looked at the steps necessary in implementing VMI for the humanitarian sector. However, it is also clear that VMI may not always be the appropriate tool for the humanitarian sector. In order for VMI to be applicable, organizations should be mindful of the VMI rules of the game:
- Need for even flow of on-going replenishments (low volatility)
- Provide the supplier with accurate forecast for consumption
- Have global visibility and networked, real-time information sharing across multiple-tiers
- Change ownership and management of buffer stocks to the supplier
- Consume or pay
The key question for all those involved during the second annual Crossroads Conference was to look for ways for the business community to share some of its expertise with the humanitarian sector, or how Anisya Thomas put it: "How can you in the private sector augment and facilitate the backroom of the humanitarian sector?" It became clear during discussions that problem solving ability is one of the key areas where the humanitarian sector can take advantage of business expertise and lessons learned from the commercial sector. By approaching this challenge from different angles, participants agreed that we could indeed understand the complexity of issues in humanitarian relief and transfer knowledge.