Efficiency in
Humanitarian Logistics
Olaf Janssen
Dubai, 25.03.2015
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The Kuehne Foundation…

…is not a Humanitarian Organization

…is not in competition with Humanitarian Organizations
 …provides trainings in hum. logistics
 …provides consultancy in hum. logistics
 …provides/supports academic education in
hum. logistics
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Humanitarian Logistics
Humanitarian Logistics
Post-Crisis
Emergency Response
(Rehabilitation, Development,
Preparedness, …)
 Time
 Money
 ad hoc
 planned
 Effectiveness
 Efficiency
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Trends in the Humanitarian World
Competition with other actors
Funding shortages
due to budget gaps
in donor countries
More large scale and
complex operations
Increasing pressure on efficient solutions,
also in emergency response
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What is the biggest Lever to increase Efficiency?
One of the most expensive parts of a relief effort
1. “At least 50 cents of each dollar’s worth of food aid is spent on transport,
storage and administrative costs“ (Dugger 2005)
2. Logistics and Procurement expenses up to 60-80% of overall costs
(Wassenhove 2006)
3. 40 percent of this spend above was ultimately wasted (fueled by factors such
as duplication of effort and the lack of the time in which to carry out effective
spend analysis). In other words, research done in this area has the potential to
impact not only lives and livelihoods, but significant amounts of money.
(Heigh, 2012)
Donors will scrutinize Logistics / Supply Chain Management
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Humanitarian vs. Commercial Logistics?
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Humanitarian vs. Commercial Supply Chains
1. The humanitarian sector operates in the absence of a market mechanism of demand and
supply regulated through price
2. Although humanitarian organizations share the same values and strive towards a common
goal, coordination is difficult as none can claim the leadership role, legally or otherwise
3. Unlike the private sector, where performance is rewarded by the market and internal incentive
schemes, in the absence of such feedback mechanisms the humanitarian sector lacks a
culture of continuous improvement and has a poor reputation for capitalizing on lessons
learnt.
4. Given the high employee turnover and the lack of financial resources, there is no systematic
attempt to improve processes and systems.
5.
Improvement programmes are mainly initiated by highly dedicated and devoted individuals
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Humanitarian Logistics Framework
Assessment
Procurement
Warehousing
Transport
Reporting
Strategic
Level
1.
Emergency Preparedness Plans (EPP) have to be
developed at various tiers in the supply chain. It needs
to be possible to implement EPPs with immediate effect.
2.
EPPs record information about possible areas of
activities that may be used in emergency operations
such as sources of key supplies, transport capacity,
possible sites for warehousing, …
3.
EPPs may comprise a number of possible scenarios
and need to be updated on a regular basis.
4.
Programme Strategy (emergency or post-emergency,
type of support, …) have an impact on strategic, tactical
and operational decisions in the supply chain.
Tactical
Level
Operational
Level
According to Blecken, 2010
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Efficiency in Emergencies
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Procurement
Assessment
Procurement
Warehousing
Transport
Reporting
Strategic
Level
Tactical
Level
Operational
Level
According to Blecken, 2010
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Most frequently expressed point of view in procurement
„We prefer local procurement because it is faster, cheaper
and it supports the local economy“
Finance/Admin Responsible, 2012
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Corruption
• Egypt (94 / 118)
• Iraq (170 / 171)
• Jordan (55 / 58)
• Lebanon (136 / 128)
• Syria (159 / 168)
• UAE (25 / 26)
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Focus Areas in Procurement Training
We prefer local procurement as one option because as long as it is faster, cheaper and
it supports the local economy

Procurement as a crucial element in designing a humanitarian Intervention

Procurement Planning

Local, regional or international procurement

Supplier management

Frame contracts / Long term agreements

Incoterms

…
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Efficiency in Emergencies
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Warehousing
Assessment
Procurement
Warehousing
Transport
Reporting
Strategic
Level
Tactical
Level
Operational
Level
According to Blecken, 2010
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Regional/National Warehouses
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Local Warehouses
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Transport
Assessment
Procurement
Warehousing
Transport
Reporting
Strategic
Level
Tactical
Level
Operational
Level
According to Blecken, 2010
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International Transport
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National Transport
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Last Mile
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Reporting
Assessment
Procurement
Warehousing
Transport
Reporting
Strategic
Level
Tactical
Level
Operational
Level
According to Blecken, 2010
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One Example
Source: Janssen 2012
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Summary
1. Efficiency in Humanitarian Interventions is no longer a nice to
have but a must have
2. Logistics is an integrated concept, of which no component can be
excluded or looked at isolated
3. Most Organizations work in matrix structures, in which horizontal
and vertical alignment needs to be ensured for efficient operations
4. Performance on the operational level seems to depend mostly on
local capacity and is rarely a result of a structured process
initiated on a higher level
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Backup
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Procurement Planning
“In one of our projects where we implemented procurement planning we managed to reduce the
number of purchase requests (and hence transactions) considerably, somewhere between 6070% less than before.
Also because of the visibility it brought us, for the first time ever senior management decided to
no longer allow changes in the Bill of quantities throughout project implementation as the
savings in changing it would not outweigh the cost and complexity to make it work on the
logistics side. Before using this tool we would easily have 15 changes in the BOQ within just 3
months which was a nightmare for logistics to handle.”
Source: Swiss Based NGO, 2013
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Number of people reported affected
Disaster Trends
Generally there is no clear increase in
terms of number of disasters in the last
years. However there is a trend of more
large scale disasters worldwide.
Estimated damage (US$ billion) caused by
reported natural disasters 1900 -2011
Natural disasters reported from 1900 - 2011
Source: EM-DAT: The OFDA/CRED International Disaster Database – www.emdat.be - université catholique de louvain, Brussels, Belgium
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Funding demand
www.unhcr.org
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Neue Zürcher Zeitung (NZZ) v. 17.05.2011
ddp Die Weltgesundheitsorganisation (WHO) hat wegen eines Spendenrückgangs und wegen des schwachen
Dollars drastische Budgetkürzungen angekündigt.
Mehrere der 30 wichtigsten Beitragszahler hätten ihre Zuwendungen zurückgeschraubt, weil sie selbst in
finanziellen Schwierigkeiten seien, sagte WHO-Generaldirektorin Margaret Chan am Dienstag.
(Several of the 30 most important donors have cut down their contributions because they
are in financial trouble themselves)
Die WHO hatte zuvor bereits bekannt gegeben, dass sie für das laufende Jahr mit einem Defizit von rund 212
Millionen Euro rechne. Aus Dokumenten der Organisation geht hervor, dass für die Jahre 2012 bis 2013 eine
Kürzung des Budgets um mehr als eine Milliarde Dollar (700 Millionen Euro) geplant ist.
(…for 2012 to 2013 there will be a budget cut of more than one billion dollars)
Die WHO ist Teil der Vereinten Nationen und unterstützt vor allem nationale Gesundheitsministerien. Den
Grossteil ihrer Einnahmen bezieht sie über Zuwendungen von reichen Industriestaaten, von NichtregierungsOrganisationen sowie von anderen privaten Spendern.
(…most of the contributions come from rich industrial countries…)
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Humanitarian Actors: Getting «Hot and Crowded»
Source: GHA 2010
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Humanitarian Actors: Getting «Hot and Crowded»
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Competition between Humantarian Organizations
Source: MAD No. 4, 1967
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Emergency vs. Post-Crisis Supply Chains
Prices/Costs
Lead Time Strategy
Emergency Response Supply Chain
Development Project Supply Chain
Typically high costs due to time pressure, competition
and lack of resources/capacities
Cost reduction should play a central role
Zero lead time  Aggressively reduce even if costs are
significant
Lead time to be based on procurement-transportdistribution characteristics and requirements
Planning
Difficult due to unknowns If no preparedness plans
exist
Long term planning possible if funding available
Distribution Network
Challenging due to the nature of the unknowns
Can be well-defined; number and locations can be
determined
Inventory Strategy
Buffer / Pre-positioning /
Limited storage space can lead to high competition &
price
Transport Modes
Speed and availability
Greater reliance on low cost modes
Big quantities and bundling options to be considered
Strategic Goals
Minimize loss of life and suffering  Effective
Response
Deliver high quality products at minimal costs and
achieve high beneficiaries satisfaction  Efficient
Response
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Minimize Inventory
Impact of Disasters
Disasters in 2013 (natural and man-made)
 308 disaster events
 Highest level emergencies in Syria, Central African Republic, Philippines and South
Sudan (all of them logistically very complex)
 Hundreds of million people affected
 $140 billion of economic losses
 $22 billion spent on humanitarian response globally
 $ 134.8 billion for development assistance (official development assistance)
Source: OECD 2014, Global Humanitarian Assistance Report 2014, SwissRe 2014
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