Student number: 201721216 Module leader: Sushma Kumari

Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

Leanness and agility in humanitarian

logistics:
The case of the United Nations High
Commissioner for Refugees (UNHCR)

TABLE OF CONTENTS

INTRODUCTION............................................................................................................................ 2

LITERATURE REVIEW ................................................................................................................ 3

CASE STUDY: UNHCR’S CHALLENGES AND BENEFITS ASSOCIATED WITH

ACHIEVING THE DUAL OBJECTIVE OF LEAD TIME AND COST WITHIN ITS SUPPLY
CHAIN STRATEGY........................................................................................................................ 7

DISCUSSIONS, RECOMMENDATION AND CONCLUSIONS ................................................ 12

APPENDIX 1.................................................................................................................................. 13

APPENDIX 2.................................................................................................................................. 14

APPENDIX 3.................................................................................................................................. 15

REFERENCES............................................................................................................................... 18

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

INTRODUCTION

Logistics, both in research and practice, has been traditionally focused on its
application in a commercial context. A different and more recent application area of logistics
is related to humanitarian aid (Kovacs and Spens, 2009). Even though humanitarian efforts
have been in place throughout history, the aid sector lacked operational knowledge (Beamon
and Kotleba, 2006) and it had a shortage in logistics experts (Thomas and Mizushima, 2005).
Also, research in humanitarian logistics prior to 2000s was scant (Altay and Green, 2006).
However, after the Southeast Asian tsunami in 2004 and the criticism related to the poor
logistics practices during the relief operation, logistics in the aid sector gained popularity
(Kovacs and Spens, 2011). Nowadays, owing to the increasing pressure from donors,
humanitarian organizations (HOs) are more concerned about optimising the way supply
chains (SCs) are managed (Leiras et al., 2014).

For the purpose of this essay, the following limited definition of humanitarian logistics
will be used: humanitarian logistics refers to the “process of planning, implementing and
controlling the efficient, cost-effective flow and storage of goods and materials, as well as
related information, from point of origin to point of consumption for the purpose of meeting
the end beneficiary’s requirements” (Thomas and Mizushima, 2005, p. 60). Consequently,
humanitarian supply chain management (HSCM) is defined as “acquiring and delivering
requested supplies and services, at the places and times they are needed, whilst ensuring best
value for money; in the immediate aftermath of any disaster” (IFRC, 2019).

Disasters are considered the centrepiece of all HSCM activities and are defined as an
event responsible for a disruption in the normal functioning of a system that negatively
impacts people, infrastructure and environment. Because time acts upon saved human lives,
HOs must be able to respond promptly and in an efficient way after a disaster occurs
(Cozzolino et al., 2012).

The first part of the essay introduces the concepts of leanness and agility, that are said
to prepare organisations to increase efficiency through process optimization and waste
elimination (leanness) and to respond quickly to fluctuating demand (agility). The present
work further explores the SC practices of the United Nations High Commissioner for
Refugees (UNHCR) and indicates that the le-agile strategy, often used in the commercial
context as the combination of leanness and agility, is also applicable for humanitarian supply

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

chains (HSCs). Worth noting that few studies have focused on leanness and agility within the
same HSC strategy. Therefore, the objective is to demonstrate the feasibility of combining the
two strategies within the same HSC, clarifying how these should be addressed in specific
stages of the logistics process. This topic is of high and rising relevance for the aid sector in
general because of the growing need for efficient and effective international disaster relief,
and contributes to the logistics research in particular.

LITERATURE REVIEW

Research in humanitarian logistics has been conducted in a number of functional

areas. For the purpose of this essay, only the literature concerning lean and agile strategies
will be considered.

In contrast to commercial SCs that associate customers with source of income, end-
users in a relief chain do not enter in commercial transactions (Bennett and Kottasz, 2000).
Consumers of aid are not customers of the supplier/donor, they get what they are given.
Transactions in such chains only occur between governments and donor country companies
and occasionally commercial suppliers that may offer different materials and services at
reduced rates. Therefore, suppliers/donors considered ‘customers’ to which HOs and NGOs
have a reporting responsibility (Olaruntoba and Gray, 2002). Donors expect transparency in
return for their collaboration and sponsorship. In case of dissatisfaction related to the NGO’s
performance, donors may cut funds (Scholten et al., 2010). Therefore, planning is challenging
because of the unstable nature of funding (Bennett and Kottasz, 2000). Appendix 1 represents
a detailed comparison of commercial and humanitarian SCM. A representation of logistics
flows within HSCs is represented in Appendix 2.

Those organizations that operate within an unpredictable environment and face

constant changes, should design an agile strategy in order to master external turbulences
(Maskell 2001). Table 1 summarises the characteristics, approaches, and practices of the agile
SC.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

Many suffering people rely on HOs to make strict necessity relief items available for
them. Consequently, pre-positioning within an IRC aims to bring closer supplies and other
resources to areas where they are likely to be needed (Oloruntoba and Gray, 2006). According
to the researchers, the strategic positioning of distribution centres plays a crucial role in
reducing the time for goods to reach those in need. In contrast, Drezner (1995) suggests that
facility location decisions are meant to reduce transportation costs. This example illustrates
that pre-positioning is interpreted in a different way by agile and lean strategy advocates.

As mentioned before, time plays a critical role in the survival rate in the affected areas.
Thus, many HOs keep stock of vehicles in order to reduce lead time and be prepared against
sudden disasters (Oudenes, 2019). Because high inventory costs are a financial burden,
designing effective inventory systems is necessary to reduce costs (Nikbakhsh et al., 2011).
This example shows that following an agile strategy (keeping vehicles in order to enhance
responsiveness) can be associated with a problem encountered in the lean thinking (waste).
Lamming (1996, p. 184) defines the concept of leanness as a “value-adding process
unencumbered by waste”. Table 2 summarises the characteristics, approaches, and the
practices of the lean SC.

The uncertainty of demand can also produce wastage. Pettit and Beresford (2009),
comparing a number of post-crisis interventions, found out that in some cases the
overestimation of the demand produced wastage rates of up to 30% in relief item delivery.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

Womack and Jones (1996) advise organizations to let the customer (in our case the aid
recipient) ‘pull the product’, providing what the end users want only when the demand is
somewhat certain. This serves as a key point for waste eradication and is also associated with
inventory management.

Bowersox and Closs (1996) claim that anticipation risks associated with logistics and
inventory can be reduced by postponement, a deliberated decision to postpone commitment of
delivery and to delay distribution until receipt of orders. In his research, Listou (2008)
combines the principle of postponement with entry mode alternatives when developing non-
commercial SCs into new regions. He explains that choice of entry mode determines access to
distribution and the postponement strategy decides how resources will be exploited. In
humanitarian operations, a logistics postponement strategy is related to direct distribution of
finished goods from suppliers or centralized inventory to aid recipients. The supplies are
distributed according to the evolving needs of end users. Chandra and Kumar (2001) suggest
that the principle of postponement should have a positive impact on the speed and flexibility
of IRCs. In contrast, Oloruntoba and Gray (2006) claim that postponement reduces the waste
and costs associated with inaccurate forecasting. Oloruntoba (2007) further suggests that

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

before host governments place an assistance request and before the United Nations and NGOs
launch an appeal for disaster founding, a needs assessment has to be completed to find out
what victims of disasters require. Worth noting although postponing is associated with an
agile strategy, it can also refer to a lean thinking.

In humanitarian logistics, according to Van Wassenhove (2006), is crucial to design

networks that can operate with less costs and reduced response time. The author claims there
is a need for a combined lean and agile strategy. As previously mentioned, lean and agile
strategies follow different priorities however, existing literature suggests these often
complement one another. Christopher and Towill (2000) not only recognize the need of a new
approach but also assert that the location of the strategic inventory decoupling point and the
demand information decoupling point (the point where the forecast driven and order driven
activities meet) can produce a hybrid SC that consists of a lean supply upstream and an agile
supply downstream (see Figure 1 below). According to the researchers, HSCs should use a
lean strategy for upstream activities at the donor level and an agile strategy at the aid
recipients’ level. By way of contrast, Oloruntoba and Gray (2006) suggest that upstream
activities in HSCs are acclaimed for their agility. More precisely, credit is given to how
quickly donors can respond to emergency appeal and to the velocity with which a specific
demand can be addressed. Cozzolino et al. (2012) suggest that prior research does not focus
on specific requirements of different SC stages, instead paying more attention to the SC as a
whole.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

CASE STUDY: UNHCR’S CHALLENGES AND BENEFITS

ASSOCIATED WITH ACHIEVING THE DUAL OBJECTIVE OF
LEAD TIME AND COST WITHIN ITS SUPPLY CHAIN
STRATEGY

UNHCR was established after World War II and is a subsidiary organization

administrated by the United Nation General Assembly and the Economic and Social Council.
The primary focus of the organization is “to lead and coordinate international action for the
worldwide protection of refugees and the resolution of refugee problems” (UNHCR, 2007).
The organization operates in more than 100 countries and by having offices in donor countries
and at the arrival points of refugees, is able to provide relief items for more than 30 million
beneficiaries (UNHCR, 2019a). Figure 2 shows UNHCS’s worldwide procurement between
2007 and 2017 and Table 3 represents the top 10 item categories purchased in 2017. The
length of this essay means that only goods and transport procurement can be discussed.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

According to Jahre et al. (2016), UNHCR runs two distinctive SCs. The first one is the
emergency relief supply chain (ERSC) that is characterised by highly uncertain demand,
urgency, and speed. In this case, transportation occures from large centralized global
warehouses, aiming to reach recipients as fast as possible. There are seven global warehouses
which are served directly from donors/suppliers and are considered as strategic unites that
further supply country and local warehouses. The Department of International Development
in the United Kingdom is one of the major donors that pre-funds the central emergency stock
which targets global operations. When an emergency occurs, global stock can be directed to a
specific country operation and delivered by fast means of transportation. ERSCs typically
follow flows C, D, and E, with the aim of reduce lead time by only satisfying demand with
inventory stocked at global warehouses (see Figure 3 below).

In parallel, the organization also supports long-term ongoing operations (OOs) with
relief items sent from decentralized country warehouses or transported directly from suppliers
(Jahre et al., 2016). The aim of this second chain is to provide items of strict necessity with
minimum costs, while still focusing on responsiveness. Therefore, in order to minimize costs,
the decentralized consigned stock financed by a country’s budget are stored in the same
country’s warehouses before getting shipped to the areas affected by disasters. OOs typically
follow flows B and G in order to satisfy demand, getting the stock usually from local
suppliers (see Figure 3 below). Worth mentioning the direct shipment of relief items from
suppliers to end users that only occurs in OOs, follows a logistics postponement strategy, a
concept introduced in the literature review.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

The decentralized network structure has its origins in the historical establishment of
the organization, with strong country operations managed by UNHCR representatives (Jahre
et al., 2016). Host countries are in charge with their own budgets and are encouraged to reach
out to local donors. It is argued that in OOs, sourcing occurs with limited SC focus and is
funding driven, resulting in sub-optimization with unreasonably large stock in some locations
and insufficient stock in others. However, OOs, in comparison with ERSCs, are characterized
by relatively low uncertainty and continuous demand. Therefore, demand should be estimated
from historic data. Yet, because UNHCR operates on annual budgets, host counties are
concerned with losing money at year end. Mizushima et al. (2008) suggest that UNHCR’s
weak SC is associated with its focus on paperwork and record keeping. While procedural
compliance implies strong discipline, SC controls are interpreted in administrative terms and
no attention is given to improve processes and reduce waste. The SC process is broken and
generates long lead times (see example of Jordan in 2007 that missed a distribution because of
late availability of funding and slow SC in Figure 4 below), forcing warehouse managers to
maintain high stock level in order to compensate. Therefore, the main challenges for the
organization are the high costs associated with inventory and transportation, the lack of
common understanding of SCM, the lack of process-oriented targets, and the outdated
decentralized network structure.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

Bendz and Granlund (2012) suggest that historically, UNHCR’s SC strategy has
focused on ensuring a fast response time with inventory kept at high level. However, with the
establishment of a Supply Management Service (SMS) in Budapest, the organization’s focus
has shifted towards a more cost-efficient strategy, mainly because donors wanted
transparency and insisted for using their funds in an efficient way. The organization also
realized that finding the right human resources in SCM is necessary in order to succeed (see
Appendix 3). Worth noting that Christopher and Towill’s (2000) suggestion presented in the
literature review, conforming which upstream activities at donor level should use a lean
strategy, have gained importance in UNHCR’s redesigned SC strategy.
Another cost-related issue arises from the fact that at transhipment points, fluctuating
commercial transport flows may push up the humanitarian cargo’s transportation related
expenses. This happens because UNHCR does not own a fleet for shipping relief supply
(Bozorgi-Amiri et al., 2013). Thus, designing a SC that brings global warehouses closer to
demand points can reduce, in the same time, transportation costs and lead time. Worth
mentioning lead times and shipping rates vary between transportation modes (Jahre et al.,
2016). In order to satisfy OO’s demand, shipment employs surface transportation which is
generally cheaper however, the lead time is longer. In ERSCs, shipment usually occurs via air
which is associated with higher transportation costs and shorter lead times. Jahre et al.’s
(2016) research suggests that by opening a greater number of global warehouses and
expanding its network, UNHCR will be able to accelerate response in both short- and long-
term operations while reducing transportation costs. In this way, the organization can also

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

cope with the challenge of developing systems that can address diverse needs. It should be
recalled that in literature review pre-positioning was presented in juxtaposition of two
judgments: Oloruntoba and Gray (2006) describes it as an opportunity to reduce lead times,
whereas according to Drezner (1995) facility location decisions are associated with reduced
transportation costs. Yet, UNHCR can achieve the dual objective of lead time and cost by
opening additional global warehouses. One of the main benefits of the organization is the fact
that is a UN subsidiary and it has the right support to initiate such projects.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

DISCUSSIONS, RECOMMENDATION AND CONCLUSIONS

Humanitarian logistics and HSCs are getting more and more embraced by researchers
however, these fields are still in need for both conceptual and empirical studies in order to
improve. So far, studies covering the topic of leanness and agility have very much focused on
SC as a whole. The present assay confirms that attention has to be shifted to the combination
of the earlier mentioned strategies within the same SC. Still, it is difficult to arrive at any
conclusion with regard to the best strategy for each SC stage. It seems evident that there
appears to be no commonly accepted theory in humanitarian logistics that encapsulates both
of these principles.

Because humanitarian logistics is a new field of research and action, no formalized

profession is linked to it. Thus, there is an increasing need to professionalize the aid sector.
This allows to the conclusion that a widely accepted skill set has to be conceptualized by the
actors operating in this field. This can further guide the advancement of education. Young
minds have to be prepared for relief work therefore, designing university programmes
focusing on the humanitarian logistics sector is essential.

This work did not focus on security, a factor related to political stability that can put
both staff and warehouses in danger. The relationship with local governments is important
when considering lead time and pre-positioning. Additional research in this matter would fill
the research gap. Furthermore, without a good infrastructure a site cannot be functional.
Inbound and outbound logistics rely on accessibility and proximity to point entry. Further
studies linking leanness and agility with accessibility has to be conducted. Since cooperation
between members along the relief chain was only discussed briefly in this essay, further
research regarding inter-organizational logistics cooperation is recommended.

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

Appendix 1
Comparison of commercial and humanitarian SCM (Ertem, Buyurgan and Rossetti, 2010, p.
205)

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

Appendix 2
Logistics flows along the relief chain (Russell, 2005, p. 48)

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

Appendix 3
UNHCR Supply Officer Profile (UNHCR, 2019b)

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

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Student number: 201721216 Module leader: Sushma Kumari
Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

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Module title: Principles of Logistics and Supply Chain Management Word length: 2745
Assessment title: 002_CWRK: Individual Assignment Submission date: 04.11.2019

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