HUMANITARIAN SUPPLY CHAIN CHALLENGES: FROM EFFECTIVE TO SUSTAINABLE OPERATIONS

Bogotà, 3rd of August 2018Prof. Matthieu Lauras

matthieu.lauras@mines-albi.fr

1. HUMANITARIAN SUPPLYCHAIN RESEARCHFEATURES

2. IMPROVING HSC EFFECTIVENESS

3. ENHANCING HSC EFFICIENCY

4. MOVING TO HSC SUSTAINABILITY

5. CONCLUDINGREMARKS

AGENDA

HUMANITARIAN SUPPLY CHAINRESEARCH FEATURES

HUMANITARIAN SUPPLY CHAIN (HSC)

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DISASTERS’ CARTOGRAPHY

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CONTEXT OF RESEARCH ON HSC

Humanitarian Supply Chains is still a recent research area

Humanitarians could benefit a lot from the use of decision-support systems to design and control a highly capable Supply Chain

But a gap exists between the research work proposals and theirapplications on the field.

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RESEARCH CONTEXT EVOLUTION

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7The HSC objectives are changing

“Alleviating human suffering”[Beamon and Balcik, 2008]

The HSC has an intangible objective…

Effectiveness as main driver

Effective + Efficient

Sustainable

End of XXth cent.

Since 2000’

Near future

Social pressure

Global trends

Accountability

[Haavisto and Kóvacs, 2014]

[Kunz and Gold, 2017]

[Wassenhove, 2006]

[Charles et al., 2010]

[Global Humanitarian Assistance report, 2016]

Requirements, funding and unmet requirements

RESEARCH APPROACH: CROSS-LEARNING AND INDUCTIVE METHODOLOGY

21/08/2018

Commercial SCCommercial SC Humanitarian SCHumanitarian SC

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EFFECTIVENESS CHALLENGES

EFFETIVENESS… WHAT DOES IT MEAN FOR HSC?

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Doing the right things… … quickly!

But in a disrupted world!

HOW TO GET THE EFFECTIVENESS CHALLENGES?

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11By enhancing…

RESILIENT = Robustness + Recovery capabilitiesRobustness: Able to avoid strong impacts on the system in case of disruptionRecovery: Able to allow getting back to an acceptable situation after a disruption

AGILE = Detection + Adaptation capabilitiesDetection: Able to notice something wrong in the system comparing to expected situationAdaptation: Able to modify the ongoing processes to solve the unexpected situation

FLEXIBILITY as pre-requisite!

[Baharmand et al., 2017]

AGILITY AND FLEXIBILITY ASSESSMENT MODELS

[Charles et al., 2010]

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Optimize location on a local level

Environmental parameterssecurity

accessibilitytelecommunication,

corruption

Location of warehouses (local level)

Choice of the weights of each environmental parameter

Environment uncertainty

TOWARD EFFECTIVE NETWORKS

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[Vargas et al., 2015]

HSC design is done by studying: The potential disasters, Their consequences,The existing infrastructures and availableresources.

But when the disaster occurs, somehazards can impact strongly the network by destroying some resourcesor collapsing infrastructures. The performance of the relief network could be strongly decreased.

TOWARD A ROBUST HSC

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[Vargas et al., 2015]

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15APPLICATION TO PERUVIANRECURENT DISASTERS

[Vargas et al., 2015]

PERUVIAN CASE: NUMBER OF UNMET DEMAND VS NUMBER OF WAREHOUSES / INVENTORIES

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EFFICIENCY CHALLENGES

EFFICIENCY… WHAT DOES IT MEAN FOR HSC?

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Doing the things right… … cost-effectively!

But again in a disrupted world!

Minimize costs on a

regional level

Choice of the « cost » of stockout

- Costspurchase costs, fixe and variable costs (warehouse)

delivery costs upstream/downstreal by plane and boat- Delays

delivery time upstream/downstreal by plane and boat

Choice of the size of the warehouse

and its contingency stock

Actual and potential location of suppliers (per product and region)

Supply uncertainty

Scenarios of demand

Location, number and size of

warehouses (regional level)

EFFECTIVE AND EFFICIENT NETWORK DESIGN:THE UPSTREAM PART

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[Charles et al., 2016]

EXPLANATION OF THE OBJECTIVE FUNCTION

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[Charles et al., 2016]

ICRCInternational committee of the Red CrossIFRCInternational Federation of the RedCross and Red Crescent SocietiesNSRed Cross and Red Crescent National Societies(186 countries)

INTERNATIONAL FEDERATION OF RED CROSS

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[Charles et al., 2016]

OPTIMIZING IFRC HSC NETWORK

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[Charles et al., 2016]

SUMMARY OF RESULTS FOR IFRC NETWORK

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EFFECTIVE AND EFFICIENT NETWORK DESIGN:THE DOWNSTREAM PART

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EFFECTIVE NETWORK DESIGN:LOCATING TEMPORARY STAGING AREAS (SAS)

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8%

UNWFP NEPAL CASE (2015): IMMEDIATE RESPONSE 26

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4%

UNWFP NEPAL CASE (2015): RELIEF PHASE

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SUSTAINABILITY CHALLENGES

SUSTAINBILITY… WHAT DOES IT MEAN FOR HSC?

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Meeting current needs… … without compromising future!

But again and again, in a disrupted world!

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Environment

High level concepts vs. Plenty of indicators

Triple Bottom Line (TBL)dimensions consideration

[Bauman, 2014]

Economy

Society

[Ahi and Searcy, 2015]

Environment

Environment

Economy Society

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SUSTAINABLE HSC POSITIONING

THE HOUSE OF SUSTAINABLE HSC OPERATIONS

HSC business processes

Sustainable HSCOperations

SO

CIA

L

ECO

NO

MIC

AL

ENV

IRO

NM

ENTA

LRe

sour

ces

cons

erva

tion

Pollu

tion

red

uction

Equi

tyEf

fect

iven

ess

Effici

encyLo

cal

emp

ower

men

tLa

bour

cond

itions

[Laguna Salvadó et al., 2017]

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HSC business processes

Sustainable HSCOperat ions

Sustainable HSCOperat ions

HSC business processes

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32THE HOUSE OF SUSTAINABLE HSC OPERATIONS

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L4 – ExpertL3 – GoodL2 – MediumL1 – BeginnerL0 – Unaware

[Laguna Salvadó et al., 2018]

THE SUSTAINABLE HSC MATURITY MODEL

0

1

2

3

4 Effectiveness

Efficiency

Equity

Pollution reduction

Resources conservation

Local community development

Labor conditions

Procurement Warehousing Transport

SOCIAL ECONOMICAL ENVIRONMENTAL

L0

L1

L2

L3

L4

HSC processes

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34IFRC PANAMA USE CASE

How to support decision-makers consciously and systematically making sustainability trade-offs and exploring consequences?

HUMANITARIAN SUPPLY CHAIN

UPSTREAM DOWNSTREAM

Field ent ry pointPreposit ioned stock

Supplier

Local dist ribut ion

center

Demand points

In-kind donat ions

Centraldist ribut ion

center

Local supplier

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35TOWARD A SUSTAINABLE HSC DECISIONSUPPORT SYSTEM

TOWARD A SUSTAINABLE HSC MASTER PLANNING

MULTI CRITERIA DECISION-MAKING

Effectiveness objective

Economic objective

Social objective

Environmental objective

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The Decision-Maker provides the sustainable performance criteria priority

Effectiveness has the absolute priority

Lexicographic Ordering (LO) Interactive Decision Support System

Effectiveness

LO 1

LO 2

LO 3

[Wray et al. 2015]

Sequential Optimization + Constraint

The Decision-Maker can introduce a tolerance within each couple of criteria

Criteria Lexicographic Order

i.e.LO1: EconomicLO2: SocialLO3: Environmental

OPTIMIZATION

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37TOWARD A SUSTAINABLE HSC MASTER PLANNING

Suppliers (RLU & SRLU) Warehouses Demanding Points Potential Flows

Panamá RLU

SRLU

Supplier

Demanding Point

ASIA

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IFRC AMERICAN & CARIBBEAN ILLUSTRATION 38

8

9

10

11

0% 5% 10% 15% 20%

Eco

no

my

Op

tim

al (

CH

F M

illio

ns)

Effectiveness tolerance % variation

Effectiveness Optimal = 27.5 CHF Millions

DECISION MAKERDECISION SUPPORT

SYSTEM

2%

+ EFF Constraint: Effectiveness optimal + 2%

Criteria order:(1) Economy(2) Social(3) Environment

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2

4

6

8

0% 5% 10% 15% 20%

Soci

al O

pti

mal

(C

HF

Mill

ions

)

Economy tolerance % variation

DECISION MAKERDECISION SUPPORT

SYSTEM

+ EFF Constraint: Effectiveness optimal + 2%

1%

+ ECO Constraint: Economy optimal + 1%

Criteria order:(1) Economy(2) Social(3) Environment

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405

410

415

420

425

430

0% 5% 10% 15% 20%

Envi

ron

nem

ent

Op

tim

al(C

HF

Mill

ions

)

Social tolerance % variation

DECISION MAKERDECISION SUPPORT

SYSTEM

+ EFF Constraint: Effectiveness optimal + 2%+ ECO Constraint: Economy optimal + 1%

+ SOC Constraint: Social optimal + 1%

1% MASTER PLAN

Criteria order:(1) Economy(2) Social(3) Environment

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MASTER PLAN

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CONCLUDING REMARKS

FROM CENTRALIZED TO SUB-REGIONALIZED HSC

Up to 2004, HSC were centralizedObjectives: effectiveness and easy coordination

Since 2004, HSC are regionalizedObjectives: faster, better, cheaper (effective and efficient)

Today is the beginning of sub-regionalization ereaObjectives: sustainability

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THE FUTURE: GOING DIRECTLY TO HYPERCONNECTED HSC MATURITY LEVEL

Atomistic: fragmented network and managed through solo operations.

Long leadtime, big lots, large inventory…

Integrated: network as an end-to-end channel, in which production and distribution plants are centralized and dedicated.

High level of assets, short leadtimes, Lean Management...

Collaborative: network as a whole in which partners are able to share data and activities in peer-to-peer relationships.

Long to deal, tough to adapt and hard to scale...

Hyperconnected: network is based on open-hubs and cooperative platforms for both data and material flows.

Flexible, real time oriented, sustainable…

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THANK YOU…QUESTIONS…

matthieu.lauras@mines-albi.fr