Supply Chain Frontiers issue #10. Read all articles in this issue.
With the U.S. Gulf Coast still reeling from Hurricane Katrina, a one-day seminar on improving the effectiveness of major international disaster efforts took place on September 8, 2005, at the Stanford Graduate Business School, Stanford, CA. The event, "Effective Disruption Management", was co-sponsored by the MIT Center for Transportation & Logistics, the Global Supply Chain Management Forum, the Center for Social Innovation at Stanford Business School, and Fritz Institute.
Members of humanitarian relief organizations, along with corporate and academic supply chain management experts, gathered in Stanford for the seminar. "Developing the management skills necessary to deliver rapid assistance under the most difficult circumstances imaginable is of major importance to the world community," said Yossi Sheffi, CTL Director and author of the new book, 'The Resilient Enterprise' (MIT Press), in which he explains how organizations can prepare for unexpected disruptions such as natural disasters.
"We are proud to provide a platform for business leaders and humanitarian agencies to work together toward the common goal of saving lives, protecting employees, ensuring the availability of natural resources, and securing the continuity of supplies anywhere on the planet," said Stanford Business School professor Hau Lee, who directs the Stanford Global Supply Chain Management Forum.
The Seminar's sessions highlighted the importance of agility, proactive planning, visibility, partnerships and performance management. Speakers included representatives from Cisco, CTL, the Tuck School of Business at Dartmouth College, General Motors, International Rescue Committee, Intel, CARE Canada, CARE USA, Mercy Corps, Philips Semiconductor, and TNT NV (Amsterdam).
"The time to help is before anything happens," stressed Lynn Fritz, founder of the Fritz Institute, an organization dedicated to leveraging private and academic sector expertise in building logistics communities and developing delivery solutions for humanitarian aid groups. "We know where disasters are prone to strike - cyclones in Bangladesh, hurricanes in Florida and the Caribbean, earthquakes in Northern California, for example. With even a rudimentary level of planning in advance, local regions can do a great deal to lessen the effects of any disruptive event."
The key to good disaster management, said Fritz, is empowering local agencies and organizations through appropriate funding and, ideally, through coordination of expertise from the business, academic, medical, governmental, and humanitarian communities. "The problem in New Orleans," he said, commenting on the widely reported sub-standard relief efforts following the hurricane, "is it seems local organizations were not helped to be as prepared as they could have been. It shouldn't be the case that the Federal Emergency Management Agency helps a city, it should be that FEMA helps a city help itself."
Offering lessons from his work as director of global emergency operations with the international relief agency MercyCorp, Randy Martin reiterated to attendees the importance of creating local field networks capable of springing into action within 72 hours in key areas of the world prone not only to disasters, but to the exacerbating effects of political unrest, poverty, and disease. "By pulling together a team where and when it was needed, we were able to mobilize $4 million worth of aid within three months of the December 2004 tsunami in Asia," Martin said of his organization. "We were punching well above our weight."
Yet Martin and Gail Neudorf, emergency coordinator of CARE Canada, also spoke of maddening challenges that relief agencies face when confronted with a crisis. Having non-taxable status as an NGO, for example, means being jettisoned to the bottom of the priority list when working with most governments, lamented Neudorf. "This makes it a hassle when we?re trying to get emergency goods out," she said. "We also work in countries where the freight forwarding system is expensive."
Martin noted that a mismatch frequently occurs between well-meaning donors and the true needs of disaster victims. "After the Asian tsunami, MercyCorp accepted $2 million worth of medicine, despite our field people?s warnings," he said. "It ended up being a nightmare. Our supply chain got completely tied up trying to get rid of the medicine."
Several presenters spoke about logistical planning in the business sector, which has long been involved in perfecting supply chain management, and which, in recent years, has taken a serious approach to risk management. Adele Martz, a director of corporate risk management at General Motors, discussed efforts she has led to help her company mitigate risks, from natural disasters to economic ones. GM has established, for example, weather monitoring systems, preemptive evacuation procedures for people and hard-to-replace equipment, backup supplier networks, and regular emergency drills - as well as plans to invest in future technologies less vulnerable to the vagaries of the oil market.
The program has been put to the test numerous times at GM locations around the world. "In 2004, for example, a hurricane in Oklahoma demolished our assembly plant," she says. "There were 1,200 people and not one person was hurt because we had practiced evacuation plans a month prior." Moreover, the plant was up and running in record time because the company provisioned for relief employees not affected by the disaster to take over the rebuilding process.
Leslie Lam of Cisco Systems similarly outlined her organization's efforts to embed risk management into company culture. Lam emphasized that Cisco has partnered closely with contractors to ensure controls and backups are in place to mitigate any disruption to supply lines.
Several corporate leaders who have been involved directly in transferring knowledge, skills, and resources to humanitarian aid agencies also shared their experiences. Among them was Ludo Oelrich, director of TNT's "Moving the World" program, an effort dedicated to helping the United Nations World Food Programme enhance its emergency operations. Jon Olson, manager of global transportation and logistical outsourcing with Intel, and John Rickard, director of logistics at International Rescue Committee, discussed the collaboration between their organizations to help strengthen IRC's supply chain.
For more information on the "Effective Disruption Management" seminar, contact Jim Rice at: Jrice@MIT.EDU