The Instant Supply Chain Challenge

Introduction

For the past few weeks, all eyes (and hearts) have been on the devastation caused by the Indian Ocean Tsunami. This is the biggest natural disaster in my lifetime—over 225,000 dead (probably many more by the time you read this), the World Health Organization predicting the toll could double due to disease, and millions left homeless and struggling for survival.

AN ACEHNESE GIRL CRIES WITH HER MOTHER NEAR THE RUINS OF THEIR HOUSE IN BANDA ACEH

We are all moved to try to understand how we can help, as witnessed by unprecedented levels of private donations. Many people are asking how they can volunteer their time as well. I ran across a tsunami blog at ProPoor.org which had put up sort of a public bulletin board for volunteering on which over 1,000 people posted messages saying "I want to help" with details like "I'm a 28 year old carpenter", "speak fluent Indonesian", "willing to fly myself there", etc. It was moving to see this out-pouring of concern, but also I felt this was a microcosm of the challenges facing the overall relief effort. People crying out into the universe "how can I help?" with seemingly random chances of anyone who could actually use their help hearing.

Another small example I saw[1] in the paper: a Buddhist monk and community leader in Sri Lanka expressed frustration "We compiled a complete list of damage in every village in this district and a list of what materials are needed where. But not one government officer or aid persona has been here since the disaster." Just two miles away, the regional director for Catholic Relief Services said he was struggling to get good information on what supplies to send out and to "find local partners for reconstruction programs." I'm sure this scene is being repeated all over the region.

The "Instant Supply Chain" Challenge

So what does this disaster have to do with normal supply chain challenges? A lot, I would contend. What is needed in a disaster like this is an "Instant Supply Chain"—ultra-rapid creation of a distribution network with coordination between the many decentralized players. To meet these challenges, relief agencies and governments can learn much from the supply chain advances made by the private sector (see this month's Feature article on Aidmatrix). But the private sector can also learn from the successes and failures of these relief efforts. There are three huge supply chain challenges faced in this kind of situation:

1. Instant Needs
2. Lack of Infrastructure
3. No Central Command

These same challenges are faced to differing degrees by normal supply chains, as well.

DESTROYED CENTRAL BUS TERMINAL IN GALLE, 125 KM SOUTH OF THE SRI LANKAN CAPITAL COLOMBO.

Instant Need

With the tsunami there was no warning, and instantly there was a very urgent need. In particular, emergency requirements such as water, medical supplies, search and rescue teams, etc., needed to get there within just a couple of days. Virtually all businesses face unexpected and sudden new demands and disruptions to their supply chain from time to time, though hopefully never as dramatic as the tsunami disaster. The key to instant response to the unexpected is preparation. By planning and practicing for various scenarios and putting the tools, procedures, and relationships in place, businesses are better prepared for unanticipated events as well. For example, even though the anticipated Y2K disruptions never occurred, the planning and preparations for various Y2K scenarios by the New York Stock Exchange turned out to be instrumental in helping them reopen only 6 days after the World Trade Center was destroyed on 9/11/01.

Lack of infrastructure

The tsunami destruction of roads, bridges, ocean ports, railroads, airports, communications, and power lines forced a lot of improvisation as well as "build as you go". As of this writing, the Indonesian ports of Banda Aceh, Meulaboh (West Coast), Sabang (Weh Island) and Lhoknga were still not accessible. The remaining infrastructure is severely constrained, as humanitarian aid and workers overwhelm airports and other infrastructure (further aggravated, incidentally, by the deluge of dignitaries and their entourages surveying the damage).

A RESIDENT WALKS PAST A TWISTED RAILWAY TRACK ON THE SOUTHWESTERN COAST OF SRI LANKA

The response has included creative approaches such as the use of hovercraft for coming ashore on damaged terrain and the use of elephants to clear rubble in areas where heavy machinery is inaccessible or unavailable.

SURVIVORS OF THE TSUNAMI USE AN ELEPHANT TO PULL A VEHICLE FROM THE DESTROYED VILLAGE OF LAM JAMEK, INDONESIA.

The military has the most experience creating instant supply chains in areas lacking in infrastructure. They are trained and organized to construct their own bridges, airports, and roads, as needed, as well as landing on shorelines and traveling over rough terrain. That is one reason that military organizations play such a key role in responses to disasters like these. Some raw materials industries such as logging, oil and gas, and coffee also face the challenges of developing infrastructure to access remote areas, but usually without the intense time pressures of military or disaster relief operations.

No Central Command

These relief efforts have required the coordination of hundreds of non-governmental organizations (NGOs ) and government agencies (involving hundreds of thousands of people). As with any supply chain, it is critical for relief efforts to know their "markets"— who needs what, how much, and where. Lack of centralized command can lead to chaos and waste. In many cases, trucks of donated clothes, food, and housing materials stopped randomly on streets, where they were immediately mobbed by people grabbing as much as they could. As one man said, "No one is in charge. People are just doing whatever they think is needed."

TSUNAMI SURVIVORS RUSH FOR CLOTHES AND FOOD DONATED BY VOLUNTEER ORGANIZATIONS IN CUDDALORE, ABOUT 112 MILES SOUTH OF MADRAS.

This challenge has been aggravated by politics, government inefficiency, and ongoing conflicts. Hong Kong based Asian Human Rights Commission ( AHRC) reports that the "lack of clear distribution procedures, the limited capacity of the central government, and strict control of TNI (Indonesian Military) over aid stocks is making it impossible for international aid to reach survivors. Stocks lay stranded at military airports because the military and government infrastructure is not capable of dealing with their distribution."

Tamil Tigers accused Sri Lankan authorities of political bias in dispatching aid. Sri Lankan government insisted that all medical aid be routed though its offices, creating delays. For their part, the Tigers declined an offer from Sri Lanka's president to participate in a unified disaster task force. The Indian government has so far refused to allow foreign private aid groups onto Andaman and Nicobar Islands.

While military logisticians also have to deal with politics (e.g. having to fly around unfriendly countries), at least they have a central command that can coordinate between branches of the military and organizations like NATO that coordinate between different nation's militaries. Since disaster relief is much more decentralized than your typical military wartime operation, it may be a closer analogy to commercial supply chains which lack a strong centralized command.

There is Hope

In spite of all these challenges, some progress has been made as of this writing, twelve days after the tsunami:

• The UN Joint Logistics Center (http://www.unjlc.org/content/index.phtml/itemId/5478) created and is continuously updating web pages for NGOs and governments to check on the status of infrastructure. Their site also serves as a channel for requesting/approving movement of relief supplies and vehicles/vessels.
  
  
• In Sri Lanka, five of thirteen damaged or destroyed bridges have already been replaced with temporary bridges, and two of three damaged railroads have been repaired.
  
  
• A Humanitarian Air Hub has been established and operational since Jan/01/05 in Subang Indonesia, with a 24x7 UN Operations Room, staffed by the Malaysian Air Force.
  
  
• Singapore flew a mobile air traffic control tower to Banda Aceh's airport to deal with a twenty-fold increase in flights and to help speed up deliveries of emergency supplies.
  
  
• Ten C-130s, two C-17s, and many US helicopters have been helping with delivery of aid. As of 1/8/05, 13,000 US military personnel have distributed over 365 tons of supplies, and aircrews have flown more than 450 rescue and recovery flights.
  
  
• CNN setup a web site where thousands of people have been able to request information on missing relatives and friends.
  
  
• Eight US ships from Guam and Diego Garcia have been sent with 450,000 gallons of water and desalination plants capable of making 90,000 gallons of fresh water per day.

Initial Lessons

It would be very insensitive to talk about a "silver lining" in the form of lessons for supply chains, given the magnitude of the destruction and suffering. Nevertheless, as supply chain professionals, we can learn from this:

• The "broker" function is critical in creating instant supply chains matching resources with needs when there is no central command and there are many players involved. Organizations like the UN Joint Logistics Center were able to step in and help fill this role.
  
  
• The Internet plays an important role in helping to create instant supply chains, particularly in brokering.
  
  
• Improvisational skills are highly valuable in these situations. The old school supply chains were all about repeatable processes and procedure to make the "normal" way more and more efficient. These are still important, but need to be balanced with development of improvisational skills that are critical in all changing situations and instant supply chains.
  
  
• Never take infrastructure for granted. Be ready with alternatives.
  
  
• Local politics must be dealt with. Not just being aware of them, but having a presence on the ground cultivating connections and relationships, knowing the local language, culture, customs, and laws.
  
  
• Agility is important on the demand side, not just on the supply side—keeping a pulse on very rapidly changing markets, what is needed where and when. Those organizations that can take advantage of a sudden new demand, or deal with a sudden drop in existing demand are more likely to succeed. For example, some fashion-oriented retailers and manufacturers have been turning that skill into a strong competitive advantage.
  
  
• Prepare for the unpredictable. Developing scenarios, creating backup plans and procedures, practicing them, and pre-positioning resources can be worth the investment. The key is being able to leverage those investments across a very wide array of circumstances. The US military prepositions assets in various regions to be able to more rapidly respond in military conflicts, but those same assets have proven to be invaluable in this crisis, and many other humanitarian efforts. The idea of "leveragable insurance investments" that can be used in normal times and for many purposes deserves attention.

As events unfold and more of the stories are revealed in the coming months, there will undoubtedly be many more lessons that can be gleaned to help in future relief efforts. Many of these same lessons can help us anywhere and anytime that "instant supply chains" are needed, which is likely to become more and more the norm as we move to ever more rapidly changing and dynamic supply chains.

More images from the Tsunami

THE COASTAL RAILWAY LINE AT LUNAW

ROAD IN ACEH PROVINCE

INDONESIAN REFUGEES PASS A CORPSE ON THE WAY TO THE WEST COAST TOWN OF LEUPUNG

About the Author

Bill McBeath, Chief Research Officer of ChainLink Research, leads ChainLink's research efforts, as well as the procurement, strategic sourcing, design collaboration, and on-line marketplaces practices.

Bill McBeath can be reached at: bill.mcbeath@clresearch.com.

ChainLink Research is a bold new supply chain research organization dedicated to helping executives improve business performance and competitiveness.