Getting materials and equipment to people for the purpose of alleviating suffering is a huge challenge for any organisation involved in disaster relief.
Humanitarian supply chains are characterised by very unpredictable demand, very short lead times, challenging inventory policies, and unreliable information flow from the affected areas - all enemies of an efficient supply chain.
Success relies on considerable logistical expertise based on practical experience and ensuring that all of the logistics operations (procurement; transportation; distribution; warehousing) are closely linked to each other, and to information coming from the field. Failure in one area may result in the failure of the entire logistics operation.
Freeplay Energy has been working in the field of humanitarian relief for more than 20 years. Our radios, solar lighting products and mobile phone chargers are now in use by millions of people around the world – primarily those who are living off-grid. In the past these products have tended to go into an affected area as part of the third or even fourth wave of relief. The first wave usually consists of life-saving essentials such as tents, blankets, drinking water, food and medicine. Radio and lighting products are, however, tending to rise up the priority list but this depends very much on the advice received from those assessing need on the ground.
Getting communications back up and running following a disaster is increasingly recognised as a major priority. Being able to tell people what the current situation is, where they can get help and how to best help themselves can make the difference between life and death for many people, so providing access to information whether on mobile phones, radios or any other channel is essential.
This more immediate need for supplies led Freeplay to review and modify our processes so that we can be more responsive to an emergency when it arises.
The logistical challenges are three-fold. First, we need good quality information from the field. Second, we have to ensure that products are available for shipment to those who need them, within the shortest possible timeframe. Third, shipping needs to be achieved as efficiently as possible if the goods are to be in situ at the appropriate time.
Local information and knowledge
Firstly, the importance of being able to receive good quality information from the field cannot be overstated. Typhoon Haiyan was a good example of how close co-operation between suppliers, forwarders and the NGOs on the ground enabled greater effectiveness in establishing the types and levels of need, and in delivering goods to the wide spread of islands that they needed to reach. Without the local knowledge that NGOs were able to offer, the practicalities of getting the right cargo to those who needed it could have been insurmountable, so the close networks that were formed between those involved in the supply chain before the disaster struck were invaluable. In addition, the creation of a permanently open Skype group for the CDAC Network following the typhoon meant that people on the ground could update Network Members on an ongoing basis, improving communications no end. It meant that we could receive information directly from the affected areas and make logistical adjustments accordingly, thereby ensuring timely provision and avoiding the possibility of duplication.
Product availability and stock levels
Making the products available for shipping at the earliest opportunity involves both rapid manufacturing capability and optimised stock levels.
One assumption that we often encounter is that suppliers have a high level of fully-assembled stock already in storage and awaiting shipment. Aside from the cost of financing this, it is not a practical approach. Internal batteries are best fitted at the last possible moment to ensure that products are ready to use straight out of the box – this is critical for affected communities.
Lead time for production can vary between 35 and 60 days, depending on component and labour availability. Those lead times lengthen in periods of peak demand, such as the run-up to Christmas – in the manufacturing world this is from the end of August to early October, and at this time factories are usually running at full capacity.
The answer is limited stockpiling, combined with the ability to add rapidly to that stock when need is identified. To reduce overall lead times, we now forward-buy long lead time components such as micro-processors, and hold these in stock. This is financially and operationally more practical than holding finished goods and is an effective way of reducing the time needed to manufacture stock. We have also changed the way in which we select our suppliers to favour manufacturing partners who are sympathetic to the unique nature of what we do, and who are better equipped for rapid assembly and shipping in the event of a crisis.
Because there is no way of accurately predicting where the next crisis will strike, it is very difficult to position those stocks close to where they will be needed. Freeplay Energy’s tried-and-trusted solution is to store our products in Hong Kong. Not only is this close to where they are manufactured, but Hong Kong’s long-held role as a global distribution centre ensures that the necessary experience to ensure rapid shipment is readily at hand. The easy availability of air and sea freight capacity means we can get our products to where they are needed as quickly as possible. The expert global knowledge of our forwarders means that we can access any region without needing to create multiple stockpiles around the world.
One middle way, which Freeplay has used in a number of regions once a crisis has arisen, is to move consignments of stock to logistics bases that are as close to the affected areas as it is sensible to get, and then to distribute from there. This means that smaller, more easily managed and monitored ‘packages’ of goods can be moved very quickly to where they are needed.
Shipping and distribution
Shipping needs to be achieved as efficiently as possible if the goods are to be in situ at the appropriate time. So the decision as to whether to move freight by air or sea may seem straightforward – following a disaster, speed of response is a vital issue and air freight appears to be the obvious answer. However, moving large consignments by air, whether via scheduled or chartered services, can be extraordinarily expensive – sometimes more than the cost of the products themselves. This is a significant issue to consider in these times of hard-won budgets. Furthermore, the impact of a disaster on local infrastructures can mean that freight ‘backs up’ once it arrives and cannot be distributed to where it is needed - negating the additional expenditure
Depending on the local situation, the significantly slower movement of goods by sea may mean that by the time they reach their destination, distribution to affected areas can be facilitated far more effectively. Even then, things can go wrong. I know of a company that shipped a consignment to an African country by sea, which took 30 days, only for the goods to sit in a port-side warehouse for a further 60 days as a result of demands for unanticipated – and unanticipatable – importation payments.
Over the last two decades, our experience has shown that effective movement of goods into disaster-affected locations relies on a combination of strong networks, good communications and deep knowledge of associated local bureaucratic and regulatory frameworks.
Detailed knowledge of the applicable import license and import duty regulations is priceless, and forming strong relationships with specialists in this area has paid dividends for Freeplay over the years. In particular, import duty can be very high indeed – especially for electronic goods. To ensure that goods are not held in a bureaucratic limbo, it is essential that the consignee has all the relevant paperwork to hand and can clearly show that the goods in question are destined for relief efforts, rather than the consumer market.
We work with a number of forwarders whose knowledge of both shipping and local regulatory frameworks has, time and again, proved invaluable. One of these is Geodis Wilson, which has a unit dedicated to humanitarian shipments and related issues, and which is expert at accessing ‘tricky’ parts of the world. Over the decade or so that we have worked with them, they have demonstrated their understanding of how to make the most efficient use of air and sea freight options and how to manage a whole range of obstacles which can seem overwhelming if you are new (or even not-so-new) to this type of operation. Furthermore, the expertise of Geodis Wilson and our other forwarder partners has enabled Freeplay to develop a wide range of local contacts around the world who can support both our efforts and those of our customers.
So, in summary, be the best at what you do, build a well-oiled supply chain with tried and trusted partners, consult the relevant aid agencies, rely on the experience of forwarders and tap into local information. Lives can depend on it.