Logistics and Supply Chain in Crisis Environments
Following the Indian Ocean Tsunami of December 2004, and the tidal wave of humanitarian aid which followed, the science of “Crisis Logistics” has come of age. Today, even a small humanitarian crisis represents a monetary value of $ 1 billion spent during a period of 6 moths on the geographic region. A large Crisis represent a budget between $ 50 billions and $ 100 billions. And now this type of Crisis is happening with increasing frequency. In 2006, the NGOs and Foundations, in the USA alone, have collected $ 50 billions in donations. This money collected translate in a 2007 spending budget of over $ 30 billions. In economic terms we are dealing here with a major “market”. For many small developing countries or for larger countries suffering from a chaotic phase this “Humanitarian Wealth” could be a welcomed accelerator for economic development. What is needed to fully benefit is to create sufficient economic space to accommodate the wealth (humans, materials and financial) just at the edge of the destructive period of the Crisis.
For a business enterprise a Chaotic Crisis can be the opportunity for big profits and increased market share. To benefit from the Crisis the company must prepare itself for what is called “inconceivable” events by the traditional Crisis managers. For small businesses, the lack of preparation usually translates in business failure and bankruptcy within the weeks or months following the Crisis. During Hurricane Katrina in 2005, some Louisiana consumer goods chains had prepared themselves and were able to resupply their stores, in the hours following the storm, with all the items which were in greatest demand. Some Banks were able to reopen for business with a full staff, within a few days, and were able to take advantage of a big share of the reconstruction billions, while their competition was still disorganized.
During most of the recent chaotic Crisis, particularly in the USA, CNN has shown us thousands of terrible images of suffering and drowning Humans, while a blind and disoriented bureaucracy is stalling, sometimes actively preventing, the arrival of help. Most of the Logistics systems including the US military were overwhelmed and disorganized both by the extraordinary mass of help and by the destroyed critical infrastructure. If this type of failure of government should happen again in the future, it is to be expected that political sanctions will follow quickly. Ignorance on the part of the political branch or the executive branch of government will not be an acceptable excuse anymore.
A number of Research Institutes and Think Tanks have worked from the Lessons Learned from past Crisis to better understand the dynamics of “Crisis Logistics”. it would appears that this special type of Logistics follows its own rules and good practices which require :
- good preparation ahead of time,
- moving into the Red Alert phase early enough at the risk of spending money which would appear unnecessary later (after the crisis),
- the system must be self-sufficient because the infrastructures will have failed,
- redundancy is required.
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