Supply chain management for Disaster Relief Operations: principles and case studies. I. Nyoman Pujawan*, Nani Kurniati and Naning A.

Transcription

1 Int. J. Logistics Systems and Management, Vol. x, No. x, xxxx 1 Supply chain management for Disaster Relief Operations: principles and case studies I. Nyoman Pujawan*, Nani Kurniati and Naning A. Wessiani Department of Industrial Engineering, Sepuluh Nopember Institute of Technology, Surabaya 60111, Indonesia pujawan@ie.its.ac.id nanikur@ie.its.ac.id wessiani@ie.its.ac.id *Corresponding author Abstract: Supply chain management has been widely researched and applied in business context. Recently, there is an increasing concern towards the management of logistics/supply chain for Disaster Relief Operations (DROs). While some aspects of commercial logistics/supply chain, such as coordination, collaboration, and information visibility, are applicable for DROs, many are not directly transferable. Based on the review of the current relevant literature, we propose a number of underlying principles of supply chain management for DROs. The principles will then be applied as a framework to evaluate the logistics/supply chain management of two DROs recently happening in Indonesia. From the viewpoint of those principles, we found some common problems in the handling of logistics operations such as lack of professional logisticians and difficulty of coordination. On the other hand, there were significant differences of the two cases in handling the logistics operations in terms of the degree of information visibility and the intensity of coordination among the involved parties. Author: Please reduce abstract of no more than 100 words. Keywords: DROs; disaster relief operations; logistics; supply chain; Indonesia. Reference to this paper should be made as follows: Pujawan, I.N., Kurniati, N. and Wessiani, N.A. (xxxx) Supply chain management for Disaster Relief Operations: principles and case studies, Int. J. Logistics Systems and Management, Vol. x, No. x, pp.xx xx. Biographical notes: I. Nyoman Pujawan is a Professor of supply chain engineering at the Department of Industrial Engineering, Sepuluh Nopember Institute of Technology (ITS), Surabaya, Indonesia. He obtained a First Degree in Industrial Engineering from ITS, Master of Engineering in Industrial Engineering from Asian Institute of Technology (AIT), Bangkok, and a PhD in Management Science from Lancaster University, UK. Previously, he was a lecturer in Operations Management at the Manchester Business School, the University of Manchester, UK. His papers have appeared in such journals as International Journal of Production Economics, European Journal of Operational Research, Production Planning and Control, among others. Copyright 200x Inderscience Enterprises Ltd.

2 2 I.N. Pujawan et al. Nani Kurniati is a Lecturer in the Department of Industrial Engineering, Sepuluh Nopember Institute of Technology (ITS), Surabaya, Indonesia. She obtained a First Degree in Industrial Engineering from ITS and a master Degree in Industrial Engineering from Bandung Institute of Technology. Her research interests include reliability, maintenance, risk management and logistics for disaster relief operations. Naning A. Wessiani is a Lecturer in the Department of Industrial Engineering, Sepuluh Nopember Institute of Technology (ITS), Surabaya, Indonesia. She obtained a first Degree in Industrial Engineering from ITS and a Master of Management from Airlangga University, Indonesia. She does research in financial management and logistics for disaster relief operations. 1 Introduction There has been an increasing demand for humanitarian relief operations in line with more and more disasters happening around us. There are about 500 disasters every year, killing about 75,000 people and affecting some 200 million others (Van Wassenhove, 2006). The International Federation of Red Cross and Red Crescent Societies (2005) suggested that the number of disasters in the period of has increased to about 707 and affected about 213 million people annually. In 2004, we all witnessed the Tsunami, one of the most tragic natural disasters in the history of human life, which killed about 165,708 people, affected more than 530,000 people, and resulted in economic losses of about US$4,451,600,000. Unfortunately, owing to environmental degradation, changing weather patterns, human occupation of hazardous locations, rapid urbanisation, and the spread of HIV/AIDS in the developing countries, the number of disaster, both natural and man-made, is expected to increase in the years to come (Ergun et al., 2007). Whybark (2007) suggests that the forces of increasing population, human infringement into risky areas, and changing of climate patterns are offsetting our ability to effectively reduce the impacts of various disastrous events, despite the advancement of relevant technologies. As a consequence, the need to continue the work of improving disaster relief is extraordinarily important. One of the most important issues in Disaster Relief Operations (DROs) has been the logistics/supply chain activities. Logistics in DRO context include such activities as assessing demand, procuring goods, determining priorities as well as receiving, sorting, storing, tracing and tracking deliveries. Using the analogy of commercial logistics, we can classify logistical activities into inbound logistics, that is the process of acquiring supplies from multiple suppliers to the distribution channel and the outbound logistics that delivers supplies from the distribution centre to the affected areas (Sheu, 2007a). Unlike the commercial logistics where the goal is to provide services to the customers in a profitable way, supply chain/logistics activities in DRO are aimed at responsively matching demand and supply of goods such as foods, shelter, tents, and medicine to the people in need. Although consideration to cost-effectiveness is important, certainly short delivery time and high-supply availability are among the most critical objectives to achieve in disaster relief or emergency supply chains. According to Sheu, emergency logistics can be defined as

3 Supply chain management for Disaster Relief Operations 3 a process of planning, managing and controlling the efficient flows of relief, information, and services from the point of origin to the points of destination to meet the urgent needs of the affected people under the emergency conditions. (Sheu, 2007a) Thomas and Kopczak (2005) suggests that the main problem in the DROs may not be in the amount of supplies available, but in the distribution of those items quickly and in sufficient quantity to the people in need. In many cases, the bottleneck in distributing the supplies is caused by the damaged infrastructure and unavailability of accurate information about the amount of supplies needed, especially in the first few days of the disasters. In other cases, the oversupply of non-essential goods could even make the logistical response slower. After the Tsunami attacked several Asian regions in December 2004, for example, the overwhelmed goods that arrived at the airports exceeded the capacity of the aid agencies in the field to sort, store, and deliver goods effectively. In spite of the importance of its role in ensuring the smooth flow of goods from the origin to the destination, the development of supply chain/logistics management concepts, theories, tools, and principles is still in the infancy stage, by far lagging behind those for commercial/business sectors. Discussions on the issues in managing disaster relief logistics or supply chains can be found in some recent academic papers, including Beamon and Kotleba (2006), Altay and Green (2006), Oloruntoba and Gray (2006), Van Wassenhove (2006), Whybark (2007) and Sheu (2007a), among others. Beamon briefly compares and contrasts between humanitarian relief and commercial supply chains. The application of agile supply chain to humanitarian aid is presented by Oloruntoba and Gray (2006). In a recent paper, Whybark (2007) discusses issues in managing disaster relief inventories. The author distinguishes the differences in characteristics between enterprise and disaster relief inventories. Sheu (2007a) outlines major challenges in emergency logistics. Some recent academic works also concentrate on the modelling of disaster relief supply chains. These include inventory modelling (Beamon, 2006; Lodree and Taskin, 2009), distribution network (Sheu, 2007b), integrated location-distribution (Yi and Ozdamar, 2007), and pickup and delivery routing (Yi and Kumar, 2007). In this paper, we propose a number of principles for logistics/supply chain management of the DRO. Such principles are important as general guidelines for those handling logistics/supply chain operations for DRO. Two case studies will be presented and evaluated based on the proposed principles. 2 Logistics/supply chain management: moving from business to DRO There is no doubt that Supply Chain Management has been the key for creating competitiveness in most commercial organisations. The roles of supply chain management in making companies like Wal-Mart, Dell, and P&G so competitive in the market is well acknowledged. With excellent supply chain management, commercial organisations are able to produce and deliver materials/products from the point of origin to the point of consumption in a cost-effective way. The underlying principles behind the supply chain management have been the integration among functions within each organisation as well as collaboration and information sharing among organisations within the supply chain. Wal-Mart and P&G, for example, have long enjoyed the power of collaboration and information sharing between them. The relationship that was initially

4 4 I.N. Pujawan et al. characterised by adversarial, fragmented processes, and obsessed by day-to-day transactions has been transformed into more collaborative relationship, which includes the use of joint scorecards and measurements, driving out costs through automation, and sharing data to better understand the consumers (Grean and Shaw, 2000). Both commercial and DRO supply chains are similar in a number of ways so that some of the underlying principles, approaches, and techniques developed for commercial/business supply chain management can be applied for DROs. In general, both DRO and commercial supply chains share the following common characteristics: Both aim at effective delivery of goods from the source to the point of demand. In essence, all logistics/supply chain operations have to be designed in such a way to ensure that the right goods are distributed to the right people at the right time (Van Wassenhove, 2006). In both cases, supply network could be very complex, involving multiple parties of both domestic as well as international organisations, structured in a multi-echelon or multi-tiered system. In both cases, demand is uncertain and effort is needed to predict the level of demand. Demand uncertainty has been a critical issue to any business sector, as we never have the privilege to know with certainty what are going to sell or to be needed by the customers. It is also the case for disaster relief supply chain. Even when a disaster has happened, there are huge uncertainties in the types and quantity of supplies needed. Visibility and coordination is required in both cases to improve the responsiveness and cost-effectiveness of the supply chain operations. On the other hand, there exist many differences between the two. Such differences suggest that many of the concepts and techniques in commercial logistics/supply chain are not directly transferable to DROs. Adjustments of the existing concepts and techniques as well as developments of the new ones are necessary, hence challenges and opportunities for the academic community. The differences span from the number of parties involved, the configuration of the supply network, the pattern and uncertainty of demand, and the pattern and uncertainty of supply, each of them is detailed below: Parties involved. In a commercial supply chain, those parties are relatively well linked with each other. Many of the relationships are long-term, developed based on partnership principles. In DRO, most of the relationships are developed instantaneously during the relief operations. The way parties involved are totally different. In a commercial supply chain, parties are engaged in supply chain activities following a proper assessment of each other s values and formalised into contracts. For example, a vendor will be able to supply parts or materials after it is evaluated and approved by a manufacturer. In a DRO supply chain, many parties are unknown and voluntary; no evaluation is needed to enable them to participate in relief operations. Individuals, social, business, and government organisations could easily be engaged in the relief operations as a volunteer or a donor (supplier) of foods, shelters, tents, medicines, and other supplies.

5 Supply chain management for Disaster Relief Operations 5 Network configuration. In a commercial supply chain, a network is often composed of multiple supply sources to cover demand in many different locations. The total demand is the aggregation of the demands from regional markets. Network configuration is relatively stable, although changes could happen through switching of suppliers, consolidation of manufacturing facilities, and changes in distribution networks. In most cases, the DRO supply chain has only one demand point and fulfilled from multiple sources of supply. Unlike in business, location of storage in DRO is political (Whybark, 2007). Configuration is unstable and many suppliers only supply once during the relief operations. Figure 1 illustrates the difference between the network configuration of a commercial and a DRO supply chain. Demand. A commercial supply chain exists because there is a sufficient demand to economically justify the supply chain existence. Although the demand for a particular product could be quite small and quickly disappear owing to rapid development of new products, the whole demand is generally quite stable, large and sustainable for a relatively long time. In most situations, past data can be used to forecast the level of demand, although causal relationships are often needed on top of the sales history. Standard techniques to forecast demand are available. In DRO, demand is largely unpredictable since it is caused by unpredictable natural and man-made disaster (Ratliff, 2007), is short-term in nature, very unstable with time, and no or very limited past data can be used to assess the level of demand. Knowledge from other disasters could be useful, but quick assessment at the field is more important to predict the demand. No standard technique is available to forecast demand. Supply. Supply of materials, components, or products in a commercial supply chain comes from predetermined suppliers. The level of supply activity reflects the level of demand, although some discrepancies exist owing to forecast errors. Suppliers normally react in response to customer orders. The performance of the suppliers is maintained through proper selection and performance monitoring (vendor rating). On the other hand, it is not possible to limit supplies from certified suppliers in the DRO supply chain. The amount of supply would not reflect the demand because supplies come as a result of appeal from news media or aid agencies involved in the relief operations. In most cases, the suppliers /donors perception and ability determines the types and quantity of items they supply. As a result, excess of non-essential supplies and shortages of critical items are often the case in the relief operations. The above similarities and differences suggest that while much can be borrowed from the commercial sectors, logistics/supply chain management for DROs requires much more effort to develop. Different characteristics in demand require different approaches to do the forecast. Differences in the supply side suggest that much is need to learn to better understand how supplier relationships, procurement of goods, and the management of inbound logistics should be performed in the DRO context. Likewise, various other issues such as network configuration, distribution, and performance measures warrant the effort for better understanding and practice of DRO supply chains.

6 6 I.N. Pujawan et al. Figure 1 Illustration of the difference in the supply demand area for commercial and DRO supply chain (see online version for colours) 3 Principles of SCM for DRO Differences in the characteristics of commercial and DRO supply chain require different ways and different focus of managing them. While logistics activities for commercial and business organisations are aimed at achieving competitive advantage in the market through one or a combination of advantages in cost, quality, speed, or responsiveness, the DRO supply chain is aimed at reducing fatality (loss of life) and alleviate suffering (Beamon, 2004). Obviously, similarity exists between the two, and thus there are common principles that apply to both commercial and DRO supply chains, but the specificity of each general principle could be quite different for the two areas. In this section, the following four principles for managing DRO supply chain are proposed. How they are adapted to DRO supply chain is discussed: information visibility coordination accountability professionalism 3.1 Visibility Visibility has been one of the most important words in the field of supply chain management and has been discussed in a great deal in the supply chain management literature (see for example Chu and Lee, 2006; Barratt and Oke, 2007; Bailey and Francis, 2008). Supply chain visibility is associated with an ability to see what is happening beyond the four walls of the organisation. With greater visibility within the supply chain, a manufacturing company would be able to trace the status of an order placed to its supplier, obtain real demand information from the end customers through POS data, and monitor stock level of its products in the retailers and distributors. Such a visibility is attainable if partners within the supply chain are willing to share relevant information. The role of information and communication technology is critical in improving visibility across the supply chain members. Visibility has helped commercial

7 Supply chain management for Disaster Relief Operations 7 supply chain to improve efficiency and service level as well as to speed up responses to customers. Likewise, in the defence sector, visibility is also a critical issue. In the Department of Defence (DOD) of the USA, visibility is achieved through automatic identification for each item in inventory (Engels et al., 2004) so that it is possible to track the quantity available and the stock position for each item. For military purposes, it is extremely important to use such technology as automatic identification so that accurate movements of items from the suppliers to the front line can be traced. With high visibility, a logistic officer, for instance, will be able to obtain detailed information about what is inside a container and when the container is expected to arrive in a port so that an appropriate anticipation can be made related to unloading of the container. Similar to commercial and military logistics/supply chain, visibility is vital to the effective operations and decision-making of disaster relief supply chains. Visibility in DRO means that critical information is well accessible by the interested parties. Immediately after a disaster occurrence, the role of news media in delivering the updated information to the public, including the types of supplies needed, is immense. When the relief operations have taken place, logistics operators in the field should know what items are available, the quantity on hand, the expected days of supply, and the location (where they are stored). This would require accurate recording of inventory transactions and regular reporting to the public, aid agencies, and major donors through various means such as news media and a dedicated website. Visibility also means that major supplies in transit from donors/aid agencies are known. With high visibility, logistics people in the field as well as prospective donors would be able to determine which types of items have sufficient stock levels and which items are in shortage. In making procurement plans and appeals, high visibility enables logistics people to account for goods in transit from major donors/aid organisations. 3.2 Coordination In the commercial context, a supply chain consists of a number of independent organisations whose primary objectives are often in conflict. Yet, those organisations should work together to achieve chain-wide competitiveness and thus, coordination among them is necessary. According to Xu and Beamon (2006), coordination exists as a strategic response to interdependencies between organisations within the chain. Coordination in a supply chain could be in terms of incentive alignment between conflicting parties (Cachon, 2003), synchronisation between production and transportation or delivery schedules (Chandra and Fisher, 1994; Goyal and Nebebe, 2000; Pujawan and Kingsman, 2002), centralisation of control such as inventory pooling into a central warehouse (Abdul-Jalbar et al., 2003), and coordination of production planning for multi-site plants (Bhatnagar and Chandra, 1993; Lo Nigro et al., 2005). In DRO supply chains, owing to the multiple parties involved, conflicting objectives are unavoidable. Although ideally all parties involved are directed towards a single point of control, such a situation is often disturbed by the lack of trust among participating organisations. Quite often, international aid agencies are unwilling to let the local authorities take control of the logistics supply chain activities because of lack of perceived transparency and accountability. Moreover, when competing organisations such as national or local political parties involve in the relief process, coordination between them could be very difficult.

8 8 I.N. Pujawan et al. The costs of lack of coordination in DRO supply chain could be enormous. Excess of supply for some types of goods, shortages on other types, duplication of efforts are examples of the outcomes from lack of coordination. Many people working for humanitarian logistics do not know what their counterparts are doing, and hence, there was little collaboration and resource sharing. Duplication and low resource utilisation could happen in many supply chain decisions, including warehousing, transportation, procurement decisions, etc. As summarised by Thomas and Kopczak we found that several of them were thinking of deploying a regional warehouse structure for faster response. Coincidently, three were actually talking with warehouse providers in the same city. Similarly, two others had commissioned expensive analyses to select a fleet management system and three were wrestling with the idea of a training program for field logisticians (Thomas and Kopczak, 2005) Coordination in a DRO supply chain requires even stronger leadership than that for the commercial sector to bring the participating organisations to move towards the same direction. In addition, visibility of information would be of much help in creating a better supply chain coordination. Misunderstanding and debates could be minimised if each of them looks at the same data/information. 3.3 Professionalism Professionalism is related to the availability of well-trained people to perform the tasks and standard operating procedure to follow. In the commercial supply chain, most people working in the logistics/supply chain field are equipped with appropriate trainings. For commercial organisations, body of knowledge for supply chain management as well as the operating procedures have been developed for decades. In contrast, development of supply chain management for DRO is still in its infancy stage, and as a result, only few people involved in the relief operations have appropriate logistics/supply chain management trainings. As Thomas and Kopczak (2005) suggest, people working in humanitarian relief operations came from various backgrounds and they improve their qualifications by experience. Lack of professionalism leads to lack of career recognition and vice versa. To many aid organisations, logistics/supply chain management is just a support function. The difficulty in promoting professionalism in logistics/supply chain of DRO is also attributable to the fact that the turnover rate of people working in relief projects is high. High turnover rate, coupled with lack of institutional learning, makes it difficult for aid organisations to deploy well-trained and experienced logisticians to the field. Professionalism also means that sufficient standard operating procedures are available and they were complied during the relief operations. Fairness principle is also an important element of professionalism. Aid agencies and government authorities must maintain the principles of equality and impartiality in delivering aids to the people in need. Such a principle is less important for commercial supply chains. 3.4 Accountability The number of parties directly involved in a DRO process could be very large, ranging from well-established international aid agencies to local authority to individuals acting as volunteers. In addition, there are so many other organisations and individuals

9 Supply chain management for Disaster Relief Operations 9 who indirectly involve as donors, contributing goods, money, facilities, etc. Obviously, those donors are in great interest to know that their contributions reach those in need appropriately and none is misused. Significant effort is needed to ensure that every contribution is distributed properly and reported transparently. In a major DRO where hundreds of organisations involve in the field and tens of thousands of organisations and individuals contribute as donors, it is very difficult to trace how each of those contributions is used to alleviate sufferings. In commercial supply chains, accountability can be maintained more easily. In addition to annual financial audit, accountability is maintained through standard and well-controlled business processes. The use of ERP and web-based supply chain in commercial sectors make it easier to record and trace any transaction. 4 Case studies 4.1 Case 1 On 31 December 2005, the happy mood of New Year celebration was disturbed by sad news from Jember, a district in East Java, Indonesia. A heavy landslide and flooding were causing massive destruction to local residential and agricultural area in the slope of Mount Argopuro. The deforestation and illegal lodging were blamed to be the major cause of the disaster. The disaster caused about 90 deaths and ruined thousands of homes, destroyed roads, schools, and other public facilities. Thousands of people were homeless and temporarily housed by the Government as refugees. Local authority, which was responsible for the relief operations, said that there were over 7600 refugees at the beginning. Soon after the disaster, news media, government agencies, political parties, NGOs, and other organisations were involved in collecting foods, shelters, tents, and money to be delivered to people in need. In the first few days, we often heard from the news media about various logistical problems in field. The problem was not in the availability of foods and shelters, but in the way those goods were distributed. In Indonesia, there is a government authority that is responsible for the relief operations. Such an authority is tiered according to the hierarchy of the government organisations, called Bakornas at the national level, Satkorlak at the province level, and Satlak for each district. On 2 and 3 February 2006, we visited the suffered area and interviewed five of the organisations involved in the relief area. The five organisations were Satlak of the District of Jember, local military officers and three political parties involved in the relief operations. Our aim was to focus on how logistics operations were handled. We used the four principles above to explore the case during the site visit. From the information visibility point of view, we found that most of the organisations involved in the relief operations were struggling to handle the logistics operations manually or at most using a simple spreadsheet application. Information on inventory level is not shared among organisations in the relief operations. Such information is also virtually inaccessible by the public/potential donors. As a consequence, donors deliver goods arbitrarily and this leads to imbalanced availability of goods in the field. For example, during our visit we found that there were a large excess of instant noodles and used clothes, while shortages on other types of goods. The relief organisations did

10 10 I.N. Pujawan et al. not have any systematical way to make the inventory level more balanced, but they were passively recording inventory transactions. Our observation also suggested that there was very limited coordination among the participating organisations. The local authority responsible for the relief operations (Satlak) was unable to effectively act as a coordinator. We found over 20 posts for relief centres operated by political parties or independent organisations that did their own operations without proper coordination from the Satlak. There was no coordination meeting involving all organisations in the field. As a consequence, there was much duplication of efforts. The interviewee suggested that it was very likely that some people received multiple aids, while others did not receive sufficient amount. We also found significant lack of professionalism in handling logistical issues. None of the organisations interviewed in the field had a trained logistician in their team. Logistics activities were managed by a team member with no prior training or experience on logistics management. There was virtually no well-developed procedure or rule applied to receiving, storing, and distributing goods. We also learned from the interview that there was no mechanism or standard operating procedure in place to identify who really were entitled to receive foods, shelter, etc., and who were not. A number of organisations explained that it was difficult to distinguish between who really entitled to receive aids and who did not. In some cases, ordinary residents, not affected by the disaster, falsely reported themselves being the victims of the disaster and asked for food, shelter, etc. Transparency in the allocation of goods and money varies depending on the organisations managed those processes. The Satlak provided us with the summary of goods received and distributed to the refugees as well as the general summary of the cash flow. They also have a website where we can see the cash flow from January to mid of March We did not have any of such figures from other organisations involved in the relief operations. 4.2 Case 2 A massive earthquake of 5.9 Richter scale was happened in Jogjakarta on 27 May 2006, at about a.m. The earthquake was affecting two provinces in Indonesia, Jogjakarta and Central Java. According to the data on 14 June 2006 (from the Media Centre managed by the government authority in both provinces), the earthquake causing 5749 people dead, 38,568 wounded, and 127,037 houses and 3432 public places destroyed. More tragically, public places such as hospitals were also destroyed, making relief operations very difficult. The disaster was very soon announced through various means of communications such as the news media, various electronic mailing lists, and short message services. Soon, we saw responses from the public and aid organisations, although it took quite some time for them to start operations effectively owing to the transportation infrastructure not functioning well (including the airport). In a couple of days, over 100 organisations involved in relief operations, which include Satkorlak of both provinces, Satlak of local districts, Red Cross, military, universities, schools, news media, political parties, international aid agencies, religious groups, and professional organisations. Many of those organisations managed logistical activities on site. Although the government, through the Department of Social Affairs, actually had some inventories for emergency aids such as tents, clothes, and foods but in the early

11 Supply chain management for Disaster Relief Operations 11 days of the relief operations, there was still a great shortage of tents, lighting and water. The types of medicine available were not what they were actually needed (there were shortages of anaesthetics for fractured bone operations). The distribution of supplies to the target people had great difficulties in the early days owing to the restricted road access. Many of the affected people were reluctant to stay in the camp and prefer to return to their destroyed homes, making the distribution of supplies even more difficult. One of our team members visited the site a couple of weeks after the event and documented various information, interviewed a couple of people, including the local authority to obtain insights on how the logistical operations were handled during the relief operations. We again use our four principles to look at the practices. Table 1 compares the practices of the relief operations against the four principles proposed in this paper. The information we collected from the interview as well as from other sources (including relevant websites and news media) indicated that there was a moderate use of information technology to improve information visibility, although many of the parties involved still used more traditional means of processing and communicating information. Information visibility was obtained through close involvement of news media in communicating what happened in the field, the use of web-based information updating (done by a number of participating organisations), the use of s and electronics mailing lists, and through short message services (SMS 9731). One of the organisations (Air Putih Media Centre) updating the information in the dedicated website every couple of hours. Table 1 Summary of results from the case study Aspect Case 1 Case 2 Information Very low information visibility Moderate information visibility visibility Manual inventory record or at most using a simple spreadsheet application Moderate use of information technology Coordination Information on inventory level is not shared among organisations in the relief operations and is also virtually inaccessible by the public/potential donors Excess some types of goods, shortage on others and no systematic way to make the inventory level more balanced Over 20 posts for relief centres operated by political parties or independent organisations Coordination was very limited Much duplication of efforts Close involvement of news media in communicating what happened in the field The use of web-based information updating (done by a number of participating organisations) The use of s and electronics mailing lists The use of short message services Over 100 organisations involved, involving local, national and international organisations There was a well-defined area of service for each organisation (especially the NGOs) The area of responsibility of each organisation was defined

12 12 I.N. Pujawan et al. Table 1 Summary of results from the case study (continued) Aspect Case 1 Case 2 Professionalism None of the organisations had a logistician in their team. Virtually no standard procedure or rule applied to receiving, storing, and distributing goods No mechanism or standard operating procedure in place to identify who really were entitled to receive foods, shelter, etc and who were not Accountability Transparency varies depending on the organisations managed those processes There was summary of goods and cash flows There was lack of professional logisticians to manage the logistics and supply chain aspects There were standard operating procedures followed during the relief operations, although not all the procedures could be executed properly Some of the difficulties came from the affected people, who refused to stay in the camp (as the procedure requires), but they return to their homes There was a website showing the supply and distribution of goods with frequent update. However, as there were many organisations operating at the field, one can not guarantee that all records were published In the first few days, owing to the lack of accurate information on the number of affected people in each area, the distribution of goods was proportionate to the population size of each of those areas. Certainly, that was not an appropriate way as the ratio of affected people differs from one area to another. Quick and more accurate assessment would be needed to avoid such a problem occurring for a quite long time. Coordination among the parties involved seemed to be better than case 1. Because of relatively severe impacts caused, this disaster was assigned to the province-level authority (called Satkorlak) to handle the leadership of the relief operations (thus, a higher authority than case 1). In addition, the neighbouring provinces (East Java and Jakarta) also provided help in the relief operations. Besides the government agencies, there were over 100 organisations involved in the relief operations, including international, national and local organisations, many of them were NGOs. The area of responsibility of each organisation was defined (such as communication, foods, health and nutrition, education, camp management, and water and sanitation). However, as the large number of organisations involved, there were significant difficulties in making a smooth coordination in the field. Similar to case 1, our observation indicates that there was lack of professional logisticians to manage the logistics and supply chain aspects of the relief operations. On the other hand, there were standard operating procedures followed during the relief operations, especially by the local authorities and experienced aid organisations. However, the interviewee admitted that not all the procedures could be executed properly. Some of the difficulties came from the affected people, who refused to stay in the camp (as the procedure requires), but they return to their homes.

13 Supply chain management for Disaster Relief Operations 13 Our observations also revealed that the recording of the distribution of aids in the first few days was quite difficult, but this improved significantly in later days. The website managed by the Air Putih Media Centre shows the supply and distribution of goods. Such entries were updated frequently, keeping the information current. However, as there were many organisations operating at the field, one cannot guarantee that all records were published. 5 Concluding remarks Unlike commercial supply chains, the body of knowledge for the disaster relief supply chains is still in the infancy stage. Much needs to be done to advance the knowledge and practice of supply chain management for DRO. This paper contributes to the field DRO supply chain by presenting four necessary principles, which include information visibility, coordination, professionalism, and accountability. Two cases were also presented and discussed based on the above principles. We learned from the cases that there were significant differences in the way the two relief operations handles the logistics/supply chain issues, but generally there were some main problems encountered such as lack of professional logisticians, difficulty of coordinating among participating organisations, and some difficulties arisen from the people affected during the relief operations. There are a number of possible extensions to this study. First is the development of more detailed process audit, based on the principles proposed in this study, to evaluate logistics management of a DRO. Second, information visibility can be improved if appropriate logistics application for DRO is available and hence development of appropriate applications is necessary. Finally, these principles may be extended to formulate best practices in supply chain management of DROs. Finally, we believe that comparison with other cases would improve our understanding on the logistical/supply chain aspects of DROs. Acknowledgement The authors thank the referees for the constructive comments on the earlier version of this paper. References Abdul-Jalbar, B., Gutiérrez, J., Puerto, J. and Sicilia, J. (2003) Policies for inventory/distribution systems: the effect of centralization vs. decentralization, International Journal of Production Economics, Vols , pp Altay, N. and Green III., W.G. (2006) OR/MS research in disaster operations management, European Journal of Operational Research Society, Vol. 175, No. 1, pp Bailey, K. and Francis, M. (2008) Managing information flows for improved value chain performance, International Journal of Production Economics, Vol. 111, No. 1, pp.2 12.

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