A Humourless Lot

Distribution center of Kühne + Nagel in Hamburg, Germany. K+N is one of the largest 3PL providers in Europe.

We have seen what third-party logistics is and what are its strengths and weaknesses; and why it will be part of logistics for global health and aid. But what does this mean for us? What will change in the way we work?

Improved information management practices

To be able to work well with 3PL providers, we will need to improve our information management: without knowing fairly well what needs to go where (and hence, what is where and what already goes where), we will not be able to enjoy the advantages of 3PL. What’s more, the more advanced 3PL providers have developed their own supply chain visibility solutions; and not only that, but often they are keen to help us to make our own systems interoperable with theirs, which almost inevitably will lead to better systems for our own use. They do that, not from the goodness of their hearts, but because their customers asked for it – you know, “no delegation without verification” – and because they think that better interoperability will also lead to better efficiency of their own processes.

Smaller logistics departments

If we can outsource all or most of our boring, ‘routine’ logistics work to 3PL providers, our own logistics departments can concentrate on those logistics that are not easily transferable: because they are in high-security settings, or because of specific sensitivities that mean that we cannot use 3PL providers without damaging our operations, or because they are in places where, quite simply, there are no 3PL providers. What remains is a small, highly specialised, highly professional, very flexible unit that delivers four types of services: supply chain management in places where 3PL providers cannot deliver or their services are not acceptable; leadership and coordination of quick scale-ups of operations in case of a sudden emergency; development and monitoring of logistics policies and contracts (including those with 3PL providers); and specialised logistics input for development of policies in other areas and for management.

Bigger logistics departments

Got you there, didn’t I?

Think of this: why would 3PL providers necessarily be from outside the aid world? We already see some 3PL activities from aid organisations themselves, e.g. WFP’s role as logistics provider of last resort in the cluster system. So why wouldn’t some of the larger aid organisations with strong logistics capacities act as 3PL providers for smaller organisations? I can easily foresee that organisations like WFP, MSF, or Oxfam, or perhaps even some governmental health logistics units would start delivering 3PL services to other aid organisations or even ministries of health. After all, they know better than most generic 3PL providers how to operate in the settings where we work, and hence can provide even better (and probably cheaper) services. These hybrid service delivery organisations will, by necessity, grow larger than they are now.

Greater logistics departments

Whichever of these choices these departments make, it will always allow them to become better than they are now: more specialised, more focused on their strengths and less exposed in their weaknesses, more flexible, more efficient, using synergies where they occur (instead of ignoring them as we often do now).

So what are your views? Is this too rosy a picture? Are you already going this way? Things I have missed?

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• Yet another scholarship from the awesome Zaragoza Logistics Center.
• The British Red Cross combines fundraising and teaching people about the logistics realities of a disaster in a hands-on, weekend-long exercise. Looks very appealing. The BRC has been raising its logistics profile over the last year or so in some very interesting ways.
• Forward Accountability: the best new development in development since the air-conditioned Landcruiser.
• Well, well, well. The UN waking up to the importance of logistics for peacekeeping.
• Sigh. Condoms costing lives? Hardly.
• I have said it before and I will say it again: aid is complex and trying to simplify it does not help. Luckily I am not the only one to say so.

[Image: Liquid Links by Desirae; some rights reserved.]

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Perhaps unsurprisingly (although it did surprise me, for reasons that I will explain later), I have received a lot of questions about the logistics of the Haiti response. Some of the most frequently asked questions, with a stab at some answers.

But first: although I am on standby for Haiti, I am not there, so everything that I say here specifically about the situation there is only second-hand, from what I hear from friends and colleagues and from what I read in the media.

And secondly: this is not a crash course in emergency logistics, nor will it be very helpful for the logisticians who are there or will be going there. If anything that you read here is new to you, you have no business of going to Haiti as a logistician (unless you will be supervised there by people who do know).

Why is logistics in Haiti so much more difficult than in other disasters?

It isn’t. Really, not at all.

Every sudden-onset disaster causes similar logistics problems. The 2004 tsunami, the earthquakes in China and Iran, even hurricane Katrina in the US: in all of these cases logistics was the main limiting factor for aid.

A painful truth that you will not hear spelled out very often: emergency aid in these circumstances is totally dependent on local preparation, and any aid that that will come from outside the area will be largely ineffective until the logistics has been cleared up – which is usually only after several days in the most favourable circumstances. This is why disaster preparedness is so important, and it is also a main reason why countries like Haiti, which don’t have much capacity for disaster preparedness in the first place, are always so badly hit when the (inevitable) disaster strikes. It is also why expectations of what aid will accomplish over the next couple of days should not be set very high (and why twits like this guy, or this nitwit, should seriously shut up until they know what they are talking about – and that I use these harsh terms here, which I have never done before, should say something).

So why do I hear so much more about logistics now than in previous disasters?

I think you are asking the wrong person (I am a logistics specialist and have no clue about media), but I have observed two parallel developments over the last couple of years that might have contributed:

1. For the second time in the history of modern of humanitarian aid (the first time was in the early 1980s), aid organisations have been refocussing on logistics as a core competence for aid. Especially the 2004 tsunami was a rude shock for many established organisations, who had become complacent about their logistics capacities and had stopped investing in it – and as a result operated at (to put it in friendly terms) less than optimal levels of effectiveness. Since then, logistics capacity is again increasingly seen as a sine qua non for effective aid, and emergency aid organisations are (again) talking about it as a key competency – also to the media.
2. Also outside of the organisations themselves, people started to become interested in humanitarian logistics, and there has been much more coverage of it. Recently there have been a number of  books on the subject released, universities have started taking an interest in it as a subject of serious research (and teaching), aid watchers have put the occasional spotlight on aid logistics, and bloggers have started writing about it (with even the occasional blog totally dedicated to the subject). All this has contributed to more attention in the press and the public at large to aid logistics, and I think we now see the first results in the huge attention for the logistics in Haiti.

In that case, what are the main logistics challenges in disasters like this?

Remember, logistics is all about the five rights: the right goods, in the right quantity, to the right place, at the right time, at the right price. One of the main issues here (and one that I have seen very little coverage of) is that in a chaotic situation like this we just don’t know what are the right goods, the right quantities, or even the right place. Needs assessment is incredibly difficult, especially in view of how difficult it is to access some areas.

“So”, I hear you say, “just send as much as possible of everything, and we’ll sort things out later”. That would be a very nice idea, if we weren’t already struggling with overburdened and disrupted infrastructure (more about that later); everything that we send that is not needed, means that we cannot send something that is needed. This is a precarious juggling act, and although logisticians have some tools to deal with it (e.g. the much-vaunted kit system, a development from the 1980s first aid logistics revolution – but one that is nearing the end of its shelf life, for reasons that I will explain at some other time), it is still the major forgotten logistics challenge.

Furthermore, unused goods can become a serious liability after the crisis; e.g. the Indonesian government had to spend untold millions of dollars on disposal of unwanted goods after the 2004 tsunami, causing a serious burden on the reconstruction.

A second issue that is under-reported, is the logistics of logistics: logistics is an immensely fuel-hungry venture (think cars, think trucks, think planes and helicopters, think generators), and getting the fuel where it is needed is not easy. In this sense, Haiti will probably be rather easier than most crises, due to the proximity of two of the largest oil producing countries in the world, and the largest navy fleet in the world; expect one or more of the US Navy’s Brobdingnagian supply ships to turn up soon with large fuel stores.

A third main issue is the wide-spread destruction of physical infrastructure. Port-au-Prince’s harbour at the moment is effectively useless, the airport (not one with a very high capacity in the first place) is damaged, and roads are destroyed and blocked. Large transport helicopters would be immensely helpful but are by far the most fuel-guzzling mode of transport (there we go again with the juggling act) and are not that easy to get there because of their limited operational range; e.g. an Mi-26 (carrying 20 tonnes) ranges only 800 kilometres, which can be extended to 1900 kilometres using additional fuel tanks – but that would seriously impact on its load carrying capacity.

In the fourth place, communications will be difficult. Over the last years, aid organisations have become more and more reliant on telephone communications, and these will be disrupted and overburdened. Many organisations have lost their expertise in radio communications (five years ago, I could program and set up a Q-mac, a backpack-sized mobile HF transceiver, in ten minutes flat, three minutes if it was pre-programmed; I now would need a manual and at least 30 minutes), and many of their staff have no clue about radio protocol – which sounds boring but is absolutely necessary to prevent total chaos on your radio channels. As a result, communication will be a real challenge.

Fifth is coordination. There will be such a host of different organisations on the ground that it will be difficult to ensure that we don’t duplicate efforts (well, duplicate as little as possible). Even more important is to avoid hindering each other, e.g. by using the available infrastructure inefficiently, causing congestion. This is one of the reasons why I would seriously suggest smaller organisations and individuals (especially those that have no previous experience in emergency response) to stay away and not even consider going there before the third stage response starts to set in (probably in about two weeks). For the people on the ground, this means going to coordination meetings. People who have worked with me know that I mostly consider these as a waste of time (I think using personal networks is almost always much more effective and efficient) – but the one main exception is during the first phases of an emergency response. So yes, even in situations like this, humanitarian logistics will involve long hours in airless rooms trying to come to agreements and exchanging information; sorry to prick your romantic bubble.
Update January 17, 10 AM AEDST Apart from going to the coordination meetings, of course it is essential that aid logisticians use and contribute to the information on the log cluster web site.

And then there is the longer term to think of. Decisions taken now can have serious repercussions later, and this is something that every loggie worth their salt will continuously have in the back of their mind. The last thing you want to happen is saving a life now, but costing multiple lives later on in the response.

Apart from these six primary ones, there is a host of secondary issues that I will not bore you with, but that will cause my colleagues in the field more than one heartache.

Any good news?

Well, I already mentioned the proximity of Venezuela and the US. One other thing that will make my colleagues’ lives a bit easier is that, although the number of victims is staggering, the geographical spread of the disaster is relatively limited (compared to e.g. the South China, Pakistan, and Iran earthquakes), so once we can get them there and the fuel issue is solved, widespread use of helicopters actually is a realistic option. And finally, the neighbouring Dominican Republic has been spared the worst of the disaster and can be used as a staging ground for the response.

So what can I do?

For this stage of the response, not much. Donating money (not goods!) to a reputable aid organisation with expertise in emergency response and a pre-existing presence on the ground might help for the longer term, but in the short term the needs seem to be met. Keep on giving, but with an eye on the longer term.

Don’t go out there. You cannot help and will only be a burden to the people who can. The only exception is if you are a humanitarian or military logistician with experience in emergency response, in which case I would suggest that you contact the organisation with which you have worked before (other organisations will not have time to vet your credentials and will use their own roster of experienced people).

And finally: spread the word about these issues far and wide, so that people start giving for emergency preparedness and not only the response; including the building of capacity within the aid organisations, like expertise at HQ level. This is one of the reasons why aid organisations spend money on ‘overhead’, and why it is so silly to judge aid organisations by the percentage spent on overhead.

Finally, comment freely in the comments section, and don’t hesitate to ask questions.

Updates

January 18, 1 PM AEDST

• WFP is contracting to get the fuel situation solved.
• US forces have taken over traffic control of the Port-au-Prince airport, but ther are some questions about how they set priorities.
• Security issues are now added to the list of logistics issues: there are reports of looting (especially at night) and the UN is recommending that aid convoys be secured by armed personnel, but there is some disagreement on how widespread and serious this actually is.

January 18, 4 PM AEDST

According to WFP, repairs to the south pier of Port-au-Prince’s harbour are underway. Informally, I have heard that some ships might be able to dock by Tuesday (local time); if that is true, that would be very good news!

January 19, 3 PM AEDST

• The informal information I received about the opening of the harbour now seems to be confirmed officially.
• Until the harbour opens, the airport remains one of the main bottlenecks. Conflicts about priorities are now fought out over Twitter, which I can only be very unhappy about: this is a triumph of the loudest voice instead of reason. Perhaps MSF’s flight should have gotten highest priority, but getting that about by flooding the USAF Twitter account is not the way to go — and I am afraid that this tactic will actually be detrimental to MSF’s interests and, more importantly, their patients’ interests in the long term.
• In general, more and more aid does seem to get to the people who need it. This, again, follows more or less the normal pattern: as logistics bottlenecks are solved and needs are assessed, the ‘pipeline’ widens and lengthens and items are getting where they are needed.

January 19, 5 PM AEDST

WFP logistician and aid blogging guru Peter Casier, on his way to the Dominican Republic to head WFP’s logistics operations there, confirms that the fuel contract was obtained yesterday and that the first fuel truck already arrived in Port-au-Prince. This will take a lot of pressure from the logisticians there.

January 20, 11 AM AEDST

• Director of communications for MSF-Canada, Avril Benoît, takes me to task on Twitter: she says that the concrete impact of the “Twitter agitation” is exaggerated and that Twitter is only a small part of MSF’s media advocacy. That might be so, but that does not negate that it was a poorly conceived idea that sets a precedent for future similar campaigns with even less reason. It will also not have made MSF any friends at the place where it matters: the people making the hour-to-hour decisions based on the priorities set — which put medical supplies only at fourth place, for reasons that one might disagree with but that are definitely not total nonsense.
• As expected, the South pier of Port-au-Prince harbour can now receive geared ships and barges; however, the container terminal is still inoperative and remains so for the near future.
• UNHAS has contracted a 12 mt plane that will start a cargo shuttle between Santo Domingo and Port-au-Prince.

January 20, 11 PM AEDST

• WFP starts a cargo shuttle between Santo Domingo and various sites in Haiti.
• Apparently coordination on the ground between aid agencies is fairly good compared to earlier large-scale disasters. However, this is a second-hand impression gleaned from a very limited number of people, so it could be totally incorrect.

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Have you ever thought about the reverse logistics in your supply chains? Very likely if you are involved in medical logistics, but probably not in those terms: reverse logistics is not something that comes up on a daily basis in discussions in our field.

Reverse logistics is basically what happens when goods need to flow back in the supply chain. The most obvious example is of course when expired drugs need to be sent back for proper disposal, but reverse logistics might actually be more common than you think: disposal of materials and equipment, recalls, returns of overstocks so they can be used somewhere else in the organisation: these are all examples of reverse logistics.

Yet we hardly ever put systems into place that deal with our reverse logistics; possibly because it is seen as an exception instead of the regular occurrence that it actually is in many organisations. The results are predictable: losses and negative side-effects are common. Some examples:

• Financial losses Most organisations would have tight controls on expensive goods as they travel through the ‘normal’ supply chain. However, I have seen many instances in which these controls were absent or much less stringent when dealing with reverse logistics. In one example, when trying to see what happened with a large generator (value: several tens of thousands of dollars) after it was sent back for repairs, I discovered that nobody had actually followed up after it was sent back and a replacement arrived, and in the end it was untraceable. This was a big and unnecessary loss for the organisation.
• Negative health effects If expired drugs are taken from the reverse supply chain and used (possibly after having been sold on the local market), they can wreak havoc on the health of the people using them; some drugs become toxic after some time, but even those who do not will probably start losing efficacy and would be as bad as under-strength counterfeit drugs – and that is even apart from the effects of uncontrolled use of e.g. antibiotics on the development of resistant strains.
• Environmental damage Drugs might be beneficial for us, but they are not always so for our environment. Many drugs are toxic for other animals and plants; and even when they are not, it is not always clear what would be the long-term effects on the environment of uncontrolled dumping of drugs. That alone should be enough to have tight controls on what happens with expired drugs and how they are disposed of. This is even more true of e.g. used engine oil and other toxic waste: do you know what happens after an oil change? Is the oil just burned, or even worse, buried, possibly poisoning ground water for years to come? Or is it properly disposed of in an incinerator that reaches temperatures that are high enough to prevent hazardous fumes to be formed?
• Legal liability In many countries where we work, there are strict laws surrounding disposal of drugs (especially psychotropic drugs), and ‘losing’ drugs in the reverse supply chain can open us to legal liability. Similar issues arise around environmental damage.
• Loss of reputation Although there is still not much press attention for aid and global health organisations’ records when it comes to the effects I mentioned above, I don’t think it will be too long before our actions in this area will be put under the microscope as well (as they should be). Do you really want your organisation to be the first of the black sheep that will be singled out for our atrocious reverse logistics practices?

It is clear that we need to start working on our reverse logistics. It should not be too hard: the basic principles and best practices that we use in ‘normal’, forward logistics, can be used in reverse logistics too. The only question is: do we start working on this now or will we wait until it is too late?

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Usually, I find myself nodding enthusiastically when reading J.’s Tales from the Hood; his thoughtful mini-essays on humanitarian aid work (with, as he describes it, “occasional digressions toward rock music, motorcycles, and parenthood”) have from time to time even been known to make me belt out a loud “yeessss!!!”, accompanied by fist-pumping motions that look totally ridiculous on a bespectacled, bald, overweight forty-something.

But this time I found myself frowning, and actually disagreeing vehemently. In his latest article on “rules to live by”, he writes:

Don’t overdo “process.” Yessssssssssssss, process is important. But process is not the actual point of aid work. The point is product, output, outcomes, impacts, benefit to beneficiaries… [INSERT PREFERRED AID-WORLD BUZZWORD]. If your process doesn’t lead to one of those in fewer steps than you have fingers, then it is probably useless and should be fixed or abandoned immediately.

And then:

Don’t overdo “participation.” Sometimes less is more when it comes to group decisions and group-led processes. If you can make the decision, make it. If you must involve others: Involve the lowest number of people practical for operational decisions. Involve only technicians and/or those with direct managerial authority over the project in question on technical decisions.

Of course, of course J. is right that outcomes are more important than process – but I think he overstates his case when it comes to the simplicity of the process. By total coincidence, I posted a response yesterday on humanitarian.info in which I said, “… if your solution can be written on a postcard, it probably solves nothing”. This was the summation of a four-paragraph argument that silver bullets don’t exist, that we need to look at systems as a whole when searching for solutions to issues, and that consequently those solutions will hardly ever be simple. To put it another way: we don’t live in a Hollywood movie; our problems will not be resolved in two hours in a script that can be gleaned from a one-page summary.

It all comes back to what I wrote in my post about ICT versus systems: if you want progress, you will need to do much more than just introduce yet another tool or another procedure – you will need to tackle the system, and on the whole systems don’t respond too well to short, sharp shocks. And all this with the caveat that, yes, of course there will be complex issues that can be resolved in a simple manner – but not that many.

Similarly, although I agree totally that one shouldn’t ‘overdo’ participation, I think that J.’s rules of thumb (“If you can make the decision, make it. If you must involve others: Involve the lowest number of people practical for operational decisions. Involve only technicians and/or those with direct managerial authority over the project in question on technical decisions.”) are overly simplistic. Yes, of course I keep the final responsibility as the manager in charge, but I can use inclusive process^[1] to:

• build consensus, which will make my life much easier when finally implementing what needs to be implemented – and in many cases actually lead to an increase of effectiveness and efficiency, because the time spent on participation is outweighed by the time saved on implementation;
• get feedback in an early stage that can make the difference between doing something stupid or doing something smart – and so improve our product/outcomes/impacts/benefit to beneficiaries/whatever. In other words: sometimes the street sweeper knows more about how to deal with autumn leaves than the dendrologist.

And now go and add Tales from the Hood to your feed reader – because J.’s writing shows that he doesn’t take his own advice on simplicity too seriously and really thinks about what he does; and that is a treat that is all too rare in the testosterone and adrenaline filled world of humanitarian aid.

[Images: simplicity by Gisela Giardino; Participation 12 pack by dharmabumx. Some rights reserved.

Back to post [1] Okay, so I have to admit that I have thrown that one in purely to be provocative. Can I have a bit of fun sometimes?

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Does your organisation currently have an IC technology project running that aims to improve the supply chain? Odds are that it has, or has had one in the recent past, or is planning one for the near future – that is, if your organisation is anything bigger than a couple of volunteers with a budget of a couple of hundreds of thousands of euros. And you should: continuous improvement of your supply chain is a necessity, and ICT is indispensable to do so.

Or rather, you shouldn’t.

Too often, ICT is implemented as a stand-alone solution for supply line problems. ICT is indispensable to support any but the most trivial of supply lines, but rarely is it a solution by itself for whatever are your supply chain woes.

Does this sound like a truism to you? In fact, it does to me – but I have seen several of these ICT-as-a-panacea projects in aid logistics, so I think it is fair to say that apparently not everybody agrees. Oh, of course management of these projects will pay lip service to the idea that processes, attitudes, knowledge and training, and many other aspects will need to improve too, but in reality you see that everything concentrates on the technological solution: processes are adjusted around the technology, staff are trained in using the technology, and so on. And there we go again, in a straight line towards the next round of ‘technological innovation’.

ICT can help us to build systems that help us get the right information, at the right time, to the right people, at the right price, to make the right decisions and take the right actions. (Sounds familiar? It should.)

But: the operative word here is ‘system’. No, I am not talking about computer systems – when I say system, I refer to (ahem) ’a coordinated whole of human, physical and organisational resources (including procedures and structure), striving for a common goal’. In other words: your logistical department is only just part of the organisation’s logistics system (striving for logistical effectiveness and efficiency), which in its turn is part of the system that is your organisation as a whole (striving to perform whatever is its stated mandate as effectively and efficiently as possible), which in its turn… you get the idea. What is not a system is the shiny new ERP software that your director of resources has just bought after a slick demonstration; it could be part of an effective and efficient system – or it could break it.

I said it before and I will say it again: information and communications technology are indispensable to run anything but the most trivial supply lines; but it is there to serve the goal of those supply lines, and not the other way around. Technology should be part of an integrated system with more or less clearly defined goals. The systems should not be built around the technology, because that will hardly ever lead to real integration; instead technology, procedures, and people should be seen as a indispensable parts of the whole system, giving us eyes to see what is coming – I-see technology instead of IC technology.

(Image: Airborne Caffeine Delivery System by Todd Lappin. Some rights reserved.)

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How much should we spend on non-project costs, a.k.a. ‘overhead’ or ‘HQ’? Ten percent? Twenty? More? Or less? Please think about this for a couple of minutes before you read on, and define for yourself what would be a reasonable percentage in the organisation that you work for.

So now I am going to tell you that whatever percentage you came up with is wrong.

Nasty, huh?

My point here is that we should really stop thinking in percentages. Sure, it sounds nice that we can tell people that we spend only 15% on ‘overhead’, but it is totally meaningless.

First of all, we have these people called accountants, who are very good at defining ‘accounting principles’ in whatever way is needed to present the best picture.^[1] When we say that we spend 15% on overhead, we actually say, “15% of our expenditure is attributed to overhead, but that could be any odd (or even) number under different accounting and presentation principles”.

Furthermore, defining how much we want spend on organisation (shall we just stop using those disparaging words ‘overhead’ and ‘HQ’?) in terms of total expenditure, or even as an absolute number, really is utter nonsense. No self-respecting company would say at the start of the fiscal year, “let’s spend so-and-so much on our corporate organisation – doesn’t matter on what, you can just spend this amount”^[2]. Instead, they look at what support and control activities are needed from corporate, and then make first an activity budget, and subsequently base a financial budget on that. Similarly, we should define what level and manner of support and control we need from our central departments, and then try to cost it. In the end, the only thing that matters here is how the people we try to aid get most bang for the buck – and if that is more by spending it on support, because that will increase our efficiency in the field by so much, than that is where we need to spend it.

Over at humanitarian.info, Paul Currion makes the very astute observation that the current global financial crisis might actually help us to look at these issues in a more rational way. In short, he contends that the resulting squeeze on our budgets might force us to look more at efficiency, and do that in a less mechanical and more rational way than just at expenditure in the field versus at HQ. He might be right – I definitely hope so.

(Image: Ritratto di Frà Luca Pacioli (1495). Luca Pacioli (1445 – 1517) was, amongst many other things, the inventor of double-entry bookkeeping, a system we still use today. He was also the first to realise that profit and loss were no absolutes but depended on how you accounted for them.)

Footnote

[1] I have been an accountant and an auditor. Believe me, I know.

[2] Show me a company that does, and I show you a bankrupt in the making.

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