Greoup 4 Case Study - Supply Chain Hubs in Global Humanitarian Logistics

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INDUSTRIAL AND SYSTEMS ENGINEERING ISEN 833 Supply Chain Systems Engineering – Fall 2023 Case Study on Supply Chain Hubs in Global Humanitarian Logistics Submitted To: Dr. Lauren Davis Submitted By: Risat Rimi Chowdhury Nowshin Sharmile Habeeb Mohammed Lukmon Rasaq (December 7, 2023) Introduction Introduction

Risat Rimi Chowdhury Nowshin Sharmile Habeeb Mohammed Lukmon Rasaq International humanitarian organizations (IHO) are global actors in the humanitarian sector as they represent the largest recipient of donor funds. Additionally, humanitarian organizations are entities with a mission to prevent or alleviate human suffering in armed conflicts. They are usually involved in searching for collecting and transporting the wounded and sick, missing, and dead; providing medical treatment to the wounded and sick; assisting prisoners of war and assisting the civilian population through the provision of humanitarian relief. Question 1. Should supply chains for secondary support items be the same as supply chains for the primary beneficiary demand? Vehicles, being the second-highest expense after staff salaries, are crucial for the safety of volunteers and staff and serve as a visible presence in humanitarian actions. To enhance fleet management, the International Humanitarian Organization (IHO) established the Fleet Management Group (FMG) in 2002, based in Dubai. The FMG employed a hybrid management model, running an international vehicle rental program (VRP), renting 600-800 vehicles globally. The FMG managed vehicles for over 80 National Societies, with 80% of 4WD vehicle procurement sourced globally and 20% by national offices, providing decentralization with adherence to FMG standards. Vehicles were procured directly from Toyota and Nissan, stored in global and regional hubs, and leased to National Societies. The FMG facilitated transportation to National Societies, with regional hubs incurring fixed costs. Strict maintenance schedules, replacement policies, and disposal methods, including sales and donations, were implemented, contributing to the financial self-sustainability of the VRP. Fleet management policies were formulated by the FMG and detailed in a fleet manual provided to National Societies. Vehicle data, including key performance indicators, were collected through centralized FleetWave information software. Despite variations in information systems among National Societies, the FMG played a crucial role in optimizing vehicle management for humanitarian operations. Primary support items are items that are critical to the victims of the disaster as part of the disaster response. These items include food, water, and medicine. Secondary support items are those that augment the relief effort such as transportation, shelter, etc. The 4WD vehicles managed by the FMG are secondary support items. These vehicles are used to transport and distribute essential items within the country or city hit by the disaster. The vehicles also help in rebuilding efforts by transporting construction materials and labor. The supply chain for secondary support items such as 4WD vehicles does not have to be the same as primary support items such as food and water. To begin, food, water and medicine are essential for the survival of disaster victims. Therefore, supply chains for these items should prioritize efficiency and reliability to meet these objectives. Lead time for these items needs to be as short as possible. To achieve this, suppliers for these items must come from nearby cities or countries, otherwise airlifted to cut travel time. Secondly, foods and medicines may have some perishables especially because communities hit by disasters usually do not have the luxury of storage facilities to preserve these perishables. 2

Risat Rimi Chowdhury Nowshin Sharmile Habeeb Mohammed Lukmon Rasaq On the other hand, supply chains for secondary support items might prioritize cost-effectiveness, flexibility, and adaptability. The demand and mode of transportation of the 4WD vehicles for instance will change based on the location of the disaster and funds available for that relief effort. Also, a vehicle can afford to be in transit for 3-4 months, as stated in the case study, without much disruption, but food and medical supplies cannot. Food is produced in almost every town/city in the world, but cars are not. Therefore, the supply chain configuration of these two different kinds of items cannot be the same. Ultimately, the design of supply chains, whether for primary beneficiary demand or secondary support items, should align with the specific needs, goals, and constraints of the organization. Flexibility and adaptability are key considerations to ensure that the supply chains can evolve in response to changing circumstances and priorities. Question 2. How centralized versus decentralized should the secondary support supply chain be for 4WD vehicles? Currently, the Fleet Management Group's (FMG) supply chain is centralized, with a global hub in the UAE, regional hubs in Indonesia and Panama, and an ad hoc regional hub in Haiti. Decentralized Supply Chain: A decentralized supply chain is a supply chain management approach in which decision-making authority, control, and data are distributed across various participants rather than being concentrated in a central entity. Having a decentralized supply chain configuration by FMG with several supply chain hubs will enable it to respond quickly to disaster areas but increase the structural costs. These structural costs are fixed costs used to maintain hub functionality. Therefore, operating five or more hubs would increase costs for the FMG. However, the transportation cost would be cheaper as the critical items only be shipped directly from the nearest hub to the disaster area. Centralized Supply Chain: A centralized supply chain is a supply chain management approach in which control, decision- making, and coordination of various activities are concentrated within a central entity. The supply chain configuration for the four-wheel drive (4WD) vehicles for the FMG should be centralized with fewer fixed hubs with an option to open temporary hubs in mega-disaster locations. The temporary hubs would serve as regional hubs as long as there are sufficient vehicles in those locations, enabling a quicker response for critical items such as food, water, and medicines to beneficiaries. If no mega disasters occur within years, then there will be only one hub, which is the UAE. This will help to reduce structural costs with pooling benefits by keeping all the vehicles in a single pool ready to respond to disasters when required. Again, keeping 3

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