“Performance measurement in humanitarian logistics” · Performance measurement in humanitarian logistics ... Logistics Performance ... Performance measurement in humanitarian

Performance measurement in humanitarian logistics

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“Performance measurement in humanitarian logistics”

FOM ild Essen, September 24th 2012

Prof. Dr. Dorit Bölsche, University of Applied Sciences, Fulda


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1. Introduction and State of the Art

2. Supply Chain Operations Reference-Model (SCOR)

3. Implementation of SCOR to a humanitarian supply chain

4. Limitations and further research

Agenda


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“Drought and the complexity of its impacts”

As for almost every year, droughts strike everywhere on earth – their impacts

increasing in magnitude and complexity due to the effects of a changing climate.

Understanding the complex impacts of drought could be the key to enhancing

drought mitigation and preparedness. The Sahel and West Africa are among the

most vulnerable regions to future climate fluctuation.” (Source: Guha-Sapir et.al. 2012, pp. 18-19)

Performance measurement could be the key to understand the complex impacts

of draught.

With a special focus on humanitarian logistics it can be the key to enhance

preparedness and therewith to lower the consequences for the affected people

and countries.

1. Introduction, State of the Art


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USA drought has an impact on hunger worldwide

“Food prices in the world’s most impoverished areas will take a dramatic hit, with

potentially devastating consequences. (...)

For the United Nations World Food Programme, every 10 percent increase in the

price of grains and food the organization provides costs the U.N. an additional

$200 million a year.”

(Source: Chigaco Sun-Times “Illinois’ drought, meager corn crop will hurt world’s poorest”, published on 13 th August 2012)

Performance measurement in humanitarian logistics might save funds which are

needed to purchase food.



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State of the Art

• Fritz Institute: 4 KPIs (appeal coverage, donation-to-delivery time, financial

efficiency, assessment accuracy). (Source: Davidson 2006)

• World Bank: Logistics Performance Indicator, LPI with 6 components

(efficiency of the clearing process, quality of infrastructure, ease of arranging

competitively prices shipments, competence and quality of logistics service,

ability to track and trace, shipments on schedule). (Source: Arvis 2012)

• Organizations dealing with performance, visibility, transparency,

accountability and standardized reference models, e.g. INSEAD,

Humanitarian Logistics Association (HLA), Kühne Foundation, German

Logistics Association (BVL), Active Learning Network for Accountability and

Performance in Humanitarian Action (ALNAP, e.g. Balanced Scorecard).


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State of the Art

• Standardized performance measurement is still not established in

humanitarian logistics.

• Most academic work refers to key performance indicators in humanitarian

logistics (e.g. Fritz Institute).

• Commercial organizations are successful in using reference-models and

performance measurement.

• Until now, a standardized reference-model to evaluate performance in

humanitarian logistics doesn’t exist.

Can a humanitarian aid organization implement successfully a reference-

model which includes performance measurement?


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SCOR 10.0 (Source: Supply Chain Council 2012, Blecken 2010, Bölsche 2009)

• Was developed in 1996 by the Supply Chain Council.

• Is a cross-industry standard process reference-model.

• Visualizes in a standardized matter the supply chain (SC) with processes in

operations and planning.

• Includes: Process modeling, performance measurement, best practices.

• Provides a process-based framework, standard terminology, shared

description of metrics and customized software.

• Considers linkages between processes and actors across the supply chain.

2. Supply Chain Operations

Reference-Model (SCOR)


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Structure of the SCOR-model 10.0, Level 1 (Source: Supply Chain Council 2012)




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Structure of the SCOR-model 10.0




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3. Implementation of SCOR to a

humanitarian supply chain

Overview World Food Programme WFP

(Source: www.wfp.org)

• Is governed by an Executive Board which consists of representatives from

36 member states.

• Reached on average 90 million people in 73 countries and provided 3.7

million metric tons of food.

• Had in 2011 US$ 3.7 billions in contributions at its disposal.

Why SCOR and not an individual process model?

• Integrates performance measurement and best practices. A basis for

integrating metrics into the process model is given.

• Inter-branch model considering organizations from different sectors

(commercial and humanitarian, whole supply chain).

• But: The model has to be adapted to the humanitarian sector.


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Structure of SCOR 10.0, Level 1 for humanitarian logistics

NGO:

e.g. World Food Programme (WFP),

purchases, transports and distributes food up to

distribution points

Local NGO:

Responsible for food distribution on the last

mile, service provider for WFP

Beneficiary

Affected people

Supplier, manufacturer:

e.g. for fortified

food

Raw material supplier:

e.g. agriculture for cereals

Donors

Donate funds, influence budget (especially for NGOs) Donate products, services along the supply chain (e.g. food, medicine, logistic services), some of them unsolicited

Demands on reporting, accounting, performance measurement

? ?

Planning and forecasting with general indicators and statistics (e.g. LPI) and individual information




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Level 1 implementation

• Performance goals have to be adjusted to the humanitarian aid sector.

• Terminology should be changed.

• “Plan” and “source” can be implemented.

• “Make”-process has to be transformed:

– Production of products “production” of services

– “Make”-process shortened, less level of detail required

– Joint modeling of “make” and “deliver” (already done by service providers)

• “Return” can be implemented:

– Return of inedible (defective), wrong goods or excess inventory.

– Ability to include NGOs into modeling.




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Structure of SCOR 10.0




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Structure of SCOR 10.0, Level 2 (Source: Supply Chain Council 2012)

5 core processes 26 process categories




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Level 2 implementation

• Plan: 12 of 16 processes are applicable; 4 „plan make“-processes (sP3) can

be dropped; they are covered by “plan deliver” (sP4)

• Source: All “source”-processes are implementable; separation of products

into: make-to-order, engineer-to-order and stocked products; probably

“source stocked products”(sS1) is the most suitable for WFP

• Make: Only some processes can be transformed (e.g. release product to

deliver (sM1.6) and package (sM1.4) for repacking)

• Deliver: All processes are applicable; minor adjustments (normally aliments

are not installed; no invoicing of beneficiary internal cost allocation)

• Return: All processes are suitable to WFP




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Level 2 implementation, performance attributes

• Reliability: ability to perform tasks as expected

• Responsiveness: speed at which tasks are performed

• Agility: ability to respond to external influences and the

ability to change

• Costs: costs of operating the process and

Assets: ability to efficiently utilize assets




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Level 2 performance attributes - key performance indicators

Performance attribute (SCOR) KPI (Fritz Institute)

reliability assessment accuracy

responsiveness donation-to-delivery time

agility none

costs financial efficiency

assets financial efficiency




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Structure of SCOR 10.0, Level 3 (Source: Supply Chain Council 2012)

This level shows single processes and process elements

– With definition and description

– With input and output relationships

– Linked to performance attributes

– Described by metrics which are assigned to performance attributes

Implementation of Level 3 metrics (some first ideas):

• Customer= beneficiary

• „Make“- metrics are not applicable (RS.2.2 , AG.2.2, AG.2.7, AG 2.12 and

AM.3.18)

• …




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Additional metrics for SCOR, Level 3

Connecting factor Addition Origin

perfect order fulfillment service provided to

customers

•transformation:

customer beneficiary

customer perception of

service

•customer satisfaction

survey

Logistics Operational

Guide

(LogCluster)

cash-to-cash cycle time efficiency of clearing

process

•speed, simplicity,

predictability of

formalities

Logistics Performance

Indicator (World Bank)




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Additional metrics for SCOR, Level 3

Connecting factor Addition Origin

cost to deliver ease of arranging

competitively priced

shipments

•carrier selection,

monitoring prices



Order fulfillment cycle

time

quality of trade- and

transport-related

infrastructure

•ports, roads, railroads,

information technology






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Structure and implementation of SCOR 10.0, Level 4

(Source: Supply Chain Council 2012)

• Level 4 processes describe sector specific activities

• They are required to perform level 3 processes

• Level 4 processes describe the detailed implementation of a process

• WFP can perform its own Level 4 processes

• Further considerations, e.g.:

– SC distinction by type of food (food basket vs. special nutritious

products)

– By type of contribution (money vs. in kind donations)

– By type of operation (emergency vs. long-term)

– By type of impact (moderate malnutrition vs. acute malnutrition)




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Short conclusion

Performance measurement can be one of the keys to enhance

preparedness and real time performance in regions like the Sahel.

Especially in regions where disasters occur frequently, performance

measurement is a useful instrument for continuous improvement, e.g.

droughts (e.g. in the Sahel), hurricanes (e.g. the U.S.), earthquakes (e.g.

Japan and China) and floods (e.g. Pakistan).

The instrument of performance measurement is not able to avoid the

occurrence of disasters, but with each step of improvement the aims of

humanitarian logistics could be achieved on a higher level – and in

consequence it contributes to alleviate the suffering of the affected people.




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4. Limitations and

further research

Limitations

• Complete integration of all suppliers (especially raw material suppliers) might

be difficult.

• Access to suitable software and adequate human resources is restricted.

• To perform an inter-industry benchmarking more than one humanitarian aid

organization has to implement SCOR.

• Individual processes of humanitarian aid organizations are not considered.

• Individual adjustments and additions are required.


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4. Limitations and

further research

Some ideas for further research

• Work out the SCOR model for humanitarian logistics in detail.

• Building up the whole supply chain.

• Integration of statistics and indicators into planning and forecasting.

• Practical implementation.

• Questions concerning the intersectoral collaboration.

Documents

“Performance measurement in humanitarian logistics” · Performance measurement in humanitarian logistics ... Logistics Performance ... Performance measurement in humanitarian