Industry: Consumer and Retail
For the decade ending in 2010, floods accounted for nearly half of all natural disasters. Floods affected a large number of people, especially in Asia. Despite the fact that the number of floods per year has been increasing exponentially since 1900, there is very little in the operations literature on humanitarian supply chains that deals with floods. Compared to earthquakes, floods are more predictable in terms of timing and location. Therefore, there is an opportunity to involve “local entities” for better preparedness and mitigation. Thus, we seek to answer the question: what type of supply chain can facilitate humanitarian relief and hasten economic recovery in case of floods, especially in the Asian context?
The gap in existing solutions
We find three gaps in the existing solutions: (1) preparedness against floods that occur frequently especially at the ‘last mile’ areas, (2) response to medium-sized floods that do not attract the attention of international NGOs or central government but create economic havoc for the people in the affected areas, and (3) recovery of the affected areas. Firstly, there is a gap in preparedness efforts. Greater attention needs to be paid to preparedness at the ‘local’ level to ensure people continue to have access to essential goods during a flood. Given the recurrence and the predictable nature of general floods, such preparedness should be semi-permanent rather than one-off events. Secondly, there is a gap in response as regards ‘medium-sized’ floods that are not large enough to attract the attention of the international or even national NGOs but still large enough to disrupt the local economy. For a massive flood with a 2% chance of occurrence in a given year, the central government or even international humanitarian relief organisations are likely to be involved in responding to the resulting humanitarian crisis. For a small flood with a 20% chance of occurrence in a given year, local communities in flood-prone areas have to devise local solutions to assist affected people. However, in the case of a medium-sized flood, international or central government humanitarian relief is unlikely to be available. At the same time, local solutions would be inadequate because normal supply chain operations would be disrupted, and relief efforts would require a coordinated region-wide effort possibly involving NGOs, local government and manufacturers of essential goods. In this case, who should organise the response for medium-sized flood?
Finally, there continues to be a gap in solutions for economic recovery, especially when the economic disruption and losses occur almost annually. Economic solutions have to be tailored to the local economy.
We examine the role micro-retailers could play in the minimisation of impact and loss during such an event. Micro-retailers are the ‘last mile’ nodes in traditional retail supply chains in many Asian countries, and we propose the use of social enterprise to buttress these supply chains for distribution of essential goods by coordinating with micro-retailers before and after floods.
Our proposed solution is: (1) to ensure that the distribution of goods to micro-retailers is not disrupted; and (2) to engage micro-retailers in flood relief efforts in a coordinated manner. This calls for buttressing existing traditional supply chains by having a “social enterprise” to work with micro-retailers, benefiting from their reach into vulnerable communities with the relief.
To ensure that the availability of goods to micro-retailers is not disrupted during and after the flood, the social enterprise needs to do certain preparatory activities. To begin with, the social enterprise will need earmarked land in order to make temporary use of for setting up makeshift warehouses. These warehouses will be used to replenish the inventories for micro-retailers during the flood. Once the emergency is over, the use of makeshift warehouse space would end, but that space would remain earmarked for use in the next flood. Note that our proposal is different from land set aside by governments for natural disasters in three ways. Firstly, we would like public (or private) land earmarked before, not during or after, a disaster to allow pre-placing inventory based on the anticipated intensity of the flood. Secondly, these plots of land/warehouse spaces should be small and distributed to allow for easy replenishment of goods to micro-retailers. Thirdly, the actual release of earmarked land by the local government to the social enterprise would be contingent on the anticipated intensity of the flood.
Another preparatory activity for the social enterprise would be to buy goods directly from the manufacturers (or from large distributors) and deliver-and-sell to the micro-retailers, using a temporary supply chain network of makeshift warehouses and flood appropriate transportation links. Furthermore, to engage micro-retailers in flood relief, the social enterprise should work with regional government, manufacturers and micro-retailers to coordinate ‘last mile’ effort to distribute essential goods. Specifically, the social enterprise can leverage the traditional retail supply chain that operates during normal times to establish a temporary supply chain involving manufacturers/distributors and micro retailers during the abnormal time around a flood event. After the flood related crisis issues subside, the regular supply chain should take over. By engaging micro-retailers with local knowledge in rural areas, the social enterprise can enable these micro-retailers to resume their business operations soon after a flood. While there are additional logistics, communication, and coordination costs for establishing and operating the proposed temporary supply chain, buttressing can enable: (1) faster and more effective humanitarian relief because these micro-retailers are already embedded in the community of affected people; and (2) speedier economic recovery by helping the affected micro retailers restore their business operations quickly after a flood.
Our research then goes on to examine our solution through the lens of supply chain flows and disaster relief efforts, before quantifying the benefits using our stylised model and finally drawing our conclusions.
The full research article, that appeared in Production and Operations Management can viewed here.