The Critical Role Of The Humanitarian Supply Chain

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Most people think of the global supply chain as a commercial process to ship products to consumers. However, there is also a humanitarian supply chain that is relatively unknown to many. And given the current geopolitical, economic and ecological crises, it is more important than ever.

According to the UN, 362 million people depend on humanitarian aid, a new record.

This increased dependence has pushed humanitarian organizations to provide even more support to the most vulnerable areas of the world.

What exactly is the humanitarian supply chain?

Humanitarian supply chain management encompasses all activities related to the preparation and management of the relief goods and services needed in crisis situations such as natural disasters or conflicts.

And in view of the fact that new disasters, such as the recent severe weather disasters in Florida or Spain, and the humanitarian impacts of wars and violence in places such as Haiti and Gaza, this topic is of particularly relevance. The recent global increase in demand for humanitarian aid organizations has spotlighted just how important their work is.

If you’d like to learn more about the humanitarian supply chain, listen to “The Future of Supply Chain” podcast HERE.

In light of this development, it seems all the more important to learn more about this particular form of supply chain and to learn from the humanitarian supply chain for the commercial supply chain. What makes the supply chain so special for organizations and companies alike? Where are the similarities, where are the differences, and in which areas can the different supply chains benefit from each other?

From cost to efficiency: parallels in the supply chain

The objectives of commercial and humanitarian supply chains could hardly be more different: On the one hand, the focus is on maximizing profits and minimizing costs, while on the other, saving lives is the top priority. But despite these differences, cost reduction plays a central role in both approaches.

As Prof. Dr. Maria Besiou emphasizes in a recent “The Future of Supply Chain” podcast episode, “From Disaster Relief to Business Strategy: Humanitarian Supply Chain Insights”, “that the time to respond is very critical, but at the same time, the cost is also very important because if I can save cost, if I can be more efficient in the way that I’m running my operations, then I can reach a bigger part of the population in need with the same budget.” And this idea can also be applied to commercial supply chains.

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According to Gartner, logistics costs account for a significant proportion of total supply chain management spend, in some organizations it is almost 80%. It is therefore not surprising that companies are looking for ways to reduce logistics costs in the supply chain.

The latest technologies such as AI or ML have great potential for reducing costs. With the help of an AI-supported transport management system, transport routes can be optimized to not only shorten the distance travelled but also reduce fuel consumption and CO₂ emissions. This leads to lower transport costs and also makes an important contribution to sustainability. Minimizing costs and increasing efficiency go hand in hand with ecological and economic benefits.

Unpredictability and planning

Supply chains are currently at the center of attention more than ever and are facing a number of major challenges. Pandemic, war, lack of resources and technological disruptions are affecting global trade.

And this unpredictability, especially in times of crisis, is well known in the humanitarian supply chain. According to Prof. Dr. Besiou, organizations are used to work in difficult locations where government regulations are constantly changing. And it is this element of uncertainty that the organizations are incorporating.

“Now, there are different strategies for preparedness, that humanitarian organizations have been using for a while, and these are also strategies that are very typical in risk management for commercial companies,” says Besiou.

Resilience in the commercial supply chain has become increasingly important in recent years, especially since the coronavirus pandemic exposed the vulnerability of global supply chains. As a result, risk management has increasingly become the focus of many companies, who now recognize the need to adapt quickly to unforeseen disruptions.

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With the help of AI-driven solutions, companies can now not only shorten their supply chain risk management cycle times, but also increase their ROI through improved process visibility, real-time decision making through scenario planning and risk assessment and automated approval controls, enabling them to respond quickly to potential disruptions and thus maintain their operational resilience.

Coordination, cooperation and workforce

Close cooperation between different actors is necessary in both supply chains. Humanitarian organizations and companies need to communicate and coordinate with suppliers, partners and other stakeholders to achieve their goals. This cooperation is crucial for minimizing redundancies and maximizing efficiency.

But what is ultimately important for both supply chains is, as Prof. Dr. Besiou sums up: “The humanitarian sector does not need only funding. Yes, it needs resources, but also different kinds of resources. It needs knowledge. It needs skills. It needs openness.”

In addition, qualified specialist personnel who are proficient in the use of new technology are essential in order to remain competitive in the long term.

If you’d like to learn more about the humanitarian supply chain, listen to “The Future of Supply Chain” podcast HERE.

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