The Red Cross, a humanitarian organization, faces logistical challenges that far exceed those of Walmart or Dell. Up to 80% of their costs are in logistics, so it is not surprising that they must seek excellence in their supply chains. But their operations are fraught with uncertainty and urgency, so many of the principles that apply to commercial supply chains don't fit so easily. The International Federation of Red Cross and Red Crescent Societies (IFRC) is the world's largest humanitarian organization, made up of 186 separate National Societies. Coordinating such a dispersed organization is no easy task, as became clear when Hurricane Mitch hit Honduras in 1998. The IFRC was very slow to organize relief efforts. Their help did not start reaching the victims until weeks after the event, long after other aid organizations were already on the ground. This lackluster performance left donors wondering if their dollars were well spent and if the IFRC was capable of running a world-class supply chain that could respond to disasters efficiently and cost-effectively.

The first version of the IFRC supply chain The IFRC's cumbersome supply chain was managed centrally at its headquarters in Geneva, Switzerland. Every time a disaster occurred, a team in Geneva would assess the damage and submit information to create the Relief Mobilization Table, which outlined what was needed and where. Tents, blankets, food, water, medical supplies, and thousands of other items may be on the table. The data is then sent to providers, individual National Societies and also to donors, so everyone knows where to send relief supplies. These agents would then send the goods to IFRC emergency units near the disaster area, handling customs clearance, inventory, storage and other logistics tasks. The emergency units would then distribute the supplies to local partners, who would transport them to the beneficiaries. This centralized supply chain model stumbled badly, especially due to poor information flow and a lack of transparency about who was shipping what. The disaster side may be awash in blankets and tents, but never receive desperately needed telecommunications equipment. Many organizations send unsolicited items, often hindering the IFRC's ability to obtain and distribute needed relief supplies. The lack of transportation coordination led to unnecessarily high costs for multiple flights and transatlantic shipments. It is clear that the IFRC needs a supply chain that is capable of handling uncertainty. New IFRC supply chain management system To improve its performance, the IFRC began transforming its supply chain into a decentralized model, creating three regional logistics units in Dubai, Kuala Lumpur and Panama. These units preposition supplies in warehouses for the most common disasters in their areas, so they can ramp up quickly. For the Information System, IFEC deployed the Humanitarian Logistics Systems (HLS), created especially for disaster recovery by the Fritz Institute. Although enterprise resource planning (ERP) vendors offer supply chain modules alongside their core modules for finance and human resources, their products are not designed for situations with such uncertainty. Instead, the IFRC needed a relatively simple system with a single data repository that could handle rapid mobilization. It also needed a system that could be accessed in real time on the ground by its regional units, emergency teams and also by local National Societies.

The HLS is web-based software that supports several essential functions that have helped transform the IFRC's supply chain. First, it maintains country and disaster data for regional units so they can preposition supplies intelligently. Once the disaster occurs, the system can add the necessary items and generate the mobilization table. The software also manages appeals to potential donors, helping to avoid the duplication that plagued previous efforts. For procurement, the software helps manage supplier relationships by tracking agreements and requests for bids, as well as generating purchase orders and standard invoices. HLS includes tables for tracking shipping information and can generate shipping documents, freight receipts, and reports on where items are currently in the pipeline and where they can be expected. Testing the new supply chain management system The IFRC's new supply chain was put to the test for the first time when an earthquake struck Indonesia and the newly launched Kuala Lumpur Regional Unit took the lead. Although failures occurred, the supply chain was up and running in just three days, less than a third of the time it took the IFRC to mobilize for the earthquake in Pakistan the previous year. The operation was also much more profitable, an estimate that cut the cost in half. A portal for reporting Getting the necessary supplies to disaster-affected areas as quickly as possible is the first step in helping as many people as possible survive. But the Red Cross also helps reduce psychological stress by offering an online people search and information service called the Safe and Well Website. When bombs went off at the finish line of the Boston Marathon in 2013, spectators and runners were able to quickly visit the website on their mobile phones to report safety and reassure their families. The IFRC continues to improve its technology-enabled supply chain and communications to help people in need around the world. But the Red Cross also helps reduce psychological stress by offering an online people search and information service called the Safe and Well Website. When bombs went off at the finish line of the Boston Marathon in 2013, spectators and runners were able to quickly visit the website on their mobile phones to report safety and reassure their families. The IFRC continues to improve its technology-enabled supply chain and communications to help people in need around the world. But the Red Cross also helps reduce psychological stress by offering an online people search and information service called the Safe and Well Website. When bombs went off at the finish line of the Boston Marathon in 2013, spectators and runners were able to quickly visit the website on their mobile phones to report safety and reassure their families. The IFRC continues to improve its technology-enabled supply chain and communications to help people in need around the world. Spectators and runners were able to quickly visit the website with their mobile phones to report that they were safe and to reassure their families. The IFRC continues to improve its technology-enabled supply chain and communications to help people in need around the world. Spectators and runners were able to quickly visit the website with their mobile phones to report that they were safe and to reassure their families. The IFRC continues to improve its technology-enabled supply chain and communications to help people in need around the world.

Discussion Questions:

1. What were the gaps in the previous Red Cross supply chain? (Indicate at least 3 deficiencies)

2. What role did IT play in the new Red Cross supply chain? (Please provide at least 3 roles)

3. What other elements are part of the new Red Cross supply chain? (Please provide at least 3 examples)

4. What were the commercial results of the Red Cross? (Please provide at least 3 results)

5. What complementary assets would the Red Cross need to reap all the benefits of the new information system implemented? (Provide at least 3 complementary assets)

Answer rating: 100% (QA)

Gaps in the previous Red Cross supply chain a Lack of coordination and transparency The centralized supply chain model led to poor information flow and a lack of transparency about what items were nee... View the full answer