This part of the survey is to gain a better understanding of the limitations and the difficulties of the humanitarian pre-positioned warehouse strategy in managerial level decision-makers point of view. Table 5.4 summarises the findings of the limitation and difficulties in humanitarian pre-positioned warehouse.
139
The major concern regarding their pre-positioning warehouse strategy that decision-makers have is that the limited shelf-life of some relief items that could deteriorate while in the stockpile (cited by 44% of the respondents). However, this was a not a big issue for some of the organisations because of the different nature of relief operations that they were dealing with. For example, Respondent 1 replied that the limited shelf life was not their problem where they focus on relief operation for refugee related programmes. Most of the relief items they handle are tents, blankets, jugs, mosquito nets and other durable items. On the other hand, relief organisations that mainly operate with nutrition foods and medicines have to be very aware of the expiry date on the relief items because they directly affect the beneficiaries. Potentially, the most sensitive items of all are medical supplies.
Table 5.4 Limitation and difficulties for pre-positioning warehouse
Limitation and difficulties No. of respondents
Limited shelf life 11
High maintenance cost 8
Uncertainty and unpredictable of disasters 5
Establishing maximum stock level amounts 5
Not confident what stocks to store 4
Transportation cost to warehouse 3
Justify funding (persuade donors) 2
Limited space 2
Security (Theft/Pilferage) 2
Not suitable for small operations 2
Difficulty of transportation access 2
Labour cost 1
Potential negative impacts for local economy 1
Climate issues 1
Complicate procedures of releasing stocks 1
Not suitable in the initial stage of response 1
Source: Author
One other problem of operating a pre-positioning warehouse was the high maintenance cost (cited by 32% of the respondents). Taking a broader view, cost includes the storage, transportation, labour and any other costs that relate to operating the warehouse system. Due to these high cost difficulties, small relief organisations with financial burdens could not dare to operate the pre-positioning warehouse system. To solve this problem some international humanitarian organisations have offered to share the burden of cost. Larger international organisation offers small relief organisations some free space to store relief items in their warehouse buildings. The strict standards of packaging of the relief items are to be required
140
for the relief items should be stored and to be take care of. Transportation cost is to be paid separately and this could be shared among the small organisations if they are delivering the relief items to the same disaster area. This attracts many small organisations to use the large international humanitarian organisation‟s pre-positioning warehouse because it could save a huge amount of costs.
The next difficulty that the decision-makers face is the uncertainty and unpredictability of disasters (cited by 20% of the respondents). Not only the uncertainty of the natural disasters in terms of being very difficult to predict requirements for the relief operation, but also the uncertainty in man-made crises. The development of new technologies to predict weather and early warning system help to prepare for the natural disaster is now better than ever before. However, the problem is that “the uncertainty of the impact that the disaster will bring no
matter how well you are prepared for it, there will be always a harm done by disasters”
(Respondent 8). A man-made crisis is a very sensitive issue, especially for refugees. Preparing the relief items for the refugees in advance will be likely to motivate them to flee the country to certain area, which will mean that the organisation has had a negative impact for the relief operation (Respondent 1). Due to the limited funding, it is difficult to purchase a variety of items in large quantities and it is also not sensible to purchase a large quantity of a single item. The range of uncertainties in a given disaster greatly affects the needs of the beneficiaries and this is a challenge for the organisations to maintain the optimal level of stock. Consequently, it is difficult for them to establish optimum stock levels to hold in the warehouse (cited by 20% of the respondents). In addition, this lead to difficulties to stock what kind of relief items in advance and brings a lack of confidence to purchase those (cited by 20% of the respondents). However, large international humanitarian organisations that have sufficient funding to purchase the relief items always aim to maintain the maximum stock level possible. They also keep the range of the relief items as simple as possible so that they can focus on purchasing the major relief items that are most often needed during similar disaster events.
Other difficulties of operating the pre-positioning warehouse is the high transportation cost of the relief items (cited by 12% of the respondents). Normally, humanitarian organisations deliver relief items to the pre-positioned warehouse as far as possible via sea. This transportation mode could save cost but will take a long time; for example, averaging from four to six weeks from suppliers (China) to pre-positioned warehouse (UAE) (Respondent 21). In addition, there is an immediate situation when there is no choice but to send the relief items
141
to the pre-positioned warehouse by air transportation. There is then a limitation of the volume of the cargo and the cost is extremely high compared to that of sea transport even though it will take only 24 – 48 hours delivery from loading (Respondent 21). To avoid this kind of incident, relief organisations must plan ahead by the purchasing of the relief items using shipping to reduce transportation cost with a positive effect of stockpiling large volume of items.
The next difficulty in operating a pre-positioning warehouse is to persuade the donors (cited by 8% of the respondents). The donors tend to see their contribution as visible when they donate the money, which is then used to purchase the relief items and deliver them to the beneficiaries. They are not happy with the money being spent for the relief organisation‟s “management purposes”, especially for the warehouse management (Respondent 9). It takes time to convince and persuade the donors of the importance of having a pre-positioning warehouse strategy. However, if the donors are still not pleased with this system, they refuse to donate and will give funds to other relief organisations that will meet their fulfilment criteria (Respondent 19). Limited space (cited by 8% of the respondents) is another problem for the relief organisation to solve. One international humanitarian organisation shared their warehouse facility with other small organisations. In the first place, this was an ideal strategy that they all agreed with. However, this came to be a problem when all the small relief organisations wanted to stock more relief items for their own purposes. It was a hard decision to accept relief items from certain organisations and not accept others due to the limited space available to stock them (Respondent 2). The issue of security is also a factor to consider in a pre-positioning warehouse strategy (cited by 8% of the respondents). Some of the relief items stocked in the warehouse are very valuable items; for example, radio-telecommunication systems, medicines, armoured vehicles, etc. (Respondents 1 and 2). There is often a threat of theft or pilferage of these items. Delivering a small quantity of relief items will not be suitable or even possible for a pre-positioning warehouse strategy (cited by 8% of the respondents). The logistics managers prefer to dispatch large amounts of relief items for cost issue “just in case” rather than sending them in small amounts (Respondent 1 and 20). The philosophy is that it is better to have too much relief cargo than not enough. For these reasons, the pre- positioning warehouse strategy is mainly used for emergency relief purposes where they can dispatch in large quantities. As long as the initial need is satisfied through pre-positioned warehouse, the later relief items could be purchased in the neighbouring countries and local markets in the disaster affected area (Respondent 1). The difficulty of transport access to the
142
warehouse (cited by 8% of the respondents) is also an issue, although the logistics managers do not consider that to be a big issue because normally the pre-positioned warehouse will be located in a well-equipped area, or at least one with transportation infrastructure (Respondent 10).
The other minor difficulties cited by the respondents are the considerations of labour cost (4%), potential negative impacts for the local economy (4%), climate issues (4%), complicated procedures for releasing stocks (4%), and goods not suitable in the initial stage of response (4%). Every logistics manager is aware of the potential negative impact for the local economy by purchasing the items outside the area because they do not want to harm the local market. They want to encourage and stimulate the local economy by purchasing the items even though the prices get higher just after the disaster event. Some of the pre-positioned warehouses are located in very hot climates which could affect the working environment of the labour and damage the quality of the relief items (Respondent 1). Complicated procedures for releasing of stock are one of the procedures that relief organisations need to experience and make the system adapt to theirs if they are aiming to establish a pre-positioning warehouse strategy (Respondent 21). Respondent 19 replied that pre-positioning of stocks is not suitable in the initial stage of emergency response because they believe it takes too long and is too complicated for the relief goods to be actually delivered to the beneficiaries compared to purchase the goods in the local area or in neighbouring countries through a conventional needs assessment.
The difficulty to initiate or to maintain the pre-positioned warehouse strategy due to the uncertainty of disaster occurrences, funding tendencies in the sector and the costs associated with operating centres are also found in Balcik and Beamon (2008), Balcik et al. (2010), and Oloruntoba and Gray (2006).
5.7 Chapter Summary
This exploratory study has provided insights into the humanitarian pre-positioning warehouse strategy. The pre-positioning warehouse strategy is of interest to many humanitarian relief organisations. There are various reasons for the humanitarian organisations to adapt the pre-
143
positioning warehouse strategy. In this study the two main reasons to implement this strategy were that it reduces cost and response time.
The dominant factor that the decision-makers most considered was that the pre-positioned warehouse should be located in the proximity of disaster prone areas. The other factors related to logistics included cost and location. The percentage weighting of the factors was distributed almost equally with a few exceptions.
Most of the decision-makers could not decide which factor should be considered to be the most important for the location problem. They replied that the factors are all equally important when it comes to the real situations. In spite of this, they need a categorised structure of the importance of the factors that could show in percentage terms (priority weighting) the process of assessing the alternative warehouse location sites. Some respondents replied that a warehouse which is close to the beneficiaries is their first priority. The results explicitly show that it is difficult for the decision-makers to decide which factors should be in their priority list for locating pre-positioning warehouse facility. In addition, the results from other respondents who listed the importance among their factors do not clearly show particular preferences. Consequently, AHP is employed to obtain the weight of the attributes to show priority preferences.
There are some limitations for examining pre-positioning warehouse location. Most of the responses concerned cost-related difficulties. The operational cost is high for small humanitarian organisations to manage if they do not get enough support from the donors or from the country. Usually, large humanitarian organisations with good reputations and which are well-known receive enough funding from the donors and are able to operate a pre- positioning warehouse relief supply chain. For these reasons, different humanitarian organisations have their own relief supply chain strategy according to their capability and this capability is derived mainly from size. The exploratory study also found that there are different types of pre-positioning warehouse strategies, ranging from establishing the organisation‟s own pre-positioned warehouse to sharing the facility with other organisations.
144