CHSCM 3.0 - Unit 1 - SCM in the Humanitarian World

UNIT 1:
Supply Chain Management
in the Humanitarian World

1.1. Introduction ............................................................................................................................. 3
1.1.1. Humanitarian Aid, Context, & Modalities ................................................................................ 3
1.1.2. The Link Between Transfer Modality & Supply Chain Design ............................................ 7
1.1.3. Introducing the Supply Chain .................................................................................................. 10
1.1.4. Supply Chain & Cash Transfer Programming ...................................................................... 24
1.1.5. Planning, Implementation, & the Structure of This Course .............................................. 27
1.2. Key Concepts & Terminology ............................................................................................... 32
1.2.1. Terminology & Concepts Used for Supply Chain Planning & Management ................. 32
1.2.2. Terminology & Concepts Used for CTP & Coordinating with Other Functions ........... 43
1.3. Supply Chain & Delivering an Organization’s Mandate .................................................... 50
1.3.1. Organizational Purpose & Anatomy ...................................................................................... 50
1.3.2. Policies, Standards, & Strategy ................................................................................................ 62
1.4. Identifying & Evaluating Options......................................................................................... 82
1.4.1. Supply Chain Types .................................................................................................................... 82
1.4.2. Assessments & Analyses for CTP ............................................................................................ 94
1.4.3. Evaluation of Options ............................................................................................................. 103
1.5. Managing People, Relationships, & Communications .................................................... 109
1.5.1. Supply Chain Alignment ......................................................................................................... 109
1.5.2. Control & Information ............................................................................................................ 120
1.5.3. Relationships ............................................................................................................................ 132
1.5.4. Gaining Commitment ............................................................................................................. 166

Welcome to the Certification in Humanitarian Supply Chain Management program.
During this unit, you will be looking at the world of humanitarian aid and specifically at
how the supply chain function enables humanitarian organizations to achieve their aims
and support people in need.
This unit will introduce how to identify and evaluation options and prepare you for the
detailed planning and analysis included in units 2 and 3. It also looks at the core
concepts of managing people, relationships, and effective communications.
Humanitarian aid is assistance provided to save lives, alleviate suffering, and
maintain human dignity.
Throughout the course, we will be using this definition of humanitarian aid. It is different from
development aid as it focuses on relieving suffering, caused by natural disasters or conflict, in the
short-term. Development aid focuses on removing the root cause of vulnerabilities, such as poverty,
for the long-term.
In thinking about humanitarian aid, it can be easy to assume that it entails responding to disasters
by providing, for example, food, medicine, and shelter. But no! The goal is to ensure the
beneficiaries have food, medicine, and shelter. Then the question for the humanitarian organization
becomes ‘what is the best way to ensure the beneficiaries have food, medicine, and shelter?’
When considered from this perspective, the options for how a humanitarian organization may
support people in need multiply. Here are a few basic examples:
• Provision of food, medicine, or shelter (of course!)
• Provision of cash so a beneficiary may buy food in the local market
• Provision of a voucher for bricks for shelter from a local brick producer
Humanitarian organizations must identify and consider all such available approaches before a
decision can be made as to the best way to meet the identified needs and achieve the organization’s
mandate. No matter which approach is chosen in the end, humanitarian organizations must be
confident that the supply chain system supporting delivery is reliable. Lives depend on it.

The focus of this course is supply chain management for humanitarian response. It includes
understanding, assessing, planning, coordinating, monitoring, and improving the supply chains used
to deliver humanitarian aid and it includes both internal (physical or in-kind) and external (marketbased
or cash transfer programming) supply chains.
The need for the provision of humanitarian aid is not
new, but the context in which aid is provided is always
changing. When people think of humanitarian
response, images come to mind of the major disasters
in the last 50 years: famines, earthquakes, tsunamis,
wars. They imagine humanitarians giving food or a
new home to people such as the lady in the picture to
the right.
However, many of the people in need in today’s world
live in urban environments. In 2016, UNHCR reported
Indonesia, 2005. Photo credit: Nathalie Abramo
supporting 16.1 million refugees, of which almost
2.7 million were in Turkey and over a million in Lebanon. In cities like Beirut, the challenge for the
refugees is not that food doesn’t exist; the challenge is refugees don’t have money to buy food.
Thus, the context has significant implications to what approaches to delivering aid are possible.
A transfer modality, or simply ‘modality’, is the form of transfer used to provide assistance to a
beneficiary.
Humanitarian aid in a physical form, such as some food or a tent, or as a service, it is referred to as
‘in-kind’. This term is also used to refer to donations of goods or services, i.e. not cash, which
organizations receive from donors (more details provided in a later section). When a disaster wipes
out everything in a region, houses, food, infrastructure, stores, hospitals, etc. included, then in-kind
humanitarian assistance is critical to keeping victims of the disaster alive.
‘In-kind’ is considered a transfer modality – one where beneficiaries receive a physical good or a
service. The two other primary modalities used by humanitarian organizations today are cash and
vouchers.
Cash transfer programming (CTP) is the standard term used to refer to humanitarian programs
using cash or vouchers as the modality for assisting beneficiaries. Alternative terms for the same
type of programming are ‘cash-based interventions’ (CBI), ‘cash and vouchers’, and simply ‘cash’.

In the picture below, a market in downtown Beirut displays WFP’s logo, indicating that it accepts the
debit card WFP uses to distribute cash to refugees for food.
Lebanon, 2014. Photo credit: Nathalie Abramo
The American Red Cross has records of distributing cash as part of disaster relief as far back as the
1870’s; however, international humanitarian aid historically focused on in-kind assistance.
Starting with the response to the Indian Ocean tsunami on December 26 th , 2004, cash and voucher
programs have been increasingly field tested for their efficacy, accepted, and even used in large
scale. From only using in-kind in the mid-2000s, WFP distributed US$680 million to approximately
9.6 million beneficiaries in 2015. (Source: http://www1.wfp.org/cash-based-transfers)
In 2015, DFID funded a high-level panel to research how CTP could transform aid. The report
concluded that increasing the use of cash transfers, in particular electronic payments, would:
• Align the humanitarian system better with what people need, rather than what humanitarian
organizations are mandated to provide;
• Increase transparency of humanitarian aid, including by showing how much aid really
reaches the target population;
• Increase accountability of humanitarian aid, both to affected populations and to the tax
paying public in donor countries;
• Reduce costs of delivering humanitarian aid and so make limited budgets go further;
• Support local markets, jobs, and incomes of local producers;
• Increase support for humanitarian aid from local populations;
• Increase the speed and flexibility of humanitarian response;
• Increase financial inclusion by linking people with payment systems; and

• Most importantly, provide affected populations with choice and more control over their own
lives.
Further, one of the recommendations of this report was for the question to be asked ‘why not cash?’
when humanitarian programs are being designed and considered. The report was published by the
Overseas Development Institute and is available here: https://www.odi.org/sites/odi.org.uk/files/odiassets/publications-opinion-files/9828.pdf.
Similarly, ECHO commissioned a review of the use of different transfer modalities in their aid actions
from 2011 to 2014 with the objective of increasing effectiveness and efficiency of their
programming. The following is a quote from the executive summary of the report:
Core findings and conclusions include that in comparable contexts cash transfers are
typically more cost efficient than other options; the scale of projects is a key driver of cost
efficiency; and, the greatest cost effectiveness is achieved through a coordinated multipurpose
cash transfer to meet basic needs. The use of cash transfers has increased but
agencies with sector specific mandates are constrained in the use of basic needs grants.
There are strong arguments for integrating emergency transfers with social safety nets
and ECHO has a comparative advantage in influencing support to national systems
through other EU instruments.
Disaster management and humanitarian response can be divided into five phases. The supply chain
will need to be managed in order to be able to respond to the different demands of each phase,
particularly the final three. The phases are:
• Disaster prevention
• Reconstruction
• Disaster preparedness
• Development
• Emergency relief
Every operational context will move through these phases differently and not every crisis will
experience each phase. Humanitarian organizations will not always be involved in all of these
phases, and every crisis response will not
necessarily cover each of them. Typically,
different organizations involved in
humanitarian aid specialize in different
aspects and will focus on either
responding to emergencies or
development.
More importantly, the approach that an
organization may take, or transfer modality
they use, to meet beneficiaries’ needs may
change depending on the response phase.

For example, an organization may choose to do an in-kind distribution of pre-made kits in the
immediate after a sudden-onset disaster. Simultaneously, they may send a team to assess the
markets for possible long-term support using CTP. That same organization, 6-months down the
road, may be concerned about a possible impending draught, which drives them to switch back to
in-kind distributions.
No matter the modality used to deliver the assistance to the beneficiary and no matter the phase of
the response, Supply Chain Management (as a function) must be ready to assess, plan, implement,
manage, and improve the supply chain.
Below is an over-simplified view of the in-kind delivery process for Supply Chain, where the activities
are to procure, ship or transport, warehouse, and deliver or distribute.
For a cash program, a similar over-simplified depiction of the delivery process is to contract a
financial service provider (FSP), to run the electronic disbursement process, which results in cash on
a debit card for a beneficiary.
However, before either of these processes can happen, Management needs to make a decision
about which modality to use.

Plus, before a decision can be made, Management needs information about the options and their
respective implications. This means Supply Chain is involved in assessments, analysis, and
comparison of feasible options.
One major implication of the modality choice is the fact that the choice in where to source and how
to deliver can no longer be made by Supply Chain Management in isolation. CTP relies on the local
markets to meet the beneficiary needs, thus boosting the local economy as well as achieving the
primary program objectives. Therefore how the project is delivered (i.e. internal vs. external supply
chain) impacts the achievement of program objectives.
IN- K I N D P R O J E C T
C A S H P R O J E C T
Delivery
Payment for
Delivery
Economic Benefit
for Host Community
The humanitarian organization obtains
and delivers the needed items to the
beneficiaries.
The humanitarian organization manages
supply chain activities in-house.
L E S S
The market delivers the needed items
through the retail supply chain.
Beneficiaries buy needs from retailers.
The humanitarian organization pays for
delivery, indirectly, as part of the retail price.
M O R E
The result is, more so than with in-kind projects, achievement of program objectives is
intrinsically linked with operations activities and resource requirements.
This intrinsic link means that supply chain design impacts achievement of program objectives and
program objectives may, in turn, influence choices in supply chain design.
Examples of Operations choices that may affect the achievement of objectives are:
• Is the private sector stable enough to ensure delivery?
• Does the private sector have sufficient capacity to meet the project requirements?

• How quickly can an in-kind supply chain be established if the private sector ceases to be
able to meet project requirements?
Similarly, here are a few examples of project design choices that may affect operational
requirements:
• Will the country program require warehouses? How many and how big? How many staff will
be required to manage them?
• How many trucks will be needed to transport the relief to field locations? Will external
transport organizations need to be contracted?
• If cash is to be distributed in envelopes, how will it be secured prior to distribution? How will
it be transported to the distribution sites?
• How many computers will be required for operations staff?
These are only some examples of the many ways in which program objectives and operations design
are linked when considering a cash project.
A second major implication of the modality choice is increased emphasis on risk analysis, risk
mitigation, and contingency planning. CTP outsources internal supply chain activities to the local
markets and, in doing so, increases the humanitarian organization’s risk exposure by limiting its
ability to control and assure delivery.
Furthermore, if anything does go wrong, the potential impact is high, not only because beneficiaries’
lives are at stake, but also because reestablishing a physical goods supply chain may take months
and/or enormous resources.
A third implication of the additional transfer modalities is the activities and scope of Supply Chain as
a function has increased. Where humanitarian logisticians have historically focused on very tactical
activities (managing a warehouse, contracting transport), they now have to have a lot more research
and analysis.
Exa mples o f
TRADITIONAL SCM ACTIVITIES
• Warehousing
• Inventory Management
• Transport
• Procurement
• Customs Clearance
• Tracking & Tracing of Consignments
• Fleet Management
Exa mples o f
ADDITIONAL/ENHANCED SCM ACTIVITIES
• Retail Market Assessment
• Procurement Options Analysis
• Risk Analysis
• Contributions to Response Analysis
• Market Monitoring

In humanitarian organizations, the terms supply chain and logistics are both used (often
interchangeably) to describe the process of getting aid, in the form of goods, to the beneficiaries
who require them. Some organizations use only the term logistics to describe the
function/department that is responsible for managing the process; other organizations use the term
logistics to refer only to the transport and warehousing portion (i.e. not sourcing or procurement) of
the overall function.
Throughout this course we will use the term supply chain to describe the process, which we define:
A process that integrates, coordinates, and controls the movement of materials, goods,
and related information from suppliers and donors to meet beneficiary requirements in a
timely manner.
The concept of a supply chain is not complicated. If aid is to be provided in the form of goods to
people, then those goods need to be made and delivered to the people who need them. The
difficulty of the task will depend on different factors, such as the type and quantity of goods
required, the location of the people who need the goods, and the speed with which the goods need
to be made and delivered.
In this diagram of a typical supply chain, we can see that on the right side we have demand that is
created by people who will eventually consume or use the goods. In humanitarian aid organizations
these people are the beneficiaries, and satisfying their demand is the goal.
In order to meet demand, goods must be supplied. For in-kind supply chains, the humanitarian
organization sources and delivers the physical goods. For cash transfer programming, sourcing,
transport, warehousing, and distribution are all handled by the markets. In either case, supply chain
management must understand and manage all components and activities in the supply chain.
All goods provided should be able to be traced back to their original source, which is only possible
with robust information flow. This is essential to being able to manage the supply chain’s
performance. Further, if there are any problems with the end goods delivered, such as a batch of
pharmaceuticals, being able to trace the goods is essential for fixing problems.

The nature of humanitarian aid operations is complex, and this, in turn, makes the logistics and
supply chain involved and, in some ways, counterintuitive. The complexity of a supply chain is often
not fully understood by others working in humanitarian aid organizations, as they frequently will not
realize the actions necessary to ensure the right goods are available in the right place, and at the
right time. It is therefore also a responsibility of Supply Chain Management to be able to
communicate challenges, constraints, and needs.
To understand the supply chain concept, we will need to consider the following:
• Supply chain participants
• Supply chain flows
• Supply chain process cycles
• Scope of supply chain strategy
• Supply chain inventory
• Key supply chain challenges
• Supply chain transportation links
Let’s look at each in turn.
Ultimately, the supply chain exists to meet the needs of beneficiaries, but seldom do these needs
provide the signal that initiates activity. Demand signals will usually come from Program
Management, or Senior Supply Chain Management, as a result of the humanitarian organization
making the decision to respond to a request for help. At different phases of the humanitarian
response, demand might reflect known beneficiary requirements, or it might be based upon their
anticipated needs.
A unique challenge to the humanitarian sector is providing standardized response. The supply
chain will be based on a detailed assessment of needs, and the government and regulatory
structures in place. Developing and maintaining a strong working relationship with program staff
that is responsible for identifying the beneficiaries’ needs is fundamental in designing an effective
supply chain. For example, the design of hygiene kits around existing hygiene practices (is toilet
paper used?) will determine the types of products needed, and where they can be sourced.
The nature of the demand signal is going to pose challenges for the supply chain to meet the
requirements. In order to meet this demand, all of the materials must be supplied. In our example,
this would be the grower of the wheat or the provider of wood pulp for the packaging in which flour
is moved.
A number of facilities will exist between these two extremities of the supply chain, and these facilities
form the basic structure of the supply chain. Some of them will be involved with the creation of the
product, undertaking some form of processing activity, i.e. growers, component manufacturers,
providers of sub-assemblies, or assemblers of the finished product. Sometimes these might all be
referred to as suppliers.

Other facilities will provide some form of storage, holding the product until it is needed by the
beneficiaries. Storage facilities are typically owned by a range of organizations, such as
humanitarian organizations, third party logistics companies, and suppliers.
Almost certainly, a product’s ownership will be transferred from one participant to another as it
moves along the supply chain. Very few, if any, supply chains operate totally under the control of
one participant.
One challenging feature of supply chain management is how to manage the complexity created by
the diversity and number of supply chain participants.
As we have seen, the supply chain structure consists of different facilities, either processing or
storing goods and materials. At each of these facilities there are a number of different processes
that will be used to create cycles of activity.
These cycles are represented by plan, source, make, move, and
return. Source, make, move, and return are execution processes, while
plan provides the signals for these processes to commence. Each
process will not occur at every stage. Further, each process cycle
does not happen only once, but several times, as products
progress from one supply chain participant to another.
A product manufacturer will need to source raw materials
from a supplier. Then, they process the materials through the make
operation. The materials may need to be moved at several points during the process.
This movement might entail external movement, by moving the raw materials from the supplier into
the factory, or it could involve internal movement, from one machine to another. Eventually, the
product will be sold and moved to the next supply chain participant.
The next participant will then repeat the process cycles until the beneficiaries eventually receive the
products. Notice how the output of one supply chain participant becomes the input of the next
participant, creating a link. These links are combined to form the supply chain.

To enable the execution processes of source, make, and move to operate smoothly, some planning
will be necessary. This will involve planning each of the activities, as well as the overall supply chain
alignment.
Typically, the process cycles will be owned and performed by a function:
• Source will be performed by the purchasing or procurement function;
• Make will be performed by the production function;
• Move will often be performed by the distribution, logistics, or fulfillment function.
Most humanitarian supply chains will include links to commercial organizations. Later on, we will
explore the problems that can be created by functions and organizations setting their own goals
and objectives, without regard to the overall operation of the supply chain. For now, it is important
to recognize that this adds to the complexity created by the diversity of the supply chain
participants.
Supply chain facilities hold quantities of materials referred to as inventory.
Inventory is held for several reasons, but commonly the purpose is to act as a buffer between supply
and demand. This requirement is associated with the time it takes to perform the supply chain
processes. Often the beneficiaries will require a product in a shorter period of time than it takes to
supply, make, and deliver it, hence we might choose to hold inventory in anticipation of demand.
Sometimes the inventory format changes as the inventory makes the journey from the supply point
of the chain to the demand point. The format of the product can change at different facilities within
the chain, and sometimes within a facility.
Production facilities typically hold inventory as raw material, work in process (WIP), and finished
goods. Storage facilities usually hold one type of inventory, depending upon where in the supply
chain they sit.
The inventory exists to balance supply and demand. Consider the diagram below.
Rate of
Supply
INVENTOR
Y
Rate of
Demand

The level of inventory is represented by the water level in the tank. One tap controls the rate of
input or supply, and another controls the rate of output or demand.
If the demand tap is closed and the supply tap open, gradually the level of inventory will
decrease until there is none left.
If we turn the supply tap is closed and the demand open, inventory will increase until it
overflows or, effectively, the tank bursts.
If the rate of supply is synchronized with the rate of demand, the inventory level will remain
the same. Indeed, if this were the case the need for any inventory could be questioned.
With no inventory in the tank, product would flow straight through from supply to demand.
In other words, it would become like a pipeline.
This concept of a pipeline will become helpful later on; it represents the utopia of all supply chain
managers.
The amount of inventory that is held in the supply chain is the result of how well it is managed. It will
affect how quickly products move through the entire chain. This, in turn, will reflect how fresh or
new the product is when it reaches the beneficiaries. Additionally, the amount of inventory held also
impacts the finance required to operate the supply chain.
The primary structure of the supply chain is created by the processing and storage facilities. To
enable products to flow from the supply point of the chain to the demand point, the different
facilities must be linked. These links are provided by the modes of transportation. They include
roads, railways, waterways, sea lanes, air lanes, and pipelines.
Each mode of transportation offers a combination of speed, cost, and reliability. In addition, each
has a different ability to handle volume, weight, and physical characteristics of products.
Sometimes it will be necessary to combine several modes of transportation to be able to move
product between two supply chain facilities. This is referred to move as inter-modal or multi-modal
transport.
So far, we have seen that a supply chain consists of facilities owned by different participants that
perform process cycles, that create different formats of inventory, and that are connected by
transportation links.
The task of the supply chain manager is to find a way to manage the flow of goods to the
beneficiaries. In doing so, there are two goals that must be met. First, the requirements of the
beneficiaries must be satisfied and, second, the activities must be performed at a cost that is
acceptable to the supply chain participants. The ability to achieve these goals will depend on how
well the supply chain flows are managed.

Within the supply chain there are three types of flow:
• Physical goods flow • Information flow • Financial flow
The physical goods flow consists of two different flows. The primary goods flow, from the supply end
of the supply chain to the beneficiaries, consists of the functional activities through which the
product proceeds to get to the beneficiaries: purchasing, production, and distribution. Not all of
these functions will be seen as supply chain activity, but they all have a fundamental impact on how
the supply chain works.
As product flows down the supply chain, it may be necessary for inventory to be held in different
places. This inventory will be in different formats at different stages in the chain, for example raw
material, work-in-progress, or finished goods. At the start of the journey it will be held as raw
materials, then as work-in-progress, before it finally becomes a finished product, in the form the
beneficiaries can use.
The primary flow is not the only goods flow. Increasingly, it is important to consider return flows.
This might be because needs were incorrectly anticipated and product has to be transferred from
one location to another. It may be that the product is not within specification and it has to be
returned to suppliers, or to a different location for controlled destruction. Another example
concerns the removal of waste created by the supply chain operation. In some geographical
locations, this could be essential to minimize the operation’s environmental impact.
Certain organizations are very skilled at moving materials from left to right, or downstream. They
have systems and processes in place that allow this activity to be managed very well. Often the
process from right to left, the upstream activity, is less well-managed and inventory becomes lost or
damaged during the process. For example, the ability to export assets, such as vehicles and
communications equipment, for use elsewhere is dependent upon the rigorous management of
documentation and compliance. Where quality issues exist, as with food supplies, the issues
involved in exporting or destroying food in food insecure areas can become both political and
complex. This type of flow is often referred to as reverse logistics.
The supply chain is not only about product flow; it also encompasses the flow of information.
Initially, the crucial piece of information is in the form of the beneficiaries’ needs, whether this is
actual or anticipated. This acts like a trigger for the entire supply chain activity. Without it, there is
little use in performing the related supply chain activity. This need will travel up the supply chain,
conveying different requirements to the different parties involved. The need will be transformed
into a series of other signals that will initiate the physical activity. As product is moved downstream
in response to the trigger, information takes on a new role of monitoring and control, providing
visibility to what is happening in the supply chain. This ability to track and trace product movement
is increasingly becoming a requirement to ensure the security of goods on their journey.
The third flow, the financial flow, provides the reward for ensuring that the other flows work well.
Since a humanitarian supply chain will have interfaces with commercial supply chains, the financial
flow must also be managed. As product flows down the supply chain from one participant to the
next, a financial transaction might be involved, and this is repeated at each stage of the chain. One

key measure of performance in a commercial supply chain will be the amount of time that elapses
between paying for goods and materials from a supplier, and receiving payment from the next
participant. This is called the cash-to-cash cycle time.
Fundamentally, the operation of a supply chain is simple. Needs flow up the supply chain, triggering
processing activity to enable goods to flow down the chain. When goods reach the next participant,
cash flows up the chain and rewards the supplier for their goods. In humanitarian operations,
donors often provide products directly, such as blankets, pharmaceuticals, buckets, or plastic
sheeting. Confirmation is needed that these donations-in-kind have been received by beneficiaries,
i.e. information flows, such as a goods received note, would replace financial flows. The relationship
between the three flows is depicted in the diagram below.
The key to managing the flow of goods is recognizing that the three flows must be synchronized.
This synchronization will figure throughout the rest of the course but, given the complexity and
diversity of the organizations involved, it will be apparent that this will not be easy to achieve.
Now that we have considered the structure and operation of the supply chain and
provided a working definition, let’s consider its scope and activities in more detail.
The diagram below illustrates how the supply chain concept spans different
levels of management, and the breadth of activity it encompasses.
Beginning at the apex of the triangle, it is important to consider the
strategic level: the beneficiary needs that the supply chain is
attempting to serve. These needs will combine product and
location. Different profiles of beneficiary groups will translate
into very different commodity needs. For example, urban
populations in Lebanon need products reflecting an urban
lifestyle, compared to rural agricultural populations in
Bangladesh.
Ensuring the appropriateness of supply is essential. Where commodities come from outside of an
organization’s own supply chain, such as donations-in-kind, strict standards are applied and supply
chain managers need to support their appropriateness. The type of product will have a significant

impact on the construction of a supply chain. Examples might surround the product characteristics,
such as temperature, bulkiness, or toxicity. Others might involve shelf-life.
On the other hand, the beneficiaries’ location will also influence supply chain construction.
Humanitarian response to disasters often requires moving products to geographically remote
locations where infrastructure has been badly damaged or completely destroyed. The way in which
products and locations are combined will therefore have an impact on supply chain configuration.
Additionally, it is important to recognize that the supply chain is a response to a combination of
products and beneficiaries. This combination will change at different phases of a response, and the
way in which the supply chain is structured must support the overall humanitarian organization
strategy at each phase. For example, a strategy to acquire timber from sustainable sources will
impact supply chain design. This point also highlights the importance of ensuring that supply chain
activity supports the overall humanitarian organization strategy.
Once it is determined which products are going where, the next important piece of information is
beneficiary requirements. These requirements might be known, or they might have been
anticipated. The requirements will vary but time will be crucial. How quickly do the beneficiaries
need the goods? We will refer to this as the beneficiary delivery time.
Armed with this information we move to the next level of the triangle, and we can begin to construct
the supply chain. In particular, we will consider different channels to meet different beneficiary
requirements. A channel is the route that a product takes to get to the beneficiary. Some products
might go directly from the supplier to the beneficiary. Others might be stockpiled in strategically
located warehouses in anticipation of future needs. Some might be sourced internationally, while
others may be sourced locally.
Inventory policy will need to be devised within each channel. In what format should the inventory be
held? Where should it be held? How much should be held? Tactical decisions made here will have
enormous implications for the channel’s speed, flexibility, and cost effectiveness.
Associated with the channel and inventory strategy design will be the construction of the network
itself. How many warehouses will be needed? Where should they be located? What capacity should
they hold?
With the infrastructure in place, we move to the next level of the triangle and consider operational
planning. Typically, a supply chain can be separated into a supply process and a demand process.
The supply process will include how materials and products are sourced and made, while the
demand process includes how they are stored and moved to reach the beneficiaries. One of the
core tasks of operational planning is balancing the supply and demand processes so that the supply
chain operates in a synchronized manner. Sourcing encompasses purchase, supply, and
production, while downstream we have warehousing and transporting activities. In order to allow
these operational activities to run smoothly, we need integrated planning.

Highlighting all these activities are common issues, such as information systems, performance
measurement and reporting, people management and interfaces, process design, and
improvement.
The scope of supply chain management therefore spans all three managerial levels: strategic,
tactical, and operational. Typically covered activities include:
• Transportation
• Fleet management
• Warehousing
• Materials handling
• Inventory control/management
• Import and export
movement/administration
• Demand forecasting
• Order processing/management
• Reverse logistics/returns management
• Production planning
• Purchasing/procurement
• Supply chain network planning
• Supply chain planning
Most of these activities should be familiar, but supply chain planning warrants a special mention at
this stage.
Since the scope of the supply chain spans all three management levels: strategy, tactics, and
operations, it will have a very close fit with the organization and program strategies. The supply
chain is the mechanism that connects products to beneficiaries. Remember that the supply chain
was described as a process and not a function. Like any process, it must be well-designed and wellplanned,
and also have its well-executed operations. Supply chain planning is a mechanism
designed to connect the above-listed activities with those contained in the supply and demand
processes. This planning attempts to ensure that the entire organization is working with one plan,
one set of numbers, and one set of forecasts. Ultimately, the supply chain activity influences the
performance of the organization and will determine the organization’s perceived effectiveness. The
supply chain plan also links with the organization’s financial activity.
The supply chain plan is like the conductor of an orchestra. Each musician is technically excellent
and capable, but without the coordinating skills of the conductor, the resultant sound is unlikely to
be appealing to the ears.
Earlier we made the statement that, at first glance, there was nothing complicated about the supply
chain. We have seen how information pertaining to needs flows up the supply chain, enabling
products to flow downstream, with the subsequent financial rewards flowing back upstream.

However, there are many things that combine and interact to make supply chain management a
challenging task. In this section, we explore factors that pose challenges to supply chain managers.
We will cover:
• Complexity
• Synchronization
• Integration
• Visibility
• Optimization
• Compressing time
• Variability & uncertainty
Having explored these challenges, we will conclude by considering the theme that links and bonds
all the supply chain activities and participants together.
There are many causes of complexity in a supply chain. Often, the characteristics of the products
being moved create complexity, requiring that specific activities be undertaken. The supply chain
network can also create complexity by reducing flexibility.
The consequences of this complexity can be significant.
The first consequence of complexity is higher inventory levels. As complexity increases, inventory is
added at more locations within the supply chain. This inventory gradually begins to block the supply
chain, slowing progress through it, and resulting in longer lead times. In turn, these longer lead
times can lead to a further increase in inventory levels.
When product takes a long time to flow through the supply chain it deteriorates in quality, resulting
in a poorer level of service to the beneficiary. Despite the high level of inventory, product availability
is often poor because the inventory held is the wrong product.
Storing and handling extra inventory will result in additional cost. Although there are many factors
that contribute to complexity, there are perhaps two dominant aspects that highlight all of them.

The first aspect is the proliferation of product handled. The supply chain becomes more complex as
more products are introduced into it. Each product has to be controlled separately and accounted
for throughout the supply chain journey.
The second major aspect of complexity is the increase in the number of stocking points within the
supply chain network. As new stock points are added, inventory levels increase. These networks
often become rapidly geographically fragmented, making their management and coordination more
complex.
Together, product and network complexity combine to pose major challenges to supply chain
managers. These features of the operating environment are unlikely to disappear, so management
must focus on the effective handling of this complexity.
We explored how supply chains are comprised of different participants, performing different
processes, under the guidance of specific functions. Traditionally, most organizations have been
managed through functional structure; indeed, most individuals identify with a function. When
asked what one does, one replies that he or she is a warehouse manager or inventory planner;
rarely does one say he or she works in the Sudan disaster supply chain.
The emphasis of this functional approach has been to seek excellence in these activities, and to find
ways of performing them most effectively and efficiently. Consequently, many people work toward
goals and objectives that have been set with this functional excellence in mind. Unfortunately,
supply chains work by spanning functions and organizations. They require cross-functional
cooperation and coordination to make them work.
A supply chain is a process, not a function. For the process to work smoothly, we must first
integrate the internal functions. This requires that the impact on the entire supply chain is
considered when setting functional objectives. It is therefore necessary for everyone to understand
how the whole process works, rather than simply the individual pieces.
Once internal integration is complete, the next step is to integrate with the immediate supply chain
partners. This is often more straightforward than the internal alignment. Gradually, the mutual
cooperation and coordination can be expanded to include all supply chain participants. Sometimes
this external integration is called collaboration.
The geographical dispersion of the supply chain activities will create the need to embrace different
cultures and languages. For this reason, integration will likely be the most difficult challenge to
which supply chain managers must respond. It also emphasizes the human aspect of the supply
chain because supply chain performance depends as much, if not more, on the nature of people
relationships than it does on the processing and movement of goods and materials. Human
behavior drives performance which, in turn, determines supply chain performance.
There is further complication when we consider how the three flows that comprise supply activity
are managed. Recall that the three flows are physical goods, information, and finance. Frequently,

these flows are managed by different functional groups and, indeed, one flow could be managed by
more than one group of people.
The optimization requirement builds on the need for integration.
Functionally driven organizations often find that people work toward functional goals that are not
typically aligned with the overall supply chain process. An example might be the buyer who seeks to
purchase raw materials at the lowest cost to satisfy the functional goal of reducing cost per ton, and
at the end of the year the buying function will report that it has reduced cost per ton by some
percentage. While this might look commendable, there may be a knock-on effect.
The supply chain has to use the materials purchased by the buying function. As a consequence of
the supplier reducing the price, they have compromised on the quality of the material used. The
result is that the purchased materials have a high rate of damage in the supply chain, creating
waste. The overall waste has more than offset the reduced cost from the buying function. This
effect is caused by the pursuit of non-aligned functional goals. An effective supply chain seeks to
optimize the overall flow, from source to consumption.
In terms of optimization, the key is to ensure that the supply chain strategy for the whole operation
is optimized, and not just the piece directed by one manager in one location.
An enormous amount of work has gone into the establishment of humanitarian standards for the
delivery of services (e.g. Sphere) and also goods (e.g. RC/RC Emergency Items Catalogue). In
emergencies, working to pre-defined and carefully established specifications can save both time and
money, but comes with dangers associated with the appropriateness of a standardized response.
An optimized supply chain consists of sub-optimized parts. The converse also applies. If only the
parts are optimized, the result will be a sub-optimized supply chain. For years, many types of
organizations have been trying to optimize functional activity, resulting in the creation of sub-optimal
supply chains. Reversing this trend will not be easy and will require consideration at a strategic,
rather than operational, level.
Another challenge faced by supply chains is coping with variability and uncertainty. No matter how
well the processes are managed, variability will naturally exist within them. Variability occurs in the
quantities beneficiaries need, the timing of order receipt and material deliveries, the yields that
machines produce, plus a host of other places.
Typically, this variability is measured using charts that display the deviation from some average
value. Sometimes events can be managed using only the average value, but often this will not be
sufficient. In the UK the average family has 1.6 children, but no family has exactly 1.6 children.
Averages are created from the actual figures that are dispersed around them, and those figures
create challenges for supply chain management.

Earlier, we discussed how inventory
is used to protect against variability
in both supply and demand. This is
just one attempt to manage the
uncertainty created by variation in
activity levels. The more variability
exists, the more difficult and
expensive it is to run the supply
chain.
After an earthquake occurs,
aftershocks can have a significant
impact on access to extended
delivery points. For example, in
2005 after the earthquake in the
Kashmir area of Pakistan, while
organizations were working hard to clear roads, aftershocks caused significant landslides that
blocked people and mechanical plant . Additional resources were required to clear the secondary
damage, as well as for ongoing road assessment for relief deliveries. There were more than 20
aftershocks greater than 5.0 on the Richter scale in the 30 days after the initial earthquake.
After the January 2002 eruption of Mount Nyragongo in DRC, there was a significant population
movement from Goma into Rwanda, as people fled the lava flows. Planners were surprised by how
quickly these populations returned to Goma, as many of these refugees had been caught up in the
1994 genocide crisis and did not wish to remain in Rwanda.
Supply chains are vulnerable to the impact of variability because they contain links of
interdependent activities that span long periods of time. A small delay in an upstream process can
cause significant problems downstream. Likewise, a small change in demand downstream can
cause chaos upstream.
Although variability cannot be avoided, we will explore the use of many tools and techniques to
combat and reduce its impact later in the program.
Another feature of successful supply chain management is the capability to synchronize the flows of
physical goods, information, and finance. There is a great deal of interdependency between these
flows.
An important part of synchronization stems from the fact that information can often be substituted
for inventory. Inventory is an expensive compensatory device, whereas information can often be
provided at a much lower cost. The provision of information will also help supply chain managers to
respond to integration and optimization challenges. Using information in this way will be a feature
of the rest of this unit.

One of the dangers of operating a supply chain using functionally driven goals is that silos are
created, which view their piece of independently from the whole supply chain. This independent
view contributes to a phenomenon called demand amplification. The nature of the supply chain
means that it is very difficult to operate part of the chain without regard to its impact on the rest of
the chain. This is where the idea of a chain is particularly useful.
If we place a chain under tension by applying a force at both ends, the chain will break at the
weakest point. The chain is only as strong as the weakest link, meaning that a supply chain is only as
strong as the weakest link within it. Consequently, everyone should be interested in improving the
strength of the whole chain.
One of the most important ways of improving the strength of the supply chain is by creating visibility
of the beneficiary need for all the participants. This is a good example of using information to
replace inventory.
Suppose that the supply chain services beneficiaries from field warehouses. Each field warehouse
records their demand and orders replenishments from a regional warehouse, and then the regional
warehouse records the demand it receives from each of the field operations. This could be
significantly different from the pattern of beneficiary needs. The regional warehouse then orders
from suppliers. The supplier only sees the replenishment order from the regional warehouse, which
could be substantially different from the pattern of beneficiaries’ needs. The needs might be for
small, regular deliveries, but the supplier might see a small number of large orders. This is what we
mean by demand amplification.
Alternately, the information about beneficiary needs could be shared with suppliers directly, helping
them anticipate when product will be required.
Time is of utmost importance in humanitarian supply chains. If we can make products available
more quickly, then human suffering may be able to be relieved in less time.
One of the definitions of the supply chain used by the Chartered Institute of Transport and Logistics
is the “time phased positioning of resources.” This indicates how time separates different process
activities and creates a delay between each of the stages.
There are several interpretations of time in a supply chain context which will be covered later in this
unit. For now, let’s mention one use as being the total time that it takes for a product to progress
through the supply chain, from source to consumption. This is called the supply chain response
time. In some cases this time can be long.

In this section, we have explored the major challenges faced by supply chain management. The
combined effect of these factors can be extremely daunting. So what is it that unites the
participants and functions?
The usual response to this question is cost, but cost is much more divisive. Supply chain
participants are often reluctant to share information about costs, for fear of customers asking for
bigger discounts or lower prices. Trying to use cost as the linking item is likely to be unproductive.
Every participant has to be interested in one thing: making the product available. A supplier can’t
make the product available to its customer, if its own supplier has not made it available. If all
participants work to make the product available, then ultimately the beneficiary need will be
satisfied. This is the ultimate goal of supply chain management.
Supply chain management is about working together to satisfy beneficiary requirements in a timely
manner. This means seeking to manage complexity, variability, and uncertainty through
optimization, integration, and synchronization, by creating visibility of beneficiaries needs.
In the previous section, we saw how cash programs have significantly different requirements in
terms of contributions from Supply Chain. We considered that the work load and value of Supply
Chain is not decreasing – it is merely changing in the types of activities and value it adds.
For an in-kind program, Supply Chain’s activities are quite structured and tangible, and therefore it is
easy to structure explanations around the core activities.
For CTP, it is easier to Supply Chain’s contributions at each stage in the project cycle.
Included in the annexes is the CTP Project Cycle Chart (PCC), which was by Fritz Institute to support
the CTP Operations Core, a 5-day training course designed to train all Operations staff on cash
programs. More specifically, the PCC is designed to support explanation of roles and
responsibilities. It is a process flow chart for the CTP Project Cycle, as agreed upon by the task force
organizations that contributed to the development of this course. It comes in two formats:
interactive and printer-friendly. Each has a summary and detailed view.
NOTE: The CTP Project Cycle Chart is based on common approaches and agreed upon best practices of
the task force organizations guiding the development of this course. It does not align with any one
organization’s internal process, nor is it a recommendation on how operations should be conducted.

At a high level, the Project Cycle is summarized as shown below. NOTE: the phases are not scaled to
show the proportional amount of time required.
Objective: Be ready to respond quickly and efficiently to emergencies
Major Activities:
Baseline Assessments
Contingency Planning
Ready-To-Go
Solutions
Implications for Supply Chain:
• Conduct relevant baseline assessments
• Monitor local and international market prices
• Identify existing and potential risks and appropriate mitigating
measures
• Establish framework agreements
• Establish standard operating procedures (SOPs) to support
coordinated and efficient implementation
Is there a need?
If yes, let’s get started!
Objective: Assess and analyze needs, markets, operational context, and feasible implementation
options to provide management with sufficient information (including a
recommendation) to make an informed decision on the best modality for the project.
Major Activities:
Feasibility Check
Assessments
Analysis
Implications for Supply Chain:
• Consult on the high-level check on cash feasibility prior to
conducting assessments.
• Conduct Retail Market Assessment.
• Analyze assessment outputs and operational design options,
building towards an overall recommendation for
management.

Modality Decision
Objective: Contract partners and suppliers required to implement and establish all relevant
operational processes and support mechanisms necessary for successful distribution.
Major Activities:
Action Plan
Contract Suppliers
& Partners
Project-Level SOPs
Implementation Set-
Up
Implications for Supply Chain:
• Contribute to a high-level plan for the project and activities
required to prepare for it.
• Manage contracting processes for all partners and suppliers,
ensuring compliance throughout.
• Build detailed instructions for distribution execution, based
(as much as possible) on existing organizational SOPs and
policies.
• Support the establishment of appropriate distribution support
mechanisms.
Ready to distribute?
Objective: Enable smooth distribution cycles, monitoring markets and accounting for payments so
that adjustments can be made as needed.
Major Activities:
Distribute
Monitor
Make Adjustments
Implications for Supply Chain:
• Support Program’s distribution activities, as required.
• Monitor the retail market for price movements and potential
breaks in supply.
• Recommend adjustments to implementation activities, as
appropriate.
Will there be more distributions?
If yes, repeat Phase III.

Objective: Initiate project closure activities, ensuring adherence to compliance procedures and
contribution of knowledge gained to long-term institutional knowledge.
Major Activities:
Reporting &
Documentation
Lessons Learned
Implications for Supply Chain:
• Compile and file all relevant reports, history, and
documentation for the project to provide an effective audit
trail, for possible future need.
• Document operational lessons learned.
Planning is a decision-making process that involves making choices about what to do, and then how
to do it. Supporting an organization’s purpose is usually a mandate and policies that define what
can be done and in what ways. Planning is the tool that enables the mandate and policies to be
applied in a way that ensures actions are taken that allow the organization to provide solutions in
specific situations.
Often, particularly in emergency situations, there will be a high expectation for action. Action that is
undertaken without planning often leads to longer response times. The overall response time
consists of planning and action times. By spending time on planning we can often make the action
more effective and timely. Good planning will lead to better results, delivered on time, with the
consequence that human suffering is relieved in a more cost effective way.
Seen in this way, planning becomes a deliberate act requiring that the current situation is analyzed
and assessed, policies are interpreted, and solutions designed to fulfill the desired objectives. By
undertaking planning we are attempting to influence the future in a manner that transforms the

current situation into a desired one. Since the future is uncertain, there will be occasions when the
plans will need to be adjusted.
Earlier in this unit, we looked at how focus on the end objective – saving lives – has resulted in
expansion of the modalities used in the humanitarian sector. We also learned that more
assessment and analysis is required at the start of a project, before a decision can be made as to
which modality is the most appropriate for a project. Specifically, this diagram:
The result is the addition of all the assessment, analysis, and critical comparison of options to
effective planning.
Before the rise in CTP and requirement for a modality decision, assessments and analysis were
primarily the responsibility of Program. Supply Chain would only become involved in a project after
needs had been assessed and the project approach had been determined.
When there were only in-kind projects,
Supply Chain involvement generally began here

From Supply Chain’s perspective, planning would primarily align with the ‘Design & Implementation
Set-Up Phase’ and implementation (or action) would primarily align with the ‘Distribution Cycle &
Monitoring’ Phase.
P L A N
ACT
However, as we’ve already learned, the intrinsic link between achieving program objectives and
supply chain design requires Supply Chain to be involved in the assessments and analyses that drive
the modality decision.
Supply Chain involvement begins here in order to contribute to
assessing and analyzing differences between modalities
Now that there are more options for approaches to delivering aid, the complexity and work involved
in planning a project is greater and takes even longer.
P L A N
ACT

If Supply Chain is not involved early in the project cycle, specifically during assessments and
analysis, then there may be significant delays during design and implementation set-up.
For example, cash is the chosen modality and the intention is to use mobile money as the delivery
mechanism, but only one mobile money transfer company has been identified in the area of
implementation. Lack of involvement of Supply Chain (specifically Procurement) may lead to
questions as to whether circumstances truly warrant a waiver of competition. The result may be 1)
starting over with assessment of potential service providers, or 2) an invalid waiver of competitive
procurement and potential audit issue.
The focus of this course is on performance and management of humanitarian supply chains – both
internal and external. As we just learned, effective planning is integral to supply chain performance
and this is reflected in the course structure.
Unit 1 begins by looking at the context in which humanitarian supply chain management
professionals operate. It talks about developments in the sector, namely the increased use of cash
transfer programming (CTP), and its implications to supply chain.
This unit addresses the identification and evaluation of options, for both in-kind (internal) and
market-based (external) supply chains, even though the details of these two supply chains will be
shared in units 2 and 3, respectively.
Finally, the unit looks at communications as well as managing people and relationships. These are
included in unit 1 as they are topics and tasks relevant for both types of supply chains.
Specifically, the unit’s components are:
1.1. Humanitarian Aid, Modalities, & Supply Chain
1.2. Key Concepts & Terminology
1.3. Delivering the Organization’s Mandate
1.4. Identification & Evaluation of Options

1.5. Managing Relationships & Communications
Unit 2 dives into the technical details of planning a supply chain for operation internally. It looks at
strategic approaches for its design and management, down to, in some cases, precise calculations.
Specifically, the unit’s components are:
2.2. Decoupling Points & Processes
2.3. Supply Chain Assessment
2.4. Supply Chain Design
2.5. Resources & Organizational Design
Cash Transfer Programming (CTP) uses the markets to deliver on the organization’s behalf. Supply
Chain must assess the market’s capability and reliability as well as quantify the impact of choosing
CTP over in-kind. Further, contracting of service providers to implement CTP requires specific
knowledge and attention to detail.
Unit 3 focuses on preparing Supply Chain personnel for their roles and responsibilities in assessing,
planning and supporting implementation set-up of CTP projects.
Specifically, the unit’s components are:
3.2. CTP & Supply Chain
3.3. Assessments & Analyses
3.4. The Action Plan
3.5. Procurement for CTP
Once Management has made a modality decision, an action plan is in place, and service providers
have been contracted, implementation can begin. Activity must be constantly monitored, looking for
changes to the operating context. Performance will need to be measured and reported.
Adjustments will need to be made. And in some cases, operations may transition or withdraw, if
support is no longer required. All of these require consideration.
Specifically, the unit’s components are:
4.1. Controls
4.2. Supplier Monitoring
4.3. Market Monitoring
4.4. Transitions
4.5. Withdrawals
4.6. Change Management

Terminology varies from organization to organization, country to country, context to
context. The following terms are often a source of confusion, so we’ve defined them here
for reference throughout the course.
The following terms and concepts are central to supply chain management and understanding is
critical before planning a supply chain can begin.
As previously mentioned, the terms supply chain and logistics are both used (often interchangeably)
in the humanitarian world to describe the process of getting aid, in the form of goods, to the
beneficiaries who require them.
Throughout this course we will use the term supply chain to describe the process, which we define:
A process that integrates, coordinates, and controls the movement of materials, goods,
and related information from suppliers and donors to meet beneficiary requirements in a
timely manner.
The word strategy has its origins in the military, and this is reflected in the dictionary definition:
The art of moving troops, ships, aircraft, etc. into favorable positions
In the military, the strategic necessity for officers is to select a battlefield favorable to their force’s
particular strengths and capabilities, and unfavorable to the enemy.
For a humanitarian organization, strategy involves setting its direction so that a match is achieved
between its resources and the environment in which it competes. A longer, more complete
definition might be:

Strategy is the future direction and scope of an organization, which attracts and retains
stakeholders through fulfilling their needs, by configuring resources and processes in a
changing environment.
Although it might seem that the meaning of strategy is clear, many people offer alternative ways of
looking at it. Common terminology is defined below.
INTENDED
STRATEGY
REALIZED
STRATEGY
UNREALIZED
STRATEGY
DELIBERATE
STRATEGY
EMERGENT
STRATEGY
UMBRELLA
STRATEGY
To some, strategy is a plan that provides direction or guidance to get from
where the organization is today, to some future point. Sometimes such a plan
is referred to as an intended strategy.
Strategy can represent consistent behavior over time. For example, an
organization could choose to provide only water sanitation or famine relief.
Seeing this consistency requires a look backward, and hence it is sometimes
called a realized strategy.
In some cases, all planned goals may not have been reached. This is
sometimes referred to as unrealized strategy.
In cases where intentions were fully realized, it is referred to as a deliberate
strategy.
The strategy that was realized may not be the one that was planned. Perhaps
things change as progress is made and decisions are altered accordingly. This
is referred to as emergent strategy.
An umbrella strategy means that broad outlines are deliberate, but the details
are allowed to emerge as progress is made.
Few strategies turn out to be absolutely deliberate because this would mean no learning took place
during the process. Few strategies are purely emergent, since this would indicate a lack of control.
In the real world, a combination of strategies is needed, because strategies have to form as well as
be formulated. The diagram shows the relationship between these different strategies.

A vision relates to the organization’s broadest and most desirable goals. A vision describes what an
organization aspires to be. Visions are important because they are designed to capture the
imagination of the organization’s people and stimulate their efforts to achieve a higher purpose,
cause, or ideal. Some of the most effective visions are those in which the organization seeks to excel
or lead in some activity that bonds its entire people with a common purpose. A vision should have a
strong emotional appeal that encourages people to commit their full energies and minds to
achieving its ideal.
A mission is a general statement of the overall purpose of the organization, which is in line with the
values and expectations of stakeholders and is concerned with defining the scope and boundaries
of the organization.
The mission statement commonly provides four types of information:
• Obligations to stakeholders
• Sources of competitive advantage
• Scope of activity
• View of the future
In order to build a mission statement, an organization seeks to answer questions such as:
• What is the reason for existence?
• What are our obligations to our various stakeholders?
• What is the relative emphasis we will place on meeting the needs of different stakeholders?
• What is unique about our organization?
• What is likely to be different about our activity in 3 to 5 years’ time?
• Who are our principal beneficiaries?
• What are our principal services?
• What are our basic values and beliefs?

By answering these questions, the mission statement guides managers in their strategic decisionmaking
process.
While mission statements provide direction, they tend be general. Goals are an attempt to make
mission statements more concrete. Goals are typically at a high level and, consequently, they may
not be quantifiable. They tend reflect longer-term, desired results, and are usually applied at an
organization or program level.
Objectives are more likely to be quantified. They represent the operational definitions of goals, and
detail in more precise terms what needs to be accomplished in order to reach the goals. Usually,
they can be measured and a timeframe is provided. They will often be established at the sector
level.
Outputs provide yet another level
of detail, supplying the defined
deliverables which enable
objectives to be achieved.
Notice that the descriptions of
each term are based upon a
process of decomposition. The
overall hierarchy of this language
can be seen in the diagram to the
right.
In the context of planning, impact is a useful tool for referring to the overall result of a strategy,
operation, or activity. It is related to goals and objectives in that it describes the desired result and,
in some cases, it is used synonymously with them. The concept of impact is particularly useful in the
design stage because it reminds of us of the importance of value for money, i.e. getting the greatest
possible impact, the best possible results, within the constraints of the available resources. In this
material, we take impact to mean: the change, positive or negative, that is the result of an activity,
project, operation, or strategy.
An activity is a specific action, or series of actions, which provides the means for achieving an
objective. Activities can be broken down into tasks and sub-tasks as part of the implementation
planning process.
An input is a human, financial, or material requirement for carrying out an activity.

This pair of terms comes from the operational aspect of planning. Needs, in this context, refer to
requirements for human existence, such as food, water, and shelter.
Resources are the human, financial, and material means required to meet needs.
Action planners will therefore be looking at a situation in terms of what is needed and what are the
available and required resources to meet needs of a group of people.
Standards are the means which enable planners to look at a situation, activity, results, or
performance, and make judgments about quality. Planners typically attempt to determine the
minimum acceptable standards to apply to the delivery and results of assistance activities.
Standards also play a role in enabling planners to make judgments in the assessment stage, in terms
of what problems the assistance program should address.
A standard is a statement of a level which provides a basis for measuring or judging quality,
particularly in terms of acceptable levels of service in protection and assistance programs.
An example showing how these terms might be used in an emergency response organization is
shown below.

Determining planning assumptions is an essential part of the planning process, as they provide a
basis for the setting of objectives. Typically, planners have little control over the conditions and
events about which they make assumptions, but they recognize that effective planning demands
that assumptions be articulated and considered as part of analyzing whether an activity will be
successful.
An assumption is a prediction, condition, or event which must exist if a project is likely to succeed,
i.e. meet its objectives.
Often, assumptions can be made subconsciously, which can lead to planning errors, particularly
oversights. The best practice is to document the assumptions that have been made so that they can
be challenged in the review of the plan.
The term scenario is useful for describing the body of assumptions which underlie a plan. Typically,
planners make assumptions about:
• Beneficiary numbers
• Government policy
• Role & contribution of partners
• Beneficiary attitudes
The scenario provides a bridge between the assessment and design of a project or operation. It
fixes the body of facts, analysis, and assumptions that allow the design process to begin.
A scenario is the group of planning assumptions planners have used to provide the basis for
developing a project, operation, or strategy.

This pair of terms is used to refer to the time period that a plan will cover. They can be
distinguished from each other in that the planning horizon usually refers to the end of the planning
period, at which point planners can say with confidence that desired results will have been achieved.
In unstable, unpredictable situations the planning horizon will necessarily be quite short.
A time frame usually refers to the start and end of the plan.
All three of these terms are related, but their distinction relates to the timing of activities.
Assessment is normally associated with preliminary activities, monitoring with ongoing activities and
evaluation with terminal activities after an activity is completed. All three activities involve data
gathering, information, and analysis.
Assessment consists of the activities involved to understand a given situation so as to provide a
basis for designing an activity, project, operation, or strategy.
Monitoring consists of assessment activities carried out in order to correct activities found not to be
in accordance with the plan or to modify the plan if it is determined to be no longer appropriate.
Evaluation is the assessment taking place during or at the end of a project in order to determine its
impact, relevance, effectiveness, and efficiency.
Planning models are often used to simplify the planning process. There is a wide assortment of
models developed by different organizations and people, but they all tend to consist of two major
phases: assessment and design.
While it would seem obvious that, at the outset, assessment is undertaken to establish an
understanding of the current situation so that the design phase can commence, in practice there
will be a continual switching between these two phases as the situation develops. It is important to
note that, at any moment, it is possible to be undertaking any of the activities shown below. For
example, while assessing beneficiary needs and gathering data, resources are being matched to
needs to help identify options and make choices as to the positioning of warehouses and selection
of suppliers.

The two activities can be broken down further, as shown in the diagram:
Viewing the planning process as the interaction of two phases helps the thinking process. The link
between the activities is the planning scenario. Recall that we defined this as the group of
assumptions planners use to provide a basis for a developing a project. In other words, a scenario
puts a fix on the current situation after the assessment has been performed. The scenario bridges
the gap between the two phases.
Following assessment, the planning scenario is fixed on the basis of the assessment of the given
situation, which allows the design to be finalized based upon the stated facts and assumptions.
Typically, the scenario will clarify:
• Time frame
• Availability of resources: finance,
• Beneficiaries: number, location,
people, materials
profile, trends
• Government policy
• Operational partners: role, contribution
Our model diagram becomes:

Following the plan development, it will need to be implemented. The implementation will be
monitored to determine progress and the need, if any, for corrective action. If it is required, there
will be a change back to the assessment phase to amend the planning
scenario, so that a new design can be made. This
process continues as the situation develops until the
desired result is reached.
Plan
Plan
Plan
Most, if not all, humanitarian organizations have their own policies on managing risk. The
terminology may vary, but they all will capture the principles and concepts below.
THREAT
VULNERABILITY
A threat is anything that can exploit a weakness. Threats are the things we are
trying to protect against.
Threats should be expressed in terms of their probability of occurrence.
A vulnerability is a weakness.
Vulnerabilities should be expressed in terms of the impact if the weakness is
exploited by the threat.

RISK EXPOSURE
Risk exposure (sometimes referred to as simply ‘risk’) is the intersection of
vulnerabilities and threats. A threat is only a problem if there is an associated
vulnerability. Similarly, a vulnerability is only a problem if something is
threatening it.
Example: There is a threat of rain in a park where John and Sally are hiking.
Sally has a raincoat but John does not.
John is exposed to the risk of getting wet from the rain.
The relationship is easy to comprehend when visualized:
THREAT
(probability of
occurrence)
RISK EXPOSURE
Priority should be given to items
with the highest risk exposure.
VULNERABILITY
(probability of occurrence)
Risk exposure can be addressed either through mitigating measures or contingency planning, or
both. Later in the program, we will tackle risk ask analysis including how to identify and plan to
handle risks, but for now, just a few more key terms:
Risk Mitigation
Contingency
Planning
The action of minimizing potential loss, or reducing vulnerability to, identified
threats.
Example: Sally and John are planning another hike in a park for tomorrow
and the weather report predicts it will be 40F (4C) a 40% chance
of rain. Sally and John plan to bring raincoats with them, so that if
it does rain, they are not vulnerable to getting wet.
Planning devised to handle scenarios other than the usual or expected.
Example: Sally is really excited for the hike and wants to go no matter what.
Sally may want a contingency plan for the scenario where John
suddenly can’t go along.
‘RACI’ is an acronym and useful tool to indicate assignment of responsibility in activities performed,
particularly in cross-functional scenarios. It is often used in standard operating procedures,
manuals, and process documents to show who does what.

From Wikipedia:
R E S P O N S I B L E
Those who do the work to achieve the task. There is at least one role with a
participation type of responsible, although others can be delegated to assist in the
work required.
A C C O U N T A B L E
The one ultimately answerable for the correct and thorough completion of the
deliverable or task, and the one who delegates the work to those responsible. In
other words, an accountable must sign off (approve) work that responsible provides.
There must be only one accountable specified for each task or deliverable.
C O N S U L T E D
Those whose opinions are sought, typically subject matter experts, and with whom
there is two-way communication.
I N F O R M E D
Those who are kept up-to-date on progress, often only on completion of the task or
deliverable, and with whom there is just one-way communication.
Often the role that is accountable is also responsible, but that is not always the case and should not
be assumed. For example, Supply Chain may be responsible for preparing contracts with suppliers,
but Management ultimately signs them.
All organizations have policies and regulations regarding what can and cannot be done while
implementing projects to achieve the organization’s mandate. The policies are often complex and
can be confusing as to how they should be applied. Standard operating procedures (SOPs) are an
essential link between organization policy and effective, efficient, and compliant project design and
implementation.
A standard operating procedure, or SOP, is a set of step-by-step instructions created by a
business to help workers carry out routine operations. Their purpose is to achieve
efficiency, quality output, and uniformity of performance, while reducing
miscommunication and failure to comply with industry regulations.
(Source: Wikipedia https://en.wikipedia.org/wiki/Standard_operating_procedure)
Where Wikipedia cites industry regulations, it is appropriate to use ‘organization policy and donor
compliance’ for the humanitarian sector.
SOPs can vary dramatically in their scope and application. Some SOPs may be developed by an
organization to provide guidance and standardize tasks or processes across the organization. At the

other end of the spectrum, SOPs may be very limited in scope – applying only to a specific task for a
particular project, circumstance, or time period.
The following terms and concepts are critical to understanding Supply Chain’s role and
responsibilities in supporting effective design and implementation of CTP.
As previously mentioned, cash transfer programming (CTP) is the standard term used to refer to
humanitarian programs using cash or vouchers as the modality for assisting beneficiaries.
Alternative terms for the same type of programming are ‘cash-based interventions’ (CBI), ‘cash and
vouchers’, and simply ‘cash’.
Also as previously mentioned, a transfer modality, or simply ‘modality’, is the form of transfer used to
provide assistance to a beneficiary.
There are three primary modalities recognized as a standard across the humanitarian sector:
• In-Kind • Cash • Vouchers
Cash and vouchers are sometimes referred to singularly as ‘cash’ and both are considered part of
cash transfer programming.
A delivery mechanism is a means of delivering a cash or voucher transfer (e.g. smart card
or mobile money).
SOURCE: CaLP Glossary (http://www.cashlearning.org/resources/glossary)
Alternative terms often used for delivery mechanism are ‘transfer mechanism’ and simply
‘mechanism’.

For this program, we have broken the modalities of cash and vouchers down further by their
physical or electronic state and have grouped the delivery mechanisms accordingly. NOTE:
Terminology for these mechanisms varies among users, contexts, organizations, and even service
providers. Specific functionality will vary similarly. These are general classifications and
specifications for reference purposes only.
Earlier in this unit, we looked at over-simplified examples of delivery processes for in-kind and CTP.
We recognized that a decision needs to be made about which modality to use and that decision
must be informed by assessments, analysis, and weighing of options.
Specifically, we looked at this diagram:

The modality decision is that critical point when management chooses which modality will be used
for a project. It is the doorway between when assessments and analyses end and when
implementation can begin.
Response Analysis is the link between situational analysis (broadly speaking, needs
assessment and other contextual information) and project design. It involves the selection
of project response options, modalities, and target groups; and should be informed by
considerations of appropriateness and feasibility, and should simultaneously address
needs while analyzing and minimizing potential harmful side-effects.
SOURCE: CaLP Glossary (http://www.cashlearning.org/resources/glossary)
Response Analysis is the last step before the modality decision. It brings all the assessment and
analysis pieces together to make an informed recommendation to Management about the best
modality for delivery, distribution mechanism, and key details required to start designing and setting
up for project implementation.
The National Audit Office (NAO) defines VfM as being ‘the optimal use of resources to
achieve intended outcomes’. It’s useful to contextualize this when we consider VfM in our
aid program.
Value for Money in DFID’s program means:
We maximize the impact of each pound spent to improve poor people’s lives.
Source: DFID – DFID’s Approach to Value for Money (VFM)
The primary focus of VfM Analysis is on efficiency and economy, where an optimal balance of
benefits and costs are weighed as the basis of total cost of ownership and not necessarily the lowest
cost.
Value-for-Money Analysis feeds into and supports Response Analysis. It continues to grow in its
importance as technology develops and more and more new delivery mechanisms emerge.
The term ‘market’ refers to a system of exchange between two or more actors or players.
The exchange can be for goods or services, or for money and can take place in a physical
space or through virtual media such as the internet. Markets are sometimes defined by
forces of supply and demand, rather than geographical location e.g. ‘imported cereals
make up 40% of the market’.
SOURCE: CaLP Glossary (http://www.cashlearning.org/resources/glossary)

There are many markets that may be assessed and/or involved with the delivery of humanitarian aid.
A few examples are:
• The Retail Market
• The Housing Rental Market
• The Financial Market
• The Labor Market
It is important to note that the most common one that Supply Chain deals with is the retail market,
which provides physical goods (food, clothes, household goods) for purchase.
Sometimes, for simplicity, logisticians may refer to it as simply ‘the market’, but it is important to
differentiate the retail market from other markets, such as the financial market, to avoid confusion.
Market based responses work through local markets and aim to give greater flexibility
and choice to program participants are any programmatic responses that employ
existing market places to meet the needs of an affected population.
SOURCE: Catholic Relief Services, http://efom.crs.org/ecsc/market-based/
Market-based responses work through local markets to meet beneficiary needs. In most cases, the
market-based responses are cash-transfer programs (either cash or voucher) and the markets are
relied upon to provide the aid. This is only possible, however, if the market supply chains are
functioning normally.
The below diagram is an over-simplified example of a normal-functioning supply chain from
producer to distributor to retail locations.
After a disaster occurs, there may be circumstances where a component of the supply chain
disappears or no longer functions, such as the distributor:

If the retail market assessment reveals that the remaining portions of the chain are still functioning,
then there is an opportunity to support the gap in the chain. The result of such a project would
mean that the market could successfully meet beneficiaries’ needs.
The term Retail Agent is used, for this course, to refer to any actor in the retail market supply chain
with whom an organization may do business in order to deliver items to beneficiaries through retail
outlets. This includes, but is not limited to:
• Retailers
• Retail Chains
• Producers
• Wholesalers
• Traders
• Farmers Markets
• Distributors
• Importers
Innovation in payment has led to a blurring of lines between traditional financial institutions and
technology providers. Mobile money providers offer accounts where individuals store money.
Financial service providers are offering services to transfer money using cell phones. The result is
incredible convenience for consumers in the developed world and enormous evolution in financial
inclusion in the developing world.
For humanitarian organizations, these services offer fast, efficient, discreet ways to deliver life-saving
aid to beneficiaries, but the services are complex and also pose new risks.
Each humanitarian organization groups these service providers differently; some organizations
including all in one group. There are many drivers behind why the groups are organized one way or
another, such as organizational capacity, procurement guidelines, or donor requirements. There
are some circumstances when a service provider might fall into both categories. For example, a
mobile money service provider will require finance to check the security of the financial aspects but
ICT to assess the technology. Further, the infrastructure supporting these two groups is the same,
making it essential to assess both in order to determine the reliability of either one.
The most important factor is to ensure that the person(s) performing the assessment has the
relevant expertise to accurately assess the service provider’s capacity and any risk exposure
from using their services.

A state in which all people who can use them have access to a suite of quality services,
provided at affordable prices, in a convenient manner, and with dignity for the clients.
The services are delivered by a range of providers, most of them private, and reach
everyone who can use them, including disabled, poor, rural, and other excluded
populations.
Adapted from the definition of financial inclusion by the
Center for Financial Inclusion http://www.centerforfinancialinclusion.org/
Humanitarian organizations assess inclusion to confirm beneficiary access to the respective services
(banks, financial service providers, payment service providers, retailers, traders, markets, etc.) that
may be used to implement a project, in particular CTP.
In the humanitarian world, distribution broadly refers to the process of the last mile: the handover of
humanitarian aid to beneficiaries.
For in-kind programs, this broad term aligns perfectly with the event, called a distribution, during
which the physical transfer occurs.
For cash-transfer programs (CTP), however, the act of transferring the aid to the beneficiary is no
longer continually aligned with a physical transfer. For example, the organization may directly
distribute ATM cards, but then use a bank to disburse funds to the beneficiary. In this scenario, the
distribution event, when the beneficiary receives the ATM card, is no longer the point at which the
beneficiary receives the aid.
Thus the terminology has become nebulous- a grey area.
What follows here is how we have chosen to delineate the subject, providing sufficient clarity for the
purposes of these materials.
DISTRIBUTION or
DISTRIBUTION PROCESS
DIRECT
DISTRIBUTION
INDIRECT
DISTRIBUTION
A DISTRIBUTION or
DISTRIBUTION EVENT
The process of the last mile: handing over humanitarian aid to its
beneficiaries.
When the organization directly hands aid to the beneficiaries, without
the use of a middleman.
When the organization provides aid to a partner or agent that hands the
aid over to the beneficiaries on the organization’s behalf.
The event during which the aid is physically handed over to beneficiaries.

DISBURSEMENT
ENCASHMENT
CONVERSION
The release of a payment, generally electronically. A smart card, for
example, may be pre-programmed with multiple disbursements, which
can be activated code.
The process of cashing a check, money order, note, or other financial
instrument.
The process of converting one thing into something else: used often
with paper vouchers, tokens, scratch cards, etc. Example: for a cash
voucher, it would the point at which the voucher is converted into cash.
Data protection is the systematic application of a set of institutional, technical, and
physical safeguards that preserve the right to privacy with respect to the collection,
storage, use, disclosure, and disposal of personal data. Personal data includes all
information that can be used to identify data subjects, which in the case of a
humanitarian cash-based intervention, means program beneficiaries.
Leaks of personal data have potential to result in individuals being targeted for
violence or harassment, due to ethnicity, religion, medical history, or just because they
have received aid or worked with international organizations. This is a major concern for
aid agencies, whose mandate is to uphold the humanitarian principle of ‘do no harm’.
Risks to the protection of beneficiary data are faced at every stage.
Source: CaLP Website, ‘Data Protection’
http://www.cashlearning.org/thematic-area/operationalizing-beneficiary-data-protection-1
Humanitarian agencies collect a wealth of personal data from individuals; cash transfer
programming is no exception. Plus, the use of e-transfer and digital technology is becoming an
increasingly popular mechanism for delivery of CTP. It is important to understand the associated
privacy risks that may occur during the collection, use, storage, sharing, and disposal of beneficiary
data.
With the ever more sophisticated methods of beneficiary registration procedures (e.g. the
introduction of biometric IDs), collection of very detailed, highly personal information is common. As
a large amount of this sensitive data is stored digitally, a single data breach can potentially expose
tens of thousands of beneficiaries to unintended use of their personal data. This raises a number of
risk factors and associated risks throughout the data lifecycle, for example:
Basic understanding of the concerns and risks associated with Beneficiary Data Protection is
important for Supply Chain specifically during the procurement process because appropriate
questions and clauses must be included in tendering documents and/or contracts.

In the last section, one of the concepts we looked at was how outputs, objectives, and
goals build to support an organization’s mission.
In this section, we will apply this concept to
Supply Chain specifically – looking at how
Supply Chain’s activities build to support the
achievement of the organization’s mandate.
To understand this, we will look more closely
at organizations’ purposes and anatomy
followed by how policies, standards, and
strategies tie guide implementation.
The focus of this course is on the performance and management of humanitarian supply chains –
both internal and external – so it is important that we understand what is meant by performance.
The term can be used in both a generic and specific sense.
In the specific sense, performance is defined as the actual output divided by the expected output,
and this is often represented as a percentage. Especially when this is related to job performance,
expectations are usually set for average workers. Consequently, an experienced, well-trained
performer is likely to achieve actual output in excess of the expectations, yielding a greater than
100% performance measure. Conversely, a new, inexperienced worker will typically have less than
100% performance.
In addition to performance, organizations also measure productivity and utilization. Productivity is
described as the ratio of output to input, and yields measures such as: cases per hour, kilometers
per 100 liters, cost per ton. Utilization compares the capacity used to the capacity available. Again,
this is usually represented as a percentage. In this case, if utilization is greater than 100%, the
definition of capacity available must be questioned. For example, it may be that a truck is used for
one shift per day, but on rare occasions it is used for a second shift. If the capacity available is

defined as one shift, when the second shift happens, the utilization recorded will be greater than
100%. Even though the truck is used for one shift, it is actually available 24 hours per day, seven
days per week.
Examination of the definitions of performance, productivity, and utilization will quickly show that they
are designed to measure different things, and provide insight into a different aspect of performance.
Sometimes all three types of measurement are lumped together under the generic heading of
performance.
At this stage of the course, we want to explore the meaning of performance in more detail and
examine how we can plan and manage the supply chain to achieve its expectations. To do this, we
will first explore the concept of organization purpose, and then look at the anatomy of the
organization to see how performance is produced.
Every day we interface with many different organizations, in all facets of our lives. Each of these
organizations has a purpose, which indicates what it exists to achieve.
The topic of organizational purpose can be confusing. When attempting to define an organization’s
reason for existing, it is important to consider the differing views of various stakeholders.
Stakeholders are those individuals or groups who depend on the organization to fulfill their own
goals, and on whom, in turn, the organization depends. It is likely that any organization will have
multiple stakeholders. For example, there will be:
• Users of the organization’s products or services
• Suppliers of resources and equipment
• Providers of finance
• People engaged in providing the products and services, such as volunteers or employees
• Local community in the area in which the organization operates
• Governments and regulatory authorities
Each of these stakeholders will view the purpose of the organization differently. Some of these
stakeholders may, at first, seem to be more important than others. For example, if there is no
alignment between the organization and its users on the purpose, then there will be no transaction.
Without transactions the organization will cease to exist. This, however, is a simplistic view. All of
the stakeholders can have an impact on the success of the organization, and many will have
significant input into how the organizational activities will be performed.

The nature of humanitarian aid has led to the development of a set of values and principles, which
parties involved in humanitarian aid situations, are widely expected to follow and uphold. These
principles can be classified under three headings:
HUMANITY
IMPARTIALITY
NEUTRALITY
That human suffering must be addressed wherever it is found, with particular
attention to the most vulnerable in the population, such as children, women,
and the elderly. The dignity and rights of all victims must be respected and
protected.
That humanitarian assistance must be provided without discriminating as to
ethnic origin, gender, nationality, political opinions, race, or religion. Relief of
suffering must be guided solely by needs, and priority must be given to the
most urgent cases of distress.
That humanitarian assistance must be provided without engaging in hostilities
or taking sides in controversies of a political, religious, or ideological nature.
Many humanitarian organizations incorporate these values and principles into their guidelines, so
that they reflect the specific aspects of their work.
The wording of these guidelines, principles, or values, as some organizations call them, may vary but
the themes and messages they give are common.
For example, the Red Cross Movement operates with the following seven key principles:
• Humanity
• Voluntary Service
• Impartiality
• Unity
• Neutrality
• Universality
• Independence
Another example, CARE, has a set of core values and principles:
Respect:
Integrity:
VALUES
Affirm the dignity, potential, and
contribution of participants,
donors, partners, and staff
Act consistently with the mission,
being honest and transparent,
and accept responsibility for
collective and individual actions
Commitment: Work together effectively to serve
the larger community
PRINCIPLES
• Promote empowerment
• Work in partnership with others
• Ensure accountability and promote
responsibility
• Address discrimination
• Promote the non-violent resolution of
conflicts
• Seek sustainable results
Excellence:
Constantly challenge ourselves to
the highest levels of learning and
performance

The United Nations has a charter which contains their ‘principles and values.’ The preamble for the
charter is:
Source: www.un.org
The measure of an organization’s success will be determined by how well it fulfills its purpose and,
hence, the needs of its stakeholders. This will enable it to attract new stakeholders and retain
existing ones. Attraction and retention are two separate, but related, issues connected to
effectiveness and efficiency.
EFFECTIVE (adjective):
Adequate to accomplish a purpose.
SOURCE: www.dictionary.com
Effectiveness is the degree to which activities or operations achieve the desired objectives or
outputs.
To attract stakeholders, an organization must present some promise of satisfaction in the mind of
the stakeholder.
• Converting potential users of the supply chain, such as governments or donors, into actual
users requires effective presentation of a product or service in which they have a vested
interest.
• Attracting people who will work in the organization requires gaining recognition as the
preferred place of activity.

• Securing finance from governments or donors requires effective presentation of how
superior returns will be provided.
Effectiveness entails defining how things will be done to achieve the purpose. Equally, it can also
involve defining what the organization will not do; in other words, the things it deems unacceptable.
Usually, the definition of effectiveness attracts stakeholders to the organization. Focus on
effectiveness requires the outlining of stakeholders’ wants or needs, and its presentation to them in
a way that they understand.
As well as specific organization principles, a number of organizations have developed partnerships,
or agreements to work closely, in aid situations. Often, these organizations agree upon a shared set
of principles that they will observe when working together.
For a number of organizations, this was taken a step further, and formalized with the Sphere Project.
This initiative is aimed at improving the effectiveness and accountability of disaster response. It
defines what people, who are affected
by disasters, have a right to expect
from the humanitarian assistance they
receive. The Sphere standards
contain a set of minimum standards
for humanitarian organizations, which
provide water and sanitation,
nutrition, food aid, shelter, and health
care, in emergencies.
The code of conduct shown to the
right was developed as part of the
Sphere project by the ICRC and IFRC.
Organizations are invited to register
their support for the code and to
incorporate its principles into their
work.
More details on the Sphere project as
well as the contents of this code of
conduct can be found at
www.sphereproject.org.
Source: http://www.ifrc.org/en/publications-and-reports/code-of-conduct/

EFFICIENT (adjective):
Performing or functioning in the best possible manner with the
least waste of time and effort.
SOURCE: www.dictionary.com
Efficiency is the degree to which activities or operations accomplish something with the least amount
of waste. It is competency in performance.
Where effectiveness is about ‘doing the right things’, efficiency is about ‘doing things right’.
It is efficiency, or the lack thereof, that typically persuades stakeholders to stay with an organization,
or to defect to another. Stakeholders might be lost because an organization has done something to
push them away, or because another organization has done something to attract them. Conversely,
stakeholders might be retained by things an organization does well, or gained as a result of another
organization’s activity.
Focus on efficiency requires definition of:
• What would make a stakeholder leave?
• What will encourage stakeholders to stay?
This matching process is one that should be assessed regularly. Conditions can change requiring
the constant assessment of stakeholder relationships. As stated above, these changes can be the
result of an organization pushing stakeholders away, or the result of another organization pulling
them away.
The starting point for managing performance must therefore be to answer the question:
What is the purpose of the organization?
To be successful, we must then define and deliver the things that will attract and retain
stakeholders.
These concepts on organizational purpose are, for any type of organization: profit or not-for-profit;
private or public; international, national or local; small or large. These concepts are broadly
applicable, though their importance will vary with the situation. For the purposes of this course, we
will focus on the application of the concepts to humanitarian organizations.
To begin, we will explore how humanitarian organizations seek to satisfy stakeholder expectations.
As is the case with other types, humanitarian organizations have a purpose. Humanitarian
organizations also have to think about how to attract and retain stakeholders. Amongst their
stakeholders will be:
• Beneficiaries
• Local community
• Suppliers
• Governments
• Employees
• General public
• Donors

Balancing the needs of a wide range of stakeholders can be difficult. In particular, many
organizations struggle to satisfy the financial needs of their backers, while also fulfilling the needs of
other stakeholders. A key role of management is to find a way to strike a balance.
There are different theories as to how best to achieve this balance. Some argue that efforts should
be concentrated on looking after the beneficiaries’ needs, and that others will be satisfied as a
consequence. Others advocate that the best way of achieving the balance is to enhance the
organization’s overall health and capability, and if this is done consistently, the needs of stakeholders
will automatically be fulfilled.
It is clear that failure to address the requirements of any stakeholder group could lead to serious
issues. There are examples of stakeholders pursuing legal actions against organizations that they
believe have infringed on their rights.
The way this dilemma is often tackled is reflected in the strategic documents of an organization. If
done well, such documents can provide guidance to managers about how to act when potentially
adverse events occur. In other words, these documents provide rules for how people should
behave and act.
Let’s turn our attention now to how an organization works to generate stakeholder satisfaction.
In order to satisfy stakeholder requirements, humanitarian organizations must define:
• Products and services they will offer
• Geographical locations they will serve
Sometimes products and locations are linked, and referred to as programs. At other times,
products and services might be segmented into groups representing particular technical skills, such
as protection or water sanitation.
At a senior level, consideration will be given to the overall purpose and scope of the organization.
This will include the structure of programs and technical units to represent the geographical
coverage and the range of products/services. Additionally, decisions will be made as to how
resources will be allocated between different units.
Within each unit, consideration will be given to how best to operate. Each unit must contribute to
the overall purpose of the entire organization, but in a way that differs from other units.
Each unit exists to produce two types of output: the first is to deliver products and services for
beneficiaries, while the second is to provide accountability and transparency to other stakeholders.
Failure to satisfy the beneficiary requirement will quickly lead to a failure to satisfy the other
stakeholders.
The way in which an organization produces these outputs depends upon the operational strategies
it employs. Operational strategies are concerned with how the components of an organization
effectively deliver the organization-level, program-level, and unit-level strategies in terms of

esources, processes, and people. The supply chain process consists of a chain of sub-processes
that are linked to ensure the product is sourced, stored, and moved to satisfy the needs of
beneficiaries. These primary processes are then strengthened by other support processes that are
responsible for providing people, finance, and IT. The primary processes consume inputs that are
often received from outside the organization, such as raw materials, equipment, research ideas, and
money.
Processes, such as the supply chain, are often coordinated at a global level to achieve the scale
needed to reach the required levels of service and value. At a local level, the processes will
determined by the distinctive needs of beneficiaries.
In operating this processing system, the organization must also relate to its operating environment.
This environment will change as governments impact the economy and legislation. Other
humanitarian organizations will also be seeking to fulfill their purpose and might, on occasion, be
competing for the same, scarce resources. Events can create supply problems for resources, such
as shortage of donors to provide financial support, demographic issues restricting the supply of
people, and material supply shortages causing disruption. The media will be reporting events,
placing extra pressures on operations. The organization must therefore be able to adapt to its
environment or it will die. Consequently, it is important to understand the environmental pressures
and plan a suitable response, or performance will suffer.
On the resource side, in some locations human resources are becoming more limited, leading to a
shortage of experienced personnel used to dealing with specific situations. Also, the information
revolution has changed the way we operate and control processes. Managers now have more
sophisticated information available from online databases and organization-wide systems. While
this can aid better decision making, it also leaves less room for error as mistakes are quickly
multiplied.
Operating the processes are individuals, or performers. These performers exist to operate the
processes in order to produce outputs that will satisfy beneficiaries and stakeholders. Hence there
is a connection between worker performance, process performance and organization
performance. The complete organization anatomy is shown below.

The pressure to satisfy diverse stakeholder requirements, and to manage the business in a way that
responds to the pressures and changes of the environment, is putting more demands on
management to make appropriate, strategic responses.
The way an organization chooses to manage its anatomy will lead to its distinctive competence. The
term distinctive competence describes those special capabilities, knowledge, skills, technologies, or
other resources, that enable an organization to distinguish itself from others.
In each of the three levels, organization, process, and individual, we must construct and operate a
system to plan for and achieve the desired performance.
This system consists of planning, execution, and management phases.

We stated earlier that performance is measured by comparing actual output with expected output.
Consequently, expectations must be planned, actual performance measured, and the two
compared. You will notice that each component of this system performs one of these tasks.
In the planning phase expectations must be set, and then be converted into operational plans which
are supported with the necessary resources. These goals, plans, and resources must then be
communicated to people who will execute the work. Once the work has been performed, a level of
performance will result, and this resultant performance must then be managed. First, it will require
monitoring and recording, with a check against the required performance specification. Any
deviation from the desired performance level must be analyzed, causes determined, and
appropriate remedial action defined. The change in execution activity can then be made.
The fact that performance systems like this exist at organization, process, and individual job levels
means that it is critical that these systems are aligned. Failure to do will result in a glitch in the
organization-process-job results chain.
With a performance system in place, the attention then turns to the performer. Each performer is a
part of an individual human performance system. This system is unique to the worker, like a
fingerprint.
The human performance system has a number of components.
First, the system inputs are provided through the task support and resource requirements, which
were defined in the performance planning system. As well as providing the necessary resources,

tools, systems, and equipment, task support also includes ensuring that work methods are defined,
and follow a logical flow. Importantly, the worker must be free of interference from other activities in
order to be able to complete the task. Finally, the worker must be able to recognize the trigger that
initiates their action, such as a receipt of an order or instruction.
To be able to perform to a desired level, a worker must be aware of the performance specification.
They must know and understand the requirements, and also believe them to be attainable.
How the worker feels about his or her performance will determine the effort that they put into the
activity. This is determined by the consequences that occur as a result of the activity. This is the
area of reward, recognition, praise, and reprimand. Importantly, these consequences must support
and encourage the desired performance. Often, organizations try to change behavior, but leave in
place old reward systems that act against the achievement of the new performance level. Instead,
this inadvertently reinforces the old behavior. All of this contributes to the beliefs and desires of the
performer, which usually manifest themselves in the performer’s attitude. Attitude, however,
appears as a response to the construction, operation, and management of the human performance
system.
With the inputs in place, outputs can be produced. In order to know and monitor their own
progress, workers must receive timely and accurate feedback. This will enable them to adjust their
actions and gradually close the gap between desired and actual performance.
Together, task support, performance specification, and feedback provide the mentality which
enables workers to think about their activities and performance.
The ability of workers to perform in the system depends upon their mental capacity, knowledge, and
skills. This area attracts the most attention when performance is deficient. The most common
response is to provide a training program that increases skills and knowledge. Reflecting back on
the human performance model, knowledge and skills are rarely a problem on their own, but
articulated expectations can have a significant impact on performance, as explained in the following
example.
Warehouse workers lost their homes in a disaster area, and were sleeping rough in the first days of
the disaster response. Emergency managers recognized this and ensured that, in the short term,
staff were provided with a covered sleeping area, blankets, and cooking equipment. This simple step
made the workers feel valued, and ensured human dignity was maintained. Payment per truck
loaded and/or unloaded, and establishing clear job descriptions, made staff understand how they

could optimize their pay, and improved supply chain volumes handled and the accuracy of
commodity tracking.
There may be many people performing the same job, meaning that several components of the
human performance system should be identical. The mental capacity, beliefs, desire, knowledge,
and skills, however, will make this human performance system unique to each worker. Managers
need to recognize this fact in order to be effective.
Managers should not perform activities for the workers. A manager’s actions do not directly lead to
an increase or decrease of the process, but they do so indirectly by the way management action
impacts the human performance system. The principle role of management is to ensure that all the
human performance systems are aligned.
The human performance system must be aligned vertically. For example, the human performance
system for a truck driver is aligned with those for the transport planner, supervisor, and manager.
In addition, the human performance systems must be aligned horizontally. Here we get into the
core principles of supply chain management and optimized flows. Optimization is the process of
coordinating everyone’s efforts toward achievement of the stated goal. Yet again, we have a link to
the goals of the organization and process.
The responsibility for optimization and alignment lies with management.
Anything less than optimization of the entire system will bring eventual loss to each and every
component. The obligation of any system component is to contribute its best to the system, not to
maximize its own objectives.
Performance results from the complex coordination and interaction of the organization structure of
performance, performance planning, execution, and management systems, and alignment of all the
human performance systems.
Failure to achieve a desired performance is therefore likely to stem from a breakdown in the
alignment and optimization processes.

Assessment provides base data in the form of the planning scenario for the design phase of the
supply chain planning process. Before we begin the design activity, we need to examine the things
that place constraints on the planning and conducting of supply chain operations. In the
assessment module, we examined the operational constraints that could affect the supply chain.
These were the external factors existing in the operating environment, over which the organization
has no control.
In this section, we focus on the internal factors that are under the organization’s control and provide
guidelines for how activities can be performed. We list them under three headings:
• Policies • Standards • Strategy
Each of these place different constraints on our operations and consequently it is important to
interpret them accurately. We will consider each in turn.
A policy is a statement of commitment by an organization to a course of action, based on universal
criteria determined in response to alternatives.
Typically, policy decisions are needed at the macro-level, in terms of the fundamental issues and
questions that must be resolved in order to move forward in a given situation to more micro-level
issues, which arise as a result of unanticipated developments as implementation takes place.
An early step in any effective planning process is the definition and/or clarification of an
organization’s mandate and policy in a given situation. At the highest level, policy is the
organization’s mandate, as applied in a given situation. It provides the basis for involvement in a
situation by defining the overall role and approach to be used in working toward solutions. For
policy to be effective, it must integrate assessment “on the ground” with the overall perspective that
Head Office provides.
When managed well, effective policy making provides the basis for an operation’s mission and
strategic intent. Moreover, it focuses the operation’s assessment and design process. Without clear
policy, assessment and design processes lack direction and specificity, leading to plans which are
unfocused and very often lacking in a solutions orientation.
By definition, even the most effective policy will not provide all the answers to managers in the field.
Situations constantly evolve. Effective operations and project planning support the policy making
process by identifying issues and problems that require a policy decision.
In summary, policy definition at the beginning of the operation provides the basis for effective
situation assessment and operations design. Effective planning processes identify gaps that may
exist in current policy and strategy so that these can be addressed by policy makers.
The following list attempts to capture characteristics of effective policy at the operational level.

Effective policy:
• Represents an organizational commitment to act
• Is congruent with organizational goals/other policies
• Is clear and provides guidance
• Represents a reasonable consensus
• Is longer-term in nature
• Contributes to a solutions-oriented approach
Policies are typically circulated through official written documents. Such documents have standard
formats that are unique to the organization issuing the policy. While such formats differ in terms of
their form, policy documents usually contain certain standard components, including:
• A purpose statement, outlining why the organization is issuing the policy, and its desired
effect
• An applicability and scope statement, describing who is affected by the policy and which
actions are included in it b; the applicability and scope may expressly exclude certain
people, organizations, or actions from the policy requirements.
• An effective date, which indicates when the policy comes into force (retroactive policies are
rare, but can be found)
• A responsibilities section, indicating which parties and organizations are responsible for
carrying out individual policy statements; these responsibilities may include identification of
oversight and/or governance structures
• Policy statements indicating the specific regulations, requirements, or modifications to
organizational behavior that the policy creates
Some policies may contain additional sections, including:
• Background indicating the reasons and history that led to the creation of the policy, which
may be listed as motivating factors
• Definitions, providing clear and unambiguous definitions for terms and concepts found in
the policy document
Examples of organizational policies include the following:
CIVIL/MILITARY
POLICY
It is not uncommon to find that organizations have a clear policy with regard to
the use of military assets for the distribution of humanitarian assistance. While
the military is often present, issues associated with independence and
neutrality are vital for agencies if they wish to access the full range of affected
people. Consequently, use of military assets may well be a last resort where
no suitable alternative exists, and where the humanitarian imperative to save
life takes precedence. An example of such a policy can be found in the Oslo
Guidelines on the use of Military and Civilian Defence Assets for Disaster Relief,
to which the UN and some other agencies subscribe.

PROCUREMENT
& FINANCIAL
POLICIES
HUMAN
RESOURCES
POLICY
SAFETY &
SECURITY
POLICY
INTERNATIONAL
DISASTER
RESPONSE LAW
These would include guidelines on levels of authorization, authorized
signatories, order processes, audit requirements, and donor compliance.
Procurement might include ethical purchasing and environmental impact
policies.
This might be contained in a staff regulations handbook and include policies
relating to equal opportunities, gender, HIV/AIDS, codes of conduct,
recruitment and appraisal processes, personnel development and terms and
conditions of employees.
The humanitarian context is becoming increasingly complex and, in some
areas, dangerous. Agencies will commonly develop safety and security
guidelines to promote and enhance safe and secure working practices.
IDRL addresses key issues around global supply chain strategy that include the
ability to secure a legal personality in country and to sign binding contracts
with suppliers and employees, obtain waivers from import duties on
humanitarian goods, and VAT on goods procured in country. When this is
applied in reality, many humanitarian agencies note that their non-taxable
status can lead to NGOs being at the bottom of the government priority list.
The supply chain manager needs to be aware of such policies, as they can have significant
implications for the way in which the supply chain is designed and configured.
In general, compliance means conforming to a rule, such as a specification, policy,
standard or law. Regulatory compliance describes the goal that organizations aspire to
achieve in their efforts to ensure that they are aware of and take steps to comply with
relevant laws and regulations.
Due to the increasing number of regulations and need for operational transparency,
organizations are increasingly adopting the use of consolidated and harmonized sets of
compliance controls. This approach is used to ensure that all necessary governance
requirements can be met without the unnecessary duplication of effort and activity from
resources.
SOURCE: Wikipedia

Compliance and organization policy are similar, but different:
• Both are rules by which the
organization must adhere when
implementing programs and
executing the organization’s
mandate.
• Standard Operating Procedures
help both to be effectively and
efficiently applied throughout the
organization.
• Compliance is primarily externally driven,
by industry standards, public accounting
standards, or donor requirements;
organization policy, on the other hand, is
inherently internal.
• Organization policy is overseen by
management, where monitoring
compliance is often the responsibility of
Finance, or possibly of a department.
Documentation and record keeping are essential to ensure compliance. Where standards exist,
records must be maintained to demonstrate achievement. It is not enough to be compliant in
project activities; organizations and staff may have to prove that their activities meet applicable
standards as well.
Problems may arise at the time of internal or external audits if appropriate documentation
and records are not maintained.
It is much easier to file appropriate documentation than it is to try to build records after the fact,
potentially years down the line and after staff have moved on. Again, better safe than sorry!
Continued awareness of compliance throughout the project cycle is vital to its success. Key tasks
are identified below:
• Establish SOPs to include
compliance
requirements
• Include segregation of
duties, as appropriate
• Include minimum
standards and required
documents
• Document assessments
and analysis
• Document modality and
mechanism decisions
• Use transparent and
ethical procurement and
contracting processes
• Include data protection
clauses in SOPs,
tendering, and
contracting
• Use different staff
to distribute than
to monitor
• Separate duties during
payment authorization
and encashment
• Require proof of receipt
• File relevant
documentation,
including decisions and
reconciliations
• Participate in lessons
learned exercises and
ensure feedback on
learnings

Segregation of duties is defined as the appropriate division of tasks and responsibilities,
such that no one person controls a process from beginning to end, and that transactions
are reviewed independently at various points during the process. It is a ‘checks and
balances’ approach, designed to easily identify errors, discrepancies, and fraud.
Individuals assigned to the various tasks in a process should be independent from each
other in both function and relationship.
SOURCE: Mercy Corps – Field Finance Manual
Segregation of duties is essential to successful operations and should be reviewed regularly, as well
as when establishing the project implementation team. Early involvement of Supply Chain in the
project cycle will help ensure that segregation of duties is applied appropriately, in particular to
procurement processes and supplier relationship management.
Key areas to review are:
• Payment approval, processing, and reconciliation
• Identification, tendering, and contracting of suppliers and service providers
• Asset management and inventory
Mercy Corps uses a Segregation of Duties Matrix tool that makes it easy to review tasks and assign
responsibility to available personnel. The tool includes key activities on the left as rows, and
available personnel across the top as column headers. Note: the below picture is an excerpt, not the
full matrix.
Personnel availability, experience and skill sets, as well as job responsibilities will be different for
every project implemented. Organizations may have policies identifying which staff member should

e doing which tasks, but it is good practice to review the matrix for each project and operational
context. Better safe than sorry!
If segregation of duties is not effectively managed, in addition to being non-compliant with
the organizations’ and donors’ policies, the project and organization are at increased risk of
fraud and loss.
RACI’ is an acronym and useful tool to indicate assignment of responsibility in activities performed,
particularly in cross-functional scenarios.
From Wikipedia:
R E S P O N S I B L E
Those who do the work to achieve the task. There is at least one role with a
participation type of responsible, although others can be delegated to
assist in the work required.
A C C O U N T A B L E
The one ultimately answerable for the correct and thorough completion of
the deliverable or task, and the one who delegates the work to those
responsible. In other words, an accountable must sign off (approve) work
that responsible provides. There must be only one accountable specified
for each task or deliverable.
C O N S U L T E D
Those whose opinions are sought, typically subject matter experts, and with
whom there is two-way communication.
I N F O R M E D
Those who are kept up-to-date on progress, often only on completion of
the task or deliverable, and with whom there is just one-way
communication.
Often the role that is accountable is also responsible, but that is not always the case and should not
be assumed. For example, Supply Chain may be responsible for preparing contracts with suppliers,
but Management ultimately signs them.
A standard is a minimum level of performance that must be achieved. Performance that is below a
standard would be deemed unacceptable. Often, as we will explore in a later module, there will be

other measures of performance that are more demanding. These measures are more like targets,
unique to individual operations.
Usually standards are imposed and are common to all operations. In other words, they represent
what must be achieved at a minimum level.
Standards are of fundamental importance in all operations and at all stages of the programming
process. Prior to the actual design of a program, the application of standards in the assessment
process provides the means for determining the core problems that must be addressed and the
gap between current and desired conditions. In the design phase, standards are the means for
establishing the appropriate level of quality to be achieved through the provision of assistance, and
thus are an integral part of the objective-setting process. Standards play a crucial role in the
monitoring process, since the monitoring of progress against standards determines whether
progress is being achieved in terms of the right quality, at the right time, and for the right cost.
Similarly, in the evaluation phase of an operation when impact is assessed, the impact of an
operation is identified and judged to be positive or negative largely in relation to standards.
Despite the importance of standards, they are often a neglected feature of operations. Not only are
standards often absent from program and project documentation, but the relevant standards for
operations are not consistently discussed and agreed upon among partners prior to
implementation, and revisited as implementation proceeds.
A promising development in terms of agreeing upon minimal standards for humanitarian assistance
among the range of humanitarian actors working is the Sphere Project. The Sphere Project has
established minimum standards in disaster response, including humanitarian disasters, by involving
NGOs, UN agencies, government agencies, and academic institutions in a joint enterprise to agree
upon minimum standards and indicators for humanitarian assistance.
The preliminary results of the Sphere Project have been recently published and are available at the
Sphere Project website (www.sphereproject.org).
The Sphere handbook is designed for use in disaster response, and may also be useful in disaster
preparedness and humanitarian advocacy. It is applicable in a range of situations where relief is
required, including natural disasters as well as armed conflict. It is designed to be used in both
slow- and rapid-onset situations, in both rural and urban environments, in developing and
developed countries, anywhere in the world. The emphasis is on meeting the urgent survival needs
of people affected by disaster, while asserting their basic human right to life with dignity.
Despite this focus, the information contained in the handbook is not rigid. It can be applied flexibly
to other situations, such as disaster preparedness and the transition out of disaster relief. It is not
designed for use in response to technological disasters, such as those involving transport, industrial,
chemical, biological or nuclear catastrophe. However, while not addressing these types of disaster
specifically, it is relevant to situations where population movements, or other consequences
triggered by such an event, create a need for humanitarian assistance.

The project offers a set of minimum standards and key indicators that inform different aspects of
humanitarian action, from initial assessment to coordination and advocacy. The standards are
general statements that define the minimum level to be attained in a given context. The indicators
act as signals that determine whether or not a standard has been attained, while the guidance notes
provide additional information.
The initial chapter on common standards sets out guidelines for program design and
implementation which are applicable to all sectors. Each of the four technical chapters, water
supply, sanitation, and hygiene promotion; food security, nutrition, and food aid; shelter, settlement,
and non-food items; and health services, has its own set of standards and indicators.
The guidance notes in each chapter relate to specific points that should be considered when
applying the standards to different situations. They offer advice on priority issues and tackling
practical difficulties, and may also describe dilemmas, controversies, or gaps in current knowledge.
The standards are based on the principle that populations affected by disaster have the right to life
with dignity. They are qualitative in nature, and are meant to be universal and applicable in any
operating environment. The key indicators, as measures to the standards, can be qualitative or
quantitative in nature. They function as tools to measure the impact of processes used and
programs implemented. Without them, the standards would be little more than statements of good
intent, and would be difficult to put into practice.
The standards for the different sectors do not stand alone; they are interdependent. However,
there is inevitably a tension between the formulation of universal standards and the ability to apply
them in practice. Every context is different. In some instances, local factors may make the
realization of all standards and indicators unattainable.
When this is the case, the gap between the standards and indicators listed in the handbook and the
ones reached in actual practice must be described, along with the reasons for the gap.
Since each operation possesses a degree of uniqueness, Sphere standards provide the starting
point for determining what will be the standards in a particular operation, but they are not
absolutes. The regional context, local conditions in particular for populations which are affected by
a program, host governmental standards, and the standards of agencies participating in the
program, must be taken into account as specific standards are agreed upon as part of the normal
planning and management process.
If you treat the Sphere standards as the minimum, they can serve as a basis for problem
identification and analysis, prioritizing of overall activities and establishing key indicators at a country
level.
In order to promote the use of standard items in the first stage of the push phase, the European
Union’s emergency donor ECHO (European Community Humanitarian Office) has set up a network
of approved Humanitarian Procurement Centres (HPCs). This enables ECHO’s Partner NGOs and
international organizations to procure goods and related services to agreed upon and approved
standards from HPCs in the framework of operations funded by ECHO.

It is not uncommon, in the early days of an emergency, to find items such as plastic sheeting in the
market place. Often, local purchase may be an acceptable short-term measure, however both
short- and longer-term, it is important to ensure that an appropriate quality of supplies is
distributed regardless of where they are sourced.
That products may come from different sources highlights another important aspect of standards.
Making sure that one group of beneficiaries is not receiving preferential treatment is necessary both
from a security management perspective, and also in terms of fairness. This may require starting
smaller scale distribution in multiple locations simultaneously, rather than a more effective large
scale distribution in one location. Such issues will clearly impact the configuration of the supply
chain, and will need careful planning.
As previously mentioned, standard operating procedures (SOPs) are an essential link between
organization policy and effective, efficient, and compliant project design and implementation. We
referenced the Wikipedia definition, but recommended using ‘organization policy and donor
compliance’ in place of ‘industry regulations’ to adapt it for the humanitarian sector.
A standard operating procedure, or SOP, is a set of step-by-step instructions created by a
business to help workers carry out routine operations. Their purpose is to achieve
efficiency, quality output, and uniformity of performance, while reducing
miscommunication and failure to comply with industry regulations.
(Source: Wikipedia https://en.wikipedia.org/wiki/Standard_operating_procedure)
In the humanitarian sector, organizations vary in how they approach and apply SOPs. Some
organizations have detailed SOPs that cover nearly all activities and as many scenarios as possible,
leaving little to chance. Other organizations have very high-level SOPs, but expect detailed
procedures to be developed for each project. No matter which approach is used within your
organization, it is essential to know the scope, audience, and purpose (detailed more later) of
existing SOPs relevant to your work.
Project-Level SOPs, as we refer to them in this course, are essential for executing smaller, repetitive
tasks, involving multiple functions and stakeholders, such as managing the encashment process for
a cash project. During the project cycle, first the action plan must be agreed upon and contracts
signed with service providers and implementing partners. Then SOPs for the specific project must
be established. Project-level SOPs will effectively delineate and coordinate the activities of all the
parties involved in implementing the project.

O R G A N I Z A T I O N - L E V E L P R O J E C T - L E V E L
DEFINITION
Strategic-level documents, establishing
procedures for the operation of the entire
organization
Tactical-level documents, addressing specific
steps designed for specific projects
FACILITATES Planning and implementation Execution of specific tasks
DEVELOPED
IN LINE WITH…
Organizational mandate
Organizational policies (e.g. compliance,
procurement, or project management)
Resources available to the agency
Organization-level SOPs
Resources available for execution
Contracts negotiated with service providers
and implementing partners
ROLES &
RESPONSIBILITIES
BROKEN DOWN BY…
CONTENT
DEFINED BY…
Function – Finance, Supply Chain, ICT, etc.
Management Level – Senior management,
team managers, officers, etc.
Office – HQ, regional, country, field
Primarily by headquarters /
organizational senior management
All listed in the organization-level, plus:
Organization – the agency, partners, suppliers
Individual – the person or position performing
a task (ensures segregation of duties)
Primarily by country teams / implementation
teams
Clear and comprehensive SOPs are always important, but they are critical in scenarios when staff
may be inexperienced with systems and processes. Examples of such circumstances are:
• Sudden on-set emergency and additional staff are being sent in to help – these staff may
not know all procedures and management may not have sufficient time for normal training
• A large program is being implemented using new technology (e.g. new CTP delivery
mechanism) – staff may rely on SOPs to ensure processes are executed correctly and
consistently
SCOPE
The scope of the SOP is essential. It should be at the top, or near the top, of
the document and delineating it concisely.

TARGET
AUDIENCE
Determining and clearly stating the
target audience of the SOP is essential.
An SOP may cover multiple functions or
contexts, or even the entire
organization, but the limitations must
be defined. One approach for defining
target audience is to consider their
function, level, and operational
context.
PURPOSE
PROCEDURES
with ROLES &
RESPONSIBILITIES
OTHER KEY
INFORMATION
The purpose of the SOP should succinctly state which tasks and/or outputs the
target audience will accomplish by executing the outlined procedures.
The main portion of the SOP will break down the task(s) identified in the
purpose into clear, executable steps (or sub-tasks).
The steps must be compliant with organizational policies, protocols, and
accountabilities. They should be comprehensive and provide sufficient detail,
yet concise and efficient in achieving the desired result or output.
Responsibility for each step should be assigned (RACI is one approach, but any
approach is acceptable, as long as it clearly indicates assignment). Segregation
of duties must be clearly identified to avoid conflicts of interest.
Other information that may be relevant to include is listed below:
• Background: a brief summary of relevant context
• Dates: issue date, validity period, anticipated review date
• Approvals: names and titles of SOP approvers
• Owner: name and title of the person, or at least the department,
responsible for maintaining the SOP
• Prerequisites: identify information, tasks, and/or conditions that must
exist prior to initiation of the SOP
• Minimum Standards: whenever possible, identify the absolute
minimum tasks and outputs that meet compliance and policy
requirements for use in emergencies
• Best Practices: identify best practices, where they exist
• Coordination mechanisms: identify and explain existing ways of
working

• Questions/Problems: where to go with questions or problems regarding
implementation of the tasks included
• Safety & Security: identify possible risks associated with the tasks, and
any efforts that should be made to mitigate those risks
• Annexes: additional documentation / background information that may
be relevant reference, such as assessments or response analysis
• Terms & Definitions: definitions for terms, acronyms, and other items
that are not common vernacular
In the concepts and terminology section, we defined strategy as the future direction and scope of an
organization, which attracts and retains stakeholders through fulfilling their needs, by configuring
resources and processes in a changing environment.
Within a humanitarian organization, there are three strategies that are likely to have an impact on
supply chain planning:
• Organization strategy • Program Strategy • Global supply chain strategy
It is important to recognize that supply chain analysis can and should be added at all levels of
strategy: strategic, tactical, and operational. Fundamentally, supply chain managers need to be
involved within the planning process. If this is not happening, the manager must to be able to
demonstrate the value that can be added to the process by including him or her.
The overall strategy of the organization is
the one that defines how the organization
purpose or mandate will be fulfilled.
Strategy, at its most basic, is a clear vision
of what an organization wants to achieve,
why it wants to achieve it, as well as an
overall sense of the means and time-frame
required.
Strategy, in the organizational context, focuses on operations and activities at the macro-level, the
big picture and, more specifically, on longer-term problems or issues that will continue to be of
concern if not addressed. Its purpose is not to go into details of operations or projects. Effective
organization strategy, however, supports operations and project planning at all levels.
The concept of strategy and strategic planning can be applied at regional, country, or work-unit
levels. In each case, the emphasis is on the big picture. Taking a strategic approach implies a focus
on the most important issues and problems, and defining solutions at the appropriate levels.
The organization strategy will provide the context for each of the other two strategy types.

Program strategies are developed to support the organization strategy. Usually, they will be
constructed by answering a series of questions:
SITUATION
ASSESSMENT
VISION
DEVELOPMENT
IMPLEMENTATION
STRATEGY
• What is the current situation?
• What are the core problems to be addressed?
• What results and impact do we want?
• How will we measure our success?
• What means will we use to achieve our desired impact?
• How will we organize ourselves in order to achieve the right results?
RISK ANALYSIS • Is our strategy feasible, relevant, and realistic?
• How will we manage risks?
STRATEGY
IMPLEMENTATION
• How will the strategy be deployed?
Situation assessment involves taking stock of the current situation with a focus on key issues/
problems and their implications. It includes a thorough analysis of the external environment, as well
as an assessment of the internal capacity of all actors involved in an operation. It is a process of
information gathering, analysis, and interpretation, as well as a forecasting of trends. It provides a
basis for the planning that follows.
In the situation assessment phase of a strategic planning process, the following questions, at
minimum, should be answered:
• What is the current situation?
• What are we currently doing to bring change toward the desired situation?
• What are the core problems we must address, and what are their causes and effects?
• What are our own and our partners' strengths and weaknesses?
• What opportunities exist that that could be advantageous to us?
• What constraints must be overcome?
• What lessons have we learned thus far that we should apply in the future?

In carrying out a situation assessment, planners have a range of techniques from which to draw,
ranging from the techniques of needs and resource assessments undertaken at the site, to detailed
surveys by specialists. For any assessment process to be effective, a people-oriented approach is
required which ensures that planners have a clear picture of the potential beneficiary population
and their communities, their activities, and their resources. The list that follows includes many of the
techniques that planners use at different stages in the assessment process:
• Mission statement development/review
• Policy gap analysis
• Challenges inventory
• Core problem analysis
• Stakeholder mapping & interest inventory
• SWOT (strength, weaknesses,
opportunities, threats) analysis
• Progress review
• Research/studies/surveys
• Expert opinion
• People-oriented planning
• Core problem identification & analysis
Vision is our image of how things should be, i.e. the desired situation in terms of how an
organization wants the situation to be transformed as a result of the impact of their and their
partners' efforts. Vision is described in terms of goals, objectives, and scenarios.
Key questions that should be answered in during vision development include:
• What is the desired situation we want, and within what time frame?
• What overall impact do we want our efforts to have?
• What is the chain of results necessary to achieve the overall impact we want?
• If we make maximum use of all available resources in the most efficient way possible, what
will be the result?
• How will we measure our impact?
Planners typically approach the development of vision, i.e. the setting of objectives, in three ways,
and often in combination. These are:
• Mission and objectives definition
• Scenario(s) development
• Core problem translation into a hierarchy of objectives/chain of results
The first approach, mission and objectives definition, involves working from the mission of an
organization to the setting of objectives. This means interpreting organization strategy in a given
situation, analyzing the situation, and then setting a hierarchy of objectives which are consistent with
the mission and situation assessment.
The second approach, scenario(s) development, involves developing scenarios which provide a best
guess about what is likely to happen in a given situation. These scenarios are then assessed in
terms of their likelihood, and a choice is made in terms of which scenario or scenarios are likely to
be most accurate, with objective setting going forward on that basis. This approach is often used in
situations in which contingency planning is needed.

The third approach, core problem translation into a hierarchy of objectives/chain of results, is the
process of translating the analysis from the assessment phase into a hierarchy of objectives which, if
implemented, should achieve the results and impact desired. In effect, an operation should deliver
a chain of results which lead to the achievement of the goals of the operation.
Typically, effective vision development involves all three techniques.
To identify the implementation strategy is to creatively determine the means for achieving the vision
(objectives). It involves identifying a range of means (i.e. tactics, the "how") for achieving the vision,
and determining which seem most appropriate.
Effective teams do not allow themselves to be bound by traditional or standard solutions for how to
achieve their visions, but instead attempt to identify new ways to approach their problems and how
to solve them.
Key questions that should be answered in this phase include:
• What are all the options and alternatives we have available to achieve our vision/objectives?
• What new and creative approaches can we take to make more efficient and effective use of
our resources?
• What activities need to be implemented to deliver the outputs which collectively will achieve
the desired impact?
The following list includes some of the techniques planners have at their disposal for identifying
strategic options:
• Brainstorming
• External strategy and operations review
• Lateral thinking
• People-oriented planning
• Outside experts
Risk analysis involves testing the feasibility and practicality of means that have been identified for
meeting objectives, in order to arrive at the means which have the greatest potential for success. It
involves identifying forces that will support successful implementation, as well as those that may
have a negative impact, and therefore involve risks. Particularly importance is determining how
important risks will be managed.
Key questions that should be answered in this step in the planning process include:
• Is our strategy (our objectives and the options we are considering for achieving them)
relevant to the expressed needs of the beneficiaries, their communities, and the country?
• Are there environmental factors, positive and negative, which will affect the potential
success of our strategy?
• Are there other actors involved in protecting and assisting our target beneficiaries, and are
we cooperating with them to achieve maximum impact?

• Do we have the necessary resources?
• Do we have the necessary capacity?
• Is our strategy compatible with the organization mission and policy?
• Are we making the best possible use of our potential?
• Have we fully taken into account all of the potential risks if we implement our strategy?
• How will we manage the risks we have identified?
Planners have a range of techniques available for testing the feasibility of a strategy, ranging from
the testing that specialists can use for technical activities, to simple techniques that can be applied
in a planning session within a team.
Implementation begins once the initial phase of planning is complete. Planning continues, however,
in the context of monitoring, not only in terms of progress in implementation, but also monitoring of
changes in the external environment and situation that demand that the implementation plan be
adjusted. The following list provides suggestions for how planners can attempt to prepare
themselves for successful implementation of a strategy:
• Plan to take stock of progress by including monitoring mechanisms with indicators to
measure impact.
• Assume the strategy will be adapted and refined over time.
• Expect the unexpected.
Humanitarian operations may consist of many projects with many partners or just a few activities
with a single partner. They may consist of multiple levels (region, situation, capital, sub-office, and
site) or it may exist on one level. In all cases, the process that is used is similar.
The program strategy that results from the development process is compiled on the basis of a
detailed assessment of the situation in terms of:
• External factors: opportunities and constraints
• Internal factors: strengths and weaknesses
• Key issues which will have an impact on the operation
And an ongoing analysis of:
• Beneficiaries and their communities, in terms of needs and resources
The program plan is a comprehensive document that:
• Establishes the planning scenario and key assumptions for the operation
• Sets the hierarchy of objectives for the operation, usually on a site and sectoral basis
• Describes key activities for meeting the objectives
• Describes the managerial structure in terms of roles and responsibilities of all operational
partners
• Describes essential coordinating mechanisms

• Establishes the time frame for the operation including a work plan with lead times,
milestones and deadlines
• And includes an overall budget that incorporates all sources of funds
Often, the development of the program strategy and plans will reference the logical framework. The
logical framework is a design matrix which summarizes the key elements of an operation, program,
or project, and is particularly useful as a team planning tool which supports effective assessment
and design processes. It is used most effectively as part of a participatory methodology for
operations and project planning, monitoring, and evaluation, which emphasizes:
• The setting of proper objectives
• Definition of measurable indicators
• Identification of critical assumptions and area of risk
• Determination of means for verifying project accomplishments
• Definition of the resources required for implementation
The logical framework was introduced in 1969, and has been widely adapted by the international
donor community and bilateral development agencies (USAID, DFID, DANIDA, CIDA, etc.), by multilateral
institutions (World Bank, Asian Development Bank, African Development Bank, Inter-American
Development Bank, UNDP, WHO, ILO, etc.) and by many NGOs.
The logical framework captures, in summary form, the hierarchy of objectives, performance
indicators, means of verification, and assumptions/risks of projects and programs. Once these
program and project elements have been defined, the logical framework will support the
development of the work breakdown structures, work plans, responsibility charts, and budgets
which are necessary for implementation to go forward in a systematic manner.

The standard logical framework is a 16 box matrix which summarizes the key features of a program
or project and which is organized as follows:
GOAL:
A statement of the overall
goal the operation/project
is contributing to achieving
Quantitative ways of
measuring or qualitative
ways of judging progress
towards/ or achievement of
the overall goal
Description of the means
for gathering data on and
assessing performance
against indicators
External factors, conditions,
events which are necessary
in order for the goal to be
met
OBJECTIVE:
A statement of the specific
objective in terms of
change or benefit to be
achieved by the project
Quantitative ways of
measuring or qualitative
ways of judging progress
towards/ or achievement of
the objective
Description of the means
for gathering data on and
assessing performance
against indicators
External factors, conditions,
events which are necessary
for the objective to be met
OUTPUT:
The specific deliverables/
results expected from the
project
Quantitative ways of
measuring or qualitative
ways of judging progress
towards/ or achievement of
the outputs
Description of the means
for gathering data on and
assessing performance
against indicators
External factors, conditions,
events which are necessary
for the outputs to be
achieved
ACTIVITIES:
The activities that must be
carried out in order to
produce the outputs
Inputs: a description of the
resources required to
produce the outputs
A description of cash flow
requirements over the
duration of the project
External factors, conditions,
events which are necessary
in order for the activities to
be carried out
The matrix serves as a discussion tool for program planners and stakeholders to agree upon and
record the key elements of the design of a program or project. Its strength lies in its orientation to
results, its emphasis on the concept of cause and effect, and its usefulness in working through the
logic of a program or project in a systematic and transparent manner.
Agencies have experimented with and adapted this basic framework in response to their own
requirements and purpose.
The final strategy that will be important to the supply chain planner is the global supply chain
strategy. This strategy will have been compiled in response to the organization and program
strategies. Remember the supply chain is a support tool.

A definition of global strategy is:
The effective management of facilities, inventories, transportation, information,
outsourcing, and strategic partnering to achieve organizational goals.
Activities associated with optimizing global strategy might include: reviewing global infrastructure
and the sitting and management of storage locations, warehouse management systems,
determining what products are needed and to what specification, where to hold product and what
quantities, reviewing method of fleet management and developing partnerships with suppliers and
3PL providers.
As a consequence of these strategies, there may be a need to establish part of the supply chain in
readiness to respond to situations. This might, for example, involve pre-positioning inventory in
strategic locations to facilitate the rapid deployment once an emergency occurs. Not all
organizations will prepare such a strategy since it will depend on the particular features of the
organizational strategy.
In such cases where a strategy does exist, it is likely to be supported by supply chain facilities, and
links with supply chain partners that are already established. Consequently, supply chain plans
under development may well have to utilize such features. In some cases, this may not seem
appropriate for a single situation, but this is a classic case of seeking to optimize the global supply
chain at the expense of sub-optimizing a part of it. The overall benefit for doing so is likely to
outweigh the increased costs and sub-optimal features of an individual program. This aspect may
well be critical to explain to people who may not be in a position to understand the bigger picture.
The global supply chain strategy will detail:
• Nature of supply chain assistance required to provide support to the organization strategy
and programs
• Beneficiaries the supply chain activity is trying to assist
• Facilities in existence, with descriptions of products available within them
• Preferred methods of transportation, including ports of exit and entry
• Resources available that could be deployed in a specific supply chain configuration, such as
trucks and handling equipment
Armed with the assessment, policy, standards, and strategies, we are now in a position to
commence the supply chain plan design.
The following section will explore the types of inputs that should be sought from supply chain
managers, particularly at program and global strategy levels.
The interaction between program and global strategies is important to understand, and is often
overlooked in the planning process. For example, a commitment to work towards achieving the
millennium development goals (MDGs) forms part of many humanitarian organizations’ strategies.

One of these eight MDGs is to combat HIV/AIDS, malaria, and other diseases. As a consequence of
this at the program level, planners realized that a rapid expansion of malaria prevention and control
programs was needed. The program strategy that was then developed identified a huge demand
for insecticide treated bed nets (ITNs). Had supply chain managers been involved in this process
early on, it would have been possible to advise program staff that the global manufacturing capacity
for ITNs was limited to one single company, lead times were extensive, and projected demand was
likely to continue to exceed supply. From this, as part of the global strategy put in place to support
program strategy, supply chain managers could look to address the availability issue with
governments and industry, to identify ways in which production capacity could be increased. As part
of this global planning process, analysis of the demand in targeted countries could be undertaken,
enabling the identification of the most effective location for site production facilities in response to a
guaranteed level of demand. The positioning of such facilities would be, from an optimal global
perspective, to serve all program requirements rather than one. A strategic overview of total
demand enables such decisions to be taken.
The supply chain manager should ask two questions:
1. What information do I need to assist with effective planning?
2. What can I input?
As previously discussed, logistics managers have a key role to play in informing the types of products
that are appropriate for beneficiaries, and need to share the supply chain constraints with program
staff who are identifying beneficiary needs. For example, in high humidity contexts, canvas tents will
rot quickly and can be uncomfortable for beneficiaries to sleep in as they become too hot. Plastic
sheeting may be a more appropriate, cheaper to transport, and easier to store alternative. Agreeing
upon product specifications based on an understanding of existing standards and market place
availability (e.g. that tinned fish is available in 125g rather than 150g), will save time and money. The
dangers of not being involved in the planning process include inappropriate goods, delays in
ordering, unnecessary spending, damage to the local economy, and failure to comply with
government and donor regulations. These directly impact organizational performance.

Now that we have an idea of how Supply Chain helps deliver the organization’s ultimate
mission, we will look at the options for doing so and how the best option is selected.
More specifically, this section introduces the different types of supply chains, the
assessments and analyses conducted to understand options, and how options are
evaluated.
Previously we spoke about in-kind humanitarian aid and that organizations deliver in-kind aid
through their supply chain. We also spoke about how cash transfer programs (CTP) effectively
outsource the supply chain function to the markets – we referred to this as an ‘external’ supply
chain.
In either case, the supply chain process integrates, coordinates, and controls the movement of
materials, goods, and related information from suppliers and donors to meet beneficiary
requirements in a timely manner. At the heart of this process is the capability to manage flow, of
both goods and information.
A manager involved in overseeing the process has a fundamental aim of providing a service to
satisfy beneficiary requirements. Not only must this be done in a timely manner, but also at an
acceptable cost. The ability to achieve a level of acceptability will depend upon how resources are
utilized. We could therefore describe the aim of management as:
To manage the flow to satisfy beneficiary requirements in a timely manner at an
acceptable cost
The idea of a supply chain highlights the structure of a chain. A chain consists of a series of
connected links. If a chain is placed under pressure by applying a force at either end, the chain will
break at its weakest point. This can be extrapolated to a supply chain by saying that it is only as
strong as its weakest link.
Time, available funds, and uncertainty will have a considerable impact on the structure of the supply
chain. In preparing for a response, the challenge is to use available product information and
beneficiary demand to establish a theoretically optimal supply chain structure. One of the

challenges in this situation is identifying sufficient resources to develop infrastructure (e.g.
warehousing, IT, systems, stock) to respond to theoretical demand. During the response phase,
supply chain structure has enormous implications on both operational effectiveness and running
costs and, as such, must be under constant review. This will significantly impact flow, and hence we
will explore this in greater detail.
We will then explain how this leads to push and pull activity, and explore the characteristics of the
different stages of supply chain response.
Earlier in the unit, we recalled supply chain structure, and how it connects supply to demand. This
connecting process involves:
• Managing flow of goods and materials from suppliers toward beneficiaries
• Managing the flow of information both up and down the supply chain
Time is embedded within these flows. First, there is the overall time that it takes for goods to flow
through the entire chain, from the supply to the demand side. During its entire time in the supply
chain, three things could happen to a product:
First, it could be moved from one place to another. This might involve transfer from one
geographical location to another, and/or movement from one part of a facility to another. An
example might be the construction of a kit by combining several goods that have been stored in one
part of the warehouse, assembled in another, and then finally stored in a new location.
Secondly, it might be processed. This could include a
repacking operation as mentioned above, but it could
also include a production activity higher up the supply
chain.
Third, it could be held as inventory. As the journey
unfolds it may be stopped several times to be held in
stock, for example in global, regional, and local
warehouses.
If all the time spent in each of these phases is added
together (moving time plus processing time plus

storing time), the result will be the overall time to travel through the supply chain. This is called the
supply chain response time.
There is another type of time that is important in a supply chain: the time from when a beneficiary
need is identified until the beneficiary receives that product. This is called the beneficiary delivery
time. This time will, in fact, consist of some information time and some movement time. When the
request is made it will need to be processed, possibly the goods will need to be ordered from a
supplier and, when they are received, be moved to the beneficiary.
The movement time that is contained within the beneficiary delivery time is the final part of the
supply chain response Time. The information time, however, is not part of the supply chain
response time; it can be undertaken while the product is being stored, moved, or processed.
Delivery times are linked to the phase of the operation, i.e. in the push phase. There are immediate
needs (health, water, shelter, protection), and the benefit of experience means that agencies can
largely predict what is required in this first phase and pre-plan. The more operations move toward
the pull phase and longer-term needs, such as permanent housing and employment, the more
beneficiaries need to drive input. In general, it is helpful to stress the importance of detailed
assessment and beneficiary participation in determining what is entered into the supply chain at all
stages. This serves as a key part of a humanitarian agency’s accountability, not only to its donors,
but to the people it serves.

There is an important relationship between the supply chain response time and the beneficiary
delivery time which we will now explore. In Module 2, we looked at decoupling points, and now we
will consider the importance of decoupling points within humanitarian operations.
If the beneficiary delivery time is equal to, or greater than, the supply chain response time, we can
wait for the product request, order it from the supplier, move it through the supply chain, and
deliver it without having to hold stock at any point. This is shown in the diagram below as situation
1.
It is likely that the beneficiary delivery time would be long in this case and, consequently, could cause
problems. The level of uncertainty in this situation is low. We know what is required in sufficient
time to be able to operate our supply chain to deliver it on time.
The second situation in the diagram shows the position when the beneficiary delivery time is shorter
than the supply chain response time. In this situation it would not be possible to wait for the
request for goods from the beneficiary, and then process it and move it through the supply chain
quickly enough for the goods to arrive by the desired time. This is problematic.
The solution to this situation is to hold stock at a point in the supply chain that enables delivery of
the goods within the delivery time. In order to have stock available, the organization will have to
forecast, or anticipate, the requirement. Sometimes the difference between supply chain response
time and beneficiary delivery time is called the uncertainty gap, and forecasts must be produced for
the duration of this time. In many cases this uncertainty gap could be quite long, creating difficulties
in producing an accurate forecast.

In post-tsunami Indonesia, entire communities needed to be rebuilt. This process required the
government to define policy on resettlement, agencies to agree on minimum construction
standards, suitable land to be identified and legally transferred to become available for building, and
for agencies to agree to lists of beneficiaries that they would serve. Forecasting timber
requirements in this context, where numbers were changing regularly, required a degree of risk
taking.
An inaccurate forecast can result in the following:
• Excess stock, as a result of the forecast being greater than the actual requirement
• Stock shortages, as a result of the forecast being lower than the actual requirement
The stock point, as we discussed in Module 2, is often referred to as the decoupling point. Stock
held at a point that enables delivery-to-make within the required time. A forecast has to be made to
anticipate need for the goods so that they can be available at the stock point.
Now that we have explored the impact of time and uncertainty on the supply chain, we can relate
this to how we operate humanitarian supply chains.
When a disaster occurs, there is a need to get specific goods to beneficiaries as quickly as possible.
During the first 48 hours following a disaster, communities are commonly the first responders.
While this can be very positive and communities play an important role in taking people in, providing
shelter, and understanding needs, uncoordinated response can lead to a large increase in
unlicensed drugs, unwanted clothing, and traffic jams. Generally, agencies look to request cash
from the general public, to provide maximum flexibility with the response. The beneficiary needs will
not be known, and so they must be forecast. If order placement, and subsequent receipt and
delivery, were to be delayed until an on-the-ground assessment could be made in the affected area,
the result would be a long response time, and many lives could be lost. Consequently, emergency
stocks are held in stockpiles in anticipation of disaster occurrence. When the disaster occurs, goods
are pushed through the supply chain to reach the beneficiaries as quickly as possible. This push
activity requires careful thought as to the type of goods that should be held, and the location in
which they should be stored.

In the early stages of a disaster, the entire supply chain consists of push activity. Products may have
been obtained from suppliers and placed into emergency stocks based upon forecasted
requirements, or received from donors. They will then be pushed into the impacted areas and
toward the beneficiaries. During the push phase, there has been little or no consultation with
beneficiaries, so items in the supply chain are not tailored to the cultural setting. Response is based
on the preparedness activities that anticipate demand. Caution should be taken to send only
appropriate items, and early feedback is needed to ensure that items, such as hygiene kits or food
parcels, are modified to reflect beneficiary preferences. At this stage of operations, there is a risk
that the products available in the warehouse will drive what is distributed. This could result in the
wrong goods or wrong quantities being pushed down the supply chain, with subsequent shortages
or blockages. After major disasters, such as the tsunami on 26th December 2004 , logistics
infrastructure can become rapidly overwhelmed. For example, at Medan airport in Banda Aceh,
limited availability of landing slots meant that it became crucial to ensure that aircraft with priority
goods (body bags, essential medicines, shelter items) were coordinated to land first.
At this stage, the logistician’s job is to manage this push activity effectively so that goods reach
beneficiaries at the required time. For the logistician, moving program and logistics staff forward to
the affected areas to start developing assessments and planning will be a key role during this push
phase. This will require that good communication lines are established with the program managers.
The communication will inform the program managers which goods are currently available, and
which ones will become available in the near future, so that they can decide on the best locations to
which they should move them.
As the disaster response progresses, more information about what is required will begin to become
available. The assessment teams will generate a further push of products into the receiving
warehouse. This assessment is a type of forecast, so it is again possible that the goods being
pushed may not be those which are required. Gradually, the logistician will be able to support the
program decision to move the supply chain into a new structure, consisting of push and pull activity.
The push activity comes from the supply side, but if effective communication can be established, the
movement out of the receiving warehouse can be based upon pull. This stage of operations is
named call-forward. Program managers call forward goods from stock to satisfy the beneficiary
needs. A strong logistics assessment of forward areas, and joint planning with program staff as to
how logistics is to deliver to extended delivery points, is required at this stage. It is likely that only
smaller-capacity trucks are able to reach remote affected areas, and until thorough assessment is
made of bridges and roads, security remains a key consideration. As discussed elsewhere, transport
configuration will have a significant impact on the volumes that can be moved through the supply
chain.
As the operation progresses and more reliable information becomes available, it will be possible to
convert the supply chain completely to pull. At this stage, the request for goods is based upon
specific requirements, which are then processed through the supply chain. Once the goods are
received, they are moved straight through to where they are required without holding them in stock.

The logistician’s task is to manage the initial push operation, and to support the transition to a pull
operation as soon as sensible, through the call-forward interim stage. The decision to move from
one type to another is a specific to each program, and the critical point in making this decision is
available information. The logistician has an important role in providing information to enable the
decision to be made and, of course, in managing activities to make the transition a reality.
The transition from push to pull relates very well
with the response time and management of
uncertainty.
The diagram to the right demonstrates the
relationship between response time, on the
vertical axis, and uncertainty, on the horizontal
axis.
So far, we have explained how the task of
managing the flow changes depending on the level
of uncertainty and the length of the response time.
This led to the definition of the supply chain types:
• Preparedness
• Push
• Call-forward
• Pull
We will now examine the characteristics of each type.
Much pre-planning goes into considering the “what-ifs” for areas and regions of the world where a
humanitarian situation can be expected. There will often be a history of this type of occurrence in a
region, and there may even be existing preparedness plans. All of this can be drawn upon for the
initial planning required to meet an emerging situation.
Although disasters can occur anywhere in the world, there are certain regions where it is more likely
that disasters, both man-made and natural, will occur. Natural disasters will generally happen in
areas with certain climatic weather conditions, e.g. hurricanes, or they will occur in countries where
there are volcanoes or natural faults.

This data from the World Disasters Report 2005 demonstrates data collection by disaster type,
representing the number of people affected.
There are also certain parts of the world where man-made disasters are most likely to occur. In
these cases it is possible for governments and humanitarian aid organizations to anticipate future
disasters.
Plans can therefore be made for specific countries or regions, which can be put into effect should a
disaster then occur. These plans, if they already exist, can be used as the basis for further
arrangements.
Key to these plans is an analysis of the infrastructure, in relation to the risk and vulnerability, in a
certain country/area. This analysis will include things such as:
• Port/airport locations, access, capacity • Supply & supplier availability
• Transport options
• Communications infrastructure
• Possible warehouse sites
• Availability of means of transport
An example of a template logistics capacity assessment form that WFP uses is provided on the
resource CD.
From these outline plans, we can begin to develop a strategy for how the supply chain can be set up
and managed for the humanitarian situation, if it should occur. Such planning needs to involve
program staff as choices made at this stage in terms of supply chain design and product choice will
influence the timing and type of goods that are received during the push phase.
When a disaster does happen, the appropriate preparedness plan will be selected and deployment
commenced quickly. It is the logistician’s job to deploy this plan.

Initially, the supply chain type that will be used is push. The logistician’s job is to deploy this type, but
then to try and convert it into a pull type as soon as it becomes sensible to do so. Sometimes the
transfer from push to pull will be rapid, but other times, it will make sense to maintain the supply
chain as a push type because the level of uncertainty is very high.
In the early stages, the push will move a selection of appropriate goods to a specified location,
usually a port or an airport. The logistician’s first task is to clear these goods from the port location
into some form of staging warehouse (which may already exist or might need to be created). This
task is crucial both to start the goods on their journey to beneficiaries and also to ensure that such
ports do not become congested, blocking further receipt of goods. Removing goods from ports also
reduces the accompanying charges for use of the facilities.
Having cleared the goods into the staging post, the logistician now needs to be proactive in
obtaining information about where they should ultimately be sent. There will be considerable
pressure to deploy these goods into the field so that people can benefit, but sending them to the
wrong place will create delay and unnecessary cost. It will also tie up scarce resources.
The key to this proactive activity is knowledge of the inventory levels of each type of product. If this
is available, and accurate, it can be communicated to the program, so that it can be deployed as
early as possible.
While the initial push activity is taking place, the rapid needs assessment will be performed by the
program staff. This will include a supply chain assessment, which will form a key element of the
actual supply chain plan that will be created to manage the current situation. There are two
important elements that this assessment will address:
• Immediate and potential future beneficiary needs
• Review of supply chain plans developed as part of supply chain preparedness, and/or supply
chain assessment.
The supply chain will manage the flow of goods to meet the needs of the beneficiaries. Information
about what type of goods the beneficiaries will want, when they will want them, and in what
quantities, is therefore vital information.
In the early part of the relief phase, this information may not be accurate, since it is based upon a
forecast. It can, however, enable the people setting up and managing the supply chain to have
some idea of the resources they need to put in place to manage the expected flow of goods from
suppliers to the beneficiaries. These resources will include people, warehouses, equipment, and
vehicles.

If, as part of supply chain preparedness, a supply chain plan has been developed for the country or
region where the actual disaster has occurred, then part of the supply chain assessment is to review
whether this plan can be implemented, or whether new plans must be developed.
In particular, this will involve assessing the current state of the infrastructure, facilities, and
resources in the country.
This will include:
• Condition and capacity of facilities, e.g. airports and ports
• Condition of potential warehouse facilities
• Condition of road, rail, and river networks
• Availability of usable vehicles
• Condition of power supplies
• Security situation
This information will enable the logistician to develop a better understanding of the situation. Some
of this information will come through formally, for example, pre-deployment briefs should be given
that cover the current situation and requirements. For this part, the logistician should be aware of
any supply chain assessment report, have a general overview of the emerging situation, and the
organization’s capabilities, structures, and in-country support requirements. The following
information is essential:
• Political sensitivities relating to the affected country, security situation, and any potential
evacuation strategy
• Response to the emergency from the affected country and local region
• International response, both from countries and other humanitarian actors
• Lessons that have been learned from previous emergencies in the affected country/region
and from other emergencies of the same type
In addition to the formal information that is coming through the organization, there will also be
other forms of intelligence, i.e. through the media.
For all of the information that you gather before you get into the area, you will need to consider the
degree of confidence that you can have in each source being factual, and therefore its relevancy to
your operation.
You should also, at this stage, be clear about your objectives and the objectives that you intend to
set for others within your team.
You should ensure that the briefings attended give you as much information about the mission as
possible, including:
• State of the supply chain and logistics in the country
• Availability of resources already in the country and resources available outside of the
immediate theater of operations

• In-country processes and procedures for sourcing and local availability of goods and
services
• Realistic estimate on lead-times, both within your organization and from external suppliers
• Thorough understanding of beneficiary requirements so that proper supply chain priorities
can be set
Remember that information is an asset for decision-making and a commodity that can be traded;
information that does not circulate is not being used. Exchange data for more information or other
forms of collaboration. In order to do this, working with others is essential.
The assessment activity will start the second wave of push. Frequently, this may involve volumes
much higher than the first wave, and hence it is possible for existing facilities to become
overwhelmed. Further systems and operating procedures may be stretched to their limit, creating
challenging operating conditions.
Another potential feature of this second push wave is that it eliminates the need for products that
have already been received. Consequently, facilities could become blocked up, preventing the
needed goods from being processed quickly. Finally, it is possible that the infrastructure is in a
worse state than it was originally assessed.
The push configuration is likely to present challenging circumstances for obtaining scarce resources
and for the security of assets, goods, and people.
As we start to get control of the push supply chain type, we can begin to plan the transition to the
pull type. The call-forward type provides a stepping stone to pull.
Once the initial push activity has been completed, so that the early distress can be relieved, it may
be possible to hold the release of goods until there is a specific instruction from the program. The
ability to communicate accurate and timely information, about the products that are available now
or will be in the near future, will encourage the program to issue release instructions. This
information about what is and will be available, when, and where, is the critical lever to enable the
move to the call-forward type.
This will help to reduce or eliminate duplication of activity, which ties up valuable resources.
While the inbound activity will still be driven by push, the process of converting the outbound activity
to pull can be started. This is an important step for the logistician to control since it will dictate the
overall speed at which the transition from push to pull can be made.
In this type there are opportunities to begin to anticipate rather than simply react. At this stage,
information about the following should begin to be obtained:
• State of the supply pipeline
• Other actors present in the field
• Security issues

• Market for resources and local supply of goods
• Availability of resources
• Front lines, geographical areas of need, and any constraints that may prevent movement of
goods through sensitive areas
This information will be the result of your relationship building activity and your ability to build
information lines with the local community.
The operational demands of the push may have constrained the amount of time that could be spent
on developing options for how the supply chain could run. Now, in this type, we can begin to
explore better options. Important points to consider are:
• Resources that can be provided by other actors in theatre
• Remaining transportation infrastructure in the country/region (emphasis on ports of entry
and access routes to emergency sites)
• Changes to customs procedures for bringing goods into the country, including costs and the
possibility of delays
• Available storage and distribution systems, including other organizations’ logistics
capabilities that could be of use
The plan for the humanitarian aid supply chain operation will contain actions or processes which
must be sequenced. The timing of these decisions will therefore be important. For example, the
acquisition of transport will be critical to the distribution of goods, but may take some time to be
available and, consequently, will determine when the operation can begin. It is critical to review
these important items regularly, to verify that they are on schedule.
Eventually, when a sufficient level of presence and contact with the affected population is
established, activity can become more tailored to specific needs. In this situation the logistician can
support the transition from the call-forward supply chain type to pull. In this type, emphasis is
placed on learning the precise beneficiary needs, and obtaining those products in a timely manner.
A cautionary note is important at this stage. While we have explored the benefits of moving to a pull
type, if this is undertaken too soon will likely be counterproductive. Only when the circumstances
are right can the program make this decision. The logistician has an important role in providing
input to the decision and supporting the smooth transition.
The pull type requires a short supply chain response time, so it is likely that more goods will be
sourced locally to reduce transit times. This will, of course, alter the configuration of the supply
pipeline.
As we progress more into the pull type, greater emphasis could be placed on the need to examine
operational costs. This will be especially important if the program continues for some time and new
sources of funding must be found.

Even though a pull type supply chain may be in place and working smoothly, there are occasions
when a new push activity must be superimposed. This is caused by a change in the operating
environment, perhaps created by a further disaster or escalation of conflict. This requires that
logisticians remain adaptable and alert to the possible changes by constructing contingency plans
that can be implemented once these changes occur.
While we have presented a cycle of development from push to pull, there can be circumstances
when a supply chain can begin as a pull type. Such circumstances are often linked to development
projects, such as building wells, where the requirement can be planned, and materials obtained
without the use of forecasts.
Many tools exist to assess the capacity of the logistics infrastructure in a country. Ideally, such
assessment takes place during the preparedness phase and leads to scenario development.
However, such assessment is valid at any stage of an operation. The Logistics Capacity Assessment
template that is available on the resource CD is used by the United Nations World Food Programme,
and highlights many of the key points that about logistics capacity that are useful to effectively plan
supply chain types.
As previously mentioned, we will look at an assessment specific for designing an in-kind supply chain
in Unit 2. This section focuses specifically on the types of assessments and analyses which are
conducted for CTP and how they combine to inform options and, eventually, the modality decision.
The assessments gather essential information about beneficiary needs and the operational context,
in order to inform program objectives and design. The information compiled feeds into analyses on
feasible options, to confirm viability and compare the relative effectiveness of implementation
options. This information culminates with the Response Analysis.
The goal is to provide Management a recommendation, and relevant supporting information,
so that a decision on the modality can be made.

ASSESSMENTS
ANALYSES
RESPONSE ANALYSIS
MODALITY DECISION
Earlier in the unit, we defined ‘transfer modality’ as the form used to provide assistance to a
beneficiary. We considered the three primary modalities – in-kind, cash, and vouchers – and that
cash and vouchers are often referred to in combination as cash transfer programming (CTP).
We also explored the benefits of CTP – specifically that cash and voucher programs can support
local markets and host community in addition to, for example, feeding refugees. These additional
benefits mean that how the project is delivered, i.e. its transfer modality, contributes to the
achievement of the program’s objectives.
Delivery
Payment for
Delivery
Economic Benefit
for Host Community
IN- K I N D P R O J E C T
The humanitarian organization obtains and
delivers the needed items to the beneficiaries.
The humanitarian organization manages
supply chain activities in-house.
L E S S
C A S H P R O J E C T
The private sector delivers the needed items
through the retail supply chain. Beneficiaries
buy needs from retailers.
The humanitarian organization pays for
delivery, indirectly, as part of the retail price.
M O R E
As a result, more so than with in-kind projects, achievement of program objectives is
intrinsically linked with operations activities and resource requirements.
Internally, this intrinsic link has a significant impact on organizations’ decision making and unilateral
decisions or choices previously considered only by one function must now be viewed from an

organization-wide perspective. This requires more communication and coordination among
different players.
Most importantly, the decision of which modality to use is made by Management because the
implications of the selection will have a large impact on both achievement of program objectives as
well as organization structure, activities, and resource requirements.
Management chooses the best modality to
achieve the organization’s objective(s).
Understanding how and why to gather and analyze information to support an informed modality
decision by Management is key to effective support of CTP. (It will also be the focus of the first five
sections of this unit!)
Accountability for assessments must ultimately lie with functions or individuals with the expertise to
make the relevant determinations. Sometimes questions arise about why certain functions may be
involved in assessing markets or analyzing options for program design and/or why assessment isn’t
the sole domain of Program. As we learn about the various assessments and analyses conducted,
consider the knowledge and skills of the Operations functions and the value they may contribute:
When conducting assessments and doing analysis, in particular with respect to markets, the same
data are often used by different functions to answer different questions. Their respective expertise
produces different perspectives.
Coordination is ultimately Management’s responsibility, but all team members should proactively
identify opportunities to coordinate research and assessment activities, and share data and analysis.
This should also be done with humanitarian agencies, working groups/clusters, and other

stakeholders working locally. By working together, staff can benefit from each other’s respective
expertise.
A few important areas of potential overlap that Supply Chain must be aware of are:
• Beneficiary Needs & Markets – Program leads on the Beneficiary Needs Assessment and
Program and Operations lead on portions of the assessments of the markets. Both
assessments are accessing distribution outlets, and both consider beneficiaries’ access and
usage. Coordination will limit duplication of efforts.
• Finance & ICT – Financial service providers (FSPs) and payment service providers overlap
significantly in terms of technology and services. In fact, some humanitarian organizations
only have one assessment. As such, it is important to coordinate to limit overlaps in efforts
as well as ensure that other non-finance perspectives are also considered.
It is also vital that both functions remain fully engaged with the assessment, as each has
essential expertise. Finance cannot be expected to effectively evaluate technology platforms
and solutions. Similarly, ICT cannot be expected to understand financial regulatory systems
and risk exposure.
Supply Chain must be aware that expertise from both of these functions may be required to
appropriate assess potential service providers during a competitive procurement process.
• Implementing Partners – Program leads the Implementing Partner Assessment, but it is
essential that all Operations functions are involved to assess the partners’ internal capacities
with respect to their functional areas.
When team members do not coordinate internally, and humanitarian organizations do not
coordinate with partners and stakeholders, then efforts are often duplicated, which may result in
wasted time and money.

Common areas assessed when considering a cash transfer program (CTP) are listed below. Supply
Chain may not lead or even be involved with all of the assessments required, but it is important to
know what needs to be done and why, so that you know when it is appropriate to contribute.
Beneficiary
Needs
Implementing
Partner
Lead:
Objective:
Lead:
Objective:
Program
Determine beneficiary needs and define program objectives
Program
Assess viability of using implementing partners and identify potential
partners to deliver services
Markets Lead: Multiple
See detail below.
Security Lead: Security
Objective:
Assess security of operational context, and specific project
implementation location(s)
Markets are the most complex of the common areas
assessed, and require expertise from multiple functions in
order to create a comprehensive picture. Program looks at
the markets– all of them– to understand what is possible
and best for the beneficiaries. Operations looks at the
same markets, but to understand what is feasible, where
the risks are, and how it would work.
Market
Situation
Lead:
Objective:
Program
Identify the strengths and weaknesses of the existing retail market in the
Program’s scope and operational area
Financial
Market
Lead:
Objective:
Finance
Assess financial market, infrastructure, players, and beneficiary access for
viable project approaches
ICT Lead: ICT
Objective:
Assess technology market, infrastructure, players, and beneficiary access
for viable project approaches
Retail
Market
Lead:
Objective:
Supply Chain
Assess retail market (including upstream), infrastructure, players, and
beneficiary access for viable project approaches

Some projects require additional assessments that are focused on specific program objectives. The
lead and supporting functions should be assigned as appropriate for the content and objective(s) of
the assessment.
Examples:
• A rental market assessment may be required for a shelter/housing project
• A labor market assessment may be required for a cash-for-work project
Each assessment area (retail market, financial sector, etc.) should be considered from multiple
perspectives. The appropriate perspectives for each assessment area should be decided by the
implementation team, based on operational context, project requirements, and your organization’s
policies.
We suggest using these perspectives when approaching each assessment area. Note – we’ll define
and explain ‘inclusion’ more just after as well as provide a little additional information about the
internal perspective.
MACRO MICRO INCLUSION INTERNAL
Review the overall
operational context:
infrastructure, regulatory
environment, competitive
environment, financial
inclusion, etc.
KEY QUESTION:
Is the operational
environment
appropriate for CTP?
Review the capabilities of
individual potential
partners and/or
suppliers: governance,
controls, services,
customer support,
experience, etc.
KEY QUESTION:
Is the company or
partner worth being
short-listed?
Review the services and
technologies used by
beneficiaries currently:
ATMs, cell phones, etc.
KEY QUESTION:
Can beneficiaries
access the services
used to deliver CTP?
Review of the country
operations/
implementation team:
skills, experience,
systems, controls,
resources, etc.
KEY QUESTION:
Do we have what it
takes to effectively and
efficiently execute CTP?
A state in which all people who can use them have access to a suite of quality services,
provided at affordable prices, in a convenient manner, and with dignity for the clients.
The services are delivered by a range of providers, most of them private, and reach
everyone who can use them, including disabled, poor, rural, and other excluded
populations.

Adapted from the definition of financial inclusion
by the Center for Financial Inclusion
The purpose of the inclusion portion is to confirm beneficiary access to the respective services
(banks, financial service providers, payment service providers, retailers, traders, markets, etc.) that
may be used to implement CTP. Initial data gathered during the macro assessments may indicate
that the country’s population has access to the services, but do the target beneficiaries have the
same access? This must be confirmed and included in the response analysis. Further, data
gathered on specific service providers should feed into the micro portion of the assessments, as well
as the vendor rosters of potential suppliers.
The market systems in which CTP projects are implemented are extremely complex. The staff
designing and implementing these projects must have the necessary analytical skills and flexibility,
which may differ significantly from their traditional roles.
As mentioned earlier in the unit, the impact to the organization is that staff need different skill sets
and operational structures and processes must be more flexible than previously required.
Management is being pushed to resource the added capacity, as well as realign internal systems
and processes to support the changing operational needs.
While Management is accountable for ensuring each function has the resources and capacities
required to perform its required tasks, each function is responsible for identifying and
communicating its needs. It is therefore essential for functions to include and consider this
perspective when considering whether or not CTP is feasible.
Later in the Assessment and Analysis phase, risks will need to be consolidated and analyzed, prior to
making a recommendation to Management on the modality. It is useful to record identified risks as
assessments are conducted.
Using a table with the perspectives across the top and a line for each assessment is a simple way to
tabulate identified risks and know that you are considering the areas from every angle.
FINANCIAL MARKET
ICT
RETAIL MARKET
SECURITY

As with assessments and, in fact, all activities, every organization organizes their analyses differently.
In the end, how an organization chooses to group and manage activities is irrelevant, as long as
Management has the information they need to make an informed modality decision.
There are five areas of analysis which we will review, each with specific objectives. They build to a
final analysis – the Response Analysis – which consolidates the findings of the assessments and
analyses. Supply Chain leads two of these, but has significant contributions to all.
Procurement
Options Analysis
Operational Design
Options Analysis
Value-for-Money
Analysis
Lead:
Objective:
Lead:
Objective:
Lead:
Objective:
Supply Chain
Compare procurement options per commodity / aid item to be
offered as well as implications of contracting approaches to cost
of project inputs
Supply Chain
Compare potential project approaches and their respective
implications to operations, including capacity requirements, costs,
flexibility, and reliability
Program
Compare value across potential project approaches and their
respective operational requirements
Risk Analysis Lead: Program
Objective:
Response Analysis Lead: Program
Objective:
Assess ultimate risk exposure with each potential project
approach and its respective operational requirements
Program, in consultation with Operations, makes
recommendation for modality to management
Just as risk identification is important during the assessment phase, it is equally important to
continue to record risks that are identified during analyses. The Risk Analysis is generally one of the
last tasks before Response Analysis, as it relies on the input from all of other the assessments and
analyses.

The analyses do not have the useful four perspectives used in the assessments section, so the chart
to record the risks is simpler:
Procurement
Options Analysis
Operational Design
Options Analysis
Value-for-Money
Analysis
Baselines are an important aspect of any process to measure change in the lives of
women, men, and children. They can be used by humanitarian teams to understand the
situation before the disaster, the change in entitlements of the affected population and
size of the gap in needs.
In crisis prone countries the pattern of disaster suggests that particular geographical
areas affected by crisis on a periodic basis. This should be the starting point for baseline
information collection. While some information can be collected soon after the disaster,
most information is best captured before the crisis, especially information related to
social relations and market supply chains.
Source: Oxfam: Working with Markets & Cash –
Standard Operating Procedures & Guidance Notes
Baseline evaluations are an important way to effectively prepare and should be done for all
assessments and analyses, if possible. They should be updated regularly to ensure relevance.
Completing a comprehensive baseline assessment is extremely valuable, but in some cases not
feasible. Internal coordination is tremendously important, and a discussion should take place with
your counterparts (other operations functions, Program, Management, and external, if appropriate)
to determine:
• How deep the baseline assessment should be
• How often the assessment should be updated
In many countries with ongoing interventions, inter-agency working groups conduct joint missions,
especially for baseline assessments. They should be contacted to understand:
• What has already been done?
• What are the gaps?
• Who else might need to do a baseline?

Once all of the components of each supply chain option are assessed and analyzed, you will be able
to generate options for the design of the supply chain. It is important to recognize that in most
situations there will be more than one option for the supply chain design. Consequently, each
option must be evaluated so that the most appropriate choice can be made for implementation.
We will first examine some criteria that can be used for evaluation, and then we will examine how
our planning process can be used to amend or adjust the plan as a result of the evaluation.
It is possible to use many different criteria for evaluation, but the one we will use covers three
factors:
• Suitability • Acceptability • Feasibility
Suitability considers whether a plan fits with the future trends and changes in the environment, and
how the plan might stretch and exploit the core competences of the organization. Suitability can be
thought of as the plan’s rationale as to whether it makes sense in relation to the position of the
organization.
Earlier in this unit, we examined assessment and policies, standards, and strategy, not only to
understand current situations but also to explore which actions might be deemed preferable. Plans
might be regarded as suitable if:
• Service requirements are met within the constraints present
• Organization strengths are capitalized and weaknesses are avoided or minimized
• Stakeholder expectations are addressed
Fundamentally, a supply chain plan has been designed to satisfy service requirements placed on it
by other parts of the organization. A key part of suitability analysis considers whether or not these
requirements will be satisfied.
It is also important to understand why plans might be unsuitable. First, a plan might not address all
three aspects of suitability. For example, it might respond to environmental opportunities, but not
maximize the strengths of the organization or meet stakeholder expectations.
While one plan might meet the suitability criteria, there could be another plan that is more suitable.
In such cases, each plan must be evaluated on a relative basis using techniques such as ranking,
force field analysis, or decision trees.
All elements of a plan must be consistent. The supply chain structure, level of resourcing, and
methods of control must all be aligned. A supply chain will only be successful if these elements are

combined into an effective package. This will ensure that the three flows, physical, information, and
financial, are synchronized.
Acceptability concerns the expected outcomes of a plan. The outcomes relate to impact, risk, and
stakeholder reactions.
Recall that impact refers to the change, positive or negative, that is the result of an activity, project,
operation, or strategy. In the context of planning, impact is a useful reference tool for evaluating the
overall result of a plan, operation, or activity. It is related to goals and objectives in that it describes
the desired result. The concept of impact is particularly useful because it reminds of us of the
importance of value for money, i.e. achieving the greatest possible impact, or the best possible
results, within the constraints of the available resources.
Sometimes, to assess the impact a cost-benefit analysis may be used. This assesses the costs and
benefits, both tangible and intangible, of the plan.
As well as impact, an organization will be concerned with the risk associated with a plan. This is likely
to involve an analysis of the plan’s scalability and sustainability. We looked at these in the resource
module. To help with assessment, it may be helpful to use sensitivity analysis. Sensitivity analysis
allows consideration of what-if scenarios so that different ranges of key data can be tested. For
example, what would be the outcome if volumes varied by plus or minus 10%? Since any form of
acceptability analysis will involve forecasts of the future, sensitivity analysis is particularly important.
The final area of acceptability concerns stakeholder reaction. A new plan might mean agreement
must be obtained from the financial stakeholders. Further, such activity will involve the cooperation
or formal agreement of others in the organization. Stakeholders can create problems for
organizations who do not consider their expectations adequately.
A plan can be suitable and acceptable, but still not be feasible. Feasibility is concerned with whether
an organization has the resources and competencies to deliver the plan.
A plan must be financially feasible, so a funds-flow analysis will usually be undertaken to assess how
much funding will be required, and at what time. The resource feasibility analysis must consider
how the proposed changes impact current resources and competencies, and assess what additional
competencies will be required in the future.
The evaluation of a plan option might result in it being deemed unworkable. This will mean that
other options will need to be generated until one is found that meets the evaluation criteria. Rather
than completely discard an unworkable plan, our planning process can be used in a regenerative
way to produce new options.

Rather than start the plan generation from scratch, it may be helpful to return to an earlier planning
process step. For example, if the plan is unworkable because it does not provide adequate control
over information it will not be necessary to consider relocating facilities, we can simply revert to the
design controls and information step.
Once a step has been revisited, it will be necessary to revisit all the
subsequent steps to check that everything is aligned.
Use of this iterative approach should
generate at least one plan option that
is suitable, acceptable, and feasible. In
the unlikely event that it does not, it
may be necessary to revisit the service
requirements in the first step.
Pla
n
Pla
n
An agency needed to send education
kits to the Democratic Republic of Congo. The options identified included sending bulk supply and
assembling kits in various in-country locations, or producing kits at either the supplier or en route in
Dubai, and sending on completed kits in containers. In the event, on reviewing these options it was
decided that the most suitable solution for program staff, based on the available funds and time
constraints would involve packing all the products and packaging into the containers in the order
needed to make the kits. This semi-bulk approach was then dispatched, half to Mombassa in Kenya
for the east of the country, and half to Kinshasa to supply the west of the country, and kits were
assembled directly out of the containers. This solution was the most suitable, given the availability
and quality of labor available.
Pla
n
If plan A doesn’t work, don’t worry – there are 25 more letters in the alphabet, 204 if you
are in Japan!
- Claire Cook
A humanitarian organization is a dynamic system where the activity of each actor– or in this case,
function– affects the others. For example, if cash-in-envelopes is selected as the mechanism, the
agency may have to hire 20 new Finance Assistants to count cash and reconcile the distributions,
but it may no longer need its warehouse for in-kind aid and warehouse staff.
This step was developed by the CTP Core Operations Course, based on WFP’s Supply Chain Options
Analysis, during which the Procurement and Logistics functions come together to determine the
overall implications of each feasible delivery mechanism to Supply Chain. The purpose is to
understand how the codependent pieces of the supply chain come together, so that the combined
state can be used to support value-for-money, risk, and response analyses.

During the working group meetings for the CTP Operations Core, WFP’s Supply Chain Options
Analysis was discussed. It was proposed and agreed upon that this useful consolidation should be
expanded to include all of Operations, thus creating the Operational Design Options Analysis.
In the CTP Project Cycle, the Operational Design Options Analysis is shown as the last Operationsled
analysis that supports Management’s modality decision. While it was designed for comparison of
options in the context of CTP, the framework and approach works equally well for comparing the inkind
supply chain to the cash or voucher options.
OBJECTIVE
Compare potential project approaches and their respective implications to
operations, including capacity requirements, costs, flexibility, and reliability
RACI Responsible: Supply Chain
Accountable: Supply Chain
Consulted:
Informed:
Finance, ICT, Security
Program, Management
ACTIVITIES
• Comparative analysis of operations
requirements for each feasible delivery
mechanism
• Risk Identification
- none identified -
PREPAREDNESS
The purpose of the Operational Design Options Analysis is to bring all Operations implementation
team members together to review the potential delivery mechanisms, their respective implications
to each component of Operations, and the implications to Operations as a whole.
Ultimately, the analysis is trying to answer:
• How will each mechanism affect Operations’ activities?
• What are the implications to Operations’ resource requirements for each mechanism?
The output of the Operational Design Options Analysis is a report summarizing the impacts to the
organization’s operations for each delivery mechanism. It supports the Value-for-Money (VFM)
Analysis along with the Response Analysis.
A template for this analysis is presented later under ‘Framework for Comparison’.

The Operational Design Options Analysis involves all Operations functions involved in supporting
implementation of a cash or voucher program: Finance, ICT, Supply Chain (including Logistics and
Procurement), and Security.
Who leads this analysis will vary among organizations, however the working groups for the
development of CTP Operations Core Course designated Supply Chain as the lead because the
implications to Supply Chain have bigger impact.
The following is an example only, but it shows the implications of resource requirements of different
Operations functions, based on the specifics of the delivery mechanism:
Direct Cash in Envelopes
Mechanism Specifics:
Cash to be distributed by agency directly to
beneficiaries in envelopes
Service Providers Required:
• Cash-in-Transit Insurance Provider
Implications for Operations:
• Cash security implications
- Secure store/safes required
- Planning for obtaining and moving cash
- Additional security required at distribution
site(s)
• Cash-in-transit insurance required
• Three Finance Assistance required full-time to
count cash and place in envelopes for each
distribution
• Two Security Officers required full-time to
oversee distribution
Paper Commodity Voucher
Mechanism Specifics:
Voucher with beneficiary’s name printed on it
Service Providers Required:
• Printer for paper vouchers
• Retailers to accept vouchers for
reimbursement at retail market prices,
contracted on a pass/fail basis
Implications for Operations:
• Planning and contracting for, as well as cost of,
secure voucher printing services
• Contracting of sufficient retailers to accept
vouchers
• One Finance Assistant required full-time to
manage retailers’ voucher remittances
• Eight Logistics Assistants required for one
month prior to start of project to contract and
train retailers
• Two Logistics Assistants required permanently
to manage relationships with retailers

Below is a picture of a matrix used to critically compare the feasible implementation options, taking
into account potential developments in the operational context.
SOURCE: CTP Operations Core Training

No supply chain, however simple, has the whole of its scope of activities under the
control of one organization or group of people. Consequently, the links and interfaces
that connect different activities need to be carefully managed. Each activity is planned,
managed, and conducted by people. While these people have a common interest in the
supply chain in question, they are also likely to have other interests, which sometimes
compete with or are not aligned with those of the supply chain. This may be even more
pronounced with CTP, as how the supply chain operates helps achieve program
objectives. The result is people are at the heart of supply chain performance.
This section focuses on people – relationships, communications, managing, aligning – all
essential for designing and implementing a cohesive supply chain.
Earlier in this unit, we looked at how the anatomy of an organization provides a performance chain,
linking strategy to processes to roles. We also introduced the idea of horizontal and vertical
alignment. Vertical alignment connects the strategy to the outside world and provides a link to the
people involved. Horizontal alignment connects processes to the beneficiaries. Historically, much
attention has been placed on vertical alignment, with less placed on the horizontal aspect. The
consequences of this can be severe, with supply chain participants losing sight of why they are
performing activities. This is why we are going to place heavy emphasis on understanding the
beneficiary’s needs.
The final idea that we introduced was that alignment is a crucial part of management’s job. A supply
chain manager could spend a significant amount of time planning, organizing, and controlling
technical activities, such as warehousing and transport, and the provision of information systems
and technology to connect them. Each of these aspects is important, but on their own they will not
ensure supply chain performance. The missing link is people and, more specifically, how they

ehave. During their careers, managers will often wonder why people don’t do what managers want
them to do. The answer to this question is the key to supply chain performance.
In this section, we will link these themes by examining the four supply chain types in more detail.
We begin by considering the role of the supply chain manager. Specifically, we will look at the scope
of this role from a people aspect, and we will link the role to the operating context of each of the
four supply chain types. We will then develop links with the organization’s strategies and ways of
working. We examine the predominant behavior highlighting each supply chain configuration, and
relate it to the needs of beneficiaries. Having looked downstream toward the beneficiaries, we will
switch to looking upstream to see the implications from the supply side of the supply chain. To
conclude, we will introduce a decision-making framework that will provide the structure for the rest
of the course.
Logistics and supply chain management is a beneficiary-focused service. It is managed within a
frame of administrative and financial rules, national and international laws, regulations, and technical
requirements. To deliver the right thing, at the right time, to the right place, at the right cost, often in
conflict and stressful situations, is the challenge for the humanitarian logistician.
Humanitarian logisticians are required to provide responses in a variety of situations. The logistician
can sometimes plan ahead for these situations, but they are equally likely to occur suddenly.
Typically, such situations require the ability to construct a supply chain and operate it to quickly
provide relief to those in need.
Different humanitarian organizations have different supply chain/logistics structures and roles, but
the role of managing and coordinating complex logistics and supply chain activities will be crucial to
all of them.
A supply chain manager is typically required to:
• Plan and resource the supply chain to meet the organization’s supply chain strategy, and to
meet the needs of the country/region’s aid programs
• Create and coordinate complex supply chain network operation
• Monitor supply chain performance and ensure problem resolution
• Support and advise others on all aspects of the supply chain
• Manage all relationships needed for effective and efficient supply chain operation
• Continuously improve supply chain performance
Supporting all of these activities is the ability to understand, influence, and direct the way people
behave. The following diagram illustrates how the role involves working with others, and developing
appropriate working relationships with people at different levels, both within an organization
(internally), and with other organizations (externally).
Supply chain managers are required to lead the work of the teams of people who operate supply
chains in the field. They need to explain the purpose of the supply chain and clarify the expected

performance objectives. To enable the achievement of these objectives, they must put in place
supporting resources and clear plans to enable the effective and efficient performance of activities.
Equally importantly, supply chain managers will be required to interpret and follow the guidelines
which are contained in policies. They will contribute to the development of supply chain and
program strategies, and will be key players in the implementation of these strategies.
To do this, supply chain managers must interface with other parts of the organization, particularly
other functions. They must also form and develop links with external organizations who could be
key participants in their supply chain.
This role requires people to be knowledgeable about how the supply chain provides support to
humanitarian operations, and also have the knowledge and understanding to lead and manage
others.
Leadership is about:
• Establishing direction: developing a vision of the future and strategies for producing the
changes needed to achieve that vision
• Aligning people: communicating direction, by words and deeds, to all whose cooperation
may be needed so as to influence the creation of teams and coalitions that understand the
vision and strategies, and accept their validity
• Motivating and inspiring: energizing people to overcome major political, bureaucratic, and
resource barriers to change by satisfying very basic, but often unfulfilled, human needs
• Producing change: often to a dramatic degree, and has the potential of producing extremely
useful change

Management is about:
• Planning and budgeting: establishing detailed steps and timetables for achieving needed
results, and then allocating the resources necessary to attain them
• Organizing and staffing: establishing structure for accomplishing plan requirements, staffing
that structure, delegating responsibility and authority for carrying out the plan, providing
processes and procedures to guide people, and creating methods or systems to monitor
implementation
• Controlling and problem solving: monitoring results against plans, identifying deviations and
planning action to eliminate them
• Producing a degree of predictability and order: having the potential to consistently produce
key results expected by various stakeholders
Having knowledge of the supply chain and the different supply chain activities is clearly important to
the role, but it is just as important for people to understand and display a range of personal
competences, including:
• Initiative
• Influence
• Communication
• Problem solving
• Planning
• Project Management
• Managing change
• Coaching & mentoring
Recall our four supply chain types:
• Preparedness
• Push
• Call-forward
• Pull
From our earlier, brief descriptions, it is clear that the characteristics of each of the supply chain
types are likely to be quite different. The objectives that each is trying to achieve, and hence their
expected performance, are different.
The way the role of Supply Chain Manager is carried out, and the style of leadership and
management required, will also need to be different for each type of supply chain. To identify the
most appropriate style, we need to understand the characteristics of each supply chain type, and
their effect on:
• Operating context
• Ways of working
• Strategy
• Leadership

The uncertainty level and the length of response define the operating context for the supply chain.
To fulfill its purpose, an organization must respond to the pressures and challenges of the operating
context.
• In preparedness, the challenge is to cope with high levels of uncertainty, but with a longer
response time.
• In push, the challenge switches to dealing with the uncertainty, but with shorter response
times.
• In call-forward, the level of uncertainty drops, but it still requires quick response.
• In pull, the challenge changes to handling greater certainty within longer response times.
If performance expectations are to be achieved, the people who manage and operate the supply
chain must behave in a way that provides effective response to the operating context. Since the
operating context is different in each case, the behavior should also be different.
To respond to the different operating context, the organization must formulate an appropriate
strategy. The strategy associated with each of the supply chain types will therefore also be different.
This time, the strategy will be defined by the level of risk and the degree of proactivity.
• In preparedness and push there are high risks. Ultimately, if the wrong actions are taken in
these types, severe human suffering could result. The level of uncertainty is also high, which
means that there are risks of doing the wrong things that could lead to waste and the
potential to block up the supply chain.
• In call-forward and pull, the risk level is reduced because the level of uncertainty has
dropped.
• Typically, push and call-forward require an emphasis on reacting to the developing situation.
• In pull and preparedness, managers can be more proactive in designing activity.
Strategy is what connects an organization to the outside world. Defining a strategy is one task, but
making it happen is another!
The ways of working that are developed provide the capabilities to convert strategy into reality.
Ways of working define how things are done. They include the tangible things, such as organization
design and processes, and the more intangible things, such as attitude and culture, as well. One
way to define the tangible things is to say that they describe what should happen and how things
should be done, whereas the intangible things describe what really happens and how things really
get done.

The things that define the ways of working are focus (internal or external) and control (direct or
indirect).
• In preparedness and push, the ways of working will have an emphasis on internal
operations.
• In call-forward and pull, the emphasis is on external operations. This aspect covers both the
nature of processes used, and the approach to beneficiary needs.
• During push and preparedness the emphasis is on anticipating needs, whereas in callforward
and pull, this switches to identifying the actual needs.
• During pull and preparedness, there will be an emphasis on using and developing links with
others. In particular, the nature of relationships with suppliers will change. Consequently,
there will be more indirect control over the activity.
• In the push and call-forward types, the emphasis is on direct control.
People implement the strategy, and the way they work and are allowed to work, is significantly
affected by the way they are managed and led. The supply chain manager’s behavior and leadership
of others need to be appropriate to the ways of working that are suitable for the type of supply
chain.
The elements that define this are: the interface with others and the preferred style of the manager.
• In both the preparedness and push supply chains, the emphasis will be predominantly on
the supply chain links with other, internal groups of people.
• In call-forward and pull, greater emphasis will be placed on developing external links.
• In preparedness and pull, there is an emphasis on thinking about the situation, or potential
situation, and planning a suitable response.
• In push and call-forward, the emphasis is on action.
In the last section we introduced the components that link the operating context to strategy, ways of
working, and leadership. Seen together, they begin to give a more complete picture of how supply
chain performance can be achieved. If supply chain alignment is to be achieved, then the operating
context must be combined with the appropriate strategy, in turn with the appropriate ways of
working, and in turn with the appropriate leadership strategy. This is because:
• Operating context drives strategy
• Strategy drives ways of working
• Ways of working drives leadership
In turn:
• Leadership enables ways of working

• Ways of working enable strategy
• Strategy enables a response to the
operating context
For each of the four supply chain types,
there is a specific operating context with an
appropriate strategy, an appropriate way of
working, and an appropriate leadership
style.
Let’s examine each type in more detail, and
also relate it to the needs of beneficiaries.
The focus of the preparedness type is readiness. Making sure that there are plans in place, which
can be accessed and implemented quickly, when a situation occurs. Overall, the behavioral forces
are focused on creativity, change, and flexibility.
There is likely to be considerable ambiguity in the available information, and the potential situations
will be built around scenarios, since actual needs will not be known. It is also likely that there will be
involvement with suppliers to jointly build innovative solutions, with strategies built on speed and
flexible response. This is a proactive supply chain, focused on broad and hypothetical possibilities.
Leaders planning these supply chains need to have a good understanding of the potential operating
context.
Suppliers will be involved on a
scenario basis. Suppliers can be very
important players in such supply
chains because their capabilities can
offset the need to hold stocks, while
still providing responsiveness and
flexibility. The availability of trained
human resources is often the biggest
challenge of a disaster response
operation for many agencies, and
effective preparedness will focus on
the identification and development of
suitable staff for disaster response.
Training will cover areas such as
needs assessment, establishing emergency warehousing, tracking, monitoring and reporting, fleet
management, and the use of communications equipment, particularly satellite technology.
From a beneficiary’s viewpoint, this supply chain is about “Preparing for Me” so that when something
happens, help will reach me quickly.

The focus of this supply chain is action to produce results. Demand will be led by the needs of the
program, and the concern will be for speed and flexibility. The strategy will be based upon
expediency and flexibility, to adapt to ongoing assessments. Leaders will be drivers of performance
who must provide clear objectives and energize people to produce the desired results. This
requires a thorough understanding of the context, and an extremely focused approach.
At this stage, leaders will also be
coordinating with other actors to
identify and share information and,
where appropriate, to align
operational strategies. A logistics
cluster (coordination cell), usually
established by WFP during a large
emergency, will address issues
associated with bottlenecks, sharing
of resources, and collaborative
working. While formal coordination
networks are often put in place,
informal networks and peer-to-peer
support are sources of advice and
information sharing that are
commonly overlooked, and often enable solutions to be found in-house.
Overall, the behavioral forces are focused on action, energy, and results.
From the supply side, things will appear quite volatile. The volatility occurs when stocks become
exhausted, and many organizations go to the same supplier for replenishment. From a beneficiary’s
viewpoint, this supply chain is about “Responding to Me” by helping me quickly.
In this supply chain type the uncertainty of the initial operations begins to decrease, placing an
emphasis on the need for systems and controls based upon a more complete analysis. Overall, the
situation begins to stabilize. Standards and procedures become more important and the strategy is
based upon improvement and the need for security and financial prudence. At this stage of
operations, the pressure to provide accurate reports to donors on the resources provided to the
first phase of the emergency becomes strong.

This type of supply chain requires
leaders who are logical and
analytically-minded, and who are
able to find solutions that efficiently
respond to program needs.
On the supply side, suppliers see a
more stable situation which assists
their planning, and operations can
be conducted more predictably with
increased efficiency. From a
beneficiary’s viewpoint, this supply
chain is about “Performing for Me”
by providing continued support cost
effectively.
The final type is focused upon cohesion and cooperation through the building of relationships.
Usually, the demands placed upon the chain will be based on actual beneficiary needs, creating
more predictable patterns of demand. These chains will likely provide longer-term assistance, so
there is an emphasis on people and teamwork using decisions based upon consensus. Leaders
need to be good at building relationships, and at providing support and advice to people to enable
them to perform their roles.
For suppliers there may be a need for a tailored service, based upon predictable needs. Usually, this
will arise between loyal and
trusted partners by building
longer term relationships.
From a beneficiary
viewpoint, this supply chain
is about “Relating to Me” by
understanding, and giving
me what I really need.
In describing each supply
chain type, we have placed
emphasis on certain
aspects of behavior. It is
important to stress that this
does not mean behaviors
represented by the three
other supply chain types
are not important. They

are not, however, as important as the emphasized actions.
Earlier in the course, we also highlighted that supply chain operations can transition between the
different types. For example, the initial supply chain might, in preparedness, locate stockpiled
products in anticipation a disaster situation. When the disaster occurs, push will be used to provide
aid quickly. As progress is made, attempts will be made to use call-forward as a stepping stone to
using pull for longer-term assistance. Not all situations will follow this path; sometimes in providing
development aid a pull supply chain will be used exclusively. When such transitions are present,
they impart particular challenges. Few, if any, leaders will be able to readily adapt their style to
accommodate all four supply chain types. A leader who is good in the push stage likely will not be as
strong in the pull stage.
Consequently, transitions from one stage to another require a reassessment of the operating
context, and adaptation to the strategy and ways of working. It may require different leadership and
people to work within the new supply chain. Later in the course, we will address transition activity in
more detail.
The supply chain types and their characteristics are summarized on the table overleaf.
Beneficiary
Focus
Prepare for me Respond to me Perform for me Relate to me
General
Force for creativity, change,
and flexibility
Force for energy, action,
and results
Force for analysis, systems,
and control
Force for cohesion,
cooperation, and
relationships
Operational
Context
- Unknown or potential
need
- Rapid changes in
suppliers, distribution
channels
- Innovative solutions
- Supplier led
- Program-led demand
- Concern for speed and
flexibility
- Needs become more
stable
- Standards and
procedures become more
important
- System emphasis
- Needs based on pull from
beneficiaries
- Beneficiary led changes
and developments
- Predictable patterns of
demand
- Loyalty and relationships
valued
Strategy
- Flexible response
- Emphasis on speed
- Innovative solutions
- High energy approach,
reliability, expediency &
responsiveness to
program assumptions
- Emphasis on getting it
done focused & practical
- Adapt to ongoing
assessment
- Focus on service
improvement
- Emphasis on efficiency &
process
- Need to provide value for
money & security
- Responsive to program
needs
- Emphasis on quality and
cost
- Longer term solutions
Ways of
Working
- Proactive orientation
towards environment
- Focus on broad concepts
& hypothetical
- Inspiration encouraged
- Emphasis on action
- Goal directed, results
count
- High context awareness
- Productivity valued
- Process is more important
than content
- Strong internal orientation
- Stability & order are
valued
- Emphasis on people &
teamwork
- Decisions based on
consensus
- External orientation

Leadership
- Prepare to move very
quickly
- Tolerance for ambiguity
- Flexible
- Good understanding of
context
- Drivers
- Set clear objectives for
subordinates
- High energy
- Clear focus & objectives
- Logical, analytical
- Provide clear structure for
subordinates
- Desire for stability
- Sensitive to people
offering support
- Ability to empower
subordinates
- Good negotiation skills
- Consensus building
Supply-Side
Approach
Scenario Volatile Stable Tailored
Means
- Innovation
- Flexibility
- Readiness
- Action
- Objectives
- Energy
- Systems
- Measurement
- Controls
- Synergy
- Teamwork
- Cooperation
End
Readiness Results Order Cohesion
The idea of supply chain alignment makes the planning and management of supply chain variable.
The operating context must be constantly evaluated and, if necessary, adjustments made to
strategy, ways of working, and leadership style. Sometimes changes can take place over a longer
period, with plans being established thoroughly and implementation carefully thought through. At
other times, things might change quickly and in unexpected ways, requiring that action be worked
out as progress is made. These situations can be quite stressful. In either circumstance, it can be
helpful to have a simple, yet robust, decision-making framework readily available.
If we recall our performance management system,
supply chains need to have performance plans, those
plans must be executed through excellent operations
and, finally, performance needs to be improved by
analyzing deviations between plan and actual output,
and taking appropriate action.
The next two units dive into the details of planning for
the in-kind (internal) and market-based (external)
supply chains. The final unit looks at implementation
and coordination.
Regardless of the supply chain type, all three of these
management activities – planning, implementation,
and coordination – must be performed.
We are going to look at each area in turn, as well as explore how they relate. However, before we do
this, it is worth stressing that the units need to be used in each of the four supply chain types. In
essence, our performance framework looks like this:

So far, we have explored the importance of assessment and the interpretation of policy, standards,
and strategy. This enabled us to create planning scenarios which formed the foundation for the
design activity.
Unit 2 will look at the details of supply chain design, including network design, location of facilities,
stock policies, and transportation methods. Each option will be then resourced using appropriate
sources. Consideration was then given to how to organize the supply chain through organization
design, processes, job design, and leadership style.
In Unit 3, the details of Supply Chain’s activities supporting implementation of CTP will be discussed.
This will include evaluation of the retail market and also particular concerns with procurement and
contracting for CTP.
For either type of supply chain – in-kind (internal) or market-based (external), information and
feedback mechanisms will need to be put in place to monitor performance.
Traditionally, the humanitarian sector has placed much less emphasis on performance
measurement. As agencies operate in an increasingly transparent and accountable manner, the
ability to quantify performance is becoming an increasingly important component of continuous
improvement. This involves setting both performance objectives and also indicators of achievement.
These are known as Key Performance Indicators or KPIs. This will involve developing metrics for
speed/cycle times, cost, cash usage, and flexibility and pipeline fill effectiveness for key
phases/breakpoints of an operation.

Our work so far has largely concentrated upon the design of the physical structure of the supply
chain and the product flows that occur within it. You will recall that there are two other flows that
are also important to the supply chain: information and finance. We will begin this module by
examining these.
We will then revisit our discussion on systems by looking at how these can support the operational
activity. During this section we will also highlight the importance of processes and procedures.
Finally, we will turn attention to performance measurement and management.
To help us understand the role of information in the supply chain, it may help to consider an analogy
of the human body. The design of the physical supply chain structure resembles the skeleton. The
design and resourcing of the individual operating activities, such as warehousing, transport,
procurement, fleet management, and import/export, provide the body with the organs. Each organ
has a specific role to fulfill, and the body can’t exist without the effective functioning of each organ.
To connect the organs, we need a blood supply. This is the role of information. Information is the
lifeblood of the supply chain that enables integration and coordination.
Information flows are two-way, both up and down the supply chain. The first piece of information
that is required is the trigger that starts all the operating activities. This trigger is the demand signal.
The demand signal effectively provides information telling us:
• What product to move
• What quantities to move of each product
• When it is required
• Where it is required
Effective supply chains satisfy the demand signal at an acceptable cost.
As we have seen, the nature of the demand signal is likely to be different in each supply chain type.
In some cases, it will be based upon a real need (as in the pull supply chain) and in other cases, it will
be based upon a forecasted need (as in the other three supply chain types).
It is important to understand where the demand signal will be initiated and to consider how we will
capture that signal. Having captured it, we must communicate it back up the supply chain so that
supply can be matched with it. This upstream supply chain flow is critical to enabling all the supply
chain activities, internally and externally, to happen when they are required. In effective supply
chains, operating activity should not occur without a demand signal. You will recall our discussion of
the supply chain processes in module 3 highlighted the difference between planning and execution
processes. The planning process provided the signal for an execution process to commence. The
upstream information flows are therefore closely associated with planning activities.

The upstream information flow enables the organs of the body to operate. Having conducted the
operational activity within the organ, the blood must then be refreshed. In the supply chain this is
represented by the downstream flow.
The downstream flow of information accompanies the product flow, monitoring the progress to
check that it is where it should be at any given time. The downstream information flows are
therefore closely associated with execution or operational activities.
Of course we have explained the two flows separately, but supply chain performance depends on
how well these two information flows are integrated. The importance of this can be seen by
revisiting the performance management system that we considered in module 5. Recall that the
system had three components:
• Planning
• Execution
• Management
The performance planned part of the system will depend upon the upstream information flow; the
performance executed part on the downstream flow. The third system component, performance
managed, requires us to use both the upstream and downstream flows. In essence, it compares
them to check that they are synchronized. This checking process provides us with the management
information.
Having understood how the whole system works, we can now examine each of the planning,
execution, and management flows separately.

At the heart of the planning flows is the demand signal. Usually the demand signal will be initiated
by program management, and it will occur in response to the identification of beneficiary needs.
The signal will trigger the activity to ensure the products flow through to the beneficiaries.
When we mapped our supply chains, we also identified three other product flows. For them, the
demand signal may be different.
• Products used to support delivery of a service such as construction materials: the signal for
these flows will be derived from the program instruction.
• Products used to support activity, such as office equipment, and generators: the signal for
these will be derived from the plan that designs that activity. For example, the supply chain
plan will determine how much warehouse handling equipment is required.
• Consumable products, such as paper and stationery: the demand signal for these will come
from procurement, as they raise replenishment orders.
The accurate capture of the demand signal is of critical importance. If the signal is inaccurately
captured, it will result in the wrong products being moved to the wrong places, causing significant
waste.
Usually, the signal will be received by one of three methods:
• Verbal Communication • Written Communication • Electronic Communication
In the case of verbal communication, there is more opportunity for things to be incorrectly captured.
Good practice suggests that the signal should be replayed to the initiator to check that the details
have been accurately captured. Care then needs to be taken to ensure that errors do not happen in
the processing stage.
So long as the initiator records the demand signal accurately, written communication should ensure
it is correctly received. As in verbal communication, care then needs to be taken to ensure that
errors do not happen in the processing stage.
The preferred method of receiving demand signals is through electronic means. Usually this means
that the signal can be processed without re-entering the information, meaning that errors cannot be
introduced. This also reduces administration activity, saving both time and costs.
When a demand signal is issued, sometimes called an order, it answers the following questions:
• Who is the sender?
• Where is it required?
• Who is the receiver?
• When is it required?
• What is being requested?
These questions can have complex answers. The three different supply chain flows: physical,
information, and financial, are usually handled by different groups within the initiating and supplying
organization. Consequently, there can easily be as many as six or more parties involved, each of
which must be treated as a separate operational or legal entity.

Specifying the “what” of an order can also be complicated. A single order may request a variety of
products, each with its own description. Often, each product will have its own identifying code.
Sometimes these codes can be industry-standard codes, but often they are unique to a particular
organization. When they are different, it requires that one or both parties perform a translation
between the two identification systems. Often, each party can also use different measurement
systems for recognizing packaging quantities.
In addition to the above questions, an order can also specify how product is to be received, such as
how it is to be packaged, or how it should be shipped.
This is a great deal of information for one document to convey. Consequently, orders have evolved
a standard structure. The order transmitted by the initiator usually takes the form of a purchase
order, which normally does not contain prices or other financial information. This information is
added by the supplier and returned to the initiator in the form of a sales order, which represents a
commitment on the part of the supplier to provide the products on the indicated terms.
Since the order can be communicated by different methods, it may be necessary for an organization
to be able to handle orders received by more than one method. This often means manually
translating the order into a standard format, ready for processing.
Once the order is in the system, different organizations perform a multitude of checks. These might
range from simple checks for errors, to more complicated checks for availability and credit
worthiness. Once again, complication may exist by the fact that the order may consist of several
different products, requiring coordination and consolidation before they can be shipped. If
products are not available, checks will need to be performed to determine when they will be.
The last step in order processing is order approval. Depending on the size of the order, it may go
through an internal review and approval within the supplier before being sent to the initiator for
approval. Once the order has been confirmed, the demand phase is complete and the process of
satisfying the order begins. Typically, this will involve sending a signal to warehousing, transport, and
possibly procurement, to commence their operational activities.
In order to balance supply with demand, each supply chain participant will need to plan product
replenishment. This replenishment seeks to address three questions:
• When should inventory be replenished?
• What quantity should be replenished?
• How much inventory should be maintained on site?
The answer to these questions will depend upon the supply chain type, and whether replenishment
is triggered by an actual order based on real needs, or on a forecast based on anticipated needs.
The answers to these questions will therefore depend on the stock policy.
The process that has been described above is the first step in the supply chain. This activity will then
need to be replicated back up the supply chain between each of the supply chain participants
involved. Clearly, considerable time could elapse before product starts to flow down the chain.

The developments that have happened in information technology in recent years have enabled this
process to be streamlined. If the initial order that starts the chain can be simultaneously
communicated to all supply chain participants, greater visibility is created. This enables participants
higher up the chain to commence preparation before an order is physically received.
The receipt of the signal from the planning process initiates the operational activities.
• In the case of the warehouse, this information will enable:
- Products to be received, inspected, and checked
- Products to be stored
- Products to be retrieved, assembled, and packaged
- Products to be dispatched
• In the case of transport, the information enables product to be moved from one location to
another.
• In the case of procurement, it triggers the ordering activity to acquire product from
suppliers.
• In the case of import/export, it commences the documentation process to enable products
to shipped and cleared through customs and ports.
The nature of the operations will be specific to the operating area and organization.
Later in this module, we will explore measures of supply chain performance. While each measure
may be helpful in assisting you to understand more about the performance in a specific area, their
real value comes from monitoring progress toward specific objectives. Simply put, to guide our
supply chain activity, we need a clear set of performance objectives.
Good performance objectives must be able to be measured. If we can’t measure, then we will not
be able to improve. Measures must be specific, ensuring there is no ambiguity in how the data
should be recorded and interpreted. Since objectives are set to aid improvement, they must be
realistic and able to be attained. They must also be agreed upon with the people performing the
roles. Often, it may be useful to involve such people in setting the objectives. This will give them
ownership and involvement in the process.
Clearly, the only way to make any real progress is to align objectives across all groups involved in
managing and operating the chain. Unfortunately, since the supply chain involves just about every
group of people in an organization, alignment can be a difficult process. One approach to solving
this problem is to find a single, common objective, and map all other objectives back to it. This
creates a measurement tree.
Once objectives have been set, measuring progress toward them is straightforward. The first step is
to choose an appropriate set of measures for tracking progress. For each measure selected, a

aseline reading must be taken to determine current performance, a target must be set for future
performance, and then periodic readings must be taken to monitor progress toward the target.
Sometimes it can help to have more than one measurement linked with an objective.
There are three common ways of setting targets for objectives:
• Percentage improvement over current performance
• Benchmarking against other organizations
• Using formal models to discover opportunities for improvement.
The first is the most commonly used method, because it is easy to apply. There can be merits in
also using the others. The last requires access to such models.
Information systems need to be in place to enable performance to be tracked compared against the
target, and provide notification where progress is not on track. Usually it is useful for the
information to be presented in graphical format. Many performance management systems will
provide information on an exception basis, reporting only when a shortfall appears likely.
The presentation of the information also needs to recognize the different uses of performance
information, and that recipients may require it in different formats.
Performance information is frequently used in:
• Organization reports to seek agreement to new projects or to justify current actions
• Organization statistics to enable longer-term tracking of progress
• Donor reports to provide donors with information about how their donation is being
managed
• Benchmarking to allow processes to compared with other organizations to identify
improvement opportunities
• Measuring performance to allow improvement
• Monitoring performance to ensure operations are on track
• Coordination of supply chain activity to synchronize the activities of several participants
Supply chain performance information will be useful to supply chain managers, but there are other
groups who will also be interested. They include:
• Suppliers, so that they are prepared for replenishment orders
• Donors, so that they know what is required and to enable them to see that their donation is
being appropriately handled
• Head office, to ensure that governance is being maintained and policies are being followed
• Finance, to monitor funding requirements and to check budget compliance
• Statistics, to inform the organization and others on historic performance
• Program, who will need to know that the appropriate support is being provided

In the first module of the course, we introduced the basic concepts of the supply chain.
The operation of a supply chain is fundamentally simple. Needs flow up the supply chain, triggering
processing activity to enable goods to flow down the chain. When the goods reach the next
participant, cash flows up the chain to reward the supplier for their goods. The relationship
between the three flows is depicted in the diagram below.
The key to managing the flow of goods relies on the recognition that all three of the flows must be
synchronized.
While the supply chain might not be directly involved with financial management, it is important that
they recognize the need to synchronize the three flows. With greater involvement of donors in
humanitarian operations, there is an increasing need to create accountability, auditability, and
transparency in operations. Fundamentally, this requires that operations are conducted using
standard operating procedures. Consequently, these need to be designed and then operated. Each
supply chain type will pose specific challenges in using such procedures, but the task can be made
easier by ensuring the procedures are robust and operationally sensible.
In the above sections, we have introduced the complexity that surrounds the provision of
information in the supply chain. The sequence of events must be followed is often slow, laborintensive,
and prone to errors.
Although the specific manner in which these activities will be performed will be unique to each
organization, there has been work in recent years that indicates at a higher level that the activities
follow a common process. Earlier in the course we introduced the SCOR®-model, which is the
leading model of supply chain processes. Many of the operational processes contained in SCOR®
could be directly applied in humanitarian operations without significant alteration. Others will need
adaptation to make them relevant. Since few humanitarian organizations will be directly involved in
manufacturing, only some of the processes will be appropriate.
The design of such standard processes has attracted the attention of software companies. These
companies can see the benefit of standard processes, since it enables them to design systems that

support both the planning and execution. Further, since the processes are standard, it enables
them to market such systems to a wide group of potential users. This has led to the rapid
development of ERP systems (Enterprise Resource Planning). The largest of these is SAP.
These ERP systems provide a central database of data to enable all the major business activities to
be planned and executed from a common source of data. This automation has led to reduced time,
cost, and errors typically associated with the activities.
Alongside these generic systems, specific supply chain applications have also been developed.
There are now applications that cover all the activities of:
• Warehousing
• Procurement
• Inventory
• Planning
• Transport
• Modeling
• Import/Export
Most of these systems have been designed to dovetail with the ERP systems, since they will receive
data from them and feed new information back into them. As these systems become more widely
adopted by organizations they also aid the sharing of information between organizations, facilitating
collaboration and making synchronization easier.
Some humanitarian organizations utilize such systems, but the specific nature of these operations
has also led to the development of systems unique to humanitarian operations. Such a system is
the Fritz Institute’s HELIOS system.
HELIOS enables relief organizations to mobilize instantly when emergencies arise. The software
automates critical logistics processes, such as the purchasing, warehousing, and transportation of
urgently needed food, medicines, shelter, and other supplies. In addition, HELIOS provides decisionmakers
with tactical visibility from all perspectives, allowing for better disaster management and less
duplication of efforts in the field. As a result, relief operations become more efficient and more
effective, providing more of the right aid, at the right time, at reduced cost, to people in need.
Once configured and loaded with an organization’s data, HELIOS can be accessed with a standard
PC, browser, and internet connection. Field locations can use it offline to automate local operations
(a critical feature for field workers operating in remote areas) or use it online and offline, connecting
to the central database as conditions permit. Transactions can be transmitted between offline PCs
via email or USB flash drive to facilitate data entry across the entire supply chain.
While such software has been made possible by the definition of standard processes, each
organization must spend time configuring such systems. The configuration involves the mapping of
processes and the definition of standard operating procedures.
A procedure is a specification of a series of actions, acts, or operations which have to be executed in
the same manner in order to obtain the same result in the same circumstances (for example,
emergency procedures). Less precisely speaking, this word can indicate a sequence of activities,
tasks, steps, decisions, calculations and processes that, when undertaken in the prescribed
sequence, produces the described result, product, or outcome.

A standard operating procedure is a set of instructions having the force of a directive, covering
those features of operations that lend themselves to a definite or standardized procedure, without
loss of effectiveness.
Every good supply chain system is based on standard operating procedures (SOPs). Most of the
supply chain operations lend themselves to the definition and use of SOPs. If SOPs are properly
defined, they will provide the audit trail and transparency of operations critical to the governance
process of humanitarian organizations.
In a later unit of this course, we will cover process mapping and improvement in more detail.
Performance measurement is important to humanitarian organizations. Organizations are facing
greater accountability for program impact and quality. Contributors, donors, and practitioners are
all asking how about the effectiveness of programs and projects. Effective supply chain operations
are central to humanitarian organizations and hence supply chain performance measurement is
important for their accountability.
One of the keys to managing and improving supply chain operations is having a solid set of
measures in place to monitor performance. The challenge is making the right selection from the
hundreds of measures available. Some organizations try to measure too much, overwhelming
themselves with data that never combine to give a coherent picture. Other measure too little,
relying on one or two indicators that don’t reflect the full spectrum of performance. This section
introduces a framework for understanding and selecting supply chain measures, based on five
broad categories:
• Responsiveness
• Cost
• Reliability
• Asset Management
• Flexibility
Usually, a variety of measures will be needed which cover the spectrum of all five categories. The
number of measures from each category, and the emphasis placed on each category, will be
different in each supply chain type.
Supply chain responsiveness is the velocity at which a supply chain provides products to the
beneficiaries.
Time is a critical issue in many of the supply chain types. During this course, we have talked about
three sorts of time:
• Supply chain response time: the total time to move a product through the supply chain from
source to use. The time includes movement time, storage time, and processing time
involved with repacking, kit assembly, etc.

• Beneficiary delivery time: this is the time from the beneficiary need being identified to when
the product is delivered to the beneficiary.
• Supply lead time: this is the time from deciding to place an order with a supplier until the
product is available for issue.
These are the easiest measures to capture because they involve nothing more than taking two
readings and performing a subtraction. The time that is likely to be of greatest interest is the
beneficiary delivery time, since this represents how quickly the suffering is alleviated.
Supply chain reliability is the performance of the supply chain in delivering the correct product, to
the correct place, at the correct time, in the correct condition and packaging, in the correct quantity,
with the correct documentation, to the correct beneficiary.
Speed alone may not be sufficient. Speed often prevents the activities being performed accurately
and reliably. There are several measures that can be used, ranging from simple to more
sophisticated.
• Delivery performance is the percentage of orders that are fulfilled on or before the
requested date.
• Availability is the percentage of products that were shipped as requested. This is sometime
referred to as fill rate.
• On-time in-full (OTIF) combines the two measurements above into one. It is the percentage
of orders that are delivered on time complete as requested.
• Perfect order is a further extension of OTIF. It measures if the order was accurately
captured, delivered on time, in full, error-free, in the right condition and specification, with all
paperwork completed correctly.
Supply chain flexibility reflects the agility of a supply chain in responding to program changes.
The uncertainty inherent in humanitarian operations makes flexibility an important measure.
Usually it is measured as the number of days to achieve an unplanned sustainable increase in
capacity within an agreed timeframe. There are different types of flexibility.
• Volume flexibility: the capability to increase the output volume of products delivered
• Delivery flexibility: the capability to change planned delivery dates
• Mix flexibility: the capability to change the variety of products delivered
• New product flexibility: the capability to deliver a new product not previously handled.

Supply chain cost covers all the costs associated with operating the supply chain. Usually it is
measured as the sum of supply chain operational costs, information costs, finance and planning,
inventory carrying, material acquisition, and order management costs.
Sometimes supply chain cost is compared to the volume handled and presented as a cost per ton
or cost per cubic meter, depending on whether volume or weight is the constraining parameter.
Asset management is targeted in both inventory and other assets, such as facilities and trucks.
While inventory is an asset it, has special significance in the supply chain. Consequently, it is usually
separated from the other assets.
The most common performance measure for inventory is inventory turnover. This is calculated by
dividing the cost of goods used by the value of inventory. The higher the figure, the more frequently
the inventory is turning over and the more quickly it moves through the supply chain. This also
relates to stock duration, as represented as days of supply.
For other assets the common measurement is resource utilization. Unless an organization manages
the use of its resources well, a donor may discontinue its funding since it sees that waste is
occurring. Utilization is measured as the ratio of capacity used to capacity available. Usually it is
represented as a percentage. It is best to utilize an available capacity based upon 24-hour, 7-day
availability.
These are the major performance measures. They can be broken down to provide greater detail.
For example, supply chain cost could be presented as:
• Warehouse Cost
• Inventory Cost
• Transport Cost
• Administration Cost
In some cases, these could even be broken down further into product costs by activity. The scope
that is used will depend on the purpose of the measurement.
Sometimes another measurement can be used as well. That of assessment accuracy. Some would
argue that the task of the supply chain is to satisfy the demands that are placed upon it. These
demands are usually determined by groups outside of the supply chain, and hence this
measurement may not be seen as a supply chain performance measure.
However, the ability of the supply chain to alleviate suffering is heavily dependent upon accurate
demands assessment. The demand signal is the fundamental input into supply chain activity, and
hence its accuracy will determine the overall effectiveness of supply chain operations.
The definition of the measurement will require clarification, but it will use a ratio to compare actual
needs with assessed needs.
Once overall performance measures have been selected, they can be broken down into objectives
for individual parts of the supply chain. In the context of the complex interaction of supply chain

variables between functions and the fundamental principle of securing rebalancing for performance
improvement, the question most often asked in relation to performance measurement is, 'How
should functional goals be set in the chain to secure the potential?' A further series of subquestions
arise from this major issue:
• How does a function see its role and contribution improving the whole supply chain?
• What levels of visibility should be given, between functions, of the goals and attainment by
others?
• How does a function influence the performance of other members in the chain that can
impact its own performance but are out of its direct control?
• Who sets the measures of performance across the chain?
The idea of inter-functional service level agreements (SLAs) is designed to resolve the first three of
the questions. SLAs create a framework in which the various functions within an organization, and
between organizations, are measured against meaningful objectives that will generate overall
performance improvement.
The first idea embedded in SLAs is that they are not merely sequential between players in the
physical chain, but also recognize the obligations of every member of the team to all other members
of the team, whether or not they are next in line. The second idea is that SLAs create a team
environment; rather like any sport, all players know their place in the side, the contribution they
make, and the dependencies they have on other positions. So, for example, in soccer, the backs and
forwards know their respective positions and the moves that they will make; the output measures
are goals scored and the percentage of tackles made on the opposition, while the input measures
are adherence to plan and position, quality of individual execution of ball control and tackling, and
speed of response to moves by either team. Each member of the back line has commitments to all
the others in his line and to the forwards, and not just to the player next to him. Inter-functional
SLAs in the supply chain are identical in conception. We will discuss them further in the module on
relationships.
At the beginning of the course, we defined the supply chain as:
A process that integrates, coordinates and controls the movement of materials, goods
and related information; from suppliers and donors to meet beneficiary requirements in
a timely manner
When looking at the definition of supply chain, we identified that it was a process and that there is
nothing very complicated about the concept of supply chain. If you are going to provide aid, in the
form of goods to people, then those goods need to be made and then delivered to the people who
need them. The performance of the supply chain can be impacted, both positively and negatively,
by the behavior and performance of many different organizations and people.

The supply chain process involves the flow of information and goods between donors/suppliers and
beneficiaries. A supply chain will not be totally owned, managed, and operated by a humanitarian
organization. A number of different organizations will be involved in managing the total supply
chain. It is therefore necessary and important that people managing the supply chain for a
humanitarian organization develop relationships with other organizations, and work together with
those organizations, to ensure an effective and efficient supply chain process.
As well as developing relationships with other organizations, because of the impact of those
organizations on the performance of the supply chain, there are a number of specific reasons why
humanitarian organizations would develop relationships and work together to manage the supply
chain. These include:
• Provide quicker and/or greater
• Manage complex operations
responsiveness
• Avoid duplication of activities
• Share capacity and resources
• Gain access to goods and resources
• Access to skills and resources
• Gain access to supply chain networks
• Share skills and resources
As well as other organizations, a humanitarian organization’s supply chain will be managed by
different functions/departments within the organization. The performance of the supply chain will
also be impacted by the performance and behavior of those different functions/departments.
Developing relationships and working together with other functions and people is therefore
important.
In this module, we are going to look at how the performance of the supply chain can be affected by
different organizations and people, but importantly, how we can develop appropriate working
relationships with these different organizations and people.

This is a key part of the role of a supply chain manager, as our diagram of the role illustrates:
To develop and manage these different relationships, we need to understand how the behavior and
performance of others can impact the performance of the supply chain. We will look at the impact
on the supply chain of:
• External organizations
• Internal functions within the humanitarian organization and people working in those
functions
The supply chain is a process that meets the needs of beneficiaries and involves the movement of
goods and services from suppliers and donors to beneficiaries. There are a number of other
organizations that can impact the performance of the supply chain. We will look at the key
organizations:
• Other humanitarian organizations
• Clearing agents & freight forwarders
• National & local government
• Military
• Donors
• Suppliers and contractors
• Port authorities & customs
In any humanitarian operation, there is likely to be more than one humanitarian organization
involved. This will include NGOs (Non-Government Organizations) both local and international, and
UN (United Nations) agencies.

These different organizations may be participants in the same supply chain, e.g. a UN agency
supplying goods which are being distributed by an NGO. Or, the different organizations may be
operating different supply chains to supply the same, or different, goods to the same beneficiaries.
Where different organizations are participants in the same supply chain, e.g. a UN agency supplying
goods to a regional or country warehouse which are then distributed to beneficiaries by an
international or local NGO, the performance of each of these organizations will have an impact on
the supply chain process. The way the two organizations work together and, in particular share
information, can have a positive effect on the performance of the total supply chain.
Different organizations will also have different approaches to managing the supply chain, which may
not be compatible with the way other organizations operate. An example of this would be an
organization that is providing the transport to move goods on behalf of other organizations. The
organization is used to transporting large quantities of goods from one location to another. They
therefore have vehicles and supply chain networks appropriate to this type of operation. The other
organizations, for which they are providing the transport, operate their supply chains differently and
require small quantities of different types of goods, moving from one location to a number of
different locations. In this example, we have the wrong type of goods moved down the wrong type
of supply chain.
Where different organizations are operating different supply chains, there is the risk of these
organizations competing with each other as well as opportunities for the organizations to work
together to positively impact the performance of the supply chain.
The risk of competing supply chains is that different humanitarian organizations will compete for the
resources, facilities, and suppliers needed to operate their supply chains. This can lead to these
resources, facilities, and goods becoming more expensive to purchase or hire, or even worse that
organizations are not able to source the resources and facilities needed to operate their supply
chain, and the goods they need to meet the needs of the beneficiaries.
There are many ways that humanitarian organizations can work together to positively impact the
supply chain performance, particularly where there are similarities in aspects of the supply chain.
There are opportunities to share resources and facilities, as well as sharing information on potential
suppliers and supplier performance. In particular, local NGOs are likely to have information on the
local supply market and local suppliers. Where goods are in short supply, they can work together to
ensure each organization obtains some of the goods, and to stop artificial price inflation. The
specification of goods can have a significant impact on how easy it is to source the goods and how
quickly the goods can be sourced and purchased. Unique specifications will usually mean fewer
sources of supply and will also mean suppliers will be less willing to hold stock of these goods and
lead times will be much longer than those for standard or common specifications. By working
together on common specifications, humanitarian organizations can increase the availability of
potential sources of goods and speed up the sourcing and purchasing process.

There may be certain aspects of the supply chain that are being coordinated, e.g. UN Joint Logistics
cells may be set up for the duration of an emergency. These cells will facilitate coordination
meetings and collect and disseminate supply chain information.
The responsibility for providing humanitarian aid, when required, lies with the government in the
country or region affected. The government plays a crucial role in coordinating aid programs but
different governments will make different decisions on how much of this coordination role they want
to carry out.
Local or regional government officers will usually have information on the local supply market and
on local suppliers. This information can be used by organizations to prepare and update their own
supply information data for the country/region.
The government will also hold information on the current rules and regulations for importing and
exporting of goods into and out of the country. Being aware of and following these rules and
regulations can have a significant impact on the movement of goods through customs at ports and
airports. There will be people in the government who will also be responsible for resolving any
problems encountered by organizations when importing or exporting goods.
There will be different government structures in different countries, but it is usually Ministries of
Finance/Foreign Affairs/Social Affairs and Development that are responsible for developing and
implementing import and export rules and regulations. These ministries are also usually
responsible for the procedure to obtain duty and tax free status for the humanitarian organization.
The military is an extension of the government (we will look at the military later).
Donors will either provide funds that the organization will use to purchase goods and services or
supply the goods and services.
When providing funds, donors will often set certain rules and criteria about how these funds should
be used. These rules can sometimes be very strict and very specific, including specifying the
procurement process that should be followed and where goods can be purchased. Donors may
specify countries where they will, or will not, allow goods to be purchased or they may specify that
local suppliers in the country of operation should be used. These rules and criteria can therefore
impose restrictions on the sourcing and purchasing of goods and services that can affect the supply
lead time and the supply chain response time, as well as the ability to use all the potential sources of
goods and services.
Donors who actually supply goods should be treated as suppliers and it is therefore important that
the right type of supplier relationship is developed with them (we will cover types of supplier
relationships later in this unit).

We also need to recognize that goods supplied by donors, and in particular goods collected by
appeals, may sometimes not be suitable for the particular humanitarian operation. This can lead to
unsuitable goods being pushed into the supply chain which can then take up space in vehicles and
warehouses or take up valuable time of people working in the supply chain. This can then have an
impact on the ability to store and move suitable goods through the supply chain to the beneficiaries.
Customs and excise departments are responsible for enforcing country rules on the import and
export of goods and in processing the appropriate documentation. The speed with which they
process the documentation can have a significant impact on how quickly goods can be unloaded
and then released from ports, airports, and country borders. Customs may, for various reasons,
also physically examine goods, including counting and inspecting goods, which can increase the time
before goods are released.
Port and airport authorities can also have an impact on the way goods are managed through ports
and airports, particularly on the time taken for goods to be unloaded. The authorities will determine
the number of people and the resources available at the facilities and on the order in which goods
are unloaded.
As well as time, the actions of customs and port authorities can also affect the cost of operating the
supply chain, as extra costs can be incurred by goods held up at ports and even being sold to
recover any customs costs that are outstanding.
A key part of the supply chain process is the movement of goods internationally, and in particular
the importing of goods into countries where the humanitarian organization is operating. Countries
will have specific customs procedures that need to be followed and documentation that must be
completed when importing goods into the country. They will also have strict rules and regulations
about which goods can be imported into the country.
Countries will also have specific rules, regulations, customs procedures, and documentation when
exporting goods out of the country.
Not understanding and following a country’s rules and regulations can have significant
consequences on the performance of the supply chain including:
• Cost: increased costs incurred by not clearing customs, unloading goods, and moving goods
from the port or airport as quickly as possible
• Penalties and fines that will be imposed for not following rules and regulations or not
moving goods from the port or airport in the time agreed
• Delays in moving the goods from the port or airport, which delays movement of goods to
the operation and ultimately the beneficiaries

• Loss of privileges that the organization may have in the country that can then add extra cost
or delay to the supply chain process
• The image of the organization can also be negatively affected, which means people may be
less willing to assist the organization or provide help to make the supply chain process work
smoothly
To facilitate the import of goods, humanitarian organizations will often use the services of clearing
agents or freight forwarders to carry out the customs procedures and produce the appropriate
documentation. They will mandate them to deal with customs issues on their behalf. In some
countries, it is compulsory to use a clearing agent or freight forwarder for some or all of the activities
involved in importing goods into the country.
The ability of the clearing agent/freight forwarder is therefore critical to the supply chain. This is a
good example of the organization being accountable for a key activity in the supply chain process,
but giving responsibility for carrying out the activity to a third party. The freight forwarder will often
use sub-contractors. A freight forwarder can act as an agent, or as an independent contractor. It is
important to understand which of these relationships is taking place. As an agent, they will be told
which carriers/contractors to use. As an independent contractor, they are liable for the subcontractors
used.
The clearing agent/freight forwarder is working on behalf of the humanitarian organization, and they
should be treated like any other service provider. Even though they are specialists and may be
officially licensed by a country, their performance needs to be monitored, as the service they provide
will vary like any other service provider. Under certain circumstances, the humanitarian organization
can be held responsible if the agents make fraudulent use of their position.
The military have become increasingly involved in the supply chain process in a number of different
ways:
LOGISTICAL There is an increasing tendency to use military aircraft where commercial
SUPPORT aircraft are not available. They are particularly used to move bulk relief
supplies to areas where road access is difficult.
SECURITY &
PEACEKEEPING
Military are often involved in reconstruction as a part of a peacekeeping
strategy. Peacekeeping operations are military operations undertaken with the
consent of all major parties, and may have a humanitarian relief component.
The Geneva Conventions oblige the parties in conflict to grant access for
humanitarian aid, but parties to a conflict may be unable or unwilling to control
threats to the safety of humanitarian personnel and humanitarian operations.
Peacekeeping mandates may therefore include specific duties relating to the
security of humanitarian personnel, including creating conditions where goods
can be moved and stored safely, e.g. providing escorts.

DISASTER
RELIEF
INFORMATION
SUPPORT
The military may be involved in disaster relief activities, where military assets
are provided to supplement or complement the relief efforts of the affected
countries civil authorities or the humanitarian relief community. This support
may include providing logistics, transportation, communications, airfield
management, and distribution of relief.
Military forces will often have a greater capacity to collect information than
humanitarian organizations. This includes aerial reconnaissance, which may
be valuable in providing information on infrastructure, facilities, and effects of
natural disasters on transport routes.
Whether humanitarian agencies like it or not, they may well be considered by the military as a force
multiplier and a key component of winning hearts and minds. Agencies need to develop clear
policies as to how, and under what circumstances, they can engage with the military.
Apart from second-hand and used goods that are donated to organizations, all other goods will be
produced by and supplied by external suppliers. These suppliers can therefore have a significant
impact on both the cost and the efficiency of the supply chain process. The number and location of
suppliers who are able and willing to supply goods to humanitarian organizations, or to donors, will
impact not only the speed with which those goods can be sourced and purchased, but also the cost
of purchasing goods and the quantities of goods that are available to be purchased.
Most suppliers of goods to humanitarian organizations will also supply goods, possibly the same
goods, to commercial organizations. The supplier’s strategy toward supplying to humanitarian
organizations, and the way that the supplier manages its business, will clearly have an impact on the
upstream supply chain. One of the main management decisions we examined earlier, that
significantly affects how a supplier will be able to respond to requests for goods, is their supply chain
decoupling point. The decoupling point will affect how quickly a supplier can respond, and also
whether they are willing to hold stock of goods.
Suppliers will also have management processes for managing situations when orders for goods
exceed stock they hold, or their capacity to produce. These processes, their strategy toward
supplying humanitarian organizations, and the relationship they have with these organizations, will
determine how they supply humanitarian organizations during periods of short supply.
Where the supplier is a manufacturer of goods, their production planning process can have a
significant impact on the supply chain process. The planning process will:
• Determine how often different goods are produced
• Determine how many goods are produced in a production run
• Determine how quickly they can respond to changes in demand

• Determine how they plan the manufacture of any special goods
The process will therefore affect how they can respond to demand from customers, particularly
significant changes to demand.
Humanitarian organizations will often have specific requirements for the way goods are packaged
and labeled. Goods will often be transported, stored, and used in countries with extremes of
temperatures and environments. These will require goods to be packaged in particular ways.
Suppliers may not be set up or willing to pack their goods in those ways, particularly if the goods are
standard goods and they have to change their manufacturing and packing operations. Where
suppliers are willing to pack goods differently, this can add extra cost and time to the supply chain
process. This is the same when suppliers are required to follow specific labeling requirements for
goods supplied to humanitarian organizations.
Suppliers are usually quite knowledgeable about what they supply, and about the market in which
they supply. This knowledge and experience can be of great value to the humanitarian organization
they are supplying, and particularly to the people managing the supply chain. Ways in which
suppliers can add value include:
• Advising on specifications, use, storage, and transportation of goods
• Holding stocks of goods allocated to a specific organization
• Managing inventory levels using vendor-managed inventory
• Providing information on lead times, capacity constraints, etc.
• Advising on shortage of goods or delays in supply
• Managing their supplies to overcome shortages in supply or long lead times
Suppliers can contribute to the better planning and management of the supply chain.
As well as suppliers, organizations may use contractors to operate part of the supply chain network
on their behalf. Contractors may be used to run warehouse operations or to provide vehicles and
run transport operations. Contractors are often used because they have the specific skills required
for that particular operation, or they have local knowledge access to facilities and resources needed
to run the operation, e.g. trucks and drivers.
By using contractors, organizations are passing responsibility for running part of the supply chain to
them. The skill, ability, and attitude of the contractor are therefore critical to the efficiency and
effectiveness of that particular part of the supply chain, and to its effect on the total supply chain.
The organization is passing responsibility to the contractor but the organization is still accountable
for that operation and for the supply chain. This means they are still accountable, should the
contractor not perform as required and things go wrong. The organization therefore needs to
oversee the operation and manage the performance of the contractor.
The importance of the way contractors are selected and managed is often not recognized,
particularly where contractors are in short supply. Because of the effect they can have on the

performance of the supply chain, it is important that they are carefully selected and managed to
ensure they can and are providing the services and performance needed. Humanitarian
organizations may find that they are in competition for contractors, which can lead to inflated prices
for their services and to contractors agreeing to providing services and performances that they
cannot deliver.
One of the key factors that will affect how external organizations behave and how effectively and
efficiently they contribute to the performance of the supply chain, is the relationship they have with
a humanitarian organization and with the people who work for that organization. We will look at this
issue of relationships later in this module.
The performance of the supply chain is not only affected by the performance of external
organizations, but it is also affected by the behavior and performance of functions, and people
within the humanitarian organization.
Different humanitarian organizations are structured differently, but usually they are structured into
a series of different functions/departments.
The supply chain process, as we have seen, is a process that involves a number of activities, e.g.
procurement and warehousing. Depending on the size and structure of the organization, these
activities may all come under the logistics function or, in others the logistics function may be split
between logistics, operations, and procurement. In small organizations, procurement will be a
function of the finance and delivery part of programs. For large organizations working in
partnership with small organizations, the lack of a dedicated logistics function can be problematic
when communicating and planning operations. The logistics function may also have people working
in Head office logistics, regional logistics, and country logistics. For example, there may be
procurement activities taking place at head office, regional, and local country levels.
These different functions, and the people working in them, can have an impact on the performance
of the supply chain process in meeting the needs of beneficiaries. The supply chain is only as good
as its weakest link, which means that under-performance of one of the activities within the supply
chain will affect the performance of the total supply chain process.

As well as functions and people who are carrying out the supply chain activities, there are other
functions and people in the organization who can have an impact on the performance of the supply
chain. These include:
• Finance / Administration
• Program Management
• External Resources / Donor Relations
• Head Office
• Human Resources
• Country Office
• Safety & Security
The finance and administrative functions will be responsible for the rules and procedures relating to
the financial operation of the supply chain. They will also be responsible for aspects of contracts
and for the payment of invoices.
Some of the key ways they can impact supply chain performance are:
• Setting and applying financial rules for procurement of goods and services
• Establishing rental contracts
• Checking that contracts include legal requirements
• Setting procedures for the management of assets, e.g. vehicles
• Supervising/arranging payment of invoices
This function will be called different things in different organizations, but it can significantly affect the
supply chain as it is the function that finds suitable donors for both funding and for goods and
services. Donations come in different forms, including:
• Cash donations
• Earmarked cash to finance specific goods and services for specific purposes
• Donations in-kind
They will also be responsible for managing the relationship with these donors and ensuring the
requirements from donors are met. Demands from donors can include:
• Cost benefit assessments
• Detailed operational and financial information
• Detailed narrative and financial reporting
• Impact analysis reporting
• Strict policies on earmarked cash donations
The ability of this function to find suitable donors will have an impact on the availability and
suitability of the goods that have to be moved and stored along the supply chain. The demands
made by donors can have an impact on the supply chain and on the amount of information that
needs to be collected by people managing the supply chain. The way that this function discusses

and agrees to these demands and requirements of donors will therefore have an effect on the
requirements that have to be met.
The human resources function will be responsible for setting and managing policies and procedures
for the management of people working within the organization, including people working in
logistics/supply chain. These are likely to include:
• Employment conditions
• Approving engagements
• Setting up & organizing the recruitment • Approving promotions & dismissals
process
• Training policy & provision of training
• Approving requests for recruitment
activities
The policies and procedures set by HR, and the support and service they provide can affect the way
that the people resources required to manage and operate the supply chain are able to be recruited
and trained.
There are a number of other functions that will set and monitor organization policies, practices, and
best practices that can have an impact on the supply chain and its performance. These include the
functions responsible for safety and security.
The content of the policies and procedures will affect the ways that the supply chain process has to
be carried out. In addition, the way that these functions allow and respond to the way policies are
implemented at a local level can affect the ability of supply chain managers to respond to local
requirements and situations.
The support and help that these functions provide to supply chain managers, particularly when
safety and security issues are significantly affecting the performance of the supply chain, can also
affect the way that supply chain managers can manage these safety and security issues.
The supply chain is a process to meet the needs of beneficiaries. The ability of the process to meet
these needs is therefore significantly affected by the way beneficiaries’ are provided and
communicated to the people setting up and managing the supply chain process. This information
will usually be supplied by people managing specific aid programs. The timeliness, accuracy, and
amount of information provided by program managers can affect the ability of supply chain
managers to set up and manage an appropriate supply chain process that meets the actual needs
of the program and the beneficiaries.
As well as providing information about future programs and program strategies, program managers
and other customers will also place demands on the supply chain by placing orders for goods and
services for ongoing programs. These goods and services may be required by beneficiaries, or may

e required by people working for the organization to enable them to meet beneficiary needs, e.g.
vehicles and equipment. Most humanitarian organizations will have procedures for placing orders,
and how well these procedures are followed and the accuracy and completeness of the information
contained in customer requests, will affect the ability of people managing the supply chain to
process and meet these orders.
The actions of people working in head offices of humanitarian organizations can have an impact on
the performance of supply chains that are supporting field operations. Some of the functions we
have already looked at will have people based at the head office, and these people set organization
policies and procedures that effect different aspects of the supply chain.
The supply chain/logistics function will have people based at head office, and these people will
determine supply chain strategy for the organization. This strategy will influence the strategy that
must be followed at a regional and country level, and will determine parts of the supply chain
network, e.g. whether or not the organization has regional warehouses. Head office will also set
organization policies on different aspects of the supply chain, for example, procurement policy
which will set policy on international versus local sourcing.
The head office supply chain /logistics function will often have people with expertise in different
aspects of supply chain, or who have expertise and knowledge of particular regions and countries.
This knowledge and expertise can be valuable when setting up and managing supply chains in the
field, and can affect the performance of those supply chains.
Humanitarian organizations may also have offices in specific countries around the world. The
responsibilities of these country offices will vary, depending upon the particular humanitarian
organization, but the actions of the office and of the people working in the country office can also
have an impact on the performance of the supply chain.
In some organizations, the people managing the supply chain at a local country level will report to
the country office. The performance of these people, and therefore the performance of the local
supply chain, will be affected by the way they are managed by the person to whom they report in the
country office. The supply chain manager responsible for coordinating a number of supply chain
operations within a country or region may therefore not have any management responsibility for the
people operating the supply chain in that country or region. They are therefore providing advice
and support to people who are reporting to someone else, and often are influencing their
performance through the way they are leading them rather than managing them.

In this section, we have identified that there are a number of different external and internal
functions and people whose actions can have both a positive and negative impact on the
performance of the supply chain. The level of impact will vary depending upon different
circumstances, which include:
• Size and structure of the humanitarian organization
• Region/country where operations are taking place
• Size of the operation
• Type of operation
• Mandate of the organization
The skill is to identify which particular external organizations and internal functions are having, or
are likely to have, an impact on the performance of the supply chain and what impact this will be.
Having identified them, we need to decide how we will work with them to minimize any negative
impact and maximize any positive impact.
The relationship we need to develop with these different organizations, functions, and people will be
different. It is not appropriate, and not possible, to develop the same type of relationship with all of
them. Before looking at how to develop relationships, we therefore need to look at the different
types of working relationships.
If we look at what has been written about different types of relationships, particularly supply chain
relationships, we will find the following types of words being used:
• Strategic alliances
• Strategic suppliers
• Partnerships
• Preferred suppliers
• Collaborative relationships
• Ethical trading relationships
• Collaborative partnerships
The problem is that there are many different terms being used to describe the types of supply chain
relationships. If we ask people to define these terms, we will find that there are many definitions
and that these definitions are not consistent and not very helpful if we want to use them to describe
the types of relationships.
It is easier to start by thinking about relationships as being on a scale:
At one end of the scale we have a very close relationship, and at the other we have a very loose
relationship.
This type of relationship is where two parties are working closely together and they are willing to
spend time and to put effort into the relationship. When talking about relationships with external

organizations, these are often referred to as partnerships, alliances, or collaborative relationships.
With internal functions, they will often be referred to as cooperative relationships.
This type of relationship involves both parties being in regular contact, and this contact may be
formal or informal.
It can involve both parties sharing information, sharing resources, communicating effectively, and
looking for ways to work together for the benefit of both parties.
This type of relationship is where two parties do not spend time or effort in working together. They
concentrate their efforts on managing their own interests, rather than looking for ways to work
together. When talking about relationships with external organizations, these are often referred to
as transactional, or even competitive, relationships. With internal functions, they are often referred
to as independent relationships.
This type of relationship involves very little contact between the two parties, with neither party
seeing any benefit in, or the need to share information, share resources, or to look for ways to work
together.
We have described above the two ends of the scale, but there are different types of relationships
between the two extremes.
The skill of the supply chain manager is to identify which type of relationship is appropriate to
develop with different external organizations, different internal functions, and different people who
can impact the performance of the supply chain.
There is a theory, developed by Morton Deutsch, which is commonly used to explain relationships
between individuals and groups that are helpful in understanding the reasons for developing
particular types of relationships. It suggests that the way in which people believe their goals and
what they are trying to achieve are related, affects the type of relationship between them. This is
called the goal interdependence that exists between two parties.
The theory identifies three types of interdependence:
• Cooperation • Competition • Independence
A cooperative or close relationship is appropriate where people believe that the goals they are trying
to achieve are positively interdependent, or where a person believes that their goals are
interdependent on the performance of the other person. Positive interdependence can either
mean that the success of one party is interdependent with the success of the other party or that the
failure of one party is interdependent with the failure of the other party.

A competitive relationship is appropriate where people believe that their goals are negatively
interdependent. Negative interdependence means that people believe their goals are competitive
and that the achievement of one person’s goals means the other persons goals are unlikely to be
achieved. In a competitive relationship, people will promote their own interests, often at the
expense of others and they will be suspicious of the actions of the other person.
An independent or loose relationship is appropriate when people see their goals as independent.
They believe that their goals are unrelated and that the goal attainment of the other person neither
helps nor hinders their goal attainment. In this relationship, neither person will actively try to
cooperate or compete with the other person.
If we take this theory and relate it to the humanitarian organization supply chain, we can identify six
different types of relationship.
These are relationships with external organizations where we have identified that the goals of the
supply chain and the goals of the external organization are positively interdependent, or that the
performance of the external organization has a significant impact on the performance of the supply
chain. These may be particular suppliers with whom we may decide to develop partnerships. Or, it
may be other humanitarian organizations, e.g. NGO or UN organization, who are managing part of
the total supply chain.
These are relationships with other functions/departments within the humanitarian organization
where we have identified that the goals of the other function are positively interdependent, or that
the performance of the other function has an impact on the performance of the supply chain.
These may be the operations department, whose goals are to provide aid to beneficiaries, or the
security department, at a time when security issues are stopping movement of goods in the supply
chain.
These are relationships with external organizations where the goals and actions of the organization
are negatively interdependent and in competition with the goals of the humanitarian organization
supply chain. These may be other humanitarian organizations that are competing for resources,
and are promoting their own self-interests at the expense of other organizations.
These are relationships with other functions/departments within the humanitarian organization
where the goals and actions of that function are in competition with the goals of the supply chain.

These may be functions who are unwilling to work together to manage the supply chain, or may
even want to negatively affect the performance of the supply chain.
These are relationships with external organizations where their goals and actions do not have any
impact on the performance of the humanitarian organization supply chain. This may be another
humanitarian organization operating independently where there are no opportunities to share
resources, information, etc. Or, it could be a supplier who is supplying goods that are not used in
the supply chain process.
These are relationships with other functions/departments where the goals and actions of that
function do not have any impact on the performance of the supply chain. This may be the HR
function at a time when there is no recruitment or training required or taking place.
It is important to recognize that different relationships may be required with the same external
organization or internal function at different times, as goals may change and the type of
interdependence may also change.
One other factor that can affect the decision as to what type of relationship is appropriate, especially
with external organizations, is the existence of organizational strategies or policies that require
specific relationships to be developed with specific organizations. For example, an organization may
have a specific policy on the relationship between it and the military during aid operations.
As a consequence of the importance of suppliers to the performance of the supply chain, we will
look at some of the specific reasons for developing different types of supplier relationships.
As with any relationship, the type of relationship that must be developed with suppliers will vary,
depending upon different circumstances. We will look at a number of different ways of determining
the most appropriate relationship with different suppliers.
We will start with two common models that are appropriate for any customer/supplier relationships,
and are used by purchasing and supply chain managers to help select the most appropriate
purchasing strategy and supplier relationship. These models are called:
• Kraljics Purchasing Model
• Kenton Model
The two dimensions of the Kraljics matrix are:
• Spend
• Upstream risk

These two dimensions generate four quadrants:
Spend is the amount that is spent on particular goods or services, as a proportion of the total spent
on all goods and services. Risk is identified by how many or how few suppliers exist and their global
location.
The model identifies the need for closer, long-term relationships for critical goods or services, as
they are both high-spend and high-risk. This may call for a strategic alliance with the supplier.
The model highlights the need for security of supply for bottleneck items, due to the low number of
potential sources. Even though the spend is low, the limited number of suppliers, or the location of
suppliers, means it is important to have a relationship that ensures those suppliers remain as
suppliers to the organization.
Leverage items denote large numbers of suppliers where the organizational spend is high. It is
important to ensure that there are always suppliers willing to supply, but there is less need to
develop long-term relationships as it is possible to use the competitive market to change suppliers
and negotiate on prices.
Routine items carry neither the spend nor risk to warrant close management or close relationships.
Loose relationships are likely appropriate for these types of goods and services.
This model also helps sourcing and purchasing management to select their purchasing strategies
and supplier relationships for different types of goods and services, by optimizing the trade-off
between usage and downstream risk.
The two dimensions included in the Kenton matrix are:
• Usage
• Downstream risk (exposure)

These dimensions generate four quadrants:
Usage is the quantity used of particular goods and services, as part of the total quantity used of all
goods and services by the organization. Exposure is identified by the associated risk of not having
the goods or services available to the organization and to the program the supply chain is
supporting.
Decisive items must be available to the program at all costs. The highest service level and closest
inventory monitoring is allocated to these goods. Purchasers will need to ensure that these goods
are available from the supplier, so a close relationship will probably be needed with formal supplier
monitoring.
Choke items will also need to be available as they are high-exposure; even though the usage is lower
it is still important that the relationship with suppliers is close enough to ensure goods are supplied.
Active goods are high-usage but lower in risk if not available to the organization. The service level
required for these goods can be less than the choke and decisive goods and the relationship need
not be as close.
Low-exposure, low-usage items will require basic service levels and a much looser relationship can
be adopted with suppliers.
Goods or services required for aid programs will either be standard and supplied by suppliers to
other market places as well as to humanitarian organizations, or they will be special with
specifications that are unique for the humanitarian aid market place. As a consequence of the
special nature of the goods and services, they will usually require development to ensure they meet
the specific needs of humanitarian aid.

Some suppliers have developed product and marketing strategies specifically for supplying goods
and services for humanitarian aid. Developing close relationships with these types of suppliers can
lead to long-term relationships to continuously develop and supply specific products and services
appropriate for the needs of humanitarian aid.
Where it has been identified that the appropriate relationship with either external organizations or
with internal functions is at the close end of the relationship scale, we need to understand and be
able to develop this type of relationship. This section will look at how to develop relationships with:
• External organizations
• Internal functions/departments
• Individuals
We will begin with, and focus on, trust because it is regarded as the key requirement of any
relationship, and because lack of trust is regarded as the major barrier to developing relationships.
Before looking at how to develop and build trust, it is important to understand what we mean by
trust. The following are some definitions of trust:
• The firm belief in the honesty, veracity, justice, and strength of a person or thing
• A person or thing on whom you can rely
• The assured reliance on the character, ability, strength, or truth of someone or something
• Trust exists when one party has confidence in an exchange partner’s reliability and integrity
These definitions are interesting in that they use the terms ‘person or thing’ and ‘someone or
something.’ They are interesting because some people would say that trust can only be established
between individuals, and not between different organizations or different functions within an
organization.
Some people believe that it is possible to institutionalize trust. This means that humanitarian
organizations will trust, or not trust, other humanitarian organizations or other external
organizations. This trust is not dependent on the people who work in those organizations, so even
when people leave and new people join an organization, this does not change the view others have
about whether or not they trust that organization.
The way that trust develops between organizations or functions will depend upon the type of
relationship they already have, and their experiences of working together. Trust between two
organizations or functions that have had no previous experience of working together, will develop in
a particular way.

Trust will first develop on the basis of calculation, i.e. calculated risk. At this stage they are willing to
take some risks in trusting the other, but they do this somewhat guardedly. They are also willing to
take the risks because they are aware that there are some safeguards or deterrents, should one
party not act/perform in the agreed upon way. These safeguards, for external organizations, may
include legal safeguards, i.e. penalty clauses in contracts.
Developing trust at this level requires both parties to be clear and realistic about the commitments
they make to each other. If the commitments are realistic, then both parties should be capable of
honoring them. Both parties should check the commitments of the other party to ensure they are
not being unrealistic about what they can deliver to the relationship. Some relationships will stay at
this level of trust. Others will move on to the next level of trust.
At this level parties will start to develop knowledge of each other. If they are happy with what they
find out, and how the other party performs and behaves, they will move to the next level of trust,
which is based on mutual understanding. Both parties feel comfortable with each other because
they understand each other, they have proved to be reliable, and they understand what each other’s
expectations are from the relationship. Developing trust at this level involves both parties’
willingness to share information with the other.
As both parties build up knowledge of each other, and they continue to be reliable and predictable,
they will develop a mutual confidence. They can then move, if they like, to the next level of trust,
which we will call bonding trust. Ideally, this level of trust should not be dependent on the
individuals who are working together from each party, so that the level of trust will continue should
these individuals change.
It is important that, whatever level of trust there is between organizations or functions, there is a
clear process for dealing with conflicts and failures. Trust will disappear if conflicts and failures are
not dealt with as quickly as possible. The way with which they are dealt should be clear and may
include an informal and/or formal process.
Organizations, however, are made up of people, it is those people who work together, and it is those
people who have relationships with people in other organizations or people in other
functions/departments within their organization. People managing the supply chain and carrying
out supply chain activities are no different from other people working in the organization. They
behave in the same way as other people, and they have the same range of personalities and
emotions that affect how they behave. Trust is as important between people as it is between
organizations and between internal functions. In fact, the trust between organizations and between
different functions can be significantly affected by the quality of trust that exists between the people
working in those organizations and functions.

Developing and maintaining trust with other people involves a number of characteristics:
• Reliability: this involves doing what you will say you will do and treating commitments and
agreements seriously. It involves acting in a consistent and predictable manner over an
extended period of time.
• Showing Acceptance: this involves not passing judgment on others, and recognizing and
valuing differences. People are different, they have different personalities and behave
differently, but that does not stop the development of trust.
• Being Open: this involves revealing information and feelings about yourself. It is very difficult
for people to develop trust with someone that they don’t know and understand. Initiating
information on your values, priorities, etc., means people know who they are working with
and knowing the real person, rather than a role a person may be playing.
• Honesty: say what you think, and state your opinions even when they are different from the
other person. Be honest with your feedback to other people. Encourage others to be
honest with you.
• Goodwill: this involves the other person being comfortable that they can share things with
you without worrying that you will take advantage or exploit the situation, and that if
information is shared in confidence then this confidence will be maintained.
• Striving for Continuous Improvement: this involves looking for opportunities for both people
to get the most out of the relationship, and exchanging feedback on how the relationship is
working.
Trust between people is something that will usually develop over time, because trust is based on
people’s experiences of contact with and/or the actions of another person. With people we do not
know, that we are working with for the first time, and we have no past experience to go on, there are
usually three approaches to decide whether to trust them or not.
• We will decide based on a gut feeling, or we will stereotype them based on experiences of
working with similar people. This approach relies on our gut feeling being right.
• We will follow the principle of trusting everyone until they demonstrate, through their
actions and behavior, that they cannot be trusted. This approach involves the risk that we
place trust in someone who is not worthy of our trust.
• We will follow the principle of trusting no one until we get to know them and they
demonstrate, through their actions and behavior, that they can be trusted. This approach
means that an important aspect of working together, trust, will not be there at the beginning
of the relationship.
It is important to recognize that, even though organizations may decide that to manage the supply
chain and improve the performance of the supply chain they are going to develop relationships with
other external organizations and other internal functions, the people who need to work together
may not want to or may not have the skills necessary to do so.

The following are key skills that are used when developing working relationships with other people.
• Communication: exchanging and presenting information clearly, precisely, accurately, and in
ways that help understanding. Listening to other people and recognizing that the words
used are only part of the message, the way words are said is also important to the message.
• Managing Conflict: identifying and dealing with any conflicts and disagreements that may
damage the relationship or affect the work being carried out.
• Empathy: understanding the world from the other person’s point of view and conveying this
understanding to them. This will include understanding and taking into account the
priorities, expectations, and authority of other people that affect their decisions and actions.
• Providing & Receiving Feedback: providing good feedback to other people on what they are
doing that is both positively and negatively affecting the relationship or the work being
carried out; seeking and responding appropriately to any feedback provided by other
people.
• Supporting: making time to support others and recognizing when to give support and
encouragement, and when to give direction and guidance; listening to others.
• Leading by Example: modeling behavior that shows respect, genuineness, and trust.
• Teamwork: being willing and able to work as part of a team and contributing to the success
of the team.
It is important to recognize that there are reasons why organizations and people do not find it easy
to work together and develop close working relationships. There are a number of barriers which, if
not overcome, can make it difficult for working relationships to develop. In some cases, these
barriers may not be overcome and close working relationships will not be possible.
We will look at the main barriers to working together between:
• Different organizations
• Different internal functions within organizations
• Different people
There are a number of barriers to organizations working together, which include:
• Trust
• Communication
• Technical requirements
• Power & self interest
• Culture & values
• Different goals and objectives

Trust, as we identified earlier, is one of the main barriers to organizations working together and
developing close working relationships. If one organization does not trust the other, then it is very
difficult, if not impossible, for them to develop a good working relationship. This lack of trust may be
based on previous experiences of the organizations working together. An example is the
relationship between a humanitarian organization and its suppliers, where the organization wants to
introduce vendor-managed inventory. If the previous performance of a supplier has been poor and
they have not delivered goods when they promised, then trusting them to manage the inventory
would be seen as a risk.
This experience may have been in a completely different situation, e.g. a different aid operation in a
different country, but the experience will have led to an attitude that the particular supplier cannot
be trusted. The lack of trust may be even between organizations that have never worked together,
but is based on perceptions or based on what one organization has heard about the other.
Working closely with other organizations can involve the sharing of information or resources.
Working together to manage the supply chain will usually involve the humanitarian organization
having to share information with the other organization involved. If there is lack of trust, then
organizations may find it difficult to share this information, and therefore to work closely together.
It is important to put time and effort into demonstrating to other organizations that your
organization can be trusted.
Another barrier to organizations working together is that they don’t have the technical systems or
technology necessary to enable them to work together. As we discussed earlier, working together to
manage and improve the supply chain will often involve organizations sharing information, providing
access to information, and making decisions based on common information. Not having systems
that can enable this to happen can therefore be a barrier.
Humanitarian organizations may have developed and introduced their own IT systems. This will
mean different organizations will have different systems that they use to help manage their supply
chains. Other organizations, e.g. suppliers and government departments, may also have their own
IT systems, or may not have any systems. This can mean the different systems may not be
compatible, and therefore the organizations cannot share or access information.
Barriers due to technical requirements can often be difficult to overcome. Organizations need to
ensure that when they are developing new systems or replacing systems used to manage their
supply chains, the system is not unique and that it is capable of talking to other systems used by
other organizations with whom they want to work closely.
Each organization involved in managing the supply chain, i.e. supplier, donor, government, military,
or humanitarian organization, will have its own culture and values. Culture and values can be

defined as the way an organization does things. Culture affects how organizations behave toward
other organizations, it affects the decisions the organization makes about the type of people it
employs, and how it manages these people. It will also determine the type of working practices and
procedures it has for managing the organization and its supply chain.
For example, the main characteristics of a military culture can be described as:
• Highly structured, hierarchical chain of command
• Authoritarian
• Goal-orientated
• Rules and regulations run the organization
• Work ethic is work hard, play hard
• Respect for tradition
• Respect for physical and mental toughness
• Trained to be secretive for operational security
• Leaders are taught to be assertive, decisive, and confident
• Concepts such as cooperation, collaboration and non–conformity are usually avoided
Humanitarian organizations may have certain values that significantly affect the management of the
supply chain. For example, organizations may not allow their goods to be moved in vehicles that
have previously been used to move arms. They require the supplier of the vehicles to be able to
prove that the vehicles have not been used for arms movements.
There is a common view that, for a working relationship to work, and for organizations to have a
close cooperative relationship, they need to have comparable cultures and values. It would be
wrong to say that, for organizations to work together and develop a close relationship, their cultures
and values need to be the same. It is true, however, that if they are different, then this can be a
significant barrier to developing a close relationship. Organizations will often make decisions about
working with other organizations based on the culture and values of the other organization.
With humanitarian organization supply chains supporting operations around the world, with the
supply chain network crossing country boundaries, and with suppliers based in different countries,
developing relationships with different organizations can be difficult because of the cultural
differences based on geographical location.
If an organization recognizes that there are significant differences in the culture and values of
another organization with which they want to develop a close supply chain relationship, they need to
recognize that this can be very difficult. For two organizations with different culture and values to
work together, they will need to recognize the following:
• That there is significant value to both organizations to work together and that they will need
to manage the different cultures very carefully
• That there are differences in culture and values and that this will cause difficulties when
working together
• That neither organization will try to influence or change the culture of the other organization

• That they must put in place ways to deal with problems as they arise
If organizations identify that a close relationship is not working or providing the benefits expected,
then this may be caused by poor communication or the lack thereof. In particular, this may be the
communication that took place when the relationship was initiated. Organizations may enter into
supply chain relationships with a different understanding of what will be involved in making the
relationship work and on the benefits they will receive from it. This is usually due to poor
communication between the two organizations and not communicating what will be required of
each organization and the people who will be expected to make the relationship work.
It can be easy to say that this barrier can be overcome by making sure both organizations
understand what is involved in making the relationship work, and that they set up communication
channels and processes for communicating between them and within the organization. These
actions are important in removing two significant communication barriers, but they presume that
people understand how to communicate effectively and have the skills to communicate well. The
majority of people are not good communicators, so it is important that the people responsible for
setting up and managing relationships acquire the necessary communication skills.
When two organizations are working together to manage the supply chain, there are often
significant differences in their size and power positions. This can lead to an unbalanced relationship,
where the organization in the more powerful position can decide to take advantage of the situation
and consider its own self-interest, rather than the interests of the other organization and the total
supply chain.
Ways of overcoming the barriers of power and self-interest are very similar to the actions identified
earlier when we looked at culture and values. It is important to recognize and acknowledge that one
party in the relationship is in a more powerful position and that this may cause difficulties when
working together if that party decides to adopt a position of self-interest. The organizations can
then identify what situations may occur that can lead to one party taking advantage of their position
of power, and put in place a mechanism for dealing with these situations if they arise.
Even where organizations are involved with the same aid operation, they can have different goals,
objectives, and priorities. These will then influence the goals, objectives, and priorities of the
function and the people managing their supply chain. Where one organization wants to work
together with an organization whose goals, objectives, and priorities are different, then there can be
reluctance of people to put time and effort into the relationship. This is not because they don’t want
to; it is because their time and effort has to be put into other things to meet the needs of their jobs
and organizations.

We have looked at these barriers under a number of different headings, but there are also clear
links between some of the different barriers. For example:
• Power and self-interest can affect the level of trust
• Different goals and objectives can affect self-interest
• Culture and values can affect trust and communication
• Trust can affect the amount of communication taking place
We might assume that, where different functions within an organization need to work together to
manage the supply chain, there will be no barriers. We would be wrong to make this assumption.
There are a number of barriers, which include:
• Organization structure
• Different objectives and key performance indicators (KPIs)
• Culture
Most organizations, particularly the larger humanitarian organizations, are structured into different
divisions, functions, departments, and sections. This is a traditional way to structure and manage
any organization. These different parts of an organization were usually set up because they needed
to be operated as a specialist part of the organization, or because the organization was of such a
size that it needed to be managed in smaller functions or sections. Historically, it is common for
people to have a job and career within a specialist part of the organization and for them to seldom
venture very far outside their part of the organization and work with others in other parts.
This structuring of an organization is often referred to as silos. The problem is that it is not normal
practice for these different functions to work closely together.
Organizations are often structured into different levels. There will be functions where there are
roles and people working at head office level, regional level, country level, and local level. This
structure can be a barrier to people working together, as the actions of people at one level can be
seen to be inappropriate by people working at a different level. An example of this could be a
decision made by someone at a head office level to stipulate the type, make, and specification of
vehicles any regional or country fleet must contain. This would make sense from an organization
point of view, as it standardizes the specifications of vehicles throughout the organization and can
reduce the cost of purchasing the vehicles. But from some regional and country level perspectives,
the decision and the specifications are not seen as appropriate for certain regions and countries.
Where the organization structure is a significant barrier to functions working together, it may be
necessary to change the structure. This can involve changing the structure of the logistics/supply
chain function or introducing cross-functional teams to manage parts of the supply chain process.
Where supply chain activities are carried out by different functions within the organization, it may be

possible to bring all these activities together under one supply chain function, or to have a supply
chain function that oversees and coordinates all supply chain activities.
In most humanitarian organizations, the functions that make up the organization will have objectives
which they are expected to achieve. These objectives are sometimes described as key performance
indicators (KPIs). How well a function performs and achieves its objectives will often affect the status
of that function, and may even affect the rewards the people working in the function receive. This
means that people working in functions, particularly senior managers who are supervising the
function, will be focused on delivering the function’s objectives.
Having these objectives is not a problem. The problem is caused when these objectives are set
independently and when they actually conflict with other functions’ objectives, particularly the
objectives of the supply chain. It also can mean that if people need to work together to manage the
supply chain, but they don’t see that this is helping them to meet their own functional objectives,
they will not want to put time and effort into working together.
To overcome this barrier, there are two different approaches that can be adopted. These are
guided by two different management principles:
• What is rewarded gets done
• What is rewarding gets done
To encourage functions to work together, objectives should be set that will require them to work
together. Further, they will be rewarded for achieving these objectives. Objectives and KPIs for
different departments should not be set independently, but set by recognizing that the performance
of the supply chain relies on different functions working together.
All organizations, as we discussed earlier, will have a culture which determines ‘the way we do things
in the organization.’ The culture of an organization can both encourage and discourage functions,
and people working in those functions, to work together and develop close working relationships.
For example a survival of the fittest culture encourages people to compete and to concentrate on
their own performance. In this culture, if a person must rely on other people and must ask for help
from others, it is seen as a weakness. This does not encourage functions to work together.
Within some organizations there will be divisions or functions with their own sub-cultures. These
sub-cultures may not encourage people working in that function to work with people in other
functions. This culture will probably have developed over time, based on the views and perceptions
of people of other functions within the organization, or based on their experiences of contact with
other functions.

We discussed earlier that it is people who work together and develop relationships between
organizations and between different functions. There are a number of barriers to people working
together. These include:
• Trust
• Skills
• Job role
• Attitude
• Personality
• Self-interest
If one person does not trust another, it can be very difficult for them to work together and develop a
good working relationship. It may not prevent them from working together, but it will usually
significantly reduce the benefits they could reap from working together. If one person has been let
down by another, e.g. they have not delivered what they promised to deliver, or they have passed on
information given in confidence, it can be very difficult for them to start to trust that person again.
Earlier in this unit, we looked at ways of developing trust with other people, but we need to
recognize that once trust is lost it can be difficult, and take time, to regain that trust.
The way a person behaves is significantly affected by the role they have and what they believe that
role is. You will often hear people say things like, “That isn’t my job,’’ or “That is not in my job
description.” If people do not see things as part of their role, they may not do them or they will do
them reluctantly and with little commitment. If people are asked to work together, with another
person in another organization or other function, and they do not see this as part of their role, then
they will not do it or they will do it without any commitment.
Some people will also see their role and job title as signifying their level and position within the
organization. If asked to work with and develop relationships with other people whom they perceive
as being at a different level, they may be reluctant as they believe they should only be working with
people at the same level.
To overcome this barrier, it is important to ensure people’s perception of their role is correct and
that the role titles and any job descriptions are appropriate. Where a person is required to work
with others for the first time, it is important to ensure that they understand the change in role and, if
necessary, ensure the job description is changed to recognize this change in role.
People have different personalities and different personality types. Whether people are happy to
work with other people is often based on whether they like them and feel comfortable with them.
People’s personalities affect the way they behave at work. There are some personality types that
lend themselves to working together with other people. More importantly, where there are

personality clashes it can mean people will find it impossible to work together and develop close
working relationships.
Where personality is a barrier to working together, we need to recognize that it is generally accepted
that you cannot change an individual’s personality, but more importantly, no person should be
allowed to change another person’s personality, just to get them to behave differently at work. It is
possible to change the way people behave at work, but this does not change their actual personality.
If we have a person whose personality is a major barrier to them working with others, or working as
part of a team, then the only way to remove the barrier is probably to remove that person from the
role or from the team. They can then be replaced with someone whose personality is better suited
to working with others and being part of a team.
The way a person behaves is also affected by the skills and knowledge that they have. A common
barrier to people working together in supply chains is the lack of skill and knowledge of the people
involved. If you ask two people, or a group of people, to work together, it cannot be assumed that
they have the skills to do this.
The skills needed to develop relationships and work together are often different than the skills that
people have been using to date in their jobs. One of the barriers to collaboration within supply
chains is the lack of knowledge and skills that people need to collaborate.
To overcome this barrier, we need to identify when it is a person’s skill or knowledge that is causing
a problem and then ensure appropriate training/coaching is provided, so that the person has the
necessary level of skill and knowledge required.
A person’s attitude toward working together and working with other organizations, functions, and
people will affect how they behave and how much effort and commitment they make. Attitudes are
different from personality, a person’s attitude is based on the experiences they have had. In simple
terms, if a person has had a positive experience with a situation, then their attitude is likely to be
positive toward similar situations in the future. Conversely, if a person has had a negative
experience with a situation then their attitude is likely to be negative towards any similar situations
in the future.
If we take the example of a supply chain manager who has previously had a negative experience
with working in a team of people from another humanitarian organization, then being asked to join a
team with people from that same organization, their attitude is likely to be, “This is a waste of time,”
or “This will not work, therefore I am not going to put any effort in to it.”

Since attitudes are different from personality, it is possible to change a person’s attitude. People’s
attitudes are based on the experiences they have had, so there are two ways that can we change an
attitude:
• Tell the person that their attitude is wrong and why it is wrong. This will work with some
people.
• Provide the person with an experience that overrides their previous experiences and shows
them that their current attitude is wrong.
People’s self-interest is another barrier to them working with other people. People will consider how
building relationships and working with others will affect them personally. In particular, they will
question how it will affect the following:
• Their job
• Their promotional prospects
• Their position and status in the
• Their workload
organization
• Their salary
If people believe it will have a positive effect on them personally, then they will put time, effort, and
commitment into it. Conversely, if they do not see it having a positive effect, they will not see it in
their interest to put commitment into it.
Self-interest is a barrier that can be difficult to overcome, as it is a common reaction for people to
think about themselves. When people are required to work together with others, they need to
understand the benefits in doing so. These benefits may not be personal benefits, but could be
benefits to the organization and to the supply chain process of which they are part.
There are a number of tools that can help us to manage relationships with other organizations,
particularly with suppliers. These tools can be used for the range of different types of relationships
we identified earlier, and not just for close relationships.
The following are some of the formal tools that can be used:
• Contract
• Service level agreement
• Memorandums of understanding
As well as these formal tools, there are also a number of other actions that can be taken to help
manage relationships. These include:
• Monitoring the service • Reviewing the relationship

A contract is a legally enforceable agreement between two or more parties that creates an
obligation to do, or not do, particular things. The term party can mean an individual person,
company, or organization. Contracts with other organizations will contain details of what is expected
of them and details of the goods or services which are being provided. If it has been decided that a
loose relationship is appropriate with another organization, then a detailed contract may be
appropriate, as there will not be close, ongoing contact. A good, detailed contract will ensure that
both parties are clear about what each party are obligated to do.
Different types of contract clauses can be used to manage specific aspects of the relationship.
These include:
• Penalty Clauses: these specify which penalties will be imposed, should one party not carry
out their obligations set out in the contract.
• Termination Clauses: these explain the rights of the parties to terminate or cancel a
contract.
• Force majeure Clauses: these provide for certain circumstances that excuse parties from
performing the contract. Usually force majeure clauses excuse performance for
occurrences of things beyond the control of the parties.
Service level agreements (SLAs) are agreements or contracts with suppliers that define the service
being provided, the level of service to be delivered, and the responsibilities and priorities. SLAs are
contractual obligations and are often built into contracts as either clauses or entire sections.
SLAs have traditionally concentrated on what is expected of the supplier but more agreements,
particularly those made between parties in a close partnership relationship, include what suppliers
can expect from the customer organization. SLAs can include both the service elements and the
management elements of the relationship. The service elements include the service standards and
timeframes. The management elements will focus on the monitoring of the service and how
disagreements will be resolved.
The actual content of the SLA will vary depending on the specific agreement, but typical SLAs will
contain the following:
• Service Provided: this describes the actual service that will be delivered. It should include,
where appropriate, the actual activities involved in delivering the service.
• Standards & Levels of Service: the levels of service should be described in a detailed
manner. Examples of service levels will include: performance, delivery timetables, quality of
service or products, and availability.
• Duration: this describes the period of the agreement.
• Responsibilities of the Supplier & the Customer: this describes the responsibilities of the
parties involved. This should include the responsibility of the supplier to inform the

customer, in advance of any problems with supply. It should also include the responsibility
of the customer to inform the supplier, in advance, of any changes to supply requirements.
• Mechanisms for Monitoring & Reporting on Service: the agreement should contain
details of how the service being provided will be monitored by both parties and how the
information on this service will be recorded and reported.
• Guarantees & Dispute Handling: this describes any bonuses or penalties that will apply if
the actual service delivered is different from that agreed upon. It should also describe how
any disputes between the parties will be handled.
• Confidentiality & Non-Disclosure Provisions: the agreement should contain details of any
provisions that determine confidentiality of information or information that either party
should not disclose to others. This is an important part of an SLA, as quite often for
relationships to work, and for the service to actually be provided, confidential information
needs to be shared between those organizations. A good example of this would be a
customer who, as part of the relationship, provides the supplier with information on their
future strategy and on research and development activities. The supplier needs to know
this information so that they can start to develop services to meet these future
requirements, but this information is clearly sensitive and the supplier needs to keep it
confidential and not disclose it to any other parties.
• Termination Conditions: this describes any conditions under which the agreement will be
terminated by either party.
• Costs Involved: the agreement should contain a description of any costs that would be
involved if the service, or level of service, changes and how these costs will be borne by each
party.
It is important that an SLA is not confused with a warranty or guarantee, which comes with a product
or service, and determines the level of after-sales service that a customer can expect to receive from
a supplier. Having a warranty or guarantee does not replace having a service level agreement. A
customer will usually have very little, or even no, say in what is contained in the warranty. An SLA,
however, should be developed through discussion between a customer and a supplier.
How SLAs are used will be important to the way the relationship will work in practice. They should
not be seen as a tool for the customer to use against the supplier every time there is a problem with
supply. Some people would question whether an agreement is needed if there is a good working
relationship with a supplier. Even where there is a very close collaborative alliance with a supplier, it
is important for both parties to make sure the agreement is formalized in writing. This is particularly
important where the people involved in developing and implementing the relationship are not
involved in managing the relationship. The people managing the relationship need to know exactly
what was agreed upon when the relationship was implemented.

A memorandum of understanding (MOU) is a legal document describing a bilateral agreement
between parties. It expresses a convergence of will between the parties, indicating an intended
common line of action, rather than a legal commitment. It is a more formal alternative to a
gentlemen’s agreement, but generally lacks the binding power of a contract.
A good example of the use of MOUs is those signed between United Nations organizations and
NGOs. These MOUs may often be global agreements with International NGOs that describe the
agreement between both organizations.
It can be used to detail the basic principles and guidelines which the parties will use to work
together to accomplish their goals. A typical MOU will contain the following:
• Names of the parties
• Timescales and timeframes
• Scope and purpose of the MOU
• Signatures of both parties
• Responsibilities of both parties
SLAs and MOUs have traditionally been used in relationships between different organizations but
they can also be used to manage relationships between different functions within an organization.
MOUs can define the relationship between the functions and a clear understanding of each
function’s commitments/purpose and expectations. SLAs can define the service and service levels
that a supplier function will provide to another function.
Earlier, we identified the need in the service level agreement to put in place a mechanism for
monitoring and reporting on the actual service provided. A key part of managing any relationship is
to make good use of this mechanism. You have probably heard the phrase, “If you can’t measure it
you can’t manage it.” This is particularly true at the beginning of a relationship, which is why it is
important that any mechanism is put in place immediately so that information on performance is
available at the early stages of the relationship. We must not underestimate the work that might be
involved in putting this mechanism in place. This might involve developing an IT system that can
capture the information needed, and then process the information into the correct format. If the
mechanism is not in place, then either the information is not going to be available or there is a risk
that the information used will not be accurate.
It is difficult for a supply chain relationship to be successful if either party is not entirely comfortable
with the information used to assess actual performance and that they can both trust the accuracy of
the information.
In the early days of any relationship, communication is vital. Experience shows that it is in this early
stage that trust will begin to be developed; also misunderstandings and problems can be identified
and resolved. There is, however, the risk of too much communication between the two
organizations, and involving too many people. This is often referred to as information overload.

Some relationships are put in place for a fixed period of time to implement particular supply chain
initiatives/approaches. Other relationships are much longer-term and include partnerships and
alliances. To manage any of these relationships and to ensure that they are successful, the
relationship must be regularly reviewed. We need to ensure that the relationship is working for both
parties and that the original reason for developing the relationship is still relevant and still being
achieved.
Strategies change, program and beneficiary demands change, and the environment changes. These,
and other changes, can mean the current relationship between two organizations is no longer
appropriate. It is wrong to maintain a relationship that is no longer appropriate and right for both
parties.
To implement a humanitarian organization’s global supply chain strategy and plans at a regional and
country level, requires action from the people responsible for setting up, configuring, and managing
the supply chain activities within the region, and countries within the region. It is important that
these people are familiar with the organization’s global supply chain strategy, as they will play a
significant part in ensuring the strategy is implemented at a regional and country level.
It is also important that these people implement the strategy in a willing and committed way. If
people are not committed to the strategy, then they are unlikely to exert the effort needed to
implement it. They may ignore the strategy or even try to sabotage its implementation.
The above also applies to the aid programs being planned or taking place within a region or country.
It is important that the people setting up, configuring, and managing the supply chain activities are
familiar with the program plans and strategies that the supply chain is supporting. It is also
important that the people managing the supply chain activities are committed to the program plans
and strategies and to providing a supply chain process that meets them.
In this module, we will look at the skills involved in communicating information and seeking the
commitment of people to supply chain and program strategies and plans. The approach and skills
required to communicate and seek commitment of others are appropriate for all situations. We will
therefore look at them as generic skills that are appropriate when communicating and seeking
commitment to either a supply chain strategy or to a program strategy.
We will begin by defining communication and commitment.
The following are some alternative definitions of communication:
• The imparting, conveying, or exchange of information or ideas by speech, writing, signs, or
actions
• The transmission of information so that the recipient understands what the sender intends

Communication is composed of four major elements:
• There must be someone who says or does something. There must be a WHO.
• There must be something to communicate. There must be a WHAT.
• There must be someone or a group to whom we wish to communicate. There must be a
WHOM.
• There must be a reason for the exchange to take place, whether this is formal or informal,
pleasurable, or a necessity. There must be a PURPOSE.
Communication is, therefore, WHO says WHAT to WHOM for WHAT PURPOSE.
These definitions help us understand the important aspects of communication, why much
communication is not effective, and that good communication requires skills. Most importantly, they
highlight that, unless the recipient of the information understands what the sender intends,
communication has not taken place.
If we look at some definitions of commitment they contain the following words: loyalty, allegiance,
dedication, and pledge. Definitions include:
• Commitment: a pledge, promise, or affirmation of agreement that binds someone
intellectually and emotionally to a course of action
• Commitment = desire + confidence
The two definitions are interesting in that they state that for someone to be really committed to
something, such as a global supply chain strategy, then that person not only needs to agree and
support it intellectually, but also emotionally. For someone to be committed they also need to have
confidence in the strategy.
We need to recognize that there are different levels of commitment and that people may be
committed to implementing a supply chain strategy or a program strategy without being totally
bound intellectually and emotionally, and without having total confidence in the strategy. In this
case a person can be committed to the strategy but not totally committed. The questions to ask are:
• Is total commitment needed?
• Will this lack of total commitment affect how the person behaves and performs in their job?
Seeking commitment can be defined as: using appropriate interpersonal skills and styles to seek
acceptance to ideas or plans.
If we combine the definitions of communication and commitment we can see that communication
information on global supply chain strategies, and on program plans and strategies, involves
imparting information to people so that those people understand and support the information and
understand what they need to do with it.
We will therefore look at the following aspects of communication:
• Identify who needs information on strategy
• Communication skills
and plans
• Influencing skills
• Planning the communication

Everyone involved in setting up and managing the supply chain needs to know details of the global
supply chain strategy and the program strategies taking place or planned in their region/country.
This is a good starting point, as these people will be involved in some way in ensuring the supply
chain strategy is implemented and the appropriate supply chain is set up to meet the program
strategies. They also need to be committed to these strategies.
What we need to recognize, however, is that different people in different supply chain roles will not
need to know, or want to know, the same amount of information. There is the risk of information
overload if everyone is given the same amount of information. There is also the risk of not giving
people enough information because of the belief that it is of no interest or use to them in their role.
The key question to help decide to whom information should be provided and what information to
provide is: Why are we giving them this information and what are we expecting them to do with the
ii?
There are three answers to this question:
• Because the person is in a role which will involve implementing aspects of the strategies
• Because the person must be committed to the strategies, and their commitment may also
affect the commitment of others
• Because the person will react negatively if they believe that they have been ignored and not
been given any information
When communicating information on supply chain and program plans and strategies, it is important
to plan the communication first. This planning includes:
• Reason for communication
• To whom we want to communicate
• What we want to communicate
• Which method(s) of communication to use
If we are unclear about the reason for communicating information on plans and strategies, then
what we communicate can be inappropriate. Are we communicating this information because we
want everyone to know what the plans and strategies are? Are we communicating this information
so that if things go wrong people cannot say they hadn’t been told and didn’t understand what was
expected from them?
The reason for communicating this information is to ensure that people understand and are
committed to the strategies and plans. This will help them put in place and manage the supply
chain, in line with the global strategy and to meet the program plans and strategies.

This involves planning the message we want to communicate, and how much information we need
to communicate, to achieve the reason for communication. The amount of information that is
communicated on the strategies and plans may be different for different people. The information
also needs to be communicated in a clear and appropriate way, using language and words that
people will understand.
This part of planning helps us to identify who needs to know the information and whether they all
need the same amount of information. Where there are matrix organization structures, it is easy for
people to be missed when communicating information, as it is not clear who is responsible.
An important decision to make is how the information on strategies and plans will actually be
communicated. The major decision will usually be between using written communication, i.e. letter,
e-mail, or notice, or verbal communication i.e. telephone, or face-to-face meeting/presentation.
There are advantages and disadvantages of different methods which need to be considered.
The advantage of written communication is that everyone receives exactly the same message and
they can keep a copy for future reference. It is also possible to ask people to confirm that they have
received the information. Written communication, however, is primarily one-way communication.
This means people cannot or do not respond, and it is difficult for people to ask questions. It is also
not possible to see people’s reactions to the information. This may be a problem when we are trying
to seek people’s commitment, as we are not able to ask them about their support for the strategies
and plans, or see their reaction to the information they are being given.
The increased use of e-mail has meant that more and more communication is now being performed
electronically. E-mail is an excellent tool for communicating information quickly to people in diverse
locations. It does, however, have its own particular disadvantages. People communicating by e-mail
will often abbreviate words and sentences in the message. This can mean there is a greater risk of
the message being misunderstood or misinterpreted by the people receiving it. (There is a story
that illustrates this point. A group of people were asked about their reactions if they received an e-
mail with words written in CAPITALS. As well as some people saying that part of the message must
be important, a number of people interpreted it as the person was shouting that part of the
message).
The advantages of verbal communication are that the person giving the information can tailor it in
response to the reaction, and to any questions, asked by people receiving the information. Verbal
communication also allows the person to include emotions and feelings into the message. This can
be very important in demonstrating their own commitment to the strategies and plans and to
encourage, if necessary, the commitment of others. The disadvantages of verbal communication are
that the message may not be consistent and people will be given a different message. This is

particularly relevant when trying to communicate the same message to different people, at different
times, and in different places. There is also no record of the strategy and plans; it depends on the
ability of people to remember what they were told or on notes they may have taken.
With something as important as gaining commitment to strategies and plans, it is usually best to use
a combination of written and verbal methods to ensure we are getting the advantages of both
methods.
To communicate and gain commitment to strategies and plans requires a range of communication
skills. These include:
• Giving information
• Listening
• Questioning
• Influencing
Let’s look at each in turn.
Communicating with people to give them information is more than just telling them. We have
probably all had experiences where we have told someone something, but it is obvious from their
actions and behavior that they did not get the message we wanted to convey. The usual response
to these experiences is to blame the other person with responses such as:
It’s not my fault they didn’t understand what I meant; I said it clearly enough!
Why did you do that? It isn’t what I told you to do. You obviously didn’t listen properly!
Communication of information does not take place unless the people receiving the communicated
understand the message that is being communicated, and the person communicating the message
knows that the people have received the right message. The responsibility for achieving this rests
with the person communicating the information.
To understand why communication often breaks down, and people either get the wrong message or
they are not committed, we need to understand the process involved in communicating information.

The process has a number of stages:-
SENDER
MESSAGE
METHOD
RECEIVER
FEEDBACK
The sender will decide what it is they want the other person to know
or to do. The sender needs to be clear, so that the message they
send is the right message, including both information and feelings.
The message is then formulated and words put together to
communicate what the sender wants the other person to know.
The method of transmission is then used to transmit the message, i.e.
face-to-face, e-mail, etc.
The receiver then hears the message and interprets what they hear
or read.
The receiver will then give feedback to the sender that they have
received the message, and what they have interpreted the message
to mean.
The sender will then evaluate whether what they wanted the receiver to know or do has been
received and understood. If the feedback shows that the receiver has not received the right
message or has misinterpreted it, they need to identify where the communication process has
broken down and repeat the process, and not merely send the same message again or say the
message LOUDER.
If we look at this process we can identify that it can break down at any of the 5 stages.
SENDER
MESSAGE
METHOD
RECEIVER
The sender is not clear what they want the other person to know or do. This is
a particular problem when giving information on strategies and plans. It is
important to be clear why we are communicating this information and what it is
we want people to do with the information.
The wrong message is formulated and the wrong words are used. This is often
referred to as ‘opening your mouth before putting the brain in gear.’ It will often
happen when a person communicates information before deciding what it is
they want the other person to know.
The wrong method of transmission is used.
The receiver does not actually hear, or read, the message. Even though a
person has heard or read a message they will misinterpret what it means.

FEEDBACK
The receiver does not provide any feedback that they have received the
message and what they have interpreted the message to mean. It is the
responsibility of the sender of the to make sure this feedback is provided; this
will usually involve asking the receiver questions to check they have heard/read
and understood the message.
It is at this stage that the sender finds out whether the receiver has heard and
understood the message. It is important that, if it is clear from the feedback
that the receiver has not received and understood the information, the sender
identifies why and ensures they carry out the process again until the receiver
receives and understands the message.
We identified earlier that to get feedback to find out if a person has heard/read and understood the
information they have been given on strategy and plans will usually involve asking them questions.
Questioning, and asking good questions, is itself a skill. It is very easy when having communicated
information on strategies and plans to people to say something like:
• Is that OK?
• Do you understand what I have just said?
• I think that is now clear and straightforward, do you have any questions?
The usual response to these questions will be yes. It is likely, though, that the people saying yes
really want to say no, but these types of questions usually lead people to say yes.
Another common question is:
• I am sure we are all committed to these strategies and plans and you will play your part in
implementing them, won’t you?
We have to first ask, is this actually a question? Or is it a statement telling people that they will be
committed?
Good questioning involves asking the right type of question, depending upon the type of answer we
desire. There are three core types of questions:
• Open questions
• Closed questions
• Probe questions

Open questions are designed to encourage the other person to talk freely and not to restrict their
choice of answer. They are used to gather information and to explore opinions and attitudes.
Examples of open questions are:
• Please tell me about…
• How do you feel about…?
• How would you describe…?
• What are the implications of…?
This is the ideal type of question to ask when gathering feedback on whether people have heard and
understood information on strategies and plans, and whether they are committed to them.
Closed questions are designed to gather specific items of information and to restrict the choice of
answer. They are used to establish facts and figures. Below are examples of closed questions.
Questions that require a yes/no response:
• Are you…?
• Do you…?
• Have you…?
Questions that establish information:
• How long will it take?
• How many people will you need?
• When will the vehicles be available?
Probe questions are designed to search for information in greater depth. They are sometimes
called follow-up questions. They are often used to follow up open questions or to get beyond a
superficial reply to a closed question. They are used to encourage people to say more, seek further
information, and explore opinions and attitudes in more detail. Examples of probe questions are:
• What makes you say that?
• Please tell me more.
• Why do you think that?
There are also a number of different types of question that should be avoided as they are
counterproductive. These include:
• Leading questions
• Multiple questions
Leading questions prompt the desired answer, which is the reason why they should not be used.
Examples of leading questions are:
• You have to admit that…
• Isn’t it a fact that…?
• I am sure you will agree that…
Multiple questions are usually a sign of poor preparation. They comprise two or more questions,
usually closed, and presented as a package. The person being asked the question is usually
confused, trying to remember all the questions and order their answers. The problem is that not all
the questions will be answered and so not all the information wanted will be gathered.
If we ask people questions, then it is clearly important that we listen to their answers. Being able to
listen is also important when responding to questions or comments people make on the

information given to them on strategies and plans. Good listening is also a skill. Good listening
involves:
• Clearing away thoughts and feelings from previous happenings and experiences and really
focusing on the person who is speaking. Concentrate on their words and any non-verbal
signals.
• Active listening: active listening involves giving the person full attention and conveying to
them that you are listening. This will involve making eye contact and making the occasional,
non-evaluative verbal signs.
• Attending to both the content in the words and the feelings behind them; the words are not
always the full message.
• Positive listening: avoid prejudices or blocks to hearing what the person is saying.
• Remembering that hearing something that we disagree with will usually mean we stop
listening or we will be formulating what we are going to say in response, and therefore not
listening.
When seeking the commitment of people to supply chain and program strategies and plans, we are
going to find initial resistance and lack of commitment from some people. To seek commitment
from these people will therefore involve influencing them that they should support the particular
strategies and plans. The skill of influencing is probably the communication skill that managers find
the most difficult. It is a particularly important skill when trying to influence someone who does not
work directly for you.
Influencing involves persuading someone to agree to something, or do something that they were
not going to do. Influencing is not manipulating or tricking someone into doing something so that
they feel bad.
The key to influencing is recognizing that successfully influencing someone requires the use of
different styles of influence, depending upon:
• The person(s) being influenced
• The influencing situation
The skill of influencing requires the ability to use different influencing styles, appropriate for the
person being influenced and the situation.
We will look at the following styles of influencing:
• Personal
• Assertive
• Bargaining
• Logical Persuasion

The personal style involves the person being influenced because of who the person is who is
influencing them. We have all heard or said something like:
• I will do that for you, but I wouldn’t do that for anyone else.
• If you believe the strategy is right, then I will commit to it.
This means the person was not going to agree to something, or be committed to something, but
because it is a person for whom they have personal respect and regard who is asking for them to
agree to a strategy or plan and be committed to it, then they will.
This style is asking the other person to commit themselves because you are asking them to do it for
you.
This style is appropriate when the influencer has the respect of others, but there is the danger of
over-using this style.
The assertive style puts pressure on the person being influenced by using precise statements of that
to which you expect that person to agree and commit. If done successfully, then the person
commits without resentment and without feeling they have been bullied. For example:
• I need your commitment to these plans and your support in implementing them in your
country.
The problem with this style is that people often confuse assertion with aggression, and instead of
being assertive they become aggressive. Aggressive behavior usually leads to conflict and to the
other person responding in an aggressive way.
Assertiveness involves directly telling someone what you want from them in such a way as to appear
neither threatening, nor punishing, or in putting the other person down. It is about a person
standing up for what they want and being able to express this without experiencing undue anxiety in
doing so.
Aggressiveness also involves expressing what you want from the other person but it is done in a way
that punishes, threatens, or puts down the other person. The aim is to get what is wanted no
matter how and no matter how the other person feels.
The assertive style is particularly appropriate when time is important and there is the need to
influence someone quickly.
The bargaining style involves providing the other person with something in return for their support
and commitment. For example:
• If you give me your support and commitment to these plans then I will make sure your
concerns about their implementation are passed on.

• If you can commit yourself to the strategy then I will put pressure on people to provide the
additional resources you need.
It is important that what is offered in return is important to the other person and that it can actually
be given, otherwise the other person will feel they have been tricked into giving their support and
commitment.
The logical persuasion style involves using logical arguments and facts to influence another person.
This may involve using facts and figures, or it can involve giving a number of different options to the
other person but then showing that it is logical for the person to take the proposed option. For
example:
• We can refuse to support these plans but we need to get the supply chain network in place
quickly.
• We can put what we believe is the right network in place, but that is not what is being asked
of us.
• We can commit ourselves to these plans and put in place the network needed now, but then
work with the program to review the plans for the future phases.
This is an appropriate style when you have alternatives and when you know the other person is
influenced by logic.
As we have seen, an important part of supply chain planning is the communication of information on
supply chain and program strategies and plans for people planning, managing, and operating the
supply chain. In particular, the commitment of these people to the strategies and plans is
important. Communicating information and seeking commitment of people requires the ability to
understand different aspects of communication, and to use a number of communication skills.