CHSCM 3.0 - Unit 1 - SCM in the Humanitarian World

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.