by Anne Leslie Davidson
Submitted to the Engineering Systems Division on May 19, 2006, in Partial Fulfillment of the Requirements for the Degree of Master of Engineering in Logistics
When disasters strike, relief organizations respond by delivering aid to those in need. Their supply chains must be both fast and agile,responding to sudden-onset disasters which may occur in cities such as New Orleans, or on the other side of the globe in places like rural Pakistan. Since 2004, two large-scale natural disasters have captured the attention of the international media: the 2004 tsunami and the 2005 earthquake in South Asia. Disasters of this magnitude cause donors, beneficiaries, and the media to closely monitor howquickly and efficiently relief organizations are able to respond. A disaster response operation involves trade-offs of speed, cost, and accuracy with regard to the type of goods that are delivered and their quantities. Balancing these trade-offs requires a means of measuring supply chain performance; however, the inability to centrally capture time and cost data related to the procurement anddistribution of goods has prevented a systematic process of performance measurement from being implemented. Today in the logistics department of the International Federation of Red Cross and Red Crescent Societies (IFRC), software that was co-developed with the Fritz Institute makes it possible to capture the necessary data which will inform the IFRC of their supply chain’s performance.
Page 1 of 11This executive summary begins by examining the underlying principles of logistic performance measurement systems from the military and commercial sectors and applying them to disaster relief operations. These principles were used to develop four indicators which measure logistic performance in terms of the trade-offs of speed, cost and accuracy: appeal coverage, donation-to-delivery time,financial efficiency, and assessment accuracy. Taken together, these indicators create a “scorecard” that will help the logistics department gauge performance both during and after a relief operation. To show how this system would be used by a relief organization, scorecards have been re-created for the 2005 South Asia earthquake operation of the IFRC. The executive summary concludes by describingone of the key issues which may arise when a performance measurement system is implemented, which is how to manage the cultural change that is needed in organizations unaccustomed to performance measurement. Although this research was performed with an international non-profit humanitarian organization in mind, the principles of measurement that are described are relevant to other organizationswhich participate in disaster relief operations, such as government agencies or national non-governmental organizations. Principles of Performance Measurement from the Commercial and Military Sectors Supply chain professionals in the commercial sector face many of the same issues of trade-offs in performance as a professional working in a disaster relief operation. In business and in disaster reliefsupply chains, speed is of the essence. Even more striking in parallel are military supply chains, which often face similarly short deployment periods and challenging working environments. Because of these similarities, it is important to understand the underlying principles of commercial and military performance measurement systems when
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developing a system for disaster reliefoperations. The following three principles emerged from business research journals and from research studies of the U.S. Army as the most applicable to the humanitarian sector. • Align metrics to the organization’s core strategy (Lambert, 2001). If a metric is not critical to fulfilling an organization’s core strategy, it should not be included on the scorecard. There is a tendency when designing...