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Natural Disaster Management Planning

Daniel Dumke — Mon, 27 Feb 2012 14:44:45 +0000

After the 2004 tsunami, which heavily affected parts of Thailand and Indonesia, national and international disaster response was quick to support the affected regions.

Within several weeks of the disaster, approximately 400 international non government organizations (NGOs) were working in Indonesia alone providing basic assistance to the affected population.

Introduction to disaster relief

Several factors are necessary to improve response activities:

Preparedness in vulnerable regions, focussing on the “ability to respond quickly and appropriately”.

Local involvement. The local authorities and population directly involved in a disaster also are “in the best position to respond immediately” to a disruption.

Coordinated needs assessment, which also includes local groups ensures that support can be given on efficiently where required

Information sharing: “Emergency preparedness and response stages are driven by information”. Therefore sharing information between the disaster response parties is an important factor to improve overall outcome.

Logistics expertise and efficiency. Natural disasters often leave most critical infrastructure destroyed. To quickly support a large number of road access is of utmost importance. “Logisticians play an important role during the initial emergency period, they are often given limited authority to carry out their decisions. Frequently too, the assessment teams sent by humanitarian agencies to determine the needs of the affected population do not include logisticians. When logisticians are not included in the planning and decision-making process this causes delays in distributing relief.” Also local logistics expertise should be levered to further foster the speed of delivery.

Method

To build her disaster response model the author conducted several interviews with disaster relief managers involved in the 2004 tsunami. The goal was to assess the degree of execution of the above mentioned factors.

The interviews were carried out with of five NGO and government managers (figure 1).

Figure 1: Interviewee Sample Group (Perry, 2007)

The author summarized shortfalls in several key areas, including preparedness, local involvement and coordination (figure 2).

Figure 2: Disaster Response Shortfalls during the 2004 Tsunami (Perry, 2007)

Model

Drawing from the cumulative findings of the extensive pre- and post-tsunami literature analysis and the research findings, a hindsight model of effective natural disaster response management planning has been developed that is holistic and inclusive.

Figure 3 summarizes the relevant stakeholders and tasks.

Figure 3: Holistic Model for Effective Disaster Response (Perry, 2007)

Key elements include:

the rigorous monitoring and forecasting of natural disaster risk and mitigating the effects of an impending disaster, with risk reduction activity, natural hazard forecasting, adoption of viable early warning systems;

the building of awareness through high profile, broad-based disaster planning and awareness programs led by the local government and building networks and trust;

the addressing of demographic vulnerability, poverty and long-term, sustainable livelihoods;

the linking of all stages from forecasting, warning, mitigation, response and recovery to community development for resilience;

the incorporation of disaster management protocols, social policy, international support, training programs in logistics and response, simulation programs, empowerment of local communities and encouragement of improvisation in chaotic scenarios; and

assurances that there is adequate funding for all facets of natural disaster management and reducing risk, with suitable early warning systems and protocols, the development of a cadre of local expertise, particularly in the field of logistics as well as planning for a positive future for vulnerable communities.

Conclusion

I presented this model for two reasons. First, for its inclusion of the logistics aspects of humanitarian disaster relief efforts. Second, for the aspects which might be transferable a business situation.

The model especially highlights the need for quick information by extensive communication and local knowledge and capabilities to deal with disasters swiftly.

One caveat I would like to mention, even though the study and the model are backed extensively using related literature, I was missing a broader empirical foundation of the work. Five interviews (as in-depth as they may be) just are not enough to build a reliable model. Further testing is therefore required!

Reference:

Perry, M. (2007). Natural disaster management planning: A study of logistics managers responding to the tsunami International Journal of Physical Distribution & Logistics Management, 37 (5), 409-433 DOI: 10.1108/09600030710758455

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Supply Chain Crisis and Disaster Pyramid

Daniel Dumke — Wed, 02 Nov 2011 15:43:00 +0000

With this review I take a look at supply chain disruption management. There is a huge number of actual and potential crisis (floods in Thailand, typhoons and risks of a greek collapse).

So it does make sense to think about preparation and recovery ahead of time.

Method

This article presents a new approach on how to improve preparedness and recovery after disaster strikes. It is built completely on a literature review of the resource, risk, crisis and disaster recovery, and preparedness literature. At its core this research is built on four different theories:

resource-based view of the firm

communication theory,

competing values theory, and

relationship management theory.

Figure 1: Four Corners of the Supply Chain Disaster and Crisis Pyramid (Richey, 2009)

Disaster and Crisis Pyramid

The four theories also form the pillars of the Disruption and Crisis Pyramid (DCP; figure 1).

Resource Management

The resources a company controls are an important factor in mitigating the effects of disasters. The authors summarize:

Still, given the prominence of resource management in the literature, and rightfully so, it seems logical that the DCP would “point” to resource management. Human resources must be moved from crisis locations to safe locations or from traditional operations to crisis locations. Physical and technological resources must be allocated, moved, opened, cleared, and customized. Informational resources must be collected, cleaned, warehoused, and redistributed. Financial resources must be acquired, allocated, distributed, and governed. The activity component in DCP research is huge and seems to thus be the consistent under current in the literature.

Collaboration: relationship management theory

The second element of the pyramid is the collaboration between the stakeholders in a disaster situation.

In crisis situations, collaboration will likely be the glue that holds organizations together. Additionally, Stewart et al. (2009) point out the broadness of the web that forms the extended supply chain in disaster and crisis situations. There is little doubt that such a tangled web will provide a huge opportunity for not only new research, but also to challenging the existing assumptions of relationship management logic.

Communication: communication theory

To achieve coordination and collaboration between all stakeholders, established and continued communication methods are essential.

Supply chain disaster and crisis situations demand effective communication. […] Examining issues such as bi-directionality, formality, modality, and frequency could be of serious importance as public and private entities attempt to understand what, when, and how much to communicate.

Contingency planning: competing values theory

A supply chain brings together a multitude of different companies. And usually instead of having on clear cut strategic goal, each company works for its own goals which also often are not properly aligned.

Competing values theory provides grounding for future supply chain disaster and crisis research by suggesting that firms simultaneously pursue various different and often conflicting strategic goals regardless of the situation

Conclusion

All in all Richey’s framework is aimed at providing a guideline for future researchers to find new insights into supply chain disaster management and how to improve supply chain reactions at the intersection of communication, collaboration, resources and values. And these four aspects should not only be considered by researchers, but also by supply chain professionals.

I especially liked the inclusion of the competing value theory, which might lead to a shift in research from the currently leading paradigm that goals of supply chain partners are always well aligned.

On the other hand, this framework could also be used beyond only disaster and crisis management, the aspects could perhaps prove influential in a larger number of supply chain related research fields and applications.

Reference:

Richey, R.G. Jr (2009). The supply chain crisis and disaster pyramid: A theoretical framework for understanding preparedness and recovery International Journal of Physical Distribution & Logistics Management, 39 (7), 619-628 DOI: 10.1108/09600030910996288

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Impact of Disasters on different Sectors

Daniel Dumke — Wed, 13 Jul 2011 11:04:00 +0000

I already wrote about different effect supply chain disruptions can have on a focal company and its stakeholders. Now I found another interesting article dealing with the impact of different disasters on different industries within the supply chain.

Method

The authors (Altay and Ramirez) use a exploratory empirical study to analyze the effect of over 3’500 historic natural disasters within over 150’000 firm-years.
From the literature analysis three hypothesis were generated:

H1: A firm’s financial leverage increases in response to a disaster.
H2: A firm’s TAT (Total Asset Turnover) will decrease in response to a disaster.
H3: A firm’s OCF (Operating Cash Flow) will increase in response to a disaster.

Two disaster databases were used to gather the relevant data about the disruptions. Three proxies for the overall effect of the disaster are used: ratio of damage over GDP, affected people by the disaster (per capita) and a composite measure based on the disaster count, affected population, the death toll and the damage.
These were then correlated with the financial leverage, the TAT and the OCF.

Results

Regarding their hypothesis the authors follow for all industries

“Results using our monetary proxy suggest a positive and time-persistent correlation between financial leverage and disaster damage for all sectors with the exception of extractive industries.”
“In general, firms become less efficient in managing their assets (lower sales as a percentage of assets) after a disaster.”
“When we turn to our composite measure, we see support for the negative impact of disasters on firm cash flows.”

The results are nonetheless not consistent over all proxies (damage, people affected and composite), so the authors follow rightly, that the correct proxy has to selected very carefully.

The authors go further in their data analysis and find that…

…damage by windstorms and floods seem to be dramatically different from that of an earthquake, providing evidence against the all-hazards approach.

furthermore:

We also show that the impact of floods on TAT of a firm is dependent on the firm’s position in the supply chain. We found that while upstream partners enjoy a positive impact, downstream partners have to plan for the opposite.

That last finding is quite interesting, since it shows that floods (and windstorms) seem to be disruptions which can be planned for and stock is accrued in advance and sold successfully.

Conclusion

The authors also take some effort to support the robustness of their results. The overall results remain unchanged after removing:

larger countries (with potentially more disruptions by which not all companies are affected equally),
G8 countries, and
countries with higher insurance consumption.

Overall I found this article kind of hard to read. Probably because the reading flow is disrupted by several multiple page tables which could have been moved to the appendix.
But still the article takes a new approach to evaluating the effect of supply chain risks on companies and industries and brings some interesting findings.

Reference:

Altay, N., & Ramirez, A. (2010). Impact of Disasters on Firms in Different Sectors: Implications for Supply Chains Journal of Supply Chain Management, 46 (4), 59-80

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