Use of Lean and Agile Commercial Supply Chain Practices in Humanitarian Supply Chains

Abstract: In humanitarian aid organisations, due to increasing pressure from donors, there is an urge to professionalise and optimise the way supply chains are managed. In the commercial companies there is strong evidence that focusing more on supply chain management can improve efficiency and lead to major cost savings which makes it very interesting for humanitarian aid organisations to adopt practices from the commercial world. The concepts of agility and leanness are said to prepare organisations to respond quickly to fluctuating customer demand (agility) and to increase efficiency through waste elimination and process optimisation (leanness), two properties which are required by humanitarian and commercial organisations likewise. In the commercial context agility and leanness are often combined as a le-agile strategy which is also applicable for humanitarian supply chains where the distinct humanitarian supply chain stages – preparedness, response, and reconstruction – follow different objectives and operate in different environments. Based on existing literature, this thesis identifies and examines the combination of lean and agile strategies with the different humanitarian supply chain stages. The combination possibility for a le-agile strategy is based on the base-surge demand approach from commercial literature. Moreover, agile and lean supply chain characteristics as well as practices how to achieve these characteristics are identified and illustrated in a theoretical framework. The empirical, qualitative research using a single-case study strategy further explores the supply chain practices of the Georgia Red Cross Society (GRCS) during the armed conflict in 2008. These lean and agile practices were studied by looking at preparedness, response and recovery stages related to the event, as well as the new preparedness phase, emerged after the armed conflict. The key findings indicate that lean practices are performed by the case organisation in the preparedness stage and to some lower extent in the reconstruction stage. Agile practices were evidenced in the response stage of the armed conflict. Overall, the findings support the theoretical propositions made prior to the empirical research. However, in the case of the studied organisation, the findings indicate that not all lean practices, identified from the commercial supply chain literature, were applied in the preparedness and reconstruction stages likewise. Nevertheless, in general there was a tendency for using lean practices in both stages of humanitarian supply chain. Another finding indicates that lean and agile practices are strongly linked and support each other. This was clearly reflected in an interconnection between preparedness and response stages, whereas implementation of efficient lean practices during the preparedness stage supported a quick and agile reaction to the armed conflict in the response stage. Additionally, it was found out that the reconstruction and preparedness stages of the GRCS humanitarian supply chain are connected through an iterative process of continuous learning and improvements. This thesis contributes to existing literature by providing empirical proof for the existence of lean and agile strategies in the preparedness, response, and reconstruction stages of the case organisation’s humanitarian supply chain. These results also support the possibility to use the commercial base and surge demand model for combining lean and agile strategies with the different humanitarian supply chain stages, which represents an under-investigated field in existing humanitarian supply chain literature.