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US federal government contracting for disaster management
Abstract
Disasters affect hundreds of millions of people every year and the response of governments is crucial in alleviating the suffering of those affected. Despite the importance of contracting in response to disasters, research on this topic is conspicuous by its absence. This paper begins to address this gap by investigating the choice of procurement contract type by US federal agencies during disaster management operations. The research relies on 47,560 contracts issued by the US federal government in response to 14 major disasters between 2005 and 2016. We build on agency theory to investigate the choice of the contract type made by federal agencies at the different stages of a relief operation. This research provides empirical evidence of the key factors underpinning the choice of contract in the context of disaster management, namely the amount of spend per contract and the type of acquisition (product or service), and reveals the moderating role of the stage of the relief operation.
Competition over the allocation of scarce resources motivates many public policy choices, and increasingly the influences the management of public organizations. With the rise of the businesslike approach espoused by adherents of “new public management,” competitive mechanisms are increasingly used in the public sector as means to improve organization and program performance. Despite the wide acceptance of competition as a viable method to improve public management, little large n empirical work has been done to determine whether competition improves performance, especially in the networked, cross-sectoral setting of modern governance. Analyzing more than 20,000 Florida contracts over a three-year period, this research explores whether competitive sourcing procedures lead to improved contractor performance. Results show that competitive sourcing may be associated with higher contract spending and undesirable contract outcomes. Other factors, including experience, existing relationships, and lower transaction costs, are more likely to lead to better performance.
This article is protected by copyright. All rights reserved.
The COVID-19 pandemic has caused a general shortage of personal protection products and therapeutic devices, which has highlighted the need for each country to have its own production resources and not depend solely on imports. Given the time that elapses between the onset of an epidemic and its detection, as well as the time required to activate production and the lead time of purchasing operations, it is necessary to have a permanent reserve, which we call shield stock, in order to immediately meet the demand for equipment at the beginning and throughout the course of the epidemic. This situation is analysed in order to identify the most relevant decisions in the scenario described, formulate a cost optimisation model and develop procedures to find the most economical combination of shield stock, domestic production capacity and imports to guarantee the immediate satisfaction of demand and the restoration of the shield stock after the epidemic, as a preventative measure. The procedure is illustrated with a specific pattern of the spread of the epidemic and some numerical examples.
The uncertainty associated with the location, severity and timing of disaster makes it difficult for the humanitarian organization (HO) to predict demand for the aid material and thereby making the relief material procurement even more challenging. This research explores whether options contract can be used as a mechanism to aid the HO in making procurement of relief material less challenging by addressing two main issues: inventory risk for buyers and over-production risk for suppliers. Furthermore, a contracting mechanism is designed to achieve coordination between the HO and aid material suppliers in the humanitarian supply chain through optimal pricing. The options contract is modelled as a stylized version of the newsvendor problem that allows the HO to adjust their order quantity after placing the initial order at the beginning of the planning horizon. This flexibility helps to mitigate the risk of both overstocking and understocking for the HO as well as the risk of overproduction for the supplier. Our results indicate that the optimal values for decision parameters are not “point estimates” but a range of prices, which can facilitate negotiation between the two parties for appropriate selection of contract parameters under an options contract. The results imply that options contract can aid in the decentralized approach of fixing the prices between the HO and the supplier, which in turn would help in achieving systemic coordination.
Governments play important roles as focal organizations in many interorganizational networks. However, the government perspective has largely been overlooked in the literature on supply networks, including research on humanitarian operations and logistics. So far, little attention has been devoted to how government agencies and other actors interact within complex networks. In this study, we use a qualitative research approach to study interorganizational interaction in the context of a major U.S. disaster: Hurricane Sandy. Specifically, we investigate the relatively successful Sandy response effort conducted by the New Jersey state government in interaction with other humanitarian actors. We find that the government took three main roles in interacting with other actors within the disaster response network: organizer, facilitator, and supply network member. Moreover, we develop a grounded model that provides a theoretical explanation of the interaction process and highlights the practices used by the government during the response stage. In addition to contributing to the humanitarian research domain, our study advances the emerging discourse on networks whose focal actors are not for‐profit firms.
Pre-positioning of relief supplies is one important preparedness action for natural disasters. This paper proposes the importance of supplier selection in humanitarian relief, and integrates it into the pre-positioning strategy. These suppliers have own physical inventories for regular business, and relief agencies are assumed to be able to use such inventories for disaster response by providing compensation. The supplier selection criteria include price discounts offered by suppliers based on order quantity and required lead time as well as physical inventory. By considering disruption risks, this paper presents a two-stage stochastic programming model to produce plans including facility location and inventory, supplier selection, and distribution of relief supplies. A case study focused on hurricane threats in the Gulf Coast area of the US illustrates the application of the proposed model. Sensitivity analysis of comparison experiments offers managerial insights for relief agencies.
There is a compelling argument that the number and intensity of disasters are increasing and will continue to do so for the foreseeable future. The causes are already evident. They include global climate change, increasing population density, human encroachment into disaster prone areas, recurrent famine, and the increasing intensity of weather events. Similarly, there is a general concern that the quality of the responses to these disasters is decreasing, particularly those causing the most damage. Recent examples include the Ebola epidemic, the Philippian tsunami, Hurricane Sandy, the Tibetan earthquake economic and famine refugee crises, and war-caused refugee situations around the world. Elements of the decrease in response quality include limited global logistics capacity, difficult inter-agency and/or international collaboration, and increased reliance on non-governmental organizations to provide the response. This essay is an appeal for more research on responder co-creation of and quality in the four broad phases of the disaster life cycle: mitigation, preparedness, response, and recovery.
Purpose
– The purpose of this paper is to identify the specific stages of the humanitarian logistics process in which the agile and lean principles are needed.
Design/methodology/approach
– To achieve this purpose, the authors propose an original conceptual framework and apply it to evidence from a “best practice” case study in the humanitarian sector: the United Nations World Food Programme and its efforts in the Darfur (Sudan) crisis.
Findings
– Although several previous works introduced the agile principle as suitable for disaster relief, when and how to embrace the agile and lean principles remained unclear. This paper demonstrates the proper combination of the agile and lean principles in disaster relief phases. The correspondence is based on the coincidence of the objectives that arises in every stage and that each principle is capable of achieving.
Research limitations/implications
– Further empirical research is needed to support the framework and to enrich the results that arise from this first explorative work.
Practical implications
– The proposed framework is targeted at leading actors involved in the operation and planning of humanitarian logistics when a crisis emerges. This approach, which is based on the combination of the agile and lean principles, is not exclusive to the humanitarian sector. This perspective may be useful to create business logistics that address disruptions to traditional supply chain flows and other forces that disrupt logistics, production and information handling.
Originality/value
– The paper clarifies how agility and leanness should be emphasised in specific stages of the humanitarian logistics process, to reach a higher level of effectiveness and efficiency when planning disaster relief.
Formal contracts represent an important governance instrument with which firms exercise control of and compensate partners in R&D projects. The specific type of contract used, however, can vary significantly across projects. In some, firms’ govern partnering relationships through fixed-price contracts, whereas in others, firms’ use more flexible time & materials or performance-based contracts. How do these choices affect the costs and benefits that arise from greater levels of partner integration? Furthermore, how are these relationships affected when the choice of contract is misaligned with the scope and objectives of the partnering relationship? Our study addresses these questions using data from 172 R&D projects that involve partners. We find that, i) greater partner integration is associated with higher project costs for all contract types; ii) greater partner integration is associated with higher product quality only in projects that adopt more flexible time & materials or performance-based contracts; and iii) in projects where the choice of contract is misaligned with the scope and objectives of the partnering relationship, greater partner integration is associated with higher costs, but not with higher product quality. Our results shed light on the subtle interplay between formal and relational contracting. They have important implications for practice, with respect to designing optimal governance structures in partnered R&D projects.This article is protected by copyright. All rights reserved.
This article explores how the purchase of services is managed within the organization, the risks associated with current services purchasing practices, and how to improve the professional management of services purchases. Survey data obtained from benchmarking research performed by CAPS Center for Strategic Supply Research reveal that purchasing services is viewed as more difficult than purchasing goods. In addition, while purchasing of services is growing in importance and magnitude, the resources to manage it are not. Accordingly, there are huge opportunities for organizations to improve their services purchasing in terms of cost and value, by dedicating more, and perhaps different, resources to services purchasing. Developing an outstanding capability to purchase services, and to manage that purchase, could truly be the next frontier for improved supply chain and organizational performance.
Funding for humanitarian operations in the global health sector is highly variable and unpredictable. We study the problem of managing inventory in the presence of funding constraints over a finite planning period. Our goal is to determine the optimal procurement policy given the complexities associated with funding and also to analyze the impact of funding amount, funding schedule, and uncertainty around the funding timing on operations. We use a multiperiod stochastic inventory model with financial constraints and demonstrate that despite the funding complexities, the optimal replenishment policy is a state-independent policy that can be easily implemented. We also provide analytical results and several insights based on our computational study regarding the effect of funding timing uncertainty and variability on the operating costs and fill rates. Among other results, we find that receiving funding early is beneficial in underfinanced systems while avoiding funding delays is critical in fully financed systems. Our analysis also indicates that receiving less overall funding in a timely manner might actually be better than delayed full funding.
Hurricane Katrina remains the “most destructive disaster in U.S. history” (Farber & Chen, 2006). The purpose of this article is to examine the public procurement practices followed by local government officials in and around New Orleans within the context of Hurricane Katrina, and define impacts of disaster on procurement processes. Original and primary data drawn from interviews with officials working in and with public procurement are used to examine the role of institutional culture and practices which encourage or constrain active, responsible behavior. We find that this behavior influences the quality, including the transparency and fairness, of purchasing responses.
This article aims to identify optimal vehicle procurement policies for organizations engaged in humanitarian development programs and to derive general insights on the characteristics of these policies. Toward that end, we follow an inductive approach. First, we study the operations of the International Committee of the Red Cross (ICRC) in three representative countries: Sudan, Afghanistan, and Ethiopia. Using a linear programming (LP) model primed with field data provided by the ICRC, we calculate the optimal vehicle fleet size and compare it with the policies actually implemented. Second, drawing from results of the LP model, we develop a stylized quadratic control model and use it to characterize the general structure of the optimal policy under different demand scenarios and operational constraints. After demonstrating that the results of the control model are consistent with those of the LP model in the specific context analyzed, we discuss the optimal policies and the applicability of the former as a practical tool for strategic asset planning.
Requirements for outcomes–based performance management are increasing performance–evaluation activities at all government levels. Research on public–sector performance management, however, points to problems in the design and management of these systems and questions their effectiveness as policy tools for increasing governmental accountability. In this article, I analyze experimental data and the performance–management experiences of federal job–training programs to estimate the influence of public management and system–design factors on program outcomes and impacts. I assess whether relying on administrative data to measure program (rather than impacts) produces information that might misdirect program managers in their performance–management activities. While the results of empirical analyses confirm that the use of administrative data in performance management is unlikely to produce accurate estimates of true program impacts, they also suggest these data can still generate useful information for public managers about policy levers that can be manipulated to improve organizational performance.
Purpose
The purpose of this paper is to compare performance measurement in the humanitarian relief chain with performance measurement in the commercial supply chain, develop performance metrics for the humanitarian relief chain, and present a framework that can be used as a basis for a performance measurement system in the relief sector.
Design/methodology/approach
The performance measurement analysis is developed through extensions on an existing performance measurement framework. Details regarding relief chain system were obtained through off‐site and on‐site interviews with relief professionals from World Vision International.
Findings
The paper finds that this work yielded: a comparison of performance measurement in the humanitarian relief chain with performance measurement in the commercial supply chain, new performance metrics for the humanitarian relief chain, and a performance measurement framework for the relief chain.
Research limitations/implications
The paper shows that future work includes performance measurement in community involvement and empowerment, performance measurement in community development, performance measurement in the combined relief and development mission, and understanding the role and impacts of cooperation and coordination in the relief chain.
Practical implications
This paper provides a practical procedure for developing effective performance measurement systems for relief logistics processes.
Originality/value
The paper presents to humanitarian relief professionals a new approach to performance measurement for relief logistics and to researchers in supply chain performance a comparison and contrast between performance measurement for relief and performance measurement in the commercial chain, new performance metrics for the relief chain, and implications for modern, quick‐response supply chains.
In this study, we consider facility location decisions for a humanitarian relief chain responding to quick-onset disasters. In particular, we develop a model that determines the number and locations of distribution centres in a relief network and the amount of relief supplies to be stocked at each distribution centre to meet the needs of people affected by the disasters. Our model, which is a variant of the maximal covering location model, integrates facility location and inventory decisions, considers multiple item types, and captures budgetary constraints and capacity restrictions. We conduct computational experiments to illustrate how the proposed model works on a realistic problem. Results show the effects of pre- and post-disaster relief funding on relief system's performance, specifically on response time and the proportion of demand satisfied. Finally, we discuss the managerial implications of the proposed model.
Purpose – The purpose of this paper is to propose using agency theory for assessing the likelihood of quality fade in buyer-supplier relationships and prescribing contractual mechanisms for reducing quality fade. In this paper, quality fade, an element of supply chain vulnerability, is defined as the unforeseen deterioration of agreed to or expected quality levels with respect to product and/or service requirements. The use of outcome-based, behavior-based, or mix contracts can be used to reduce the likelihood of quality fade and illustrate preferred scenarios for buyer and suppliers. Design/methodology/approach – This paper proposes a conceptual model for using agency theory to explain and address a type of supply chain vulnerability called quality fade. A 2×2 matrix is proposed that contrasts outcome measurability with outcome uncertainty to illustrate buyer and supplier vulnerability and to suggest contractual mechanisms that can be used to mitigate vulnerability for both parties. Findings – A typology of governance mechanisms is presented and described with the use of a manufacturer third-party logistics provider example to illustrate the theoretical framework. Four different scenarios are discussed and described. Contractual mechanisms are provided to mitigate vulnerabilities and reduce quality fade. Originality/value – Quality fade is a term that has not been described extensively in academic literature but is a term that is relevant in the broader discussion of supply chain vulnerability. Given that quality fade is a behavioral, as opposed to process oriented, approach, it requires a theoretical framework rooted in behavioral considerations. Agency theory is an appropriate framework for studying governance options.
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Services have become increasingly important as the driving force in the U.S. economy. However, there has been little research to date on services supply chains. It is believed that service businesses can benefit by applying some best practices from manufacturing to their processes. However, the inherent differences in services create a need for supply chain management tools specific to the services sector. This article documents the growing importance of the services sector and of services purchasing. Next, it develops a supply chain framework appropriate for a services supply chain by comparing and contrasting the applicability of three product-based manufacturing models: Global Supply Chain Forum Framework, SCOR and Hewlett-Packard's Supply Chain Management Model. Finally, this research describes the challenges for procurement professionals managing purchases for a services supply chain and provides suggestions for use of supply chain management theory, and practices for improvement.
Continuous improvement (CI) has played a key role in Japan's quality management. U.S. companies have begun to adopt CI in recent years. This paper studies the implementation of CI in seven U.S. manufacturing companies. We view values as the core concept of culture that impacts CI effectiveness. Using both qualitative and quantitative data with a sample of seven companies, we observe empirically a relationship between process-oriented values and CI effectiveness. We also find that communications involving workers is strongly associated with CI effectiveness. Finally, we find an association between process orientation and communication frequency, and argue that communications act as an intervening variable between process orientation and effectiveness.
After reviewing the problems of supply disruption caused by worldwide public health events, a two-echelon dual-marketing-channel supply model is presented in this paper, whose participants are one pharmaceutical company with disruption risks, one pharmaceutical company without disruption risks (NDPC), and one pharmaceutical retailer (PR). Their marketing consists of online and offline marketing channels. The PR signs an option contract with the NDPC to secure an adaptive and continuous pharmaceutical supply. The model is divided into three sub-models: single coalition structure, double coalition structure, and multi-party coalition structure, whose coalitional strategies and profits are investigated respectively. Their optimal decisions under disruption risks also are compared, and their pharmaceutical quality and process resilience are discussed. The merit of the model is to combine option contracts, government double subsidies, and business interruption insurance in the supply chain.
We present a novel humanitarian supply chain approach to address disaster preparedness and build response capacity in humanitarian supply chains when people’s vulnerability matters. Our primary motivation comes from the fact that disasters in Brazil are often associated with unequal distribution of opportunities and social inequalities that end up pushing more vulnerable people to risky areas or informal settlements. Moreover, investment in disaster management has dropped over the past few years in Brazil. In this way, we wonder: how to use the somewhat limited financial budget as effectively as possible towards meeting those that need the most while addressing disaster preparedness activities? To answer this question, we develop an optimization model to address location, capacity planning, prepositioning, local procurement, and relief aid flows’ decisions. Differently from most existing research, we adopt the so-called Social Vulnerability Index (SoVI) in the objective function to build enhanced response capacity in more vulnerable areas when the lack of resources makes impassable to fulfil all victims’ needs at once. Through a rich and real case-study based on the Brazilian Humanitarian Supply Chain, we come up with critical insights that can help to improve the humanitarian supply chain practices in the country. In particular, we show that the social benefit of using SoVI is as more significant as the vulnerability increases, which reveals the importance of considering this index to design more social-effective humanitarian supply chains.
Emergency contracting has risen to the fore in both interest and importance in the US since September 11, 2001 (9/11). Most recently, the US government's response to Hurricanes Katrina and Rita piqued the interest of both the Executive and Legislative branches of the US government and their respective oversight bodies. This paper briefly reviews the literature of emergency contracting with special focus on the statutory and regulatory framework for emergency contracting, identifies some contracting solutions established by the US government to deal more effectively with emergency contracting, and pinpoints some problems faced by emergency contracting agencies and anomalies of their emergency contracting practices.
Humanitarian organizations typically preposition relief items in strategic locations whose optimum levels are affected by the amounts of pre-disaster contractual agreements and post-disaster procurements. To account for these interrelationships, this paper proposes a novel two-stage scenario-based mixed fuzzy-stochastic programming model for integrated relief pre-positioning and procurement planning based on a quantity flexibility (QF) contract under a mixture of uncertain data. An effective multi-step solution method is also devised to solve the problem in real-sized instances. Applicability of the proposed model is examined through a real case study. Finally, a number of sensitivity analyses are conducted to provide helpful managerial insights.
Timely and adequate supply of vaccines in disastrous situations has a key role in controlling communicable diseases. This paper develops a specific option contract for proactively provisioning required vaccine doses from two suppliers (a main and a backup). The model aims to minimize the procurement and social costs using the SIR epidemic model. A novel hybrid solution procedure is developed using the optimal control theory, Stackelberg game model and nonlinear programming approaches. To evaluate the performance of the developed solution method, a number of numerical examples are presented and their results are discussed.
An integrated process, interlinked operation and interoperable communication network amongst operating agencies are critical for developing an effective disaster management supply chain. The traditional managerial problems observed across disaster management operations are: non-cooperation among members, disrupted chain of commands, misuse of relief items, lack of information sharing, mistrust and lack of coordination. This study aims to understand the issues affiliated with negative attitude towards disaster management operations using theory of cognitive dissonance. A qualitative investigation was undertaken across 64 districts in Bangladesh. Five constructs were examined for their influences on attitude and behavioural intention of members participating in government emergency supply chain for disaster management. The results indicate that administrative conflict, political biasness and professional growth have significant effects on attitude. Impact of insecurity is non-significant on attitude. This research offers substantial theoretical contribution to the cognitive dissonance theory in the context of disaster management supply chain.
In this study, we argue that contract design is a predominant strategy to set contractual expectations among supply chain partners to manage risk. We draw upon resource dependence theory and transaction cost economics to suggest that variation in risk management strategies is dependent upon both the complexity of the procured product or service, and the extent to which it is mission critical. In this preliminary study of public sector supply chains, we find evidence based on an analysis of 240,600 buyer-supplier contracts that when both mission criticality and service complexity are low, suppliers tend to bear most of the disruption risk by agreeing to fixed price contracts. When mission criticality is high, we find that the federal government is more likely to share risk with suppliers by utilizing time and materials contracts or incentive contracts. Evidence suggests that cost reimbursement and incentive contracts are preferred when service complexity is high. This article is protected by copyright. All rights reserved.
The logistical deployment of resources to provide relief to disaster victims and the appropriate planning of these activities are critical to reduce the suffering caused. Disaster management attracts many organisations working alongside each other and sharing resources to cope with an emergency. Consequently, successful operations rely heavily on the collaboration of different organisations. Despite this, there is little research considering the appropriate management of resources from multiple organisations, and none optimising the number of actors required to avoid shortages or convergence.
We have reviewed disaster management research papers published in major operations management, management science, operations research, supply chain management and transportation/logistics journals. In reviewing these studies, our objective is to assess and present the macro level “architectural blue print” of disaster management research with the hope that it will attract new researchers and motivate established researchers to contribute to this important field. The secondary objective is to bring this disaster research to the attention of disaster administrators so that disasters are managed more efficiently and more effectively. We have mapped the disaster management research on the following five attributes of a disaster: (1) Disaster Management Function (decision-making process, prevention and mitigation, evacuation, humanitarian logistics, casualty management, and recovery and restoration), (2) Time of Disaster (before, during and after), (3) Type of Disaster (accidents, earthquakes, floods, hurricanes, landslides, terrorism and wildfires etc.), (4) Data Type (Field and Archival data, Real data and Hypothetical data), and (5) Data Analysis Technique (bidding models, decision analysis, expert systems, fuzzy system analysis, game theory, heuristics, mathematical programming, network flow models, queueing theory, simulation and statistical analysis). We have done cross tabulations of data among these five parameters to gain greater insights into disaster research. Recommendations for future research are provided.
This paper seeks to empirically identify the key drivers for firms in selecting a contract in a supply chain by investigating their performance, supply chain orientation, and supply chain integration. A conceptual model is drawn up based on the existing literature in supply chain coordination contracts, performance, supply chain orientation, and supply chain integration and tested on a large sample of European firms. Multiple and multinomial logistic regression models allow for estimating the relationships between these variables. Our results demonstrate that the selection of contracts and the probability of their adoption depend on several combinations of firms' performance, supply chain orientation, and integration. Overall, the research provides an empirical contribution to the literature on coordination with contracts, which turns out to be mainly game theory based.
Different procurement decisions taken by relief organizations can result in considerably different implications in regards to transport, storage, and distribution of humanitarian aid and ultimately can influence the performance of the humanitarian supply chain and the delivery of the humanitarian aid. In this article, we look into what resources are needed and how these resources evolve in the delivery of humanitarian aid. Drawing on the resource-based view of the firm, we develop a framework to categorize the impact of local resources on the configuration of humanitarian supply chains. In contrast to other papers, the importance of localizing the configuration of the humanitarian supply chain is not only conceptually recognized, but empirical investigations are also provided. In terms of methodology, this article is based on the analysis of secondary data from two housing reconstruction projects. Findings indicate that the use of local resources in humanitarian aid has positive effects on programs’ overall supply chain performance and these effects are not only related to the macroeconomic perspective, but benefits expand to improvements related to the use of knowledge. At the same time, it was found that local sourcing often comes with a number of problems. For example, in one of the cases, significant problems existed, which were related to the scarcity of local supplies. Both housing reconstruction projects have indicated the continuous need for changes throughout the programs as a dynamic supply chain configuration is important for the long-term sustainability of reconstruction aid.
Purpose
– The purpose of this paper is to understand the impact of cooperative purchasing on buyers’ purchasing power. Purchasing in the humanitarian sector has traditionally been characterized by a low level of coordination due to inter-agency competition for funding, diverging mandates and other organizational differences. Relationships with commercial suppliers have also remained arm's-length and often dormant due to high levels of uncertainty and strict public procurement rules and regulations. However, recent pushes for increased efficiency and effectiveness are driving humanitarian agencies toward cooperative purchasing – a purchasing strategy that is claimed to be highly beneficial for members of the purchasing consortium not least for its ability to increase buyers’ purchasing power. In reality, the effectiveness of the strategy in increasing purchasing power is unclear.
Design/methodology/approach
– The authors study a single case of several humanitarian organizations aiming to increase their leverage in buying freight forwarding services by joining forces.
Findings
– Following several incidents during the process, the cooperative purchasing initiative did not contribute to increased power in the case. It was found that in addition to increased volumes, the effect of the strategy on other sources of power such as interconnections is also of importance.
Research limitations/implications
– The research is limited to the boundaries of a single case study including the perceptive view of respondents interviewed.
Practical implications
– The findings of the study provide insights for organizations aiming to practice cooperative purchasing.
Originality/value
– The findings of the study provide insights for organizations aiming to practice cooperative purchasing.
In this study, we consider the supplier selection problem of a relief organization that wants to establish framework agreements (FAs) with a number of suppliers to ensure quick and cost-effective procurement of relief supplies in responding to sudden-onset disasters. Motivated by the FAs in relief practice, we focus on a quantity flexibility contract in which the relief organization commits to purchase a minimum total quantity from each framework supplier over a fixed agreement horizon, and, in return, the suppliers reserve capacity for the organization and promise to deliver items according to pre-specified agreement terms. Due to the uncertainties in demand locations and amounts, it may be challenging for relief organizations to assess candidate suppliers and the offered agreement terms. We use a scenario-based approach to represent demand uncertainty and develop a stochastic programming model that selects framework suppliers to minimize expected procurement and agreement costs while meeting service requirements. We perform numerical experiments to understand the implications of agreement terms in different settings. The results show that supplier selection decisions and costs are generally more sensitive to the changes in agreement terms in settings with high-impact disasters. Finally, we illustrate the applicability of our model on a case study.
Logistic activity can be thought of as a socio-technical process whereby a social network of individuals orchestrates a series of technical activities using supporting systems such as transportation and communications. To understand the functioning of the entire system requires proper consideration of all its components. We identify seven key components: the objectives being pursued, the origin of the commodity flows to be transported, knowledge of demand, the decision-making structure, periodicity and volume of logistic activities, and the state of the social networks and supporting systems. Based on our analysis of the differences between commercial and humanitarian logistics, we pinpoint research gaps that need to be filled to enhance both the efficiency of humanitarian logistics and the realism of the mathematical models designed to support it.
We argue that humanitarian logistics is too broad a field to fit neatly into a single definition of operational conditions. At one end of the spectrum we find humanitarian logistic efforts of the kind conducted in long-term disaster recovery and humanitarian assistance, where operational efficiency – akin to commercial logistics – is a prime consideration. At the other, post-disaster humanitarian logistic operations involved in disaster response and short-term recovery activities represent a vastly different operational environment, often in chaotic settings where urgent needs, life-or-death decisions and scarce resources are the norm. The huge contrast between these operational environments requires that they be treated separately.
This paper investigates the problem of contract choice game of two supply chains, which compete at both manufacturer and retailer levels. The two manufacturers, as Stackelberg leaders, produce competitive products and distribute through two common retailers or exclusive retailers, and can choose either wholesale price or quantity discount contracts. We present and compare the results of two different types of contracts under different scenarios, to explore in depth the effect of supply chain structure and competition at both manufacturer and retailer levels on the profits and contract choices of two supply chains. We find that under the setting of common retailers, when the competition at manufacturer level exceeds a certain value, the equilibrium contract of the manufacturers would shift from quantity discount to wholesale price. In contrast, in the case with exclusive retailers, the quantity discount contract is the dominant strategy and the unique Nash equilibrium of contract choice game regardless of the competitive intensity at both manufacturer and retailer levels.
Relief material management which aims to reduce the impact of disaster and maintain social stability is of great importance for nonprofit organization (NPO) such as government, department of civil affair or Red Cross. However, the research of efficiency and performance on this field has long been ignored. In order to improve the efficiency and performance of the relief material management, we apply the supply chain management method into this field. Considering the relief material management system as a supply chain with one buyer and one supplier, we introduce the option contract mechanism into relief material supply chain management. With reasonable assumptions, we design an option contract with two delivery steps, and build an option pricing model with binominal lattice to estimate the different values of the same option contract for both members of supply chain. Furthermore, we analyze the impacts of the different parameters (such as the ratio of inventory, subjective probability of disaster, etc.), on the supply chain and its members in detail. The numerical example presented at last demonstrates that, with two delivery steps, there is a feasible price range of option contract which makes both members of relief material supply chain profitable and willing to conduct the transaction with option contract.
Taking agency theory and stakeholder theory as points of departure, this article proposes a paradigm that helps explain the following: (1) certain aspects of a firm's strategic behaviour; (2) the structure of management-stakeholder contracts; (3) the form taken by the institutional structures that monitor and enforce contracts between managers and other stakeholders; and (4) the evolutionary process that shapes both management-stakeholder contracts and the institutional structures that police those contracts.
This paper surveys literature from Economics, Accounting, and Management to address theoretical issues in Public Administration regarding government provided services in order to contribute to a formal connection between principal-agent models in these disciplines and public policy administration decision-making. In particular, it addresses the question: What theoretical properties of the services themselves might guide (a) the choice of producer of the services (government or outsourcing firm/contractor), and (b) the accountability imposed for the work produced. It is found that a theoretical framework of principal-agent models that includes the decision of whether to contract out can be useful as a first step in systematically formulating the government's decision for a variety of goods/services. This provides an alterative to the identification of key decision properties “from the ground up” for each good or service the government provides.
This paper builds on the idea that private sector logistics can and should be applied to improve the performance of disaster logistics but that before embarking on this the private sector needs to understand the core capabilities of humanitarian logistics. With this in mind, the paper walks us through the complexities of managing supply chains in humanitarian settings. It pinpoints the cross learning potential for both the humanitarian and private sectors in emergency relief operations as well as possibilities of getting involved through corporate social responsibility. It also outlines strategies for better preparedness and the need for supply chains to be agile, adaptable and aligned—a core competency of many humanitarian organizations involved in disaster relief and an area which the private sector could draw on to improve their own competitive edge. Finally, the article states the case for closer collaboration between humanitarians, businesses and academics to achieve better and more effective supply chains to respond to the complexities of today's logistics be it the private sector or relieving the lives of those blighted by disaster.Journal of the Operational Research Society (2006) 57, 475–489. doi:10.1057/palgrave.jors.2602125 Published online 14 December 2005
Purpose
The purpose of this paper is to identify the challenges of humanitarian logisticians with respect to different types of disasters, phases of disaster relief and the type of humanitarian organization. A conceptual model is constructed that serves as a basis to identify these challenges.
Design/methodology/approach
The paper is based on a country as a case, namely Ghana. Structured and unstructured data are collected in a workshop with humanitarian logisticians, and complemented with presentations of humanitarian logisticians, as they perceive their challenges. Disaster statistics and country profiles are used as secondary data.
Findings
The paper shows that some disasters defy a categorization between natural and man‐made causes. Challenges of humanitarian logisticians depend not only on the disaster at hand, but also on the local presence of their organization. The most emphasized challenge is the coordination of logistical activities. Challenges can be managed better if attributing them to different stakeholder environments.
Research limitations/implications
Applying stakeholder theory to logistics, this paper provides a greater understanding for the challenges of humanitarian logisticians.
Practical implications
A stakeholder categorization of the challenges of humanitarian logisticians helps to find potential collaboration partners as well as to mitigate these challenges.
Originality/value
Humanitarian logistics is a rather new field in logistics literature. What is more, there is a lack of empirical cases in the field. This paper proposes a conceptual model based on an actual empirical case.
Purpose
The objective this paper is to develop and describe a conceptual framework for collaborative Ethical Procurement Due Diligence (EPDD) between International Aid Non‐Government Organisations (IANGOs) in Humanitarian Supply Chains (HSCs). Second, to explore EPDD relationships with IANGOs, IANGOs and their suppliers, IANGOs and their suppliers' suppliers, donors, IANGOs and IANGO suppliers.
Design/methodology/approach
The approach takes the form of qualitative research in the shape of a number of in‐depth interviews, and the collection of secondary information across 11 IANGO organisations with senior logistics and purchasing managers.
Findings
Supply chain co‐opetition strategies are being enacted by IANGOs to explore the formulation of EPDD. Concerns surrounding ethical risk in HSCs differ from commercial supply chains (CSCs) in relation to NGO relationships with donors and supplier networks. EPDD by IANGOs beyond the first tier of suppliers in HSCs is limited to Lead IANGO(s).
Research limitations/implications
The case study approach adopted restricts the generality of findings; however, the research explores ethical behaviour in a new direction, that of IANGOs in HSCs, and their relationships with donors and supplier networks. This has implications for the management of ethical risk strategies in HSCs.
Practical implications
The paper determines barriers and enablers to collaboration between NGOs and as such assists in the process of developing risk‐rating systems for ethical procurement in NGO HSCs.
Originality/value
This is the first study to investigate the issues surrounding collaborative ethical procurement in IANGO HSCs, and associated ethical procurement risk management strategies in relation to donors and supplier networks.
Purpose
The purpose of this paper is to discuss and to help address the need for quantitative models to support and improve procurement in the context of humanitarian relief efforts.
Design/methodology/approach
This research presents a two‐stage stochastic decision model with recourse for procurement in humanitarian relief supply chains, and compares its effectiveness on an illustrative example with respect to a standard solution approach.
Findings
Results show the ability of the new model to capture and model both the procurement process and the uncertainty inherent in a disaster relief situation, in support of more efficient and effective procurement plans.
Research limitations/implications
The research focus is on sudden onset disasters and it does not differentiate between local and international suppliers. A number of extensions of the base model could be implemented, however, so as to address the specific needs of a given organization and their procurement process.
Practical implications
Despite the prevalence of procurement expenditures in humanitarian efforts, procurement in humanitarian contexts is a topic that previously has only been discussed in a qualitative manner in the literature. This work provides practitioners with a new approach to quantitatively assess and improve their procurement decision processes.
Originality/value
This study adds to the existing literature by demonstrating the applicability and effectiveness of an analytic modeling technique based on uncertainty, such as stochastic programming with recourse, in the context of humanitarian relief procurement activities.
Purpose
This paper aims to further the understanding of planning and carrying out logistics operations in disaster relief.
Design/methodology/approach
Topical literature review of academic and practitioner journals.
Findings
Creates a framework distinguishing between actors, phases, and logistical processes of disaster relief. Drawing parallels of humanitarian logistics and business logistics, the paper discovers and describes the unique characteristics of humanitarian logistics while recognizing the need of humanitarian logistics to learn from business logistics.
Research limitations/implications
The paper is conceptual in nature; empirical research is needed to support the framework. The framework sets a research agenda for academics.
Practical implications
Useful discussion of the unique characteristics of humanitarian logistics. The framework provides practitioners with a tool for planning and carrying out humanitarian logistics operations.
Originality/value
No overarching framework for humanitarian logistics exists in the logistics literature so far. The field of humanitarian logistics has so far received limited attention by logistics academics.
The main thrust of the article is to distinguish between four types of IT sourcing decision: total outsourcing; multiple-supplier sourcing; joint venture/strategic alliance sourcing; and insourcing. To illustrate each type, detailed case histories are used that analyse the reasons why specific IT sourcing decisions were adopted. Here, we consider total outsourcing at the London Stock Exchange; multiple-supplier sourcing at ICI plc; joint venture project sourcing at CRESTCo Ltd; and insourcing at the Royal Bank of Scotland. The trend towards outsourcing is increasing in all industrial and commercial sectors. However, client organizations need to become more aware of some of the pitfalls, particularly in respect of large-scale outsourcing deals to single or multiple suppliers. This is because the move to IT outsourcing engenders the need to develop new capabilities and skills to manage complex commercial contracts. We therefore conclude that, while many IT outsourcing contracts followed rationalization, cost-cutting and disappointing results from in-house IT provision, short-termism and current uncertainties over market, business and political conditions pose problems for many organizations in deciding future outsourcing arrangements.
What is the most effective framework for analyzing complex accountability challenges within governing networks? Recognizing the multiscale and intersector (public, private, and nonprofit) characteristics of these networks, an accountability model is advanced organized around democratic (elected representatives, citizens, and the legal system), market (owners and consumers), as well as administrative (bureaucratic, professional and collaborative) relationships. This concept draws from 2005 events following Hurricane Katrina. Multiple failures of governing networks to plan for and respond to Katrina include a breakdown in democratic, market, and administrative accountability as well as a pervasive confusion over trade-offs between accountability types emerging from crises. This essay offers several useful recommendations for emergency management planners as well as for those who teach and research.
Managing supply risk is an essential element of the overall supply management task. As the complexity of risk management has increased, responsiveness seems dominated by varying the level of inventory and using multiple supply sources as means of creating buffers. This research uses the framework of agency theory in managing supplier behaviors as a means to reduce supply risk and the impact of detrimental events. Empirical results indicate that purchasing organizations address various sources of supply risk by implementing management techniques that reduce the likelihood that detrimental events will occur. Firm size, purchases as a percentage of sales, and industry characteristics were also found to influence the manner in which supplier behaviors are managed.
The competitive bid process used by the US Department of Agriculture (USDA) to procure food supplies and transportation services for humanitarian food aid is subject to bidder gaming that can increase prices and deter competition. Additionally, suppliers and carriers are matched after bid submission, preventing synergies from coordinated planning. Given these concerns, we determine the optimal auction mechanism to minimize gaming then justify pre-bid planning between suppliers and carriers using properties of the cost distribution functions. We operationalize these changes with a uniform price auction. The improved mechanism should deter gaming, enhance bid participation, and increase delivered food aid volumes.
Bruce, Buck and Main (2005) offer two criticisms of agency theory as a valid model of executive behaviour. First, they suggest that because researchers have failed to find a strong empirical link between executive pay and firm performance, and since this research generally rests on models derived from agency theory, then we must question the theory. Second, they suggest that agency theory is under-socialized and therefore lacks generalizability to settings where social solutions would seem to eliminate the agency problem. In our response we make three points. First, agency theory rests on an assumption of self-interest that does not necessarily reflect opportunism. Second, agency theory does not make any reference to pay-performance sensitivity, and the failure of this research can be attributable to a variety of problems with the research. Third, we agree that agency theory does not explicitly recognize contextual factors, but suggest that this abstraction from context, gives agency theory greater generalizability. Finally, we review the UK and German contexts discussed by Bruce, Buck and Main to show that socialized solutions do not prevent the occurrence of agency problems. Copyright Blackwell Publishing Ltd 2005.
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the ‘separation and control’ issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears these costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.The directors of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.Adam Smith, The Wealth of Nations, 1776, Cannan Edition(Modern Library, New York, 1937) p. 700.