Large Scale Disruption Risk Management: Comparison of the Humanitarian and Commercial Supply Chain Responses

Humanitarian organizations need to respond to large scale disasters with a very short lead time and operate effectively in very disruptive environments. At the same time, these large scale disruptions are emerging as one of the most pressing issues for commercial supply chains. This development has been well publicised after significant events such as the 2011 tsunami in Japan. Consequently, supply chain managers and researchers have strived to develop risk conscious management practices to build better resilience into the supply chain. This paper therefore seeks to compare the characteristics of a humanitarian supply chain with those of commercial organisations, thus preparing for effective large scale disruption risk management. The authors survey the extant literature on humanitarian supply chains to draw out the similarities and differences between the disaster-response supply chains of humanitarian organisations and selected commercial supply chains. Next, the authors apply system dynamics to simulate and understand the causal loops and yield some performance benchmarks in terms of the disruption impact and costs. They posit that the supply chains for the disaster response operations and commercial purposes differ in terms of the management strategies, adaptive capacity, and supplier relations. By adopting some of the humanitarian supply chain’s features, such as Supplier Framework Agreements and Rapid Assessment Processes, the authors demonstrate an enhancement of the disruption handling capabilities of commercial supply chains. The cross-sectional study of the supply chain of humanitarian organisations can help commercial supply chain managers to improve their disruption risk management practices. This is the first study to analyse the potential for improving the disruption risk management of the commercial supply chain community through learning from humanitarian organizations.