Services operations management and humanitarian logistics

The mismatch between global humanitarian needs and the resources available (Department for International Development, 2011), together with chronic vulnerability in many parts of the world, continues to have a direct bearing on the lives of millions of people in need of assistance (Humanitarian Policy Group, 2012). In this context, there is a growing understanding within the international humanitarian community of the need to further emphasise preparedness and resilience (Tatham, 2012) and fine‐tune appropriate assurances on the quality and efficiency of the humanitarian response (Apte, 2009). This paper considers these gaps in terms of the servitisation of humanitarian logistics (Kovács and Spens, 2011).

In today's logistics world freight forwarding, transportation and other logistic contributions have become so well defined that the service component has in effect been productised. In other words, the intangible contributions of logistics have become so well defined and understood by customers and suppliers that in effect they are sold as a product (Johnston, 2005). As logistics providers struggle to differentiate themselves from their competition they have sought to become more and more integrated with their customer's processes. This trend becomes apparent when we look at industry leaders in humanitarian logistics such as DHL, Kühne+Nagel and UPS, all of which position themselves as providers of integrated services or solutions.

This paper examines the nature of service operations management and its application to the field of humanitarian logistics. Its main aim is to stimulate a debate on the growing influence services operations management is having on humanitarian logistics. The paper argues that by paying closer attention to the service humanitarian logistics provides we could make an important contribution to theory development in humanitarian logistics and services operations management.

The paper is organised into four sections. The next section provides some background on recent trends in humanitarian logistics literature. Included in this section is a description of the systematic review protocols used in collecting data. To increase understanding of how services operations management can be applied to humanitarian logistics examples of services operations management literature is then presented. This leads to a discussion of new opportunities for humanitarian logistics while the final section closes with a discussion, including implications for practitioners, and suggestions for future research.

Understanding and applying supply chain principles and concepts to service‐based supply chains has been an emerging area of interest and investment within academia (Oloruntoba and Gray, 2009; Taylor and Taylor, 2009; Johnston, 2005, 2008). The growth in the service sector has seen the service industry expand to a point where it has become the dominant industry in many countries (Paton and McLaughlin, 2008). The service operations sector and service activity more generally have been increasing in terms of the number of people employed and relative contribution to the economy. Improvements in productivity for some service industries (government, healthcare, education, etc.) have not kept pace with those for manufacturing (Taylor and Taylor, 2009; Johnston, 2005, 2008). Raising productivity for the service sector is becoming an urgent issue for all industrialised nations.

At the same time, performance in the service operations sector is based largely on the intuition and experience of employees, and investment in research and development for services remains disproportionately low (Sampson and Froehle, 2006). Where services knowledge has been codified, firms have found substantial opportunities for value creation, from both process improvements and export of services (Taylor and Taylor, 2009; Johnston, 2008).

In humanitarian logistics^[1] Oloruntoba and Gray (2009) were the first to highlight the gap in addressing the effectiveness of humanitarian supply chains through enhanced customer service and satisfaction in the supply chain. The paper demonstrated the value that a customer service analysis could provide in understanding, designing and implementing effective emergency relief chains and to identify potential research opportunities. As well as outlining a pathway for potential research in the area of customer service the paper concluded that customer service is a necessary attribute for effective and efficient emergency relief chains (Oloruntoba and Gray, 2009).

Due to the perceived paucity of academic papers in humanitarian logistics on the application of service operations management concepts a systematic, quantitative review, consistent with suggestions that the methodological rigor of reviews of the management literature (e.g. Denyer and Neely 2004; Thorpe et al., 2005; Tranfield et al., 2003) was undertaken. The decision to review the humanitarian logistics literature from a services operations management perspective entailed one selection decision, limiting the review to double‐blind reviewed journal papers published in this field's top‐tier journals, as described further below.

The review focused on non‐invited peer‐reviewed journal papers, omitting books, book chapters and other non‐refereed publications, because journal papers can be considered validated knowledge and are likely to have the highest impact on the field (Ordanini et al., 2008). Established influential journals tend to shape the theoretical and empirical work in a field by setting new horizons for inquiry within their frame of reference (Furrer et al., 2008, p. 2). Therefore it was felt that this approach provides an accurate and representative picture of relevant scholarly research.

The most influential journals in the humanitarian logistics field were identified using McKinnon's (2013) citation‐based study of renowned logistics management journals. To ensure that a broader spectrum of humanitarian operations literature was reviewed additional journals were incorporated. The review thus covers the following 15 journals: Disaster Prevention and Management, International Journal of Disaster Resilience in the Built Environment, International Journal of Logistics Management, International Journal of Logistics: Research and Applications, International Journal of Operations and Production Management, International Journal of Physical Distribution & Logistics Management, International Journal of Production Economics, International Journal of Public Sector Management, Journal of Business Logistics, Journal of Humanitarian Logistics and Supply Chain Management, Journal of the Operational Research Society, Journal of Supply Chain Management, Management Research News, Supply Chain Management: An International Journal and Transportation Research E: Logistics and Transportation Review. This wide range of journals also allows provides a broad and deep analysis given that prior reviews in the humanitarian logistics field only considered subsets of these journals (e.g. Tatham, 2012; Balcik et al., 2010).

A three‐stage selection process to identify relevant papers from these journals was formulated. First, a search of all issues of these journals from 2006 to the last issue of 2012 that was available online on 6 December 2012, using various electronic databases (Business Source Premier, JSTOR and the journals’ homepages). The year 2006 was chosen as the cut‐off point for the past, because the seminal paper on humanitarian logistics, “Humanitarian aid logistics: supply chain management in high gear” by Van Wassenhove (2006) was published at this time. Consistent with prior approaches to identifying relevant papers, such as: Nielsen (2010), Rashman et al. (2009), Thorpe et al. (2005) and Tranfield et al. (2003) keyword searches were performed and those papers that contained the word “humanitarian” and/or any of the phrases “disaster”, “humanitarian aid (HA)”, “humanitarian logistics”, “humanitarian operations” or “Humanitarian supply chains”, in either their titles, abstracts or full texts were retained. Table I categorises the different areas that have been researched in humanitarian logistics in the last six years.

It is clear that within humanitarian logistics research the area of services operations management has been neglected. In overview, research in the areas of: foundations in humanitarian logistics; processes, modelling and performance; and cooperation, coordination and collaboration has been prolific. The area of information flow would appear to be the less covered.

The word service means many different things to different people, and even within the service operations management community there is no commonly agreed definition (Sampson and Froehle, 2006). This is due in no small way to the many different industries that perceive themselves as providers of services in one form or other. Irrespective of the type of industry (finance, healthcare, education, manufacturing, shipbuilding, HA) all organisations need to consider how best to meet their customers service requirements. Therefore, it is important to realise that a “service industry” is not simply, by default, any industry not engaged in the manufacturing of a tangible product (Paton and McLaughlin, 2008).

A more specific definition limits a service industry to those focused on providing customers with the product they require, and delivering that product in a manner acceptable to the customer (Taylor and Taylor, 2009). Any organisation that develops their service as a core competitive strength can, and should, be considered part of the service industry (Johnston, 2008).

Vandermerwe and Rada (1988) describe how companies initially considered themselves to be in goods or services (e.g. product manufacture or insurance), and then moved to offering goods combined with closely related services (e.g. products offered with maintenance, support and finance), and finally to a position where “firms offer ‘bundles’ consisting of customer focused combinations of goods, services, support, self‐service and knowledge”. They termed this movement the servitisation of manufacturing. In management‐related literature, servitisation development is commonly traced back to the early 1990s. However, Davies et al. (2006) point out that the industrial marketing literature suggests that pioneering applications originated in the 1960s with the introduction of “systems selling” strategies. In the evolution of servitisation, many manufacturing companies have moved dramatically into services and so caused the boundaries between products and services to become blurred.

Innovations in supply chain services are particularly important because they take place not in discrete operations but across the complete supply chain (Paton and McLaughlin, 2008). When examining the term “service” in this context it takes on a very important “primary” role for the organisation. Many organisations still relegate “service” led activity to a support role such as customer care, complaint management or some other “cost‐centric” role. In doing so, organisations are missing a clear opportunity to use their service capabilities to drive revenue (Taylor and Taylor, 2009).

The failure to correctly capture customer requirements is inherent in organisations that have a dominant “product‐focus”, as opposed to a “customer focus”. The characteristic of the product‐focused organisation is one that develops a product first and then looks to match that product to a market. This differs from a customer‐focused organisation in that this type of organisation strives to understand the needs of the market, and then develops the right product or service for that market (Johnston, 2005, 2008). This is a subtle difference but one that can mean the success or failure of a service organisation. Considering the fluid and dynamic nature of many markets the need to establish a clear customer perspective is vital if an organisation is to be competitive (Oloruntoba and Gray, 2009). Therefore, any organisation that fails to understand and respond to the changing needs of their customers will fail to provide services that stand any chance of meeting their customers expected levels of quality and satisfaction (Oloruntoba and Gray, 2009; Haskett et al., 2008).

The provision of services has now turned into a conscious and explicit strategy with services becoming a main differentiating factor in a totally integrated products and service offering (Baines et al., 2009). The value proposition often includes services as fundamental value‐added activities (Gebauer et al., 2006; Vandermerwe and Rada, 1988) and reduces the product to be just a part of the offering (Gebauer et al., 2006; Oliva and Kallenberg, 2003). Indeed, some companies have found this to be a most effective way to open the door to future business (Wise and Baumgartner, 1999).

In his paper “Service operations management: return to roots”, Johnston (2005) charted the development of service operations management from its manufacturing roots. He emphasises that services are different, from the development of service‐specific concepts, through to the more recent emergence of service management as a subject in its own right. More specifically, he identifies nine areas as ripe for operations management thinking to be applied. These included:

• (1)

  linking operations performance to business drivers;

• (2)

  performance measurement and operations improvement;

• (3)

  guarantees, complaints and service recovery – tools for improvement;

• (4)

  people management;

• (5)

  service design;

• (6)

  service technology;

• (7)

  the design of internal networks;

• (8)

  the service encounter; and

• (9)

  managing service capacity (Johnston, 2005, p. 1299).

So where is the subject of services operations management within humanitarian logistics going and what are the challenges for the future? There is clearly work to be undertaken from a humanitarian logistics perspective, which requires underpinning and strengthening by our supply chain tools and approaches.

Bask et al. (2010) observed that logistics and transportation services have been changing and diverging into several service segments. The multiple services provided earlier by transport and trucking companies have been broken down into several specialised services to attain lower costs (cut‐rate trucking) or to offer value‐added services (warehousing, packaging, price ticketing, final assembly, etc.) through third‐party and fourth‐party arrangements and alliances (Bask et al., 2010; Lieb, 2005).

As logistics is receiving increasing recognition as a competitive parameter, the focus is shifting to more strategic considerations of service response and flexibility instead of simple make‐or‐buy decisions (Bask et al., 2010; Skjoett‐Larsen, 2000). Bask et al. (2010) demonstrate the many good reasons to focus on research regarding logistics services. First, the outsourcing of logistics services is expected to increase; second, the logistics service industry is an emerging industry which promises a positive future and new roles in supply chains and value networks for the logistics industry. Third, value added logistics services seem to be the fastest growing part of the transport industry. Moreover, as highlighted by Skjoett‐Larsen et al. (2007) e‐commerce has created major changes in the structures and processes of distribution. To summarise, in the future, logistics service providers (LSPs) are likely to continue to strengthen their value creation in supply chain networks both at global and local levels.

Reflecting on these applications in humanitarian logistics it can be observed that information technology has enabled new channels such as online services, for example the UNHRD web site facilitates purchasing non‐food items through and real‐time tracking of cargoes enabling customers to monitor their deliveries using data networks. Interestingly, this is also an area that has received relatively little attention in the systematic review performed for this paper.

At the other end of the spectrum, the management of customer relationships is the driving force of development (Oloruntoba and Gray, 2009). Customer service management is the supply‐chain management process that represents the organisation's face to the customer (Oloruntoba and Gray, 2009; Bolumole et al., 2003; Croxton, 2003), and delivering superior customer service has become a fundamental strategy to achieving competitive advantage in supply‐chain management (Oloruntoba and Gray, 2009; Collins et al., 2001; Porter, 1985). Commercial supply chains focus on the final customers as the source of income for the entire supply chain. In humanitarian logistics, the originating supplier may also be a donor who has to be convinced that humanitarian action is taking place at the most efficient cost. Thus, as observed by Oloruntoba and Gray (2009) measures of “customer service” are perhaps, overly aimed at the supplier/donor. This is because, mostly, donors are the “customers” to whom NGOs (and other agencies) are accountable and have a reporting responsibility. Therefore, the “key customers” – the victims of crises – and their perspectives and requirements may become of secondary importance because donors are usually more powerful than those affected by disasters (Benini et al., 2009; Oloruntoba and Gray, 2009).

Contract logistics services with third and fourth parties such as those offered by UNICEF and IFRC, include shared facilities, outsourcing and alliances to provide a wide service mix from JIT deliveries and distribution to full‐scale services and supply chain solutions replacing the HA organisation order processing and warehousing functions.

The continuing consolidation and deregulation within the logistics service industry has also resulted in the emergence of large companies (DHL, Kühne+Nagel and UPS) that have the capabilities to offer sophisticated logistics solutions on a continental or even global scale. Recently, these LSPsstrive to achieve a strategic role within the supply chain of clients, expanding their scale and scope of operations (Tatham, 2012; Kovács and Spens, 2011; Selviaridis and Spring, 2007). Consequently, it can be expected that these services provide a good setting for the analysis of service repositioning and new business models in humanitarian logistics.

Using Johnston's (2005) identified nine areas of services operations management as the starting point, this paper now formulates four areas that humanitarian logistics academics could apply to services in humanitarian logistics:

• (1)

  servitisation in humanitarian logistics;

• (2)

  service developments in humanitarian logistics;

• (3)

  HA organisations as logistics service providers; and

• (4)

  service standardisation.

Servitisation, the term coined by Vandermerwe and Rada (1988), is now widely recognised as the process of creating value by adding services to products. There are a variety of forms of servitisation with the features differing for each. The literature identifies potential applications along the so‐called “product‐service continuum” (Gebauer et al., 2008; Gebauer and Friedli, 2005; Neu and Brown, 2005). This is a continuum from traditional manufacturer where companies merely offer services as add‐on to their products, through to service providers where companies have services as the main part of their value creation process. As observed by Gebauer et al. (2008), companies have to look at their unique opportunities and challenges at different levels of “service infusion” and deliberately define their position. This is envisioned to be a dynamic process, with companies redefining their position over time and moving towards increasing service dominance.

Baines et al. (2009) describe how commercial companies are moving to exploit downstream opportunities from services. They demonstrated that these opportunities fall into four categories: embedded services, comprehensive services, integrated solutions, and finally distribution control. Applying these criteria to humanitarian logistics shows that HA organisations are to the fore in adopting servitisation techniques:

• 1.

  embedded services which allow traditional downstream services to be built into the product (e.g. WFP stock lists for monitoring of non‐food items);

• 2.

  comprehensive services such as those offered by DHL around its product markets (e.g. DHL's comprehensive logistics solution);

• 3.

  integrated solutions where companies look beyond their traditional product base to assess the overall needs of customers (e.g. UNHRD's move to network‐infrastructure solutions); and

• 4.

  distribution control as used by WFP with its high‐volume low‐margin non‐food items.

Adopting a downstream position, such as the provision of installed base services, organisations have to be service oriented and value services (Oliva and Kallenberg, 2003). In humanitarian logistics this could be the tracking and tracing of relief goods. These organisations provide solutions through product‐service combinations and tend to be client‐centric and providing customised, desirable client outcomes organised around particular capabilities competences and client requirements (Miller et al., 2002). For example, WVI Canada has been working on a tracking and tracing system that they intend to offer to other HA organisations for a fee (WVI, 2012). Similarly, in the beginning of the Haiti earthquake, WFP acted as a consignee for other HA organisations who had not been registered in Haiti previously (WFP, 2012 or Besiou et al., 2011). Kovács and Spens (2011) observed that HA organisations not only started to develop new technology but also services for each other, such as, specialised systems for tracking and tracing and fleet management. At the same time, social media applications have entered the scene not just for fundraising but through applications including searching for missing relatives to matching donations with demand, for example ALAN's Aid Matrix (Kovács and Spens, 2011).

The general notion of HA organisations functioning as LSPs needs further research. This lends to an important perspective on HA organisations in research aside from the more common focus on how HA organisations use companies as LSPs. For example, WFP transports and distributes items belonging to HA organisations, and UNHRD hubs items for HA organisations, i.e. they act as a logistics service provider. IFRC perform a similar role with their hubs. This is an emerging trend in the field and demands more research.

The first editorial (Kovács and Spens, 2011) of the Journal of Humanitarian Logistics and Supply Chain Management (JHLSCM) outlined a few topics related to product/service development for humanitarian purposes (p. 9). Expanding on this Kovács and Spens (2011) identified (service) standardisation and modularisation, improving the interoperability of humanitarian operations and the role of humanitarian organisations as service providers as a gap in current humanitarian logistics research.

This is an important issue, in particular it may facilitate the use of services across HA organisations. For example, the Logistics Operational Guide (Log Cluster, 2012) of the Logistics Cluster to Sphere Standards (2011) to the use of items catalogues (WFP, 2012; IFRC, 2012). The WHO has adopted a logistics standardisation for not only equipment but also standard operating procedures in Ethiopian labs (WHO, 2012).

A solid foundation, expertise and a body of knowledge exists in humanitarian logistics, such as, managing information flows, lean thinking, efficient process management and process design but this needs to be examined through the lens of services operations management.

Services have always been an essential part of logistics; they are becoming increasingly important in today's world, especially in humanitarian logistics. Considering the interaction of different kinds of organisations and the globalisation of relief efforts, it is imperative that the humanitarian relief community embrace new strategies, techniques and technologies for improving productivity and quality in services operations. The service operations of the logistic function starts well before a disaster strikes and continues past the occurrence of the crisis and the direct response to it.

Similarly to humanitarian logistics service operations management involves anticipating impending disasters, trying to prevent them from occurring, mitigating their destructiveness and facilitating the humanitarian actions that are required, and completing the cycle by applying the lessons learned to improve response to future events and to minimise impact. Drawing on the four key areas of service outlined in this paper, the humanitarian logistics community have an opportunity to influence theory development in services operations management. The insights from humanitarian logistics and aid relief can increase the understanding and application of services operations management principles and concepts.

Several important challenges also face the humanitarian logistics academic community. This paper argues that we could make an important contribution by paying closer attention to the service humanitarian logistics provides. If we do not, logistics is at risk of being “left high and dry” like some developed countries’ manufacturing sectors. A window of opportunity exists for humanitarian logistics academics to seriously engage in the service arena and apply their knowledge and skills to answer fundamental questions in the areas of quality, productivity and efficiency, drawing in part on expertise in business services (for both internal and external customers).