Service outsourcing and disaster response methods in a relief supply chain

Abstract

Private enterprises, such as Wal-Mart and Home Depot, have implemented effective relief efforts in responding to Hurricane Katrina in 2005. From the perspective of operation research, the factors of this success have been addressed as quick response, pre-position and logistic expertise. However, the waste made by FEMA for stockpiling food and ice in anticipation of a busy hurricane season in 2006 and several other cases indicate otherwise. In this paper, we introduce the private enterprise into a relief supply chain and propose an outsourcing framework to uncover the reason of Wal-Mart’s success and provide explanations to the counter-cases. Our study shows that the effective relief effort carried out by private enterprises in responding to Hurricane Katrina in 2005 attributes to the combination of proactive response method and logistic expertise. Our findings advocate adopting different strategies to deal with different types of relief supplies. Specifically, the proactive insourcing strategy is good enough for a relief supply chain involving only imperishable relief supplies. For perishable goods, the proactive outsourcing strategy can make a relief supply more efficient.