Factors Affecting Global Inventory Prepositioning Locations in Humanitarian Operations—A Delphi Study

• Author: Wout Dullaert,Sander Leeuw,Delia A. Richardson
• Published date: 01 March 2016
• Date: 01 March 2016
• DOI: http://doi.org/10.1111/jbl.12112

Factors Affecting Global Inventory Prepositioning Locations in

Humanitarian Operations—A Delphi Study

Delia A. Richardson

1

, Sander de Leeuw

2,3

, and Wout Dullaert

2

1

Amsterdam University of Applied Sciences

2

VU University Amsterdam

3

Nottingham Trent University

This article investigates the factors that are important to humanitarian organizations when determining locations for inventory prepositioning

in preparation for emergencies—a critical decision faced by humanitarian managers. Current research in the sector is rich with mathemati-

cal models that focus on this decision, although these models have a limited scope in terms of decision factors. Through a Delphi study our arti-

cle investigates, identifies, and orders a comprehensive set of factors that decision makers in the humanitarian sector take into consideration

when determining where to preposition inventory on the global level. Through this process, 10 main factors are identified, with the top five fac-

tors being required: speed of emergency response, the availability and quality of infrastructure, the availability and quality of business support

services, the cost of operating the facility, and the availability and quality of labor. We also include suggestions for facility location research

based on the outcomes of our study.

Keywords: humanitarian logistics; inventory prepositioning; Delphi method

INTRODUCTION

Inventory prepositioning (IP), the strategic locating of relief

items in preparation for disasters, has received increased attention

in the academic domain (Balcik and Beamon 2008; Ukkusuri

and Yushimito 2008; Gatignon et al. 2010; Campbell and Jones

2011). Relief items are prepositioned to access those affected by

emergencies as quickly and as efficiently as possible, making the

decision about where to locate such relief items highly relevant

to ensure timely and efficient disaster response. Some humanitar-

ian organizations decentralize their operations (such as the Inter-

national Federation of Red Cross and Red Crescent Societies

[IFRC]; Gatignon et al. 2010), whereas others stock disaster

relief items in locations worldwide to serve the entire world. In

this respect, Dubai is a location used by many organizations for

stockpiles that serve the entire world. Others locate disaster relief

items to serve a region; for example, the United Nations High

Commissioner for Refugees (UNHCR) places inventory in

Douala, Cameroon, to serve Western Africa, while yet other

humanitarian organizations place disaster relief items in the

country they are intended to serve.

In the humanitarian logistics literature, we have witnessed a

surge in Operations Research modeling efforts in relation to situ-

ating inventory (De Leeuw et al. 2010). These models primarily

incorporate traditional elements related to factors such as cost

and capacity. While the factors used in these models have cre-

dence, we contend that other factors are important to IP location

decisions and they need to be explicitly researched and identi-

fied. There is some empirical research that identifies the need to

incorporate a wider, more comprehensive variety of variables in

humanitarian logistics (de Leeuw et al. 2010); however, there

has been no structured attempt to first identify and then prioritize

these comprehensive factors that are so important to the sector

when determining where to preposition inventory for emergency

response. This article addresses this gap by conducting an empir-

ical analysis of factors that are important.

We wish to contribute to the research on factors that affect the

selection of global IP locations for humanitarian organizations.

In this article, we predominantly focus on nongovernmental orga-

nizations (NGOs) such as World Vision or Oxfam, governmental

organizations such as Irish Aid, and supragovernmental organiza-

tions such as the Office of the UNHCR. We also focus our

empirical analysis on nonfood items (NFIs), such as tents and

kitchen sets, since they are considered core relief items in

humanitarian response. Since manufacturing activities are absent

in the supply chains that these organizations are directly involved

in, we focus our discussion of IP location decisions on the locat-

ing of distribution centers. Specifically, this study aims to iden-

tify and prioritize a comprehensive set of factors important to

humanitarian organizations in IP location decisions for emer-

gency relief on the global level. We believe that findings from

this research will provide an important contribution to the litera-

ture on IP location decision making and provide guidance to

facility location research in humanitarian logistics. We use the

Delphi method to identify these factors as it is well-suited to

exploratory research that involves a complex issue (Linstone and

Turoff 2002)—facilitating organized group communication (Lin-

stone and Turoff 2002; Powell 2003). It is considered a suitable

method to use when the opinions and judgments of experts are

indispensable (Powell 2003). The Delphi method is also very

appropriate for issue prioritization (Okoli and Pawlowski 2004).

The remainder of the article is organized as follows. The first

section discusses the literature on IP in humanitarian logistics.

The second section describes the research methodology and the

choice and design of the Delphi study. The results, ranking the

factors important to IP location decision making, are presented in

Corresponding author:

Sander de Leeuw, Faculty of Economics and Business Administra-

tion, Department of Information, Logistics and Innovation, VU

University Amsterdam, De Boelelaan 1105, 1081 HV Amsterdam,

the Netherlands; E-mail: sander.de.leeuw@vu.nl

Journal of Business Logistics, 2016, 37(1): 59–74 doi: 10.1111/jbl.12112

© Council of Supply Chain Management Professionals

the third section. The discussion and future research implications

are presented in the fourth section, and the last section concludes

the article.

INVENTORY PREPOSITIONING IN HUMANITARIAN

LOGISTICS

Decision variables for facility location in humanitarian

logistics

IP is identified as consisting of facility location, inventory man-

agement, and transportation decisions (Duran et al. 2011). In this

article, we focus on one key aspect: facility location decisions in

the humanitarian sector. Below, we give a brief overview of deci-

sion variables typically incorporated into these models, following

a structure similar to Melo et al. (2009) who describe decision

variables in terms of inventory, capacity, and procurement cate-

gories. It is not our ambition to be exhaustive but rather to provide

examples of how key decision variables have been incorporated

into facility location model research in humanitarian logistics. An

overview of facility location models in humanitarian logistics can

be found, for example, in Apte (2009).

Facility location models focus on managing inventory in two

different ways: determining the number of stock points and

defining levels of inventory (Melo et al. 2009). In facility loca-

tion models, inventory costs typically take the form of unit hold-

ing costs or inventory shortage costs but may also be represented

by other factors, such as restocking fees for leftover quantities

(cf. Campbell and Jones 2011), penalties for unmet demand

(Mete and Zabinsky 2010; Rawls and Turnquist 2010) or costs

of inventory being destroyed (Campbell and Jones 2011; Najafi

et al. 2015).

Second, facility location papers dealing with capacity deci-

sions in the distribution network typically relate to determining

the number and size of the distribution centers required (cf.

Chang et al. 2007; Balcik and Beamon 2008; Horner and Downs

2010). Some model both types of capacities, such as Mete and

Zabinsky (2010), who develop a model for medical supplies

facility location and distribution. Another example is the article

by Rawls and Turnquist (2010), who develop a two-stage deci-

sion model where the capacity of facilities is taken into account

in the constraints and the capacity of the arcs between facilities

is also considered (i.e., the transport lanes).

Third, procurement aspects, which focus on integrating suppli-

ers, have received little attention in humanitarian facility location

design research. An exception is the article by Najafi et al.

(2015), who account for capacity constraints of suppliers. A key

aspect in procurement is the availability of funding for procuring

relief items and services. Funding may be incorporated as a bud-

get constraint on the number of prepositioning facilities that can

be opened (cf. Ukkusuri and Yushimito 2008) or on the invest-

ment in prepositioned stocks (cf. Balcik and Beamon 2008).

Identification of factors relevant to IP in the humanitarian

sector

While there is credence in existing facility models that focus

on humanitarian logistics, the number of variables that they

incorporate is limited. There is a need to incorporate a wider and

more comprehensive set of factors when locating facilities in

humanitarian logistics (de Leeuw et al. 2010).

In our study, we used an approach similar to MacCarthy and

Atthirawong (2003), who identify factors relevant to international

location decisions in the business sector. In order to establish a

comprehensive set of factors for IP location decisions in the

humanitarian sector, we performed a detailed study of the busi-

ness logistics literature and used this in combination with the

humanitarian logistics literature as a basis. We primarily focus

on business literature that has empirically investigated facility

location factors. Where appropriate and possible, we have used

humanitarian literature to strengthen these findings and to make

them more applicable to the humanitarian sector. These factors

are summarized in Table 1.

In the consecutive sections, each factor is detailed into rele-

vant aspects. Every section is structured in the same way: we

first use humanitarian logistics literature to discuss why a factor

is relevant in the humanitarian sector (note: these articles are not

mentioned in Table 1 since they do not focus on facility location

per se). Then, we discuss which aspects business literature identi-

fies as relevant for facility location, and finally we discuss—

where applicable and possible—additions and further clarifica-

tions to make statements more applicable to and focused on the

humanitarian sector. These aspects are then used as an input for

the questionnaire used in the empirical study.

The cost of operating a facility

Cost has been identified as important to IP in the humanitarian

sector by several authors, among others because the high cost of

IP can deter a humanitarian organization from taking on an IP

project (Balcik and Beamon 2008; Duran et al. 2011). Based on

business literature, we have identified several aspects relevant to

the cost of operating facilities when making a location decision.

These include labor costs (Schmenner 1994; Bhatnagar et al.

2003; MacCarthy and Atthirawong 2003), utility costs (Jungthi-

rapanich and Benjamin 1995; Bhatnagar et al. 2003; MacCarthy

and Atthirawong 2003), transport costs (Ulgado 1996; Bhatnagar

et al. 2003; MacCarthy and Atthirawong 2003), fixed costs

related to salaries as well as import duties and taxes (MacCarthy

and Atthirawong 2003), business and support services (handling,

repackaging) costs (Bhatnagar et al. 2003), and facility rental

costs (Schmenner 1994; MacCarthy and Atthirawong 2003).

Speed of humanitarian response

The ability to respond quickly after a disaster is an important fea-

ture of the humanitarian sector (Schultz et al. 1996; Gustavsson

2003; United Nations Humanitarian Response Depot 2011). In

business literature, this “speed”is often operationalized as proxim-

ity to the market, which has been labeled as important by Bhatna-

gar et al. (2003), Ulgado (1996), Jungthirapanich and Benjamin

(1995), Mazzarol and Choo (2003), and Schmenner (1994). Prox-

imity to similar organizations may be relevant in location decisions

(Ulgado 1996) as this may increase overall speed of assistance.

In humanitarian supply chains proximity to ports is relevant

since this enables making items available for shipping to a wide

range of locations, while reducing transportation times for emer-

gency shipments as much as possible (Balcik et al. 2010; United

Nations Humanitarian Response Depot 2011). In our study, we

60 D. A. Richardson et al.