Measuring performance, controlling costs and reducing the environmental footprint

1Key indicators

A useful logistics dashboard fits on one page and covers each link:

Each indicator has a written definition, a source, a frequency, a person responsible and a target. Without a definition, figures that do not measure the same thing are compared: does "procurement lead time" start at the request, at approval or at the budget check?

2Reading procurement lead time

The average procurement lead time often hides very uneven stages. It is broken down:

Example. Average lead time of 38 days for purchases of 10,000 to 100,000 USD: incomplete request sent back to the programme (6 days), budget check (4), preparation of the file (5), publication and receipt of offers (14), evaluation (3), approval by headquarters (6). The "market" part (14 days) cannot be compressed; the others (24 days) are down to the organisation itself.

Targeted actions: purchase request template with mandatory specifications (−5 days), budget check within 48 hours (−2), delegation of approval to the country up to 100,000 USD (−5). Target lead time: 26 days.

The median is often more telling than the average: a few purchases blocked for months push up the average without representing the usual situation.

3Logistics costs

Logistics costs include transport, storage, handling, customs clearance, the fleet, logistics staff and losses. They are related to a useful unit:

• Cost per tonne delivered (for food and bulk items);
• Logistics cost as a percentage of the value delivered (LTSH rate, landside transport, storage and handling, for food assistance);
• Cost per household served.

Example. 4,200 t delivered in the year; transport 336,000 USD; storage and handling 126,000; customs clearance 42,000; logistics staff 180,000; losses 21,000. Total 705,000 USD, i.e. 167.9 USD per tonne. If the value of the food is 2,520,000 USD (600 USD/t), logistics costs represent 28% of the value.

This figure is neither good nor bad in itself: it is compared over time, between areas, and with other options (local procurement, cash transfers). A landlocked area will always have a higher cost per tonne.

4False economies

Some "savings" prove expensive later:

• Choosing the cheapest transporter without checking its reliability: losses, delays, stock-outs.
• Reducing safety stocks below a reasonable level: stock-outs and emergency purchases at high prices.
• Cutting preventive maintenance: breakdowns, vehicles off the road, accidents.
• Buying lower-quality items: replacements, dissatisfaction, resale by beneficiaries.
• Under-sizing the logistics team: incomplete files and ineligible costs at audit.

Worked example. Poor-quality tarpaulins at 8 USD instead of 12 USD, for 10,000 pieces: apparent saving of 40,000 USD. If 40% have to be replaced after the first rainy season (4,000 × 12 USD + 1.50 USD for transport and distribution = 54,000 USD), the operation costs 14,000 USD more, not counting the families poorly sheltered for weeks.

5The environmental footprint

Humanitarian action has a significant environmental footprint: air transport, diesel generators, plastic packaging, waste. The Climate and Environment Charter for Humanitarian Organizations (2021), signed by many organisations, commits them to measuring and reducing this footprint.

Logistics levers:

• Transport: prefer sea and road to air when the lead time allows (air often emits 50 times more CO₂ per tonne-kilometre than sea); optimise truck loading.
• Energy: solar power for offices, warehouses and cold chains; properly sized generators.
• Packaging: reduce plastic, favour reusable or recyclable packaging, ask suppliers for lighter packaging.
• Waste: management plans, take-back of packaging, appropriate disposal channels.
• Procurement: environmental criteria in specifications and evaluation.

Simple emissions calculation. Indicative factors: air about 0.6 kg CO₂ per t·km, road about 0.1, sea about 0.012. 50 t over 6,000 km: air 50 × 6,000 × 0.6 = 180,000 kg (180 t of CO₂); sea 50 × 6,000 × 0.012 = 3,600 kg (3.6 t). The exact factors depend on the sources used; the order of magnitude is enough to decide.

6Continuous improvement

A dashboard is only useful if it leads to decisions. A simple cycle:

• Measure every month with the same definitions.
• Analyse variances against targets and their causes (cause-and-effect diagram, "five whys").
• Decide on specific actions, with a person responsible and a date.
• Check the following month that the indicator is moving.

"Five whys" example. Chlorine stock-out at water points. Why? The district stock was empty. Why? The order was placed late. Why? The reorder point was not reached in the system because issues were not entered. Why? The storekeeper enters data at the end of the month. Why? No daily access to the tool. Action: data entry at least weekly, offline access, supervisor check. The root cause was not procurement but information.