Haiti: Exemplifying the Value of Distribution

Posted by Anthony

I was watching the news recently and there was a piece on CNN about Haiti's food crisis in the wake of January 2010's massive earthquake. Food crisis? How could this be? Didn't Americans and other generous countries around the world send enough food and money to last months, maybe years? Where did all of it go?

As it turns out, Haiti is experiencing a classic distribution problem. The #1 goal and priority was to get supplies to the country. And so most funds & mindshare were focused on that goal. A distant priority was figuring out what to do with the supplies once they arrived. And so many of them continue to sit around, just miles away from where they needed to be.

Many people - especially Americans - tend to discount the value of distribution. We shop wholesale where possible and push on retailers, dealerships, etc to operate at near-losses. We go online to purchase items that are available in a physical store for a premium. And - what do you know? - we donate straight from our cozy homes, and assume in good faith that the money will be turned into tangible help in some village thousands of miles away.

Problem is, by ignoring the value distributors have to offer, we are shooting ourselves in the feet. What we gain in cost savings and convenience, we lose in the ultimate effectiveness of our purchase/contribution.

Take a car, for example. While everyone hates to pay a dealership a penny more than what a car actually costs, let's consider for a moment the alternative. What if there were no dealerships? Where would you test drive your car? Would it be shipped to you? Where would you get it serviced? Who would you go to for simple questions and guidance related to your specific make & model?... The convenience a dealership offers is what, in the business world, is known as a "value add", and no matter how much it pains the average Joe to admit it, a value add is usually worth the price. That's what a distributor offers, and if distributors vanished tomorrow, the world would be a rough place for both suppliers and consumers.

Now - charity is a different beast. But the principles are the same. When you give money to an organization, the #1 most important thing to consider is how that organization uses the money. Most people hate to find out that a large portion of donations go to salaries and operational costs. They want to hear that 100% of it is going to supplies. And with an "out of sight, out of mind" attitude, it's pretty easy to be a person that makes those types of demands. I'm not one of them. The harsh reality is that without properly considering or funding the operational aspect of a charity, you end up with a situation like the one in Haiti - a bunch of supplies, and no clear direction.

So here's your action item -- every time you make a purchase or donation moving forward, ask yourself a) if you are ignoring the "value add" distribution has to offer, and b) what consequences that may bring. If those consequences are too great, then be willing to pay a premium, whether that means shelling out an extra grand or two for a car, or coming to grips with the fact that reliable charities use a certain percentage of contributions to fund operational costs. This isn't because they're evil. It's because they recognize that without proper distribution, everything else is meaningless.