What’s in the Box? An embedded single-case study of Médecins Sans Frontières Operational Center Geneva to determine inventory holding costs within humanitarian logistics

Abstract

Title:
What’s in the box? - An embedded single-case study of Médecins Sans
Frontières Operational Center Geneva to determine inventory holding
costs within humanitarian logistics

Authors:
Ludvig Wenglén, Theo Larsson Malmstedt

Supervisor:
Joakim Kembro, Division of Engineering Logistics, Faculty of Engineering (LTH), Lund University

Problem definition:
Médecins Sans Frontières and the humanitarian field currently lacks a structured method to calculate inventory holding costs. Existing commercial models are unsuitable due to contextual differences, limiting MSF’s ability to assess and optimize warehousing decisions.

Purpose:
The purpose of this study is to explore and quantify inventory holding costs within humanitarian logistics and propose a cost model adapted to the operational characteristics and constraints of humanitarian logistics.

Research questions:
RQ1: What are the primary cost-driving factors in inventory management
within HL?
RQ2: How can inventory cost assessment models commonly used in
commercial logistics be adapted to HL?

Method:
Embedded single-case study design, supported by both quantitative and
qualitative elements.

Conclusion:
The study identifies six primary cost drivers for holding inventory in humanitarian: routine warehouse operations, receiving, emergencies, obsolescence, capital, and operational volatility. While the thesis initially aimed to apply Berling’s (2005) Activity-Based-Cost method to allocate these costs, it was found to be too complex and data-intensive for MSF OCG’s current capabilities. Instead, a more feasible approach was adopted, inspired by Gurtu (2021), which structures costs into four core components, and then allocates them based on item characteristics - offering a better fit for the humanitarian context.

Contribution:
This thesis has been a complete elaboration between the two authors. Each author has been involved in every part of the process and contributed equally.

Popular Abstract

Counting the cost of aid - understanding inventory holding costs in humanitarian supply chains
LUDVIG WENGLÉN & THEO LARSSON MALMSTEDT, Lund University, Division of Engineering Logistics LTH

To deliver crucial aid effectively, humanitarian organisations must use their limited supplies where they are needed most. From vaccines to tents, these organisations store and manage thousands of items in uncertain, high-risk environments. But what does it actually cost to stock these supplies? This study helps humanitarian organisations better understand and manage inventory holding costs, by using Médecins Sans Frontières (MSF) as a real-world case study.

Why inventory costs matter in humanitarian work:
In commercial businesses, inventory holding costs are well tracked and managed to minimize costs, but humanitarian logistics are different. Organisations like MSF often deliberately overstock supplies to enable rapid responses to emergencies. They also normally operate in volatile environments with limited infrastructure and minimal automation. As a result, inventory decisions are driven by readiness and not profit. Yet, understanding the cost of being ready is still crucial, since there is a need to allocate limited donation funds where they help the most.

Our project
We collaborated with MSF’s Operational Centre in Geneva and three of its country missions to develop a cost model tailored to real humanitarian conditions. The project began with identifying the most impactful cost drivers in MSF’s inventory operations. These were challenges that cause major cost variation across countries and warehouses.

Through interviews and data analysis, we found four recurring challenges:
- Manual labour dominates – Warehousing tasks rely heavily on human effort, not automation
- Emergency supplies disrupt routines Large shipments and emergency stockpiles add cost and complexity
- Perishability and product variation - Medical and non-medical items require different storage and handling approaches
- Data inconsistencies - Gaps in financial and inventory records limit precision but can be bridged through expert input

Using these insights, combined with inventory management theory, we built a cost model with four main components:
1) Handling - Labour to receive, move, and manage goods
2) Storage - Space, utilities, and upkeep
3) Capital - Value tied up in stock
4) Obsolescence - Losses from expiry, donation, or waste

It was tailored to MSF by adding SKU-level details like price, weight, and volume, capturing item characteristics influencing costs. The blend of field insights, operational data and theory made a practical tool for humanitarian logistics.

Why it matters
Understanding the cost of holding inventory helps humanitarian organisations make better decisions about stock levels, warehouse design, and funding priorities. It improves transparency toward donors while maintaining emergency readiness. Our findings and developed model support not just MSF, but any humanitarian actor looking to improve their capability of balancing cost-efficiency with impact.

This popular scientific article is derived from the master thesis: What’s in the box? An embedded single-case study of Médecins Sans Frontières Operational Center Geneva to determine inventory holding costs within humanitarian logistic, written by Ludvig Wenglén & Theo Larsson Malmstedt (2025)

• author: Wenglén, Ludvig and Larsson Malmstedt, Theo
• supervisor: Joakim Kembro
• organization: Production Management; Engineering Logistics
• course: MTTM05 20251
• year: 2025
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: Humanitarian logistics, inventory holding costs, cost model, Médecins Sans Frontières - Operational Center Geneva
• other publication id: 6049
• language: English
• id: 9203977
• date added to LUP: 2025-06-23 17:08:32
• date last changed: 2025-06-23 17:08:32