Transcript Supply Chain Security

Supply Chain Security
“the single biggest threat facing
American traders is
supply chain security”
Website for C-T PAT
Why should you care about SC
Security?
• Is it a US problem?
• Global Problem
• Heathrow Airport delays Superbowl
weekend 2005
• RFID – is this the solution?
• ISO Guidelines for SC Security
• Terrorism Insurance
Supply Chain Security
What’s the cost of 9/11 to the
Supply Chain?
Fortune Magazine - $50-80 billion a
year
• inefficient supply chains
• higher transportation costs
• increased inventory
Problem?
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Terrorism/Piracy
Obsolescence
Pilferage
Information Breach
Proprietary Data – Camera Phones; Thumb
Drives
Cyberspace Security
RFID Data Security
66% of Sealift Containers arrive at 20 Major
Ports
>58 % of all inbound containers come through
New York/New Jersey, Los Angeles, Long Beach
~44% through Los Angeles/Long Beach in 2003
Lengthening of Supply Chains – coupled with
Globalization
7/16/2015
Recent Headlines
• IMB identifies rash of false shipments into North
Africa
• Pirates intensify attacks in new areas, with first
Somali hijacking reported in Red Sea
• Maersk Alabama Captain Held by Pirates
• Peanut Corporation of America
• Somali piracy is worst in world – BBC News
• Russia Sends Warship to Somali Coast to
Fight Piracy – Bloomberg.com
• UN adopts new Somalia piracy resolution
Supply Chain Headlines
• “New Budget includes $10.2 Billion for
Border Security.”
• “Battling the Bad Guys: 2005 Was a
Tough Year” Dec 2005 Baseline Magazine
• “Major Data Theft Leads to Major Legal
Problems” Baseline Magazine
• “Polo Ralph Lauren – Lost Point of Sale
Data”
• “Somali pirates hijack fourth vessel in a
week ,” January 2, 2010
7/16/2015
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More Headlines
• “Somali pirates hijack cargo ship near
Seychelles,” April 11, 2010, AP News
• “Somali pirates attempt attack on
Dutch warship,” March 17, 2010
• “New suite of ISO supply chain
management standards to reduce risks
of terrorism, piracy and fraud”
7/16/2015
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Examples
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Major Distributor, Dec 2006
Locks on trucks
SAFE Port Initiative
Scanning of Containers
C-TPAT
ISO Standards for Supply Chain
Security
Threats in the international marketplace know no borders.
Terrorism Risk Insurance
U.S. Terrorism Risk Insurance Act (TRIA) – property and casualty insurance
experts are helping clients with interests in the United States make informed
decisions about terrorism coverage.
U.S. President George W. Bush signed the Terrorism Risk Insurance Act (TRIA)
into law in November 2002 to stimulate business investment that had slowed to
a trickle after the events of September 11, 2001. The law creates a three-year
federal program that backs up insurance companies and guarantees that
certain terrorist-related claims will be paid.
TRIA is a short-term measure designed to give the insurance market time to
recover and develop new solutions.
On December 26, 2007, the President signed into law
the Terrorism Risk Insurance Program Reauthorization
Act of 2007 which extends the Terrorism Risk Insurance
Act through December 31, 2014. The law extends the
temporary federal Program that provides for a transparent
system of shared public and private compensation for
insured losses resulting from acts of terrorism.
Supply Chain Security
“We have proved to our management
that good security is good
business.”
— Ann Lister of Texas Instruments
Risk
Supply Chains are inherently
complex, dynamic, and fluid,
characterized by uncertainty,
ambiguity, and friction. These
characteristics cloud the operating
environment: they create risks
Risk Assessment
• Terrorism
• Port Security – over 12 million
containers annually to the US; 200
million world wide
• Port Security – 300 US Ports
• Longshoremen Strike – 2002
• Potential Airport Attack – LAX;
MPS; LGA
Risk Assessment
“If you do things the way you’ve
always done them, you’ll get the
same things you’ve always got.”
-Darrell Waltrip
This is not your Dad’s Supply Chain!
Security is an integral part of the
Supply Chain and Homeland Defense
What are Supply Chain Hazards?
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Theft/Pilferage
Competition
Information Systems
Cell Phones
Thumb Drives
Camera Phones
Disgruntled Employees
Lack of Training
Problems?
• 66% of Sealift Containers arrive at
20 Major Ports
• >58 % of all inbound containers
come through New York/New
Jersey, Los Angeles, Long Beach
• ~44% through Los Angeles/Long
Beach in 2003
• Lengthening of Supply Chains –
coupled with Globalization
• Top 5 “Hottest Global Markets”:
China, Mexico, Eastern Europe,
Southeast Asia, India
What is a Catastrophic Risk?
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Inaccurate receipts?
Customer Satisfaction?
Sloppy Warehousing?
National Emergency?
Hurricane?
Or, Only when it makes it to CNN?
Important?
• September 11, 2001 - $2 billion per
day lost
• Longshoremen Strike, 2002 – 300500 ships backed up
• Potential loss of attack to major
port - $20 billion estimate
• 2008 estimate ~ 12 million
containers into US; up to 490
million containers world wide; 2009
- ~10 million containers
New Problem?
• “There were no ‘secure’ rear areas.”
General Joseph Heiser on
Vietnam Logistics
• Sun Tzu – Chapter 1, The Art of
War
• Native Americans
• American Civil War – Great Train
Chase
• Pirates of the Caribbean
Supply Chain Security
A Global Perspective
Top 5 European Ports
• Rotterdam – 9.743 million TEUs in
2009
• Hamburg – 7.088 million TEUs (9.7
mil in 2008)
• Antwerp – 7.3 million TEUs (8.6 in
2008)
• Bremen – 4.565 million TEUs (5.5 in
2008)
• Valencia – 3.65 million (3.6 in
2008)
Other Key Ports
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Singapore – 25.87 million TEUs
Shanghai – 25 million
Hong Kong – 20.9 million
Shenzhen – 18.25 million
Pusan – 11.98 million
Rotterdam
• > 900 intermodal barge moves daily
to 72 locations
• > 200 rail moves
• 220 million people within 600 miles
of Rotterdam
Rail
• > 15% of cargo to Germany via rail
• ~ 13% of Belgium cargo
• ~ 14 of French cargo
• US Rail – 4 major bridges over the
Mississippi River
Other issues
• 9000 distribution centers in the
Netherlands
• 2000 - $64.4 billion USD in logistics
and distribution in The Netherlands
SAFE Port Act
• The SAFE Port Act codified into law
a number of programs to improve
security of U.S. ports, such as:
• Additional requirements for
maritime facilities
• Creation of the Transportation
Worker Identification Credentials
• Establishment of interagency
operational centers for port
security
Safe Port Act
• Container Security Initiative
• Foreign port assessments
• Customs Trade Partnership Against
Terrorism
Container Security Initiative
• CSI consists of four core elements:
• Using intelligence and automated
information to identify and target
containers that pose a risk for
terrorism.
• Pre-screening those containers that
pose a risk at the port of departure
before they arrive at U.S. ports.
• Using detection technology (X-Rays)
to quickly pre-screen containers
that pose a risk. Using smarter,
tamper-evident containers.
Containers - Concerns
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Cost to X-Ray containers
Manpower
Delays
Radiation
Transportation Worker
Identification Credentials
• Port Employees
• Long Shoremen
• Unescorted access personnel
C-TPAT
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Voluntary
November 2001
9000 members
Canada has a program very similar
to C-TPAT named FAST – Free and
Secure Trade.
C-TPAT
• According to US Customs and
Border Protection Agency, the
benefits of participating in C-TPAT
could include:
– Playing an active role in the war
against terrorism
– A reduced number of CBP
inspections.
– Priority processing for CBP
inspections.
Orlando International Airport
• No staffing of doors for employee
entrance to baggage claim areas
• Guns smuggled into planes by employees
• “no requirement for us to staff those
doors” OIA Spokesperson; TSA – “not my
job!”
• Identified as security issues in 2004
• 2006 – ½ of TSA Screeners failed test
that measured how well employees could
identify explosives, guns and other
weapons on the scanner – but can
identify bottles of mouthwash and
toothpaste
Source: Mike Thomas, Orlando Sentinel, Mar 15, 2007, p. B-1
Food Security
BioTerrorism?
• Peter Pan Peanut Butter – e coli –
2007
• E-coli from fresh Spinach – 2006
• Chi Chi’s e-coli – from green onions
– 2003
• Taco Bell – e coli 2005
• None were terrorist attacks but
impacted supply chains
• US Salmonella/e-coli scare 2008
• Salmonella epidemic 2009 - >3921
separate items recalled
Summary
• Direct link between supply chain
security and homeland security
• Logistics costs are large part of
manufacturing costs
• Savings in supply chain costs to
bottom line