Supply Chain Security: Is Your Company Complacent or Engaged?

Imminent terrorist attacks or no, your competitive advantage demands that you secure your company's supply chain


At the National Industrial Transportation League's spring conference in March 2004, Admiral James Loy, deputy secretary of the Department of Homeland Security (DHS), admitted DHS's biggest fear is that citizens have become complacent because no major terrorist attack has taken place on U.S. territory since September 11, 2001.

A sense of normalcy and "business as usual" has descended upon America, despite the fact that it's impossible to read a magazine or newspaper or attend an industry conference without hearing about supply chain security and government initiatives to keep our borders safe. There's been much discussion but less action taken by citizens and companies to guard against terrorist threats. Because we're assaulted with so much information on this topic on a daily basis, perhaps it has become easy to ignore the perils since they seem nebulous and remote. But we do so at our own risk.

It comes as no surprise that conventional wisdom assumes another major terrorist act will occur in America at some point in the not-too-distant future. Terrorists are patient and single-minded in purpose, and many suspect that they have already infiltrated legitimate but unsuspecting businesses as a means by which they will orchestrate their missions. National security expert Stephen Flynn drives home this point in his new book, America the Vulnerable: How Our Government is Failing to Protect Us From Terror, that not enough has been done by government and the private sector to prevent or mitigate such a disaster. Air Force General Ed Eberhart, commander of the North American Aerospace Defense Command and U.S. Northern Command, recently said, "I believe that it is just a matter of time until the terrorists try to use a seaborne attack, a maritime attack against us. The nation hasn't done enough work to prepare for a maritime threat compared to what's been accomplished in aviation."

So the question is, what has your company done to get ready for the eventuality of the next terrorist strike? Are you complacent, or are you engaged? How will you defend your brand equity? How will you keep your company's international supply chain functioning and service your customers when ports and airports are closed? How will you contribute to a national solution?

The Price of Inaction

Certainly, many companies have taken a proactive approach to securing their supply chains. It's not just the big ones, though they have more resources to throw at the challenge and, perhaps, greater brand risk. Some small companies can also be cited as models to benchmark.

The Bureau of Customs and Border Protection (CBP) announced this year that Customs-Trade Partnership against Terrorism (C-TPAT) applications for membership now exceed 8,319, of which 4,493 have been certified (approved for membership) with 816 validations initiated and 425 validations completed. CBP claims that nearly all the major U.S. importers are members, accounting for over 50 percent of the cargo imported into the United States. That's good news, and these companies should be admired and rewarded for their diligence. The "green lane" should become a reality.

But what about the other 500,000 or so importers that CBP says engage in international commerce? How many will choose to become C-TPAT members or unofficially take measures to secure their supply chains? How many will sit back and just pray that the terrorist problem will disappear? How many believe the government's security legislation and initiatives are merely impediments to conducting business? How many believe their companies are immune from disruption? No wonder Flynn and other experts are so worried — this is a thorny problem.

Into which category does your company fall? If your company is actively doing what it can to improve supply chain security then you need read no further. But if you're one of the 500,000 "Complacent Shippers," please read on and ponder the questions posed and the recommendations offered.

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