Building the Secure Supply Chain

The threats may be new, but the tools and processes for ensuring your company's supply chain is secure are the same solutions you have been using to keep your goods moving efficiently through the chain.


In general, Verle Hammond, president and CEO of supply chain consultancy INNOLOG, recommends that companies view security not as a separate goal in and of itself, but as part of the larger supply chain environment. "The understanding of the end-to-end nature of the supply chain on the one hand, and the understanding of security on the other hand, have really been separate concepts," says Hammond. That disconnect has prompted some companies to focus more on implementing point solutions to shore up security in one particular aspect of their supply chains — such as implementing RFID tags to track containers while they are in transit — rather than looking at the movement of goods all the way up and down the supply and demand chain. "You have to understand everything that happens from beginning point to the point of ultimate use," Hammond urges.

Can a supply chain ever be totally secure? Hammond, a veteran of 28 years as a logistician in the U.S. Army and a supply chain consultant for 14 years, since he founded INNOLOG, doesn't think so. He notes that many nodes through which goods pass employ outmoded asset management and inventory processes that need to be revised. "You need to update those processes, otherwise all the technologies that you can implement won't guarantee that you can reach that 100 percent secure and efficient supply chain," Hammond concludes.

Read the iSource Business Magazine article "Risky Business" for a CIO's view of supply chain security.

[SIDEBAR] New Rules of the Game

Government and private initiatives relating to supply chain security include:

" 24-hour Manifest Rule (24-hour Rule) U.S. Customs rule requiring carriers to submit a cargo declaration 24 hours before cargo is laden aboard a vessel at a foreign port.

" Automated Commercial Environment (ACE) Update of outmoded Automated Commercial System (ACS). Intended to provide automated information system to enable the collection, processing and analysis of commercial import and export data, allowing for moving goods through the ports faster and at lower cost, as well as detection of terrorist threats.

" Customs-Trade Partnership Against Terrorism (C-TPAT) Private-public partnership offering supply chain security guidelines. By complying with the voluntary guidelines and submitting to inspections, importers can qualify for expedited Customs clearance for incoming goods.

" Container Security Initiative (CSI) U.S. Customs program to prevent global containerized cargo from being exploited by terrorists. Designed to enhance security of sea cargo container.

" Fast and Secure Trade (FAST) U.S. Customs program that allows importers on the U.S./Canada border to obtain expedited release for qualifying commercial shipments.

" Smart and Secure Trade Lanes (SST) Private initiative of the Strategic Council on Security Technology, an assembly of executives from port operators, major logistics technology providers, transportation consultancies, and former generals and public officials. Aims to enhance the safety, security and efficiency of cargo containers and their contents moving through the global supply chain into U.S. ports.

For more information on government security programs, go to www.customs.gov or www.dhs.gov.

[SIDEBAR] New Threats, Same Old Tools

While terrorism presents new threats to the supply chain, many of the technologies that companies can use to secure their own supply chains already exist. Here's a rundown of security-related applications for some existing solutions:

Existing Solution: Supply Chain Process Management (SCPM)/Network Connectivity; Application: Connectivity with trading partners; "real-time" visibility to inventory, demand; enables companies to respond to disruptions.

Existing Solution: Logistics Resource Management; Application: Up-to-date intelligence on global shipping regulations; connectivity to government systems; a central repository for all shipping documentation and activity.

Existing Solution: Global Trade Management; Application: Restricted party screenings; compliance with trade regulations and documentation requirements.

Existing Solution: RFID Tags, Wireless Networks; "Real-time" tracking of inventory, conveyances and assets; detects tampering of sealed containers.

Existing Solution: Network Design, Strategic Sourcing; Application: Reconfigure supply chains and perform "what if" analyses.

Source: Adrian Gonzalez, "Trade Security: A Wildcard in Supply Chain Management," ARC Strategies, September 2002. Mark W. Vigoroso, "Vessel Manifest Rule Underscores Importance of Logistics Visibility," May 5, 2003, Aberdeen Group.

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