Supply Chain Security/Supply Chain

Preparedness

“the single biggest threat facing American traders is

supply chain security”Website for C-T PAT

Supply Chain Security

“We have proved to our management that good security is good business.”— Ann Lister of Texas Instruments

Six vessels within a 100-mile radius of the port of New York have been waiting since at least Oct. 28, according to IHS Inc. vessel-tracking data compiled by Bloomberg News today. The tankers, also able to carry cargoes including diesel, are probably being delayed because of the storm and would normally load or unload within two days, according to Truls Dahl, a shipbroker at Astrup Fearnley A/S in Oslo.

Nov 2, 2012

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?• 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 • Lengthening of Supply Chains – coupled with

Globalization

04/21/2304/21/23

Supply Chain Security/Disruption Headlines

• IMB identifies rash of false shipments into North Africa

• Pirates intensify attacks in new areas • New High for Piracy• Russia Sends Warship to Somali Coast to

Fight Piracy – Bloomberg.com• UN adopts new Somalia piracy resolution

04/21/23 7

Supply Chain Headlines

• “New Budget includes $10.2 Billion for Border Security.”

• “Major Data Theft Leads to Major Legal Problems” Baseline Magazine

• “Polo Ralph Lauren – Lost Point of Sale Data”

Examples

• Major Distributor, Dec 2006

• Locks on trucks

• Security and Accountability for Every Port Act - SAFE Port Initiative

• Scanning of Containers

• C-TPAT

Threats in the international market-place know no borders.

IMB Piracy Reporting Centre in 2012 Worldwide Incidents: updated on 27 Oct 2012Total Attacks Worldwide: 252Total Hijackings Worldwide: 26

Incidents Reported for Somalia:Total Incidents: 71Total Hijackings:13Total Hostages: 212

Current vessels held by Somali pirates: Vessels: 9 Hostages: 154.

Jakarta Anchorage

Type of Attack : Boarded

Narrations:

03.11.2012: 2100 LT: Posn: 06:00.4S - 106:54.6E, Jakarta Anchorage, Indonesia. Four robbers in a small boat approached the stern of an anchored container ship. One robber boarded the ship using a hook attached with rope while the other three robbers remained in their boat. Deck watchmen spotted the robber and raised the alarm. Seeing crew alertness the robber escaped empty handed.

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• Theft• Port Security – over 14 million containers

annually to the US; ~500 million world wide• Port Security – 300 US Ports• Longshoremen Strike – 2002/potential strike

2012• Potential Airport Attack – LAX; MPS; LGA• Potential loss of attack to major port - $20

billion estimate

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

• Lengthening of Supply Chains – coupled with Globalization

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

• Singapore – 25.87 million TEUs• Shanghai – 25 million• Hong Kong – 20.9 million • Shenzhen – 18.25 million• Pusan – 11.98 million

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

• Cost to X-Ray containers • Manpower• Delays• Radiation

C-TPAT• Voluntary• November 2001• > 10,000 members• ~50% of all imports • Mutual Recognition Agreements

– New Zealand, Korea, Japan• Canada has a program very

similar to C-TPAT named FAST – Free and Secure Trade.

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

Salmonella

BioTerrorism?• Dole Foods recall April 2012• 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

• Supply chains need to be prepared for man-made and natural disruptions