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Op-Ed: Heightened Supply Chain Security in the Shadow of Risk

The recent tragic events that unfolded in Belgium are a heavy reminder that terrorism has a dramatic ripple effect on people, economies and the global supply chain. The Paris attacks stifled business and trade in that capital city last November. Government leaders demanded more security in areas of great vulnerability.

Just this week, the bombings of two shipping and transportation hubs in Brussels are evidence that securing global supply chains is still integral to safeguarding the lives of people around the world and maintaining the stability of the global economy.

Global supply chains are growing in complexity, yet remain vulnerable to myriad dangers damaging to both people and businesses. Supply chain disruptions, delays and loss of goods are costly global problems. The supply chain must be protected against those disruptions by establishing processes like counter-terrorism evaluations, identifying the most critical elements of the supply-chain system, and bolstering resilience so the supply chain can recover quickly from any disruptions. 

Better execution of cargo security

Supply chain assessments should begin with identifying any risk that will interrupt the flow of goods from the location where materials are originally sourced, to the product being put on store shelves. A strong cargo security program should connect each and every critical link along the chain in a holistic way.

At a minimum, a strong cargo security program requires these critical elements:

  • Define risks — Companies need to work with their suppliers and providers to determine which risks are most likely to occur within their supply chain, rank them according to those most likely to occur given each unique scenario, and determine which risks carry the most disruption.
  • Implement risk mitigation “must-haves” — A strong cargo risk mitigation strategy starts with C-level support. Other must-haves including budget and organizational structures to support the program and financial incentives to encourage compliance to policies.
  • Follow best practices — Cargo risk management strategies should address the best practices of people, processes and technology.
  • Develop and manage importer self-audits — At the most basic level, perform regular supplier audits, diagram the supply chain, and profile suppliers according to location, transportation modes, port of shipment, carriers and each supplier’s tier two and tier three supplier network.
  • Develop corrective action plans — Once risks are identified and ranked, shippers should establish corrective action plans (CAPs) for deficient suppliers and other supply chain issues.
  • Provide risk mitigation training and remediation — This training, together with a formal, written security manual, should include overall awareness training and follow-up requirements, including in the areas of procedural, personnel, documents and records, and facility security.

Supply chain risk management strategies should also address people, processes and technology through some best practices, including:

  • Know your supply chain partnersThis knowledge includes your vendors’ vendors and customers’ customers. The shipper is responsible for ensuring that they are not doing business with undesirable entities, regardless of whether compliance operations are outsourced.
  • Map out supply chain processes Software visualization tools can help shippers diagram their supply chain; evaluate risk levels of various supply chain partners and potential issues; and manage cargo flow risks. Identify dwell time and pinpoint maximum points of exposure.
  • Use the Incoterms 2010 Rules These rules define key responsibilities between the buyer and the seller, to determine where risk of loss or damage to goods begins and ends.
  • Borrow best practices from established security entities — There are several organizations that provide suggested security standards and a recognized framework for mitigating risk, including the International Standard Organization’s ISO 28000: 2007 standards, the Business Alliance for Secure Commerce (BASC), and the Transported Asset Protection Association (TAPA).
  • Know what your cargo insurance really covers — Closely review your insurance policy for items covered and more importantly, items that are omitted.

By implementing the best practices and basics recommendations, businesses and their partners will have more transparency into their overall risk posture and better control in the case of a disruption.

With a better understanding of their vulnerabilities and programs to manage and correct them, companies will be in a more secure position.

If each importer takes these steps within their own network, global threat levels will be lower and world economies stronger.

 

By Gary Barraco

Gary Barraco is director, global product marketing at Amber Road, a global trade management solutions provider. 

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