New threats to SCM: security issues lead to a crisis of reputation and efficiency
on a dock in a distribution warehouse in the United States, a cargo truck arrived on time at 9:30 p.m. at the routine receiving time every day. However, after the warehouse door was opened, a group of armed gangsters jumped out of the car. They forced more than 20 warehouse employees to lie on the ground with guns, and then took away with microprocessors worth nearly $1million. A few hours later, the truck crossed the U.S. border into Mexico. Here, the stolen chips are sold to the black market, finally installed on the computer board, and then shipped back to the United States to sell to those who know nothing to open up innovative households
this is a new threat. "In the past, people used to track objects in a direct way: leave from point a and then arrive at place B. But now this is far from enough." Scott horn, head of logistics engineering at Sihai company, an EMS provider, pointed out, "you must ensure that items have not been tampered with. This chain of custody is increasingly becoming a focus in the field of supply chain security."
although stealing goods is a global problem, if it is linked to terrorism, its destructiveness may be very alarming. According to the statistics of the international maritime bureau, the annual loss of global cargo theft is more than 50billion US dollars, of which high-tech is one of the most severely damaged industries. There are a large number of goods crossing the U.S. customs border every day, and the security problem must be controlled by strengthening the inspection process, but the negative impact of this may lead to customs congestion
in order to solve these problems, various safety plans and measures came into being. Most typically, the United States launched the customs trading partner counter terrorism program (C-TPAT). The plan is implemented by the U.S. Customs and the border protection department under the Department of homeland security, giving priority to the release of goods from "reliable" importers, that is, importers who meet strict certification requirements, which allows customs officials to deal with suspicious goods
whether the C-TPAT safety guidance can solve the supply chain congestion caused by safety problems is still unknown. Other security programs being implemented include the container security initiative (CSI), which means that when goods are transported to the United States from certain regional ports identified as high-risk, they are inspected in advance before they leave these ports. In addition, there is a free and safe trade agreement to provide a "fast track" for the transportation of goods with C-TPAT certification between the United States and Canada
according to executives of enterprises in the industry, the C-TPAT guidelines generally include the contents stipulated by the high tech Asset Protection Association (tapa) and any security measures used to prevent criminal activities. Tapa is a non-profit organization in the high-tech industry, which is mainly responsible for recommending safety standards and best practices
adopt a globally consistent security strategy
electronic companies have to consider how to ensure the security of the supply chain every day, and as their business expands to low-cost developing regions with high risk of goods theft, such as Malaysia and Eastern Europe, these companies' demand for global security strategies has become more urgent
industry executives said the problem continued to worsen. Ron Greene, a supply chain risk analyst at first advantage, said that theft of goods is so rampant in Europe that many insurance companies have stopped providing insurance services in this regard
the data provided by tapa seems to confirm Greene's statement. In 2002, the total loss of goods in Europe more than doubled, from US $15.9 million in 2001 to US $39.9 million, and the number of cases increased from 80 to 187. Although the cases involving products decreased by about one third, and the loss of memory products decreased by almost 90%, the loss of hard disk increased by more than six times. Robbery cases decreased by one third, warehouse theft fell by nearly half, but the number of reports of cargo loss and truck theft at European airports increased. Greene said, "if you lose a truck or a container of goods, the minimum loss is at least several million dollars."
although there is no shortcut to solve these problems, many high-tech companies are adopting storage and transportation security strategies and implementing consistent strategies in all regions, whether in the United States, Brazil or China. In addition, depending on the specific location or product, additional measures may need to be taken. For example, on a route in Mexico, government officials suggested asking armed guards to escort high-tech products, and some insurance companies made it clear that they would not provide theft insurance for goods without armed escort
john Novotny, the logistics director of the verification point of the EMS service provider Jabil's multi range change experimental machine, said that the business in Mexico has not affected the insurance rate, "but if there is no (armed) guard, the insurance rate may be as high as 30%."
defensive transportation mode
choose different transportation modes of goods, and the risk of goods theft is different. Jill Systems Co., Ltd. uses FedEx to handle 96% of its international transportation. Simon Powell, the company's logistics director, said that the risk of choosing "comprehensive" express delivery companies such as FedEx is much smaller. Such express delivery companies use their own logistics infrastructure and only use third-party logistics partners when necessary
moreover, FedEx has all the necessary documents and transportation records, and can handle the customs clearance procedures for Jer when the goods are still in transit. Although the cost may be higher than other commercial transportation modes, the potential benefits of safety may offset these additional costs. For example, planes flying to China transport goods to the airport and then hand them over to the airport authorities. The airport unloaded the cargo from the aircraft and handed it over to a third-party broker. The broker may find a local car transportation company to complete the final transportation. "The possibility of losing, delaying or even stealing the goods will be greatly increased after they have been transferred many times." Powell said
as part of the transportation safety process, prior to the departure of the goods, Jer used a commercial software of Tradepoint systems to verify the documents before transportation, including the documents of end customers. Powell said, "in many ways, this is as important as ensuring the physical security of goods, because it ensures that we can control the arrival of goods at the final destination."
UPS has similar capabilities through an Internet based tool. For the transportation of international goods, the tool calculates the overall transportation cost before the goods leave the port, provides the compliance with the latest regulations, and notifies the customs in advance before shipment
anfuli, the distributor, has also formulated relevant plans with its cargo transportation partners to provide a series of detailed information about its goods. From the time the transportation company sends a car to the place of delivery to pick up the goods, until the car returns to the transportation company, each link must comply with specific operating instructions. When the goods are in the process of transportation, various communication and safety assurance processes will be started to ensure that the products are safely and smoothly sent to the destination. Receiving and shipping plans may be temporarily adjusted to make them more difficult to be targeted by thieves
at the same time, anfuli also classifies by region and records any shortage, loss or delay in delivery, so that the missing goods can be found as soon as possible to prevent greater losses. "At present, the theft phenomenon in the export sector is the most serious. We must make the whole operation process impeccable so that thieves can't start." Jim Smith, senior vice president of global operations at anfuli, said
not only for theft prevention
enterprises with a global vision are increasingly aware that adopting safer means of transportation is not only for theft prevention, but also to avoid their own supply chain becoming a channel for illegal activities. As Greene of first advantage said, if the goods can be easily stolen from the supply chain by thieves, it will also be easily tampered with, or used to launch unauthorized products into the supply chain, "even make fake products in your name." Greene said
with the increasingly prominent security issues, security plans such as C-TPAT have attracted more and more attention. According to the U.S. Customs, since the program was launched in late 2001, more than 7000 enterprises have joined, and about 40% of all goods shipped to the United States are transported by C-TPAT partners
although C-TPAT is still a spontaneous program at present, it is indeed beneficial to participate in this program. "For example, if you and all your trading partners have passed the C-TPAT certification, it means that the U.S. Customs has reviewed your security policies and procedures and recognized that these measures are sufficient, so your goods will enjoy the treatment of rapid customs clearance." Horn of Sihai said
but if you don't participate in the C-TPAT program, the goods will be subject to very strict inspection. Once the customs authorities have doubts, they need to send special personnel to deal with it, which takes up a lot of working time. "If the goods are the key items in the production line and are detained by the Customs for a day or two or a week, you will have to try to ship another batch of substitutes to solve the urgent problem, otherwise the production line may be shut down. Because your production line may implement a closely coordinated lean process." Horn said, "this will lead to a very serious cost problem."
Earl Agron, vice president of the Security Department of APL logistics, a subsidiary of APL, a U.S. shipping carrier, also said that importers who have passed the C-TPAT certification rarely have delays in customs clearance when goods enter the United States
however, it is not easy to pass the certification. Industry executives said that according to the time required by the current U.S. Customs regulations, it is not easy to produce documents with detailed and appropriate contents. For example, maritime cargo is now required to provide relevant documents 24 hours in advance, and some air cargo requires four hours in advance. "Before the introduction of the C-TPAT plan and the 9/11 incident, you may only need to stick a waybill indicating the electronic products inside," said Novotny of Jabil. "But now you must have a very detailed and precise description, describing all the items in a batch of goods."
indeed, in order to comply with relevant regulations, electronic companies will need to spend more time and energy on writing relevant documents and preparing for audit, which will lead to increased costs. Therefore, jewel's Powell suggested that a good import and export process should be established before seeking certification, "of course, this also requires an additional fee." Powell said
it is reported that Jer's C-TPAT certification took less than a year, but the company took two years to build its internal processes and establish relevant documents before applying for inspection by government auditors. "In the pursuit of true security, you must balance the interests of the world with the interests of your company and the investment in these projects." Horn of Sihai company believes that "C-TPAT has been supported in the right place. It has eliminated some obstacles, but having a good architecture and process is more critical."
other measures to protect the safe transportation of goods
if sending armed escorts similar to household appliances, safety audits and perfect documents are not enough to maintain the safety of goods, enterprises can also take many other additional measures to protect the transportation of goods
for example, using ordinary Brown packaging materials is the most basic way to stop theft