04


House to House July 2010


Securing your supply chain


The economic position over the last couple of years has underlined the extent towhich theworld is connected. In such a globalised world, trade is themain driver of economic growth and therefore, resilience in the way that trade can be conducted is of huge importance.


Globalisation has resulted in supply chains becoming extended across continents as neverbefore.Researchhasshownthat it typ- ically takes25differentpartiesand30differ- entdocumentsforgoodstogofromoneend of thesupply chaintotheother. Thevulnera- bility thatarises fromthis levelof complexity andtheimpact thatdisruptions tothesupply chainwouldhaveontheglobaleconomyare apparent toall.Thus, therecontinues tobea need tomanage supply chains effectively, in terms of efficiency, costs and risks overall.


It isobvious thatports andcargohandlingterminals – as key nodal points – are vulnerable links in the supply chain fromthe security point of view.How- ever, the reality is that all operators throughout the supply chain are exposed to security issues. A long-establishedmethodology hasbeen to seek to respond in a proportionate and risk-based fashion to such an exposure, for example, focusing on high-valuegoodsorparticular routes. Implementing additional securitymeasures in this way is neces- sarily subject to cost-benefit analysis, supplement- ingusualprocesses andperhapseven, ironically, in- creasing the exposure of goods by segregation or otherovert signals.Thus, security hasbeen seen as an inherent cost rather than an overall benefit. This means that the effective integration of security regimes into businessworkflowis critical.


As if the essential effective management of risk was not challenging enough, theworld economic and political landscape in the first decade of the 21st Century has been overshadowed as much by the events of 11 September 2001 as any fi- nancial crisis. Governments around the world


havemoved to counter the unseen and intangible threat of global terrorism. Since transport is the web which holds the global economy together, systems transporting people and goods have be- come targets for terrorist groups.


Terrorism through the last decade in particular has heightened the awareness of governments and industries to the vulnerability of the supply chain, accelerating the importance of supply chain security internationally. A number of governmen- tal and industry initiatives have been developed on supply chain security, and have undoubtedly gone some way to improve security. However, the sparse statistics that are made available tell a patchy story.While the TTClub itself has noted a fall of around 30%in the number of incidents of pilferage and theft at ports since 2002 when ISPSwas implemented, the value is fairly consis- tent, leading to the conclusion that criminals are more targeted.Other insurers andmarket sources seem to indicate an increasing trend, particular away from the nodal points in the supply chain. Moreover, these statistics not only point to the discriminatingway inwhich criminals nowoperate but also confirm that the value of goods stowed in each transport unit has increased.Criminalswill always seek the easy targets that combine with goods that contain the balance of ingredients of value and ease of sale; the economic downturn may have reduced volumes in trade, but enlarged the pool of those seeking ‘bargains’.


As with so many issues in the transport and lo- gistics industry, any potential solution is neces- sarily a mixture of practical steps and thought- through procedures. And theClub has sought to


provide relevant and timely guidance spanning these two dimensions, intended as a guide to operators on howbest to enhance value through effective security implementation. The newhand- book, jointly researched and written by TT Club and ICHCA’s InternationalSecurityPanel, aims to define the principles of security in the supply chain and to guide all operators in the supply chain on how to enhance value through effective security implementation. ‘SupplyChainSecurity -Man- agement, initiatives & technologies’ – not only promotes good practice but also explains why security need not be seen as an unnecessary drain on resources and can actually provide a significant contribution to the bottomline.


There are a number of perceived weaknesses in the way that the international initiatives have de- veloped, amongstwhich are the bi-lateral charac- teristics that can become barriers to trade devel- opment and the lack of objectivity in assessing compliance. Further, asCarinaDixon,who chairs ICHCA’s International Security Panel, points out, “the real problemwith such protocols is enforce- ment and reciprocity. Although many countries signed up to the ISPS Code, enforcement re- mains the responsibility of the ship’s flag state or the country in which a port was based.What is lacking is a globally verifiable and universally accepted standard”.


The answer in part is provided by ISO 28000:2007 ‘Specification for SecurityManage- ment Systems for the Supply Chain’, which pro- vides what ISO terms “A high-level management standard that enables an organisation to establish an overall supply chain securitymanagement sys-


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