How vulnerable is your supply chain? (page 4)
-- Logistics Management, 4/1/2005
Page 4 of 4
LM: What would you advocate as a key “pain point” to inspire adoption of more progressive security layers?
SF: The main pain point that gets you from where we are now to where we need to be in a reasonable hurry is to build it around the new [three-level] ISPS alert system at the ports. If a port terminal is not running at 90 percent tempo they’re starting to lose money. If you say to them, we need you to raise the [alert] level and slow things down by one-third because we want to run more checks, they may as well just turn off the port. In this scenario, Wal-Mart or Home Depot are currently at risk.
They need to be told that if they invest in this technology, this security insurance, and the port goes to [alert] level 2 or level 3, they’re unaffected and only the non-compliant shippers are inspected.
LM: The shipper benefits you've mentioned are similar to those CBP is offering with C-TPAT: assess your vulnerabilities, invest in measures to patch the holes, and you'll be seen as a low-risk shipper. Are you suggesting that C-TPAT has a limited future or will be supplanted?
SF: I'll just say that CBP is under increasing pressure for a more "validatable" system than the one they have today. There's very strong pressure coming from Capitol Hill. They're not convinced that CBP has raised the bar high enough, so it's in the political mix right now. Commission Bonner gets a lot of credit for making C-TPAT happen in a hurry. He expected that the program would be resourced properly, and that's been a real struggle. This year it's finally getting some money.
LM: Is funding enough to help C-TPAT "raise the bar"?
SF: It could be, but there are still a couple of problems. Do people inside CBP understand supply chains well enough that they can assess whether your security is good, bad, or indifferent? Understanding supply chain management was never a core competency of customs officers. Now, with this "push the borders out" approach, you need to build a skill set inside Customs that simply didn't exist.
The second problem is the sheer number of applicants. We have more than 7,000 C-TPAT applicants, but how do you actually look through the applications? They've barely begun. Fewer than 1,000 applications have been reviewed and have been considered "good plans." Don't forget, this is a paper exercise. The program looks at the application and determines if it's a good plan; they're not going out and checking to see if you're doing the things you say you're doing.
LM: Where does this put shippers that have put hard work and resources behind their C-TPAT applications?
SF: This is creating problems for companies that have been good citizens. Those leading shippers are looking around and seeing that there are 7,000 members of C-TPAT and they're saying, "Give me a break." The good citizens are investing real money, and then they see all these small players who have just filled out the paper work? It's not working.
C-TPAT is an excellent first step toward getting out of the "cat and mouse" game between Customs and the trade. Before, Customs would say, "I got you," then the trade would say, "Who do I write the check to?"
LM: You're suggesting we have well-meaning guidelines that are underfunded and understaffed to a point where their effectiveness is compromised. In turn, ports and ground transportation systems—and importers—have become targets. Is that correct?
SF: That's a good summary. We all have to be playing by the same rules on the international level. As for C-TPAT, let's get the private sector engaged and let's get out of the "cat and mouse" game because these programs have not been adequately resourced, and it's to the point where they really don't provide credible improvements in security.
My fear is that when we have the next event, the very sound principles that underpin our current security approaches will be compromised and we'll end up with the model we had in the 1990s along the Mexican border—building a wall. We have to think when we design security systems, not about what works now, but about what will hold up after something goes wrong.
LM: Is there a single recommendation that you could make to U.S. shippers to thwart a future terrorist attack through their global supply chains?
SF: Corporations that are running global supply chains have to realize that they may become unintentional conduits for terrorists. They have to realize that systems they are participating in will likely suffer from the consequences if they haven't taken adequate measures to improve overall security.
Ultimately, shippers have to take ownership of the security problem. They can't treat it as something that's inherently a governmental responsibility. It's a corporate responsibility in much the same way that the "quality revolution" was something that the successful companies managed to build throughout their organizations…
But it's key to remember that any measure that's just about security will fail. People get complacent. The only security measures that are doable and effective are things that provide another benefit—ideally a market benefit and a benefit for the public good.
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