1. “the single biggest threat facing supply chain security”
American traders is
supply chain security”
Website for C-T PAT

4. Why should you care about SC Security?
Is it a US problem?
Global Problem
Heathrow Airport delays Superbowl weekend 2005
RFID – is this the solution?
ISO Guidelines for SC Security
Terrorism Insurance

5. 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

7. 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 in 2003
Lengthening of Supply Chains – coupled with Globalization
4/15/2017

8. Recent Headlines
IMB identifies rash of false shipments into North Africa
Pirates intensify attacks in new areas, with first Somali hijacking reported in Red Sea
Maersk Alabama Captain Held by Pirates
Peanut Corporation of America
Somali piracy is worst in world – BBC News
Russia Sends Warship to Somali Coast to Fight Piracy – Bloomberg.com
UN adopts new Somalia piracy resolution

9. Supply Chain Headlines
“New Budget includes $10.2 Billion for Border Security.”
“Battling the Bad Guys: 2005 Was a Tough Year” Dec 2005 Baseline Magazine
“Major Data Theft Leads to Major Legal Problems” Baseline Magazine
“Polo Ralph Lauren – Lost Point of Sale Data”
“Somali pirates hijack fourth vessel in a week ,” January 2, 2010
4/15/2017

10. More Headlines
“Somali pirates hijack cargo ship near Seychelles,” April 11, 2010, AP News
“Somali pirates attempt attack on Dutch warship,” March 17, 2010
“New suite of ISO supply chain management standards to reduce risks of terrorism, piracy and fraud”
4/15/2017

11. Examples Major Distributor, Dec 2006 Locks on trucks
SAFE Port Initiative
Scanning of Containers
C-TPAT
ISO Standards for Supply Chain Security
Threats in the international market-place know no borders.

20. Terrorism Risk Insurance
U.S. Terrorism Risk Insurance Act (TRIA) – property and casualty insurance experts are helping clients with interests in the United States make informed decisions about terrorism coverage.
U.S. President George W. Bush signed the Terrorism Risk Insurance Act (TRIA) into law in November 2002 to stimulate business investment that had slowed to a trickle after the events of September 11, The law creates a three-year federal program that backs up insurance companies and guarantees that certain terrorist-related claims will be paid. TRIA is a short-term measure designed to give the insurance market time to recover and develop new solutions.

21. On December 26, 2007, the President signed into law
the Terrorism Risk Insurance Program Reauthorization
Act of 2007 which extends the Terrorism Risk Insurance
Act through December 31, The law extends the
temporary federal Program that provides for a transparent
system of shared public and private compensation for
insured losses resulting from acts of terrorism.

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

23. Risk
Supply Chains are inherently complex, dynamic, and fluid, characterized by uncertainty, ambiguity, and friction. These characteristics cloud the operating environment: they create risks

24. Risk Assessment Terrorism
Port Security – over 12 million containers annually to the US; 200 million world wide
Port Security – 300 US Ports
Longshoremen Strike – 2002
Potential Airport Attack – LAX; MPS; LGA

25. Risk Assessment
“If you do things the way you’ve always done them, you’ll get the same things you’ve always got.”
-Darrell Waltrip
This is not your Dad’s Supply Chain!
Security is an integral part of the
Supply Chain and Homeland Defense

26. What are Supply Chain Hazards?
Theft/Pilferage
Competition
Information Systems
Cell Phones
Thumb Drives
Camera Phones
Disgruntled Employees
Lack of Training

27. 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 in 2003
Lengthening of Supply Chains – coupled with Globalization
Top 5 “Hottest Global Markets”: China, Mexico, Eastern Europe, Southeast Asia, India

28. What is a Catastrophic Risk?
Inaccurate receipts?
Customer Satisfaction?
Sloppy Warehousing?
National Emergency?
Hurricane?
Or, Only when it makes it to CNN?

29. Important? September 11, 2001 - $2 billion per day lost
Longshoremen Strike, 2002 – ships backed up
Potential loss of attack to major port - $20 billion estimate
2008 estimate ~ 12 million containers into US; up to 490 million containers world wide; ~10 million containers

30. 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

31. Supply Chain Security
A Global Perspective

32. Top 5 European Ports Rotterdam – 9.743 million TEUs in 2009
Hamburg – million TEUs (9.7 mil in 2008)
Antwerp – 7.3 million TEUs (8.6 in 2008)
Bremen – million TEUs (5.5 in 2008)
Valencia – 3.65 million (3.6 in 2008)

33. Other Key Ports Singapore – 25.87 million TEUs Shanghai – 25 million
Hong Kong – 20.9 million
Shenzhen – million
Pusan – million

34. Rotterdam > 900 intermodal barge moves daily to 72 locations
> 200 rail moves
220 million people within 600 miles of Rotterdam

35. Rail > 15% of cargo to Germany via rail ~ 13% of Belgium cargo
~ 14 of French cargo
US Rail – 4 major bridges over the Mississippi River

36. Other issues 9000 distribution centers in the Netherlands
$64.4 billion USD in logistics and distribution in The Netherlands

37. 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

38. Safe Port Act Container Security Initiative Foreign port assessments
Customs Trade Partnership Against Terrorism

39. 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.

40. Containers - Concerns Cost to X-Ray containers Manpower Delays
Radiation

41. Transportation Worker Identification Credentials
Port Employees
Long Shoremen
Unescorted access personnel

42. C-TPAT Voluntary November 2001 9000 members
Canada has a program very similar to C-TPAT named FAST – Free and Secure Trade.

43. C-TPAT
According to US Customs and Border Protection Agency, the benefits of participating in C-TPAT could include:
Playing an active role in the war against terrorism
A reduced number of CBP inspections.
Priority processing for CBP inspections.

44. 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

45. Food Security

46. BioTerrorism? 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 >3921 separate items recalled

47. 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