Since Sept. 11, U.S. leaders have consistently cited the thousands of imported shipping containers that arrive in this country daily as one of the highest areas of concern. Yet many companies have not initiated an assessment of their own supply-chain security. A sobering statement from one Fortune 100 importer was that the only reason it was even considering participation in the Customs-Trade Partnership Against Terrorism program was that it would help to minimize the economic and political fallout if one of their containers was compromised. Understandably, the worst-case scenario for any company would be for one of its containers to be responsible for delivering a major terrorist attack. But given the potential for that horror, one would think that companies would be scrambling to assess the risk within their respective trade and logistics operations. Apparently, that's not the case.
The reasons for inactivity vary from waiting to see what "everyone else is going to do," to waiting to see what an importer's legal obligation is. Other reasons include cost, lack of direction, lack of resources and insufficient import volumes. Others say they have conducted business with the same vendor for numerous years, and thus their risk is low. Ironically, having an established trading pattern was the very basis of one think-tank scenario in which al Qaeda operatives acquire a legitimate business ? one with a lengthy and compliant shipping history to the U.S. ? knowing that they will have a better chance of beating Customs' "high-risk" profile.
If you've been waiting for official guidance by Customs, you now have it in the form of C-TPAT. Drafted by representatives from trade, industry, government and others, it will require time to develop and mature. This will undoubtedly include growing pains associated with tackling some touchy operational and political issues. But if left unaddressed, they may render the program ineffective against the very objective it was designed for. For example:
-- The program is voluntary. Considering the seriousness of the issue, I find this self-defeating. I see no middle ground here ? either we're serious about security or we're not. In my opinion, not making security a mandatory requirement sends the wrong message to importers. I believe trade security should be another tenet of "reasonable care" ? a mandatory requirement for any U.S. importer that wishes to engage in international commerce. Customs says C-TPAT participants "will have a commitment to both trade security and trade compliance," yet only trade compliance is required and enforced.
-- The program lacks teeth. Importers already are hearing the rumblings from their offshore vendors about how C-TPAT represents "another bothersome requirement from the U.S." And without adequate enforcement coupled with real incentives, this program may indeed become just that. The reality is that a number of importers will be held ultimately responsible for ensuring the integrity of security questionnaire data collected from hundreds of vendors. But without sufficient incentives, what will compel an importer to impose sanctions on uncooperative or noncompliant vendors, particularly if the vendor is perhaps a sole source for a highly competitive article? Frustrated importers committed to C-TPAT may find themselves quickly shifting time and resources toward defining their minimal requirements under reasonable care, rather than toward executing a truly effective security program.
If your company is evaluating whether to participate in C-TPAT, or is proceeding with a supply-chain security assessment, here are some tips:
-- Find credible security expertise. Because the operative word here is "security," many importers are simply turning to their own corporate loss-prevention departments or cargo-security firms for assistance, yet these resources alone may not be enough. Companies should look outside for help with competitive and strategic intelligence; pre-employment screening and updated employee checks; offshore vendor history and relationships; banking trails; property and personnel security; technology and information systems; due diligence; and trade and customs considerations. Depending upon your company's needs, you may need to pull together a coalition of multiple firms.
-- Build a strong supply-chain security team. Identify representatives from internal operations and external service providers, for participation on a corporate supply-chain security committee. The committee should be spearheaded by your senior Customs officer as this is a Customs-driven, enforcement and trade initiative (Will someone please get the word to Rob Quartel, JoC Week, March 18-24, 2002, Page 13). Representation should include procurement, systems, traffic, legal, warehouse and distribution, real estate, loss prevention, as well as security companies, vendors, customs brokers, forwarders, carriers and others.
-- Don't secure a weak supply chain. Before you make plans to secure your existing supply chain, make sure it's the right one. Start with a trade process blueprint of your operations, procedures and logistics. You may be startled by what you find.
Jerry Peck is a trade and customs consultant and a licensed customs broker. He can be reached at (815) 462-1732, or via e-mail at firstname.lastname@example.org.