A PLAN OF ACTION

A PLAN OF ACTION

What I'm going to try to do today is offer you a few ideas about supply-chain security. In the past, when I've described various programs employed at Target Corp., a number of people have said, 'Oh sure, you're a multibillion-dollar company. You can afford the significant expenditures for the necessary resources.' Well, let me tell you a little bit about discount retailing . . . we're actually pretty darn frugal. We have a number of resources we can bring to bear on process improvement, but many of the things we do can be implemented with little or no added cost. Target's bottom line: We want no more . . . nor any less than what we've ordered when it comes to an international consignment. We want no contraband of any kind, no drugs, laundered money, weapons of mass destruction, bio or chemical hazards, contaminating our shipments.

But you know what? It's already happening today at many companies. In fact, it's been happening for quite some time. That's right; otherwise legitimate commercial shipments have been and are being, tampered with by the drug cartels. Until now, those incidents have generally been confined to a certain geographic region of our world. Now with the menace of terrorism, the challenge of preventing tampering is global in scope.Several years ago, when the narcotics smugglers began infiltrating ordinary commercial cargo, the trade and Customs Commissioner George Weise came together to form a coalition known as BASC, the Business Anti-Smuggling Coalition. It was the corporate equivalent of 'Say no to drugs,' and has a single objective -- tightening supply-chain security. By borrowing lessons from BASC, there are some things you can do tomorrow morning to begin the process of reviewing your company's supply-chain security.

First, determine if anyone in your firm has undertaken a security review. If no one has, launch one. You might just get a few bonus points on your annual review.

Flow out your process on paper and identify all the different entities that handle or interact with your imports. In addition to identifying the physical movement and chain of custody for your consignments, it's vital that you also identify all links in the paper trail. Then you need to identify specific contacts at each external source and match them up with the individual or individuals within your own organization who routinely communicate with or manage them.

Once they're identified, pull the various process owners within your company together. Pinpoint what you believe to be the vulnerable areas in your supply chain, and then ask the stakeholders managing those areas to help you close those loopholes. It's possible that any number of Target representatives will come into contact with a foreign factory. They could come from the sourcing group, marketing, quality assurance, the import group, the compliance team, logistics, assets protection, and/or vendor relations.

The next key issue is to deliver a consistent message. Superb communication will greatly increase your odds of success. Ideally, every time a representative from Target, no matter what area they're from, comes into contact with a vendor or service provider involved in our supply chain, they'll take a few minutes to discuss security concerns. It sends a clear message that security is something we feel very strongly about.

Perhaps the single most-important thing is having knowledge of who you are dealing with. To that end, a few years ago, through a process at Target known as 'Approved for Purchase' we began collecting information from potential suppliers. The AFP process is similar to making application to become a Target vendor. All the work is done upfront, when the relationship first begins, and it's periodically updated as required. A significant amount of data is gathered at the outset, such as the factory size, capacities, number of employees, and the names and addresses of all facilities they might subcontract with. We look at the loading areas, perimeter fencing, security lighting, cameras and other technology, and we look at how the factory controls access to their dock area.

To complement our textile anti-transshipment strategy, we realized that tracking a vendor by company name isn't enough. So we're requiring the individual name of the principals or owners of each factory. The information is validated during the facilities' first compliance inspection.

Because our terms of purchase are generally FOB foreign port, we feel most susceptible when the merchandise is being moved from the factory to the foreign terminal. In most cases, it's the local factory or forwarder that selects the cartmen to transport the product. Right now, we're working closely with our vendors and foreign forwarders to intensify security in this realm.

I guess you could say that this is a call for action, and to be ever vigilant because, if I may borrow the phrase, the life you save just might be your own.

Michael D. Laden is president of Target Customs Brokers Inc. and chairman of the American Association of Exporters and Importers. This article was adapted from his comments at the Customs Trade Symposium in Washington, D.C., on Nov. 27. He can be reached at Mike.Laden@target.com.