Supply Chain Security Study Guide

Unlike Customs administrations, who view their increased role in securing international trade as an extension of their historical responsibilities, the role business is expected to play is new and far more challenging. Business has been asked to support the fight against terrorism through tougher controls. Restrictions imposed in the name of security have made the movement of goods more complex.

CTPAT and other international forms of Customs-private sector partnership (such as AEO and Regulated Agent) have placed considerable additional responsibilities on companies in the supply chain. Although these programs are voluntary, companies that do not participate are at a disadvantage.

Governments have developed extensive guidelines on the security requirements expected of supply chain businesses. Individual businesses must look after their own security and must also be aware of the security standing of others in their supply chain. CTPAT publishes minimum security criteria for nine different sectors of the supply chain, including importers, carriers across all modes, brokers, manufacturers, freight consolidators, and port and terminal operators (CBP 2006b). The breadth of the list reflects the reality that supply chain security depends on every link, not just the importer.

Carriers, freight forwarders, port authorities and terminal operators are each responsible for different stages in the supply chain process. The best procedures of one trusted trading partner are meaningless if other parties in the supply chain do not have effective security procedures of their own. This is the notion of an integrated supply chain. An integrated supply chain also requires close collaboration between industry and government.

There are strong incentives for the private sector to work with regulatory agencies. Logistics managers need to reduce the risk of delay, and Customs clearance is the greatest and most unpredictable source of disruption in the supply chain. Regulatory agencies, in turn, can use this incentive to draw private sector contributions into border security. Manufacturers, freight forwarders, carriers, importers and exporters that adopt approved security practices, maintain tight control over logistics flows, and provide detailed and timely information to regulatory agencies, can have their cargo processed quickly. The benefit is lower transportation costs and faster movement, with reduced risk of delay or spoilage.

Businesses in a particular supply chain now have to work together in a different way. Importers will need to develop deeper relationships with their suppliers and transport partners.

In addition, business has been challenged to self-assess its security practices. This extends to both physical security and personnel security. The impact will vary by country, depending on how prescriptively the guidelines are interpreted. The level of prescription in the international and national guidelines and minimum standard criteria will challenge many companies to become compliant. Companies must embrace their role in supply chain security if they are to continue to do business. The benefit of compliance is the ability to remain an active participant in international trade and, in many countries, to receive expedited processing of their goods.