Supply Chain Security

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world class contracting. For example, my Masters program had several courses involving contracting and the Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore supply chain security adding some additional support as well.

Supply Chain Security

Proper supply chain management involves a wide array of security and compliance issues having implications for timing, cost, and information systems. Failures to comply with security and compliance issues impact customers, costs, and legal outcomes such as civil and criminal penalties.

Security Design and Concerns

Keeping the supply chain secure is a challenge most often. Not only does the chain need to protect against loss due to flooding, fire, theft, damage, and vandalism but the growing threat of terrorism has increased awareness as well as urgency of the security concerns. Of course, direct terrorists acts are at the forefront of people’s minds but there are collateral issues such a trafficking of weapons, goods, money, and humans in which terrorists may attempt to co-opt or leverage elements of the supply chain as part of the logistics of terrorism. State actors may engage those elements of the supply chain disrupting operations for a time. Therefore, it is to the benefit of the supply chain managers to seek methods and means of reducing this risk.

Key security efforts involve:

• Ensuring the physical security of modes of shipment and storage
• Meeting increased identification requirements
• Establishing systems to limit or deny access to the supply chain Comply with global anti-terrorism initiatives such as Customs Trade Partnership Against Terrorism (C-TPAT)
• Securing the supply chain information systems from malevolent and malicious attacks

Customs Trade Partnership Against Terrorism (C-TPAT)

C-TPAT is a combined state-business effort purposed to increase security of supply chains and the US borders. The idea is to achieve the highest level of security in the supply chain. This requires the voluntary cooperation of supply chain participants such as importers, carriers, brokers, warehouse operators, and manufacturers. Acceptance requires a online application and a signed agreement to take the following actions:

• Assess the firm’s own supply chain security in relation to C-TPAT guidelines.
• Submit a supply chain security profile to the US Customs
• Develop and implement a program to enhance supply chain security to meet C-TPAT guidelines
• Communicate the C-PTAT guidelines to partners in the supply chain and work towards including the guidelines in supply chain relationships

The benefits for participating in C-TPAT include:

Fewer inspections and reduced time at the border Access to participating C-TPAT partners Eligibility for account based processes such as bimonthly or monthly payments Emphasis on self-policing rather than customs verification.

Comment: I served in the Operations Net Assessment Group on a project called African Partnership Station which was a variation of Global Fleet Station. The objective was to build international and regional cooperation among participating nations to police their littorals, ports, harbors, and international commerce in order to diminish war and deter terrorism. The key element here is that the United States increased the capacity and capabilities of host nations to perform the necessary tasking to deter terrorism.  As part of the effort the US trained port supervisors and staff on how to secure the ports, perform inspections, and maintain security postures. Then the US coalition force performed exercises with host nations to assess effectiveness and skill levels. As a collateral effort to this project, we also conducted an Energy Security Conference in which European and African principles discussed the need for secure energy to drive their economies. The primary underpinning of Democracy is a capital economy. The principle underpinning of a capital economy is energy which punts the economy into motion. Terrorist and radicals who despise democracy, capitalist, and capitalism target energy. Due to this coalition effort, industry can take advantage of safer ports and shipping lanes reducing risk as opposed to regions where piracy and terrorism are a high risk.

GreenPeace Trespassing on an Oil Drilling Rig
Source: GreenPeace New Zealand

I want to take a brief moment to address the depth of security issues and how they mask themselves often as something innocent or seemingly important. Modern day Global Warming can be traced to European Pantheism which is a belief that creation and a supreme deity are one and the same. Thus, the need to worship the mother Earth and deify nature. The Progressive Political party latched onto environmental movements such as global warming and biodiversity following a series of environmental conferences during the formative years of their strategy during the late 1980’s. A constituency of environmentally sympathetic nations was built and  then this constituency targeted US energy demands. Thus, Global Warming was co-opted as a means to undermine US Democracy and the capital economy. Energy companies operating supply chains accessing, refining, and transporting energy resources to the US were then confronted with environmentalist action groups who were leveraged to increase stressors on the system. Hence, the increased need for security of the ships and off shore facilities but many nation-states who control security forces were constituencies of the global warming movement. In this case, industry became subjected to political whims and follies of clashing world views. The energy companies responded by disassociating with nation-states and formed their own terrestrial and maritime security forces to defend their interests and supply chain pipelines. "Whether or not security is the government’s responsibility, oil companies are coming to the realization that they must provide their own solutions (Elliot, 2013)."

Iraqi Northern Oil Field Security Force
Source: DVIDS Taken 08Feb09

The take away from this is that security ultimately rests in the hands of the supply chain operator. Many companies begrudgingly relent to enhanced security which becomes an overhead cost to operating the chain. The first line of defense is to build relationships with the communities affected by the presence of energy producing organizations.  In the case of the oil industry and piracy or terrorism, a security consortium was formed that provides security across the industry for sensitive operations. Each member contributes funding. 

Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.

Elliot, R. (2013) Security management: crude oil and corruption. Resourced on 26 Oct 2013 at http://www.securitymanagement.com/print/43?page=0%2C0

Young, N. (2011). Warships, polar bears, ice and oil do not mix well. Green Peace New Zealand. Resourced on 26 Oct 2013 at
http://www.greenpeace.org/new-zealand/en/blog/warships-polar-bears-ice-and-oil-do-not-mix-w/blog/35218/