More than 6,500 port and harbor facilities served by over 45,000 shipping companies in 225 trading nations worldwide creates an environment in which economies take varied approaches to security in the supply chain. To help overcome the complexities of this challenge, government officials and representatives from the private sector came together in Singapore last week at the APEC Symposium on Total Supply Chain Security. The ultimate aim of the symposium was to share best practices for protecting against threats in the supply chain in the Asia-Pacific region.
Ambassador Benjamin Defensor, the Chair of APEC's Counter-Terrorism Task Force, summoned participants to improve the odds against terrorism by addressing three challenges: leadership, public-private partnership and developing a counter-threat culture.
Said Ambassador Defensor, "Unless we develop a functional security culture that is embodied in philosophies, carried in policies, transmitted across communities, emphasized in public messages and symbols, and integrated in corporate and non-government objectives, there will be dissonance. There will be dilution of intent. There will be diminution of effort, and ultimately, convergence of our security efforts will remain challenged."
One of the questions at the core of the two day symposium was how to convince regional business that the costs of fighting terror also improve the bottom line. A recent study conducted by Massachusetts Institute of Technology in June quantified the collateral benefits companies could receive from investment in supply chain security. The study showed that those who invest enjoy a 48% reduction in inspections, 50% improvement in asset visibility, 31% shorter problem resolution time, and 38% reduction in theft, loss and pilferage. With results like these it is hard to argue against investing in supply chain security.
Both business and government agreed that collaboration is critical to identifying and implementing credible supply chain security solutions. Business representatives recommended that international standards be developed with input from the private sector. After all, it is the private sector that manages the many linkages in the global supply chain. Business representatives also argued that an integrated approach to communications protocols, standards and training should include the most important component of the supply chain - the people who run it.
"Ensuring the supply chain is not just about safety, but it's also about keeping trade flows moving," said New Zealand Customs Service Comptroller Martyn Dunne when he discussed the Secure Exports Scheme, a voluntary partnership with industry that targets low-risk, high volume exporters.
Examples of other voluntary programs include the United States' Customs-Trade Partnership Against Terrorism (C-TPAT), Canada's Partners in Protection and Singapore's national supply chain security program which was announced by Deputy Prime Minister Professor S. Jayakumar at the symposium.
Singapore's new program spells out a set of security guidelines and goals for the players in each of the different nodes of the supply chain, noted Professor Jayakumar. The Singapore government is in the process of consulting with industry and working to raise awareness of the importance and benefits of supply-chain security. Referring not just to ships and terminals but to each of the stakeholders involved in the process, Professor Jayakumar urged those to "seek to enhance the security of their operations."
In principal, business representatives agree that international guidelines would encourage cooperation in securing the supply chain. "Why invest in security," asks Ken Wheatley pondering the reasons that spur business into action. As Vice President for Corporate Security at Sony Corporation, Wheatley has worked with suppliers and couriers to minimize disruptions in the supply chain but it's still a work in progress. He explains, "motivations vary for investing in supply chain security."
The private sector is not united. While some advocate mandatory security standards which, they argue, would flatten the playing field, others prefer a voluntary approach. Multi-national companies can afford to invest in added security measures but small and medium-sized enterprises are more concerned with covering the costs of both slowdowns and risks to cargo loss. Other SMEs express concerns over adding an investment burden that could jeopardize their competitiveness. And there are still different concerns for companies who deliver air freight versus those who ship by sea.
While they concur that international standards and processes be set up, some question the benefits of voluntary measures. Former Vice Admiral Gordon Holder asserted that "voluntary involvement would be a good first step but mandating participation would ensure the mitigation of risks for those businesses that don't comply." Mr. Holder, who is now a principal with Booz Allen Hamilton, suggested that APEC members need to develop a focused strategy by working with manufacturers, carriers, port operators and labor organizations. "After all, the international economy is at stake," he concluded.
Representatives from the electronics industry at the symposium pressed their private sector colleagues to work with governments to meet their needs for ensuring the security of the supply chain. They encouraged the pursuit for common standards around the world.
Overall, participants at the symposium concurred that a holistic approach to supply chain security is required and that the responsibility for that security should be borne by each link in the chain. Discussions will continue within the rubric of the APEC Framework for Standards to Secure and Facilitate Global Trade and under the Secure Trade in the APEC Region (STAR) initiative. One of APEC's key counter-terrorism priorities, STAR aims to secure and enhance the flow of goods and people through measures that protect cargo, ships, international aviation and people in transit.
Summing up the broader sentiment of the symposium, the APEC Secretariat's Executive Director, Ambassador Tran Trong Toan concluded that for trade and investment flows to move smoothly and safely among economies and regions, it is vital to ensure the security of the supply chain in all of its nodes and modes of transportation. Ambassador Toan said to delegates, "APEC will continue to focus its own efforts and strengthen its collaboration with governments and the business sector as well as international organizations and all stakeholders for this purpose."