2. Agenda
Security Threats and Risks
Supply Chain Security Guidelines
Major Security Challenges
Loss Prevention Maturity Model
3. Supply Chain Security
Supply chain security management is the application
of policies, procedures, and technology to protect
supply chain assets (product, facilities, equipment,
information and personnel) from theft, damage, or
terrorism, and to prevent the introduction of
unauthorised contraband, people or weapons of mass
destruction into the supply chain.
4. International Trade
International trade is a key driver of global economic
growth
80% of general cargo is transported in containers
18 million containers daily across 7 oceans
Global cargo supply chains are complex and involve
many parties
Global trading system cannot afford the
consequences of a catastrophic attack
5. Security Threats
Terrorism
Organised Crime and Cargo Theft
Hijacking and Piracy
Drug/human smuggling
Illegal weapons
Counterfeit goods
Illegal exports of licensed materials/technology
6. Cargo Theft
US$40 Billion stolen worldwide annually (2000
report)
CIA reported as much as 50% due to organised
crime
Majority of thefts (80% +) due to collusion with
employees
High value items that are easily disposed are main
targets
7. Cargo Theft
Internal thefts of high value items within warehouse
Thefts in cargo warehouses along supply chain
Exit facility in loaded vehicle using fraudulent
paperwork
Hijack of cargo trucks
Piracy of sea shipments
Armed robbery at warehouses
People are the weakest link
8. Supply Chain Security Programs
WCO Framework of Standards
ISO/PAS 28000 Outlines Security Mgmt. for Supply
Chain
ICAO Annex 17 for Regulated Agents Regime
TAPA Freight Security Requirements
Customs-Trade Partnership against Terrorism
(CTPAT)
9. Supply Chain Security Guidelines
Singapore will launch Secure Trade Partnership in
mid 2007
Consistent with other key international supply chain
security guidelines
Holistic stance bolsters entire network
Goals… not prescriptive specific measures
Voluntary national program
10. Key Objectives of Supply Chain
Security Guidelines
To make it difficult for terrorists to make use of the
supply chain
To emphasise the importance of a total supply chain
security approach to cargo security
To help local companies gain a source of
competitive advantage
To profile SGP as a secure transport and trading hub
To encourage companies to secure their own
processes within supply chains
11. Players in the Supply Chain
Suppliers
Manufacturers
Warehouse Operators and Owners
Transporters
Terminal Operators
Sea and Air Freight Operators
12. Players in the Supply Chain
1. Suppliers
Includes parties engaged in import, export,
trading, wholesale activity and retail
2. Manufacturers
Includes parties engaged in processing,
assembly, manufacturing and provision of
other value-added activities to manufactured
goods
13. Players in the Supply Chain
3. Warehouse Operators and Owners
Includes users of warehouse space, distribution
centres, freight forwarders who own or operate
warehouse facilities, and cargo consolidators
4. Transporters
Includes road and rail hauliers, parties who own
or operate vehicles involved in road or rail
haulage and freight forwarders providing land
transport services
14. Players in the Supply Chain
5. Terminal Operators
Includes airport operators, ground handlers,
marine terminal operators, stevedores, and
operators of cargo consolidation points
6. Sea and Air Freight Operators
Includes shipping lines, air cargo carriers, non-
vessel-operating common carriers (NVOCC)
and agents for such entities
15. Supply Chain Security
ALL players have to be involved
It involves securing every node and link along the
chain
A chain is only as strong as its weakest link
Start with safe/secure packing of a shipment from
point of origin to final point of deconsolidation
It is about secure custodian of cargo at every point
along the supply chain
16. 12 Elements of Supply Chain
Security Guidelines
Physical Security
Risk Analysis
Access Control
Conveyance Security
Business Partner Security
Incident Management/Investigations
Crisis Management and Disaster Recovery
Education and Training Awareness
Documentation Processing Security
Information Security
Personnel Security
Procedural Security
17. Implementation of Guidelines
Inline with requirement of WCO certification of
“Authorised Economic Operator” status
Phased approach – Start as voluntary program
Companies to engage in self-assessment process
against the security guidelines
Customs will administer a validation and
certification process
Does not exempt companies from complying with
existing regulations and legislation
18. Major Security Challenges
Supply Chain involves many players
Multiple modes of transport
Various types of intermediaries
Several government agencies globally
Complexity of the system leads to challenges
Security Directors need C-suite support…
The Human element…
19. Typical Business Priorities
Achieve profitable growth
Increase gross margin
Reduce operating cost and improve balance
sheet metrics
Justify Capex by ROI
Create a high performance culture
20. Supply Chain Performance
Efficiency
The system’s core capability measured in terms of speed, cost and volume of
shipments
Shipment Reliability
Ensures that goods arrive within a specified timeframe with a minimum of loss
from theft and accident
Shipment Transparency
Ensure that cargo is legitimately represented to authorities and legal for transport
Fault Tolerance
The system’s ability to respond to disruptions and failures of isolated components
to ensure business continuity
Resilience
Ability to return to normal operating conditions quickly after disruption of service
21. Supply Chain Security –
Collateral Benefits
Efficiency Visibility
Reduced inspections Improved asset visibility
Increased automated handling More timely shipping information
Less process deviation Reduced inaccurate shipping data
Shorter transit time
Resiliency Inventory Management & Customer
Shorter problem resolution time Relations
Quicker response to a problem Reduced theft/loss/pilferage
Reduced time to identify a problem Decreased tampering
Less Customer attrition
Source: Masssachusetts Institute of Technology, White Paper, May 2005
22. Benefit of Supply Chain Security
Study by Stanford University’s Manufacturing Institute
11 manufacturers and 3 third-party logistics providers
14 companies got more than a return on their security
investments in supply chain security
Reduce cargo inspections by 48% average
Reduce transit times by 29% average
Delivery times fell by 28%
Theft, loss of freight and tampering fall by 90%
Damages reduced by 50%
Source: Traffic World, 7 Aug 2006
23. The Human Element
Security relies on people
People perpetrate criminal and terrorist acts
People are key to preventive measures
But to make Security work, people have to be
engaged, be supportive and willing, and see
and feel the benefits
24. Management of Cargo Area
Poor physical working environment
People who write Procedures and Processes
rarely do the job
Staff have little knowledge of:
Airport and Freight Company requirements
Company policies
Procedures and Processes
Emergency Procedures
25. Why Staff Violate Procedures
If followed to the letter, job wouldn’t get done
Staff are not aware that procedure exists
Staff prefer to rely on own skills and experience
Use of informal procedures (black books)
In recent studies, 67% of all human performance
problems have been traced to bad procedures
(incorrect, absent or unworkable)
27. What are the solutions?
Risk management… to add value in long term
Safety and Security Culture
Proper management control of operations
Staff have to see benefits – ‘feel safer’
Monitoring mustn’t seem like punishment
Focus groups – staff are key; they know the weak
links in the processes
Top management has to set examples
29. Level 1: Basic Security
Measures Maturity Indicators at Level 1 - Adhoc
Security Leader Lack of standards or measurements
CCTV Lack best practice or industry models
Access Control Inconsistent/spotty controls
Alarm System Loose accountability
Security Screening Undetectable and unmeasured losses
Guarding
Physical Barriers
30. Level 1: Basic Security
Major emphasis in preventing external thefts
Deterrence against internal thefts
Local Security Champion to drive initiatives
Basic physical security infrastructure
Access control and CCTV surveillance
Security guarding and response
Metal detector screening
Depth in depth
31. Level 2: Security Behaviour
Measures Maturity Indicators at Level 2 – Repeatable
Losses Metrics Standards applied with consistency but
Education & Awareness lack best practice or industry models
Photo ID Badges Poor organizational accountability
Security Committee Poor efficiencies/limited metrics
Audits and Self Checks Tactical remediations
Security Procedures Vertical organizational communication/
Background Checks little sharing
32. Level 2: Security Behaviour
Major focus in preventing external/internal thefts
Deterrence against inventory damages and
shipment losses
Improved documentation of security procedures
Security training and awareness program
Develop a loss prevention mindset
Self-driven security program
Security metrics and measurement
33. Level 3: Process Compliance
Measures Maturity Indicators at Level 3 - Managed
Security Controls Organizational accountability
Check and Balances Broad organizational communication
Segregation of Duties and sharing
Transport security language Use of best practice standards
Contract Review Strategic remediations
Investigations Controlled/forecasted lossses
IT Security Best Practices Formal metrics/cost efficiencies
34. Level 3: Process Compliance
Major emphasis in thefts, shipment losses and
inventory damages
Deterrence against fraud and conspiracy
Optimise loss compensation
Enforcement of security and inventory controls
Quality control of operational processes
Segregation of duties for accountability
Security language in transport contracts
35. Level 4: Synergy
Measures Maturity Indicators at Level 4 - Optimised
Trend Analysis Balanced protection with business needs
Fraud Prevention Continuous improvement program
Source Development Horizontal and vertical communication
Reward Program Best practice modelling
Benchmarking Cost optimization based on metrics
Security Standards Executive sponsorship
Integrated Security
36. Level 4: Synergy
Loss prevention is part of normal business
Detailed security metrics and measurement
Prevention and detection of losses and fraud
Security focus to meet customer expectations and
to maximise profits
“3S” culture – Service, Safety and Security
Security involvement at all levels
37. Summary of Maturity Model
Risk management approach…add value
Business solutions for business issues
Progressive security portfolio
Flexibility in budget planning
Grow a self-directed security environment
Maturity indicators of progress
38. Thank You
Supply Chain Security:
A Maturity Model for Loss Prevention
