The Hindu Business Line : Making safe the supply chain

Irrespective of the type of facility or mode of transport, they are all potential targets for criminals and terrorists, who look at the supply chain either as the means to move illicit material around the world or as a way of achieving publicity. Some even view supply chain vehicles as weapons, says the Lloyd's Register Group, in its latest report. More companies are expected to implement supply chain security schemes, and many are now seeking independent verification of compliance with the required standards.

Despite the success of the International Ship and Port Facility Security (ISPS) Code, the international supply chain remains complex and vulnerable. Other links in the chain are just as exposed as ships and ports — some even more so — and are now receiving similar attention.

The ISPS Code is a comprehensive set of measures to enhance the security of ships and port facilities developed in response to the perceived threats to them in the wake of the 9/11 attacks.

Irrespective of the type of facility or mode of transport operated by supply chain service providers, they are all potential targets for criminals and terrorists, who look at the supply chain either as the means to move illicit material around the world or as a way of achieving publicity.

Some even view supply chain vehicles as weapons to be used for the perpetration of atrocities, says the Lloyd's Register Group, a UK-based independent risk management organisation, in its latest report.

Development of standards

Since it became apparent that the supply chain was a potential means for terrorists to infiltrate and threaten society, governmental and intergovernmental organisations have been developing schemes and initiatives that will help reduce risks.

However, when numerous committee-based organisations and governmental departments are involved, reaching a consensus is a challenge.

At present, the US government has a well-established scheme — the Customs-Trade Partnership Against Terrorism, which has over 6,000 members.

A number of others are still under development, including the European Commission's Regulation for Enhancing Supply Chain Security. During the development of this scheme, research identified over a million potential logistics operating companies in Europe that could benefit from a scheme which designated compliant companies as `authorised economic operators'.

Customs organisation

There is also the World Customs Organisation's (WCO) SAFE Framework of Standards, which is in the process of being implemented through the national customs organisations of the 160 WCO member-states.

A lot of work has been done to compare the relative merits of each of these schemes with a view to establishing a global fast-track network of authorised operators.

To support this, the International Organisation for Standardisation (ISO) has developed a family of voluntary specifications to help organisations adopt management services, or that rely on the chain for business, can benefit from ISO/PAS 28000 or a similar scheme, the report said.

The first step for any operator is commitment to a clear policy and security strategy from the highest levels of management down. It is then necessary to identify any threats and assess the potential risks so that the follow-up actions required to implement the strategy can be prioritised.

"Security threats are perpetrated by people," Mr Paul Lightburn, Intermodal Product Manager, Lloyd's Register, said in the report.

"Therefore, it is the people in organisations that are essential when it comes to evaluating risks and implementing management control mechanisms to reduce the likelihood of threats becoming real. Because people are critical, so is their training, and effective communication within the company, at and between all levels of management, is crucial — from the bottom up, as well as the top down," he said in the report.

Assessing the arrangements

Having put in place the required operational controls, organisations must check the effectiveness of the arrangements. But, unlike a manufacturing process where effectiveness can be measured by checking physical features, assessing security can be difficult.

Drills and exercises can be useful for testing resilience and countermeasures, but these will only be as good as the people and the knowledge and skills they bring. Often, the effectiveness of planned security measures can only be fully tested when a criminal act actually occurs. A feature key to the support of any operational scheme is the management arrangement that underpins it.

If `plan-do-check-act' principles are to be properly followed, it is essential to determine how any policy will be implemented and by whom.

All elements of the management system must be designed with a security risk management approach in mind. Most organisations already have a management system in place as part of their business management process.

This might be driven by quality, environmental protection or by safety management policies, but many organisations still do not have a security policy that takes into account the risks to their security and that of their supply chain partners and stakeholders.

Using management systems to manage all aspects of business — including security — should be customary, not just for ship operators using the ISPS Code as the verifiable model, but for all organisations where threats upstream or downstream could result in harm to some aspect of the supply chain.

An organisation that takes this approach will be several steps closer to compliance with ISO/PAS 28000 and the other schemes aimed at delivering fast-track movement along the international supply chain.

Demonstrating a commitment

More and more companies are expected to implement supply chain security schemes, and many are now seeking independent verification of compliance with the required standards.

As a result, Lloyd's Register Quality Assurance (LRQA) recently issued its first ISO/PAS 28000 certificate of approval to one of the world's major global container port terminal operators — DP World, which also runs the Chennai Container Terminal.

Indian scenario

Indian ports have taken seriously the ISPS Code. However, port users — especially in places where containers are handled — are yet to fully understand its necessity.

For instance, ports frequently undertake mock drills of a possible terrorist attack and how to counter it. However, there is no such concept among users, according to sources.

More Stories on : Shipping | Security | Supply Chain Management

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