“The expansive nature of the global supply chain system renders it vulnerable to disruption. Given this, governments and businesses around the world have an interest in transforming the old model of [supply chain] efficiency and adopting a new one based also on ensuring the integrity and reliability of the system as well. In other words, we must move from a model principally focused on ‘just-in-time’ to one also predicated on ‘just-in-case’ on a global scale.” –from the joint testimony of David Heyman assistant secretary for policy the U.S. Department of Homeland Security, Rear Admiral Paul Zukunft, the U.S. Coast Guard’s assistant commandant for marine safety, security and stewardship, and Kevin McAleenan, acting assistant commissioner-office of field operations for U.S. Customs and Border Protection before Congress last week.
Supply chain security is one of those issues that must always be in the background when talk turns to the future of trade, freight flows, and all the transport modes that connect the world’s far-flung markets together.
In light of the many (and growing) number of challenges on the supply chain security front, the call is being made for the U.S. to “transform” the strategic underpinnings of how stuff gets moved both around the world and within our borders.
Rep. Candice Miller (R-MI), chairman of the subcommittee on border and maritime security, held a meeting on the need to “revise” supply chain security thinking in this country last week and elicited some interesting observations on the subject from some of our government’s top experts: David Heyman assistant secretary for policy the U.S. Department of Homeland Security (DHS), Rear Admiral Paul Zukunft, the U.S. Coast Guard’s assistant commandant for marine safety, security and stewardship, and Kevin McAleenan, acting assistant commissioner-office of field operations for U.S. Customs and Border Protection (CBP).
“International trade is the engine that powers economies all around the world,” they explained. “Billions of dollars worth of commodities and merchandise move between trading partners every month – by land, by sea, and by air. This global supply chain system provides food, medicine, energy, and myriad of other products that support and sustain our daily lives, and while it is a model of economic efficiency built to sustain ‘just-in-time’ delivery, but it also means that our economies are more and more interdependent, one upon each other. Thus the expansive nature of the global supply chain system renders it vulnerable to disruption.”
[Rep. Miller herself understood this issue very well, highlighting it in her opening statement at the hearing.]
Heyman, Zukunft, and McAleenan all stressed that it is this notion of a need for greater integrity and reliability that should re-shape the U.S.’s global supply chain strategy, to ensure security and resilience in the face of disaster, either natural or man-made.
“At its core, this strategy is about a layered, risk-based and balanced approach in which necessary security measures and resiliency planning are integrated into supply chains,” they said. “It is about protecting supply chains from being targeted or exploited by those seeking to cause harm [while] maximizing the flow of legitimate commerce."
Four critical principles buttress this new strategic approach to supply chains:
• Promote the timely and efficient flow of legitimate commerce, while protecting and securing the supply chain from exploitation and reducing its vulnerabilities to disruption; and
• Foster a global supply chain system that is prepared for and can withstand evolving threats and hazards and can recover rapidly from disruptions.
• Galvanize action through a “whole-of-government, all-of-nation” approach and by collaborating with state and local governments, the private sector and the international community.
• Manage risk by utilizing layered defenses, resolving threats as early in the process as possible, and adapting our security posture to changing environments and evolving threats.
“Disruptions to the global supply chain can be triggered by a range of causes—man made or naturally occurring—a number of which we have witnessed in recent years,” they noted in turn, pointing to the ripple effects caused by terrorist acts like the cargo bomb plot in October 2010, market-driven forces like the slowdown and lockout in 2002 of 29 ports on the West Coast, and – most recently – the volcanic ash clouds of the 2010 eruption of the volcano Eyjafjallajökull in Iceland along with the Tsunami that hit Tohoku, Japan, in 2011.
[Watch the horror of that Tsumani unfolding from inside a commuter’s car in the clip below.]
Given such issues, Heyman, Zukunft, and McAleenan explained that governments and businesses around the world have an interest in transforming the old model of supply chain efficiency and adopting a new one based also on ensuring the integrity and reliability of the system as well. In other words, we must move from a model principally focused on “just-in-time” to one also predicated on “just-in-case.”
To get there requires seven steps, they said:
• Refining our understanding of the threats and risks associated with the global supply chain through updated assessments;
• Advancing technology research, development, testing and evaluation efforts aimed at improving our ability to secure cargo in air, land, and sea environments;
• Identifying infrastructure projects to serve as models for developing critical infrastructure resiliency best practices;
• Seeking opportunities to incorporate global supply chain resiliency goals and objectives into Federal infrastructure investment programs and project assessment processes;
• Promoting necessary legislation to support Strategy implementation by Federal departments and agencies;
• Developing, in concert with industry and foreign governments, customized solutions to speed the flow of legitimate commerce in specific supply chains that meet designated criteria and can be considered low risk; and
• Aligning trusted trader program requirements across Federal agencies. We will consider the potential for standardized application procedures, enhanced information-sharing agreements, and security audits conducted by joint or cross-designated Federal government teams.
[Below is a snapshot of how CBP currently works to protect international trade.]
The trick in all of this is that the global supply chain system is not single, unified, centrally-organized operation – rather it’s a very decentralized interconnected multimodal system, encompassing foreign and domestic ports, transportation systems, conveyances and infrastructure.
“Enhancing its security, efficiency, and resilience requires a culture of mutual interest and shared responsibility among stakeholders throughout the world,” stressed Heyman, Zukunft, and McAleenan.
“It requires a balanced approach and the dedication of resources, collaboration – and where necessary, compliance verification and enforcement,” they added. “More importantly, the risk of natural disasters and other disruptions to the global supply chain presents a risk to our nation’s economic strength and vitality. That is why further diligence is required.”