Collaboration + Supply Chain = Security

Retailers Battling Cargo Theft Consumers think little of the security and technology needed to bring goods to market. Almost daily, cargo thieves are aiming at freight which is worth upwards to millions of dollars. The targets run the full gamut from food, drinks, electronics, home products, building materials, clothing, auto parts, and pharmaceuticals. As cargo theft gangs (think of the movie “Captain Phillips) become ever more organized, many logistics firms are signing on with loss prevention and risk professionals in order to keep the supply chain safe. Add to the mix that traditional means of securing property may not meet the regulations of the U.S. Customs and Border Protection or World Customs Organization; this compounds the problem of these external risks. There are several joint business ventures – Customs-Trade Partnership Against Terrorism (C-TPAT), Partners-in-Protection (PIP) and EU Authorized Economic Operator (AEO) – organized to strengthen the impact of supply chain and border security efforts. For example, with C-TPAT, companies can speed up the business process and capitalize on the efficiencies of the supply chain process. Price point is another factor influencing the logistics market. The choice of vendor may be a strictly price-driven idea but development teams are creating non-price point factors to acquire new business. We are beginning to see this with blanket insurance policies at no additional cost. With such policies in place this translates to the customer: if there is any loss during the supply chain process, the vendor takes on 100% of the liability and replacement costs. As well, with these policies, risk professionals are re-assessing risk models and employing new security measures. In the past, the greatest concern for many supply chain managers was ensuring security in their warehouses against deceptive pickups, driver theft, facility theft, etc,. Today, these concerns are the simplest and most easily ‘cured’ challenges the supply chain is facing. Today, the biggest challenge is when the product leaves the property. Product is most vulnerable when it is in transit. Even in the past when a large percentage of theft was internal, that percentage is falling due to more sophisticated and prevalent external cargo theft gangs. As a result of this increased risk to cargo, loss prevention professionals are instigating solutions to keep a step ahead of criminals and securing the assets after they leave the premises. One of the solutions is covert tracking of high dollar shipments, accomplished by inserting a GPS device in the shipment. If the shipment steers off course or the driver stops for a long time, an alert is immediately fed to the monitoring system for action. The screening of covert tracking can be active or passive. If active, security can visually track the movements of the shipment along the designated route. If it is passive screening, there are check points that the shipment must reach at allotted times. However, there is a downfall with both of these. The window of opportunity to steal a shipment is very small and by the time loss prevention personnel become wise to the problem, the shipment may very well be lost. Overt scrutiny is just that – obvious and out in the open. Usual method is to install a GPS and inform the drivers of such a device. This tells them the shipment and they are being tracked. Another overt method is to hire a third party escort. Vehicle escorts can lead or follow shipments from start of trip to the final destination. This process is labor-intensive and expensive, but it has proven to be most successful in ensuring product reaches its destination. The use of overt tracking is becoming increasingly prevalent, especially in the electronics and high dollar freight. Loss professionals by administrating a risk assessment and a cost analysis are capable of determining which method of tracking will bring best results – risk management and return on investment. Law enforcement and private security are concentrating their efforts on cargo theft in order to reduce the outside influences of crime in the supply chain process. The National Cargo Theft Task Force is taking the forefront on this attack. This group and others are working hand-in-hand with other law enforcement agencies; sharing information, technology and best practices. The challenges linked to securing the supply chain and its processes cannot be answered by one group. Solutions are only possible with collaboration between local, state, federal law enforcement agencies and supply chain management teams of all companies cooperating with each other.

U.S Manufacturing Competitiveness at a Critical Crossroads

In the past I have written about LEAN Manufacturing and its primary goals of streamlining and control various types of wastes.  I thought I would take a breather from that format and write about something else which has been on my mind for a long time.  Can and or will United States manufacturing recover and bring along with it the US economy?

I believe we are at a critical juncture where either the US manufacturing sector could either prosper or help the economy regain its’ health or continue to decline to the point where the US may never fully recover its former manufacturing prowess.

At present, the U.S. manufacturers provide about 75% of the products Americans consume (never mind for now where these products are made).  The percentage could rise to 90% if the private sector and government leaders make the right decisions.  Conversely, the percentages could fall if the wrong decisions are made. (The percentages are from study conducted by The University of Michigan’s Tauber Institute for Global Operations).  As labor costs continually play a smaller role in manufacturing processes, this is where the possibilities for opportunities to create new conditions that support manufacturing will arise.

If these conditions surface the most likely winners in each manufacturing segment will be the following:

1.      Global leaders: Aerospace, chemicals, machinery, medical equipment and semiconductors. These industries have a worldwide advantage that stems from their high investment scales, intellectual property, skilled workforce and ties to customers.

2.      Regional powers: Food, beverages, tobacco, mineral products, wood products and petroleum coating segments. These markets will benefit from the fact that the U.S. is their largest and primary markets.

3.      On The edge: Paper, plastics, electrical components and computer equipment: These industries are being attacked by low cost overseas competitors.  The idea is that they may be forced to globalize or see their operations displaced to other countries.

4.      Niche players:  Textiles, apparel, furniture and appliances: Service domestic operations though most production is outside of the U.S.

Regardless of which sector or sectors win out the access to talented workers capable of supporting innovation is the critical factor driving global competition in the manufacturing field.  This has become even more critical than the “classic” factors such as material and labor costs, energy policies and government investments.  If the U.S cannot access the right kind of talent, this will contribute to becoming less globally competitive in the near future.  A strong manufacturing sector is a crucial component of a country’s intellectual capital, innovation capacity and ability and economic prosperity. Manufacturing competiveness is driven by an empowered talent base, especially as manufacturers integrate technology and products into new platforms.

This comes down to this mantra: WE NEED TO NURTURE THE INDUSTRIES OF THE FUTURE.  Yes, this statement begs for an answer to two questions:

1.      What do competitive industries look like?

2.      What specifically do we need to nurture?

The answers should cause all of us to pause, take stock and formulate a new path.  While the U.S. is still the world leader in ‘share-of-manufacturing-value added’ we are no longer the most competitive location for manufacturing.  It won’t be a surprise to most of us that China is at the top of the most competitive list but it should concern us that the U.S. is losing ground and becoming increasingly less competitive. 

Though, Americans believe a strong manufacturing industry is critical to our economy and recovery, as this sector of the economy increasingly goes abroad the growth or creation of jobs will prove ever more difficult.   There are many characteristics that will be inherent to the leading manufacturers of the future and chief among them are the following:

1.      Global Orientation: Sustainable manufacturers will be global, even if they never produce products outside their nation.  They will need to open their business processes to from collaboration with partners around the world.

2.      Innovators: Innovation of products, processes, services and sales will be the most important competitive differentiators of the leading manufacturers around the world.

3.      Intersection Conductors: Innovation will occur at the intersection of intellectual capital, financial capital, human capital and physical capital.  Leaders will outpace competition by developing and deploying capital through superior leadership, collaboration and technology.

4.      Customer & Supplier Assets: Manufacturers will derive competitive advantage from the creation of assets in the form of networks of suppliers and customers.  These new suppliers and customers will play a huge role in creating new products, services and commercializing them.

5.      Supply Chain effectiveness: Effective global supply chains will become increasingly important. The definition of productivity will be inclusive of all facets of manufacturing and the business environment.

What we are seeing is the shared factors of leading manufacturers – especially given the increased competitiveness due to the Great Recession.  Are we looking at the formation of nation-states?

All of this brings us back to the original questions: How will we know what industries to nurture? How can the U.S. remain among the most competitive locations for manufacturing and the prosperity that arises from a strong industrial base?