>>> www.cotecna.com 1November 22, 2004 Copyright © 2004 COTECNA S.A. All rights reserved.
THE IMPACT OF SUPPLY CHAIN SECURITY ON THE IMPACT OF SUPPLY CHAIN SECURITY ON TRADE FACILITATION AND SUPPLY CHAIN TRADE FACILITATION AND SUPPLY CHAIN
MANAGEMENTMANAGEMENT
Workshop on Trade Facilitation Moscow, The Russian Federation
22-23 November 2004
Mark R. Miller
>>> www.cotecna.com 2November 22, 2004 Copyright © 2004 COTECNA S.A. All rights reserved.
• Founded in 1974• A leading Inspection Company with over 30 years experience • Privately owned and managed; parent company based in Geneva, Switzerland;
offices in 120 countries• Core Business - Inspection of Cargo• Member of the International Federation of Inspection Agencies (IFIA) • Operates under multiple Government and private sector contracts throughout the
world• A leading innovator in the use of advanced technology in the inspection process,
including: X-ray scanning, Risk Management, Valuation systems, and Container Tracking
• Cotecna (as a member of the Innovative Trade Network) is a Category A Liaison to Technical Committee No. 8 (TC8) of the International Standards Organization (ISO)
• ISO Certified
Certificate N° 200202361
COTECNA INSPECTIONCOTECNA INSPECTION
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EVOLUTION OF EVOLUTION OF SECURITY vs. FACILITATIONSECURITY vs. FACILITATION
Trade Facilitation
Cont
aine
r Sec
urity
HIGH
LOW
LOW HIGH
!
GOSLOW
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THE « SECURITY » REACTION:THE « SECURITY » REACTION:
Container Security Initiative (CSI)
US 24-Hour Rule
EU « known shipper »
EU « approved economic operator »
Operation Safe Commerce (OSC)
Smart and Secure Tradelanes (SST) Customs-Trade
Partnership AgainstTerrorism (C-TPAT)
EU « 24-Hour » Rule (coming soon)
« If you are not with me, then… »>Constraints
>Delays>Costs>Economic penalites>Substitute products
Secure Trade in the APEC Region (STAR)
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GOVERNMENTS: Balancing GOVERNMENTS: Balancing Compliance & Security Cost for BusinessCompliance & Security Cost for Business
Security compliance level
Cost for implementing & operating the security measures
Security cost for trade & logistics
Low High
Cost for being non-compliant: penalties and lost incentives
Total cost of security compliance
Optimum ComplianceHigh
Governments aim to shift the
optimum compliance
point toward full compliance!
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THERE IS A « PRICE » FOR SECURITY …THERE IS A « PRICE » FOR SECURITY …• € 1 billion Euros in up-front
costs and € 560 million Euros in annual costs will be required to meet International Ship and Port Facility Security (ISPS) Code requirements
• In addition to this, US maritime security requirements are expected to push shipping costs up by approximately € 6.2 billion Euros over the next 10 years
• Trucking companies in the US have to send complete cargo information to Customs Border Protection (CBP) at an annual cost of $91 million USD
SOURCE: Deloitte Research
Cost ofsecuritydeliveryfor trade &governments
Security efficiency level“0%” “100%”
“Infinite”
“0 euro”
Cost ofsecuritydeliveryfor trade &governments
Security efficiency level“0%” “100%”
“Infinite”
“0 euro”
Cost ofsecuritydeliveryfor trade &governments
Security efficiency level“0%” “100%”
“Infinite”
“0 euro”
But there are significant benefits to business as well !!
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THE SUPPLY CHAIN SECURITY BENEFITS FOR THE SUPPLY CHAIN SECURITY BENEFITS FOR BUSINESS ARE …BUSINESS ARE …
> Supply chain efficiency resulting from trade security lowers costs (e.g. SST – potential savings of $378 to $462 per container as reported to the US Transportation Security Administration).
> Retail and wholesale visibility with RFID tags facilitates higher turnover (« full shelf » for the consumer).
> Proactive security policies and plans enable companies to better manage risk (including additional areas such as pilferage and theft).
> Crisis response mechanisms provide the opportunity for companies to protect their brands when facing an event.
> There is a « Good Corporate Citizen » effect resulting from participation in security initiatives.
> Trade Facilitation for goods undergoing trade security processes.
From various sources including: Smart and Secure Tradelanes (SST), Deloitte Research, Hewlett Packard
ManufacturerExporter
WholesalerDistributor
Retailer & ConsumerPort of
Loading Transit Port Port ofUnloading
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END-TO-END SUPPLY CHAIN SECURITY IN PRACTICEEND-TO-END SUPPLY CHAIN SECURITY IN PRACTICE
Manufacturer
Receive purchase
order
Consolidation warehouse
Loading into containers and
sealing
Truck transport Local port
Customs and terminal
authorities checks
Terminal
Containers are loaded on a feeder
vessel
Ocean transport
Transit port
Transfer to the mother
vessel
Ocean transport
Destination port
Customs and terminal
release
Distribution centre
Final Customer
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COTECNA’S EXPERIENCE IN TRADE SECURITY AND COTECNA’S EXPERIENCE IN TRADE SECURITY AND TRADE COMPLIANCE PROGRAMS:TRADE COMPLIANCE PROGRAMS:
LOAD CENTER / DESTINATION ORIGIN
• Oakland <= Germany
• Seattle-Tacoma <= Japan
• New York – New Jersey <= Brazil
• New York – New Jersey <= Turkey
• Los Angeles – Long Beach <= China / Hong Kong
• Los Angeles – Long Beach <= Singapore
• Los Angeles – Long Beach <= South Africa / Singapore
Trade Security / Supply Chain Security - COTECNA has been involved in 7 of the 18 trade lanes under the US Operation Safe Commerce (OSC):
COTECNA (as a member of the Innovative Trade Network) is a Category A Liaison to Technical Committee No. 8 (TC8) of the International Standards Organization (ISO)
Trade Compliance and Trade Facilitation Programs for Governments
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WHERE CAN COTECNA HELP?WHERE CAN COTECNA HELP?
>Supply Chain and Trade Security for imports into the Russian Federation
>Supply Chain and Trade Security for Russian Federation exports into the European Union, the United States and the APEC Region
>C-TPAT certification support for companies exporting to the United States
COTECNA Inspection & Control ServicesEnd-to-End Supply Chain SecurityCargo Physical VerificationRisk Management SystemDestination InspectionCargo Data Validation Origin VerificationX-ray ScanningCounterfeit DetectionStandards ConformityCommercial InspectionCredentialing Personnel
Other COTECNA ServicesContainer Tracking Collateral Management (Warehouses)Social Accountability MonitoringISO Certification
>>> www.cotecna.com 11November 22, 2004 Copyright © 2004 COTECNA S.A. All rights reserved.
CONCLUSIONSCONCLUSIONS
>There is a balance for governments:> Security Cost and Business Compliance> Trade Facilitation and Security
>There are cost reduction and revenue benefits to business in trade security implementation
>The challenge of compliance for the business and trade communities can be clearly addressed
>>> www.cotecna.com 12November 22, 2004 Copyright © 2004 COTECNA S.A. All rights reserved.
POINT OF CONTACT INFORMATIONPOINT OF CONTACT INFORMATION
Mark R. MillerCOTECNA Supply Chain Security - COSEC
Tel: + 41 22 849 7821Fax: + 41 22 849 7807
E-mail: [email protected] site: www.cotecna.com
