Supply Chain Services and Solutions - tapa-apac.org · BSI Supply Chain Services and Solutions ... PIP or AEO Certified Companies. ... India –Cargo Theft Increasing in Sophistication

1

Supply Chain Services and Solutions

BSI Risk Management and Intelligence Approach

Emmanuel Herve

Copyright © 2016 BSI. All rights reserved.

2

Objectives

• Introduction

• Supply Chain Concerns and Risks

• Supply Chain Risk Exposure and Evaluation Network (SCREEN)

Overview

• Cargo Theft

• Supply chain disruptions

3Copyright © 2015 BSI. All rights reserved.

Founded in 1901

3 Regional Hubs

73

Offices

182

Countries

A truly global brand

80,000

clients

37,384 standards published

Experienced: The world first National

Standards body founding member of ISOThought Leaders: Shaped world’s most adopted

standards including ISO 9001, ISO 14001, OHSAS 18001

4

BSI Supply Chain Services and Solutions

Supply Chain Risk Analysis

Global Risk Maps

Incident Reporting

Country Risk Reports

Customizable Assessments

Corrective Action Plans

Supplier Risk Ratings & Reports

Global Supplier Mapping

Audit Management Platform

73 offices worldwide

Supply Chain Security

Quality

Corporate Social Responsibility

Business Continuity

Intelligence Audit Platform Audit

Financial Risk Modeling

Security Countermeasure Cost Analysis

Quantifying Security Spending

Over or Under-spending on Security?

Advisory - QRS

5

Government Partnerships - INTELLIGENCE

For 6 years, BSI Supply Chain Solutions has been the one source used by Department for Homeland Security (DHS), CBP, and AEO for supply chain and cargo risk intelligence

• BSI provides annual security and threat awareness training to the government as well as specialized reports around specific supply chain incidents and trends

Canada CBSA and PIP program uses BSI intelligence to quantify risk and BSI provides supply chain security and exposure training to PIP officers

BSI Intelligence is used in over 40 countries by U.S. Customs Attaché officers including 80% of AEO countries (including Japan)

UK Freight Crime Police Division – data sharing agreement and co-reporting

Copyright © 2015 BSI. All rights reserved

6

TAPA EMEA and BSI – Audit Risk Management Platform

• TAPA Member Company locations seeking certification will be uploaded into the TAPA EMEA audit report tool, provided by BSI

• TAPA will send a self-certification assessment (FSR C 2014 or TSR 3 2014) to Member Companies through the TAPA EMEA audit report tool, provided by BSI

• TAPA Member Companies will complete the self-certification assessment and waiver process through the TAPA EMEA audit report tool, provided by BSI

• Automated management and facilitation of results

• Tracking of completion progress and macro collation of data will be easier and more streamlined through the TAPA EMEA audit report tool, provided by BSI

7

Today’s Risks

In the Global Supply Chain

Copyright © 2013 BSI. All rights reserved. 8

Top Global Supply Chain Concerns

41.4%

56.1%48.8%

68.3%

53.7%

36.6%

46.3%

2.4%

0.0%

50.0%

100.0%

SocialResponsibilities

Brand protectionincluding

counterfeiting,intellectual property

rights &unmanifested cargo

Governmentcompliance

including C-TPAT,AEO, PIP

Supplier riskassessment

Business continuity(including naturaldisasters, labor

strikes/portoutages)

Political Instability Financial risksincluding cargo

thefts, counterfeits,insurance increasesas well as transport

security costs

Other (specify)

What Are Your Top Supply Chain Concerns?

Survey of 310 C-TPAT, PIP or AEO Certified Companies


Top Global Supply Chain Concerns


SecurityComplianceGovernment Compliance to include C-TPAT, PIP and AEO

• Keeping goods moving efficiently across borders is more important than ever

• Compliance with government programs is a business necessity, not a nice to have

• Managing programs are time and manpower intensive

• Unverified supplier information could lead to loss of government certifications


In-TransitRiskDirect result of theft, insurance increases, transport security costs and counterfeit goods entering the global supply chain

• The weakest point in the supply chain – while freight is moving

• The use of a legitimate supply chain to introduce contraband, people or harmful materials

• Chain of Custody is very important

• Know your contractors and subcontractors


BrandProtectionIncreased threats to include counterfeiting, intellectual property rights and corporate social responsibility

• You must know your supplier’s labor practices in today’s market

• Visibility into supplier’s environmental practices is important

• Quality of the facility and products needs to be inspected to ensure there aren’t any issues

• Your suppliers must have processes and security measures in place to protectyour IP

• Exposure in any one of these areas can damage your reputation and your companies brand


BusinessContinuityMan-made supply chain shutdowns as a result of political / labor instability, along with the threat of natural disasters in the region• Having complete, up-to-date

intelligence on your supplier locations is imperative to mitigate supply chain disruptions

• Having a back-up plan in case of a natural or man-made disaster is key

• Knowing if your redundant suppliers are really redundant or just a agents for a single manufacturer is critical

14

Supply Chain Security

Risk Management Best Practice Approach


15

Reasons to Model Risk

Can we safely spend less?

Can we spend better?

SPENDING

LO

SS

ES

We need to spend more

16

Avoid the Security Spending Pendulum

High losses,increase spending

Low losses,pull spending

Acceptable losses,

Efficient security

ReactiveReactive

Proactive responses to predictable risks

17

BSI’s Supply Chain Risk Management Framework – Smart Resource Allocation

This integrated supply chain risk management solution in delivered in three distinct

risk components

Company Business Risk

Variablesi.e- critical commodity,

high spend with supplier, high volume

of transport

Compliance with TAPA TSR/FSR Standards

Probability Vulnerability Impact Risk Index

Likelihood of supply chain disruption events occurring in your global operations

How vulnerable are you to an event happening due to policy/procedural compliance

How consequential would the event be to your business if it happened in your supply chain?

18

Probability of Disruption

BSI SCREEN Country Risk Intelligence


19

• BSI combines a variety of risk factors, quantifies them, and produces threat ratings for 203 countries

• Countries are rated on a five-panel scale

Low

Guarded

Elevated

High

Severe

• Intelligence is gathered from a wide range of sources:

Proprietary incident database

Information from auditors around the world

In-depth analysis and synthesis of local news sources

Information from governments, NGOs, and industry

• A dedicated team of analysts is constantly updating and refining our intelligence, making sure our risk ratings reflect the situation on the ground

SCREEN-Supply Chain Risk Exposure Evaluation Network

20

Security Business Continuity Social Responsibility – Human Rights

Environmental

Cargo Disruption Natural Disaster Exposure

Overall Human Rights Overall Environment

Cargo Theft Business Impact of Natural Disaster

Child Labour Air Pollution

Hijacking Political Stability Women’s Rights CO2 Emissions

Illicit Smuggling Social Unrest Discrimination Water Pollution

Counterfeiting Economic and Financial Stability

Working Conditions Stringency of regulations

Supply Chain Terrorism Man-made Disruption-strikes, labour unrest

Freedom of Association/Collective

Bargaining

Enforcement of Regulations

Sea Piracy Civil Liberties

Political Rights

BSI Proprietary Geographic Risk Intelligence Components

BSI Country Intelligence

21

© COPYRIGHT BSI 2016

22

Cargo Theft Trends in Malaysia


23

Malaysia – Cargo Theft Trends

• Threat of cargo theft in Malaysia remains , but new data suggest a downward

trend

• Both median and average loss values have seen significant reductions

• Mirrors trend of overall crime rate, which has dropped by as much as 13 percent, according to Royal Police

• Law enforcement efforts are helping improve security situation for cargo transporters

• Includes task forces designed to combat organized criminal groups and vehicle theft (includes cargo and personal vehicles)

• Country still lacks task forces specifically focused on reducing cargo theft

Police in Malaysia recover a stolen cargo truck

24

Malaysia – Cargo Theft Trends

• Average and median theft values declined into 2015

• 2014: $198,600 (median); $234,059 (avg.)

• 2015: $53,800 (median); $74,389 (avg.)

• BSI also notes increasing diversity among commonly targeted goods

• Movement away from electronic goods thefts

• Base metals, consumer goods, and food and beverage items continue to be targeted

• Other causes of downward-trending risk include

• Lower-value commodities being increasingly targeted, suggesting diversification in targeted goods

• Reduction of Mamak Gang and other organized groups’ role in Malaysian cargo theft

25

Cargo Theft in Malaysia

• Reduced cargo-related activity by Mamak Gang members likely contributor

• Multiple deaths and arrests of gang members

• Remaining Mamak Gang members appear engaged in non-cargo crimes

• Theft of luxury personal vehicles

• Bank robberies

• Some pharmacy robberies

• No evidence to suggest pharmacy robberies will transition to targeting of pharmaceutical cargo shipments

26

Cargo Theft Trends in Indonesia


27

Cargo Theft Trends in Indonesia

• The risk of cargo theft in Indonesia remains

• Cargo trucks targeted for most thefts, though warehouses increasingly targeted

• Hijackings remain a concern, particularly for West Java province

• Data from past two years show a shift towards a more even distribution among modalities

• Warehouses targeted in more than 23% of thefts over past two years; BSI rarely recorded warehouse thefts prior to 2014

28

Warehouse Thefts in Indonesia

• BSI has noted a distinct rise in the number of warehouses being targeted for theft

• Commodities targeted in warehouse thefts largely mirror overall cargo theft trends in Indonesia

• Agricultural products and other food items most commonly targeted (36%)

• Industrial goods also heavily targeted (27%)

• Warehouse thefts often small in scope and value (avg. loss value is $26,790)

29

Cargo Theft Trends in China


30

Moving Truck Thefts in China

• BSI has recorded a number of thefts from moving trucks throughout China

• Most prominently in Guangdong Province

• Known locally as “kaitianchuang” (开天窗) – “open sunroof thefts”

• Soft-sided trailers are targeted more often

• Hole is usually cut on top rather than opening from the back as seen in other countries

• Electronics and pharmaceuticals have both been targeted in these thefts

31

Cargo Theft in Guangdong Province

• Guangdong Province is one of the few places BSI sees thefts by highly-organized cargo theft gangs

• High-risk highways

• G4 (JingGang’Ao) highway between Huadu and Shaoguan north of Guangzhou

• G45 highway north of Guangzhou

• More thefts occur during the summer

• Jurisdictional issues harm investigations

32

Cargo Theft Trends in India


33

India – Cargo Theft Increasing in Sophistication

• BSI has recorded a rise in sophisticated cargo theft techniques over the past two years

• Threat of cargo theft in India is

• Theft groups targeting shipments after customs seals placed on container, prior to container reaching port

• Shipments diverted to group-controlled warehouses where paneling is removed

• Customs seals often left intact, delaying discovery until after shipment reaches customer

• First instance of a theft from a moving truck in July

34

India – Cargo Theft Increasing in Sophistication

• Occurrence has been geographically dispersed – New Delhi, Navi Mumbai, and Chennai

• Supply chain employees integral parts of these criminal groups

• Multiple high-profile cases of supply chain employee thefts in 2016

• Implications for cargo integrity:

• Incidents underscore gaps in security and tampering detection in India

• Ability to counterweight consignments exposes capacity for UMC introduction into export shipments

• Criminals’ ability to break into shipments without breaking customs seal poses major UMC risk due to seeming legitimacy/verification of shipments

• Background security checks a must for supply chain employees/contractors

35

Terrorism and the Supply Chain


36


37

Terrorist Extortion of the Supply Chain

• Leading groups for supply chain terrorism attacks are also most likely to extort or exploit the supply chain

• Groups often perpetrate attacks to threaten or intimidate businesses into paying extortion fees

• Extortion can increase as revenue from other sources declines

ISIS tax on trucks reached as high as $4,000 per vehicle in 2015, up from $200 in 2014

• Revenue from the extortion of local businesses is a major financing source for terrorist groups

• Other supply chain concerns• Contraband introductions

• Smuggling for supplies, revenue

February 2016 case in Spain

• Hijacking and cargo theft

Group Supply Chain Exploitation TacticSupply Chain Terrorism

Attacks (2006-15)

FARCExtortion, Kidnapping, Illegal taxes, Drug

smuggling

New People’s Army Extortion

ISIS Extortion, Kidnapping, Illegal taxes

PKK Extortion, Hijacking, Drug smuggling

MEND Kidnapping

AQAP Explosives introduction, Oil smuggling

Communist Party of India - Maoist

Kidnapping, Cargo Theft

Leading Supply Chain Terrorism Groups Often Exploit the Supply Chain

38

Increasing Terrorism Risk to Commercial Supply Chains

• Terrorists targeted a wider range of industries and cargo transport modalities in 2015 than any other recent year

• Increased targeting of industries associated with private/corporate supply chains rather than state-owned infrastructure since 2013

• Agriculture/food and beverage attacks more than tripled

• Attacks on industrial/manufacturing materials and pharmaceuticals more than doubled, metals nearly doubled

• Portion of fossil fuels targeted dropped from 75% to 51%

• Decline in previous hotspots for targeting of government supply chain

• One cargo truck attack in Afghanistan in 2015 compared to average of nearly four annually over past decade

0

50

100

150

200

250

300

2013 2014 2015

Fossil Fuels/Minerals Agriculture/Food and Beverage Industrial/Manufacturing Materials

Base Metals Pharmaceuticals/Chemical

0

50

100

150

200

2013 2014 2015

Pipeline Production/Processing Facility Truck Storage Facility Worker

Leading Industries and Modalities Targeted for Supply Chain Terrorism Attacks (2013-15)

39

Increased Terrorist Targeting of the Supply Chain

• Supply chain terrorism activity increased by virtually every metric in 2015-16

• Proportion of supply chain terrorism attacks grew 16% from 2014

• Geographic distribution increased 38% to a record of 33 countries

• Top 10 countries for supply chain terrorism exported $664 billion• $96 billion exported to the United States

• Highlights significant volume of international trade at risk of disruption by terrorist groups

40

Asia

Factory Labor Unrest


41

Labor Unrest in China –Q2 2016 Update

• Major protest in Dongguan in late May highlighted increasing concern of protests over factory closures and relocations

• Portion of relocation-related factory strikes in China has increased significantly over the past year

• Absolute number of strikes over relocation issues has also risen dramatically

• Protest numbers likely to continue rising as operational costs in China escalate


Factory Strikes in China by Grievance2013-2015 Average

Relocation

Wage Arrears

Other Grievance

Factory Strikes in China by Grievance2016 (YTD)

Relocation

Wage Arrears

Other Grievance

42

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2013 2014 2015

Growth in FDI and Wages in Cambodia

Foreign Direct Investment Growth Minimum Wage Growth

Factory Unrest in Asia

• Other countries in Asia have witnessed protests over grievances seen in China

• Timely payment of wages, factory closures, and contract employment vs. physical working conditions, higher pay

• Most demonstrations in the garment manufacturing industry

• Cambodia• Recent protests over factory closures

• Industry representatives blame closures on rising operational costs, especially increasing wage rates

• Bangladesh• Officials identified nearly 360 factories ‘vulnerable’ to

protests over wage non-payment, holiday bonuses

• Likely an increasing concern as factory investment continues rising in these areas


43

Vulnerability and Compliance

Infusion of Probability with TAPA standards


44

Strategic Program Design with Operational Program Toolbox

An integrated approach to managing organizational risk, adhering to compliance objectives & instilling knowledge

Business ImpactVariables

Business Specific Components

Volume of Throughput

Criticality of Commodity

Security countermeasure spend

% of site production on site

Social Responsibility

Environment

Supply Chain Corruption

Political Stability

Cargo Theft

Counterfeiting

Supply Chain Terrorism

Natural Disaster Exposure

Legal Compliance

Ethical Trading

Hijacking

Illicit Smuggling

TAPA FSR/TSR

Standards

Logistics Security

Site Security

Physical Access Controls

Personnel Security

IT Security

Questions are weighted

Probability Vulnerability Impact Risk Index

45

Financial spend

Risk-Based Results Lead to Smart Audit Strategy

Co

ntin

uo

us Im

pro

vem

en

t

46

Contact Information

Emmanuel Herve

BSI Supply Chain Services and Solutions

[email protected]

www.bsi-supplychain.com

Documents

Supply Chain Services and Solutions - tapa-apac.org · BSI Supply Chain Services and Solutions ... PIP or AEO Certified Companies. ... India –Cargo Theft Increasing in Sophistication