In February, the Executive Office released the National Strategy for Global Supply Chain Security. It details new priorities for how the United States protects the domestic and international supply chain, working with industry to achieve security, efficiency and resilience. Business Insights spoke with Seth Stodder, the former Director of Policy and Planning for U.S. Customs and Border Protection (CBP), who also assisted in developing the supply chain security strategy.
Some of the approaches outlined in the strategy can be traced to Customs and Border and what Stodder called a CBP philosophy. It uses the kind of risk-based approach that can also be found in the Air Cargo Advanced Screening (ACAS) initiative and which resonates with many of the important principles in effective air cargo security. A strategy focusing on risk-based security in air cargo marks a welcome departure from the 100 percent solutions mandated in the past. Yet, this raises a question – what drove the shift in thinking that concluded security and efficiency are equally essential?
Seth Stodder: After 9/11, the border agencies went to Level 1 Alert, which was highest level of security. It shut down trade. From that lesson, there was a blast of programs out of CBP focusing on the Customs-Trade Partnership Against Terrorism (C-TPAT). Collecting relevant data from industry and analyzing it to assess risk was a basic principal. Assessing risk is about identifying high risk but also low risk cargo. Can you identify shipments that are low risk so you can reduce the size of your haystack? This ultimately became the theology of risk management and assessment after 9/11. Air cargo was a challenge because Customs and the Transportation Security Administration were [and remain] two different organizations. And then along the way comes Congress and the 9/11 requirement for 100 percent screening. That was not a risk management solution.
The mandate to screen all cargo on passenger planes went into effect in August 2010 and was a heavy lift for shippers, forwarders and carriers whose business demands the fast movement of cargo. Efficiency was not much of a consideration in this mandate. The new strategy, however, seems to move away from this, drawing in large part from CBP.
Stodder: The CBP philosophy has been following the twin goals of efficiency and security. You had to achieve both of them. [Former CBP Commissioner Alan] Bersin’s twist along the way was not only do you have to achieve both goals, but you cannot effectively do either one without achieving both. The same things that you need to do to speed legitimate commerce through – knowing your shippers, knowing data, analyzing it – are the same as what you do for security.
The strategy also focuses on building resilience in the supply chain, making it better withstand a disruption and quickly return to full operation.
Stodder: Think about the Fukushima nuclear reactor [after the tsunami in Japan in 2011]. There was a blip in the system and certainly with an impact on supply chains from Japan, but I think the data has shown the private sector restored itself pretty quickly.
Indeed, while the tsunami and resulting nuclear disaster hurt Japanese industry with inconsistent power supplies and shortfalls in materials, most manufacturers returned to normal production by the end of the year, an example of how resilience impacts disaster recovery.
Stodder: The supply chain strategy is really about the holistic goal of security and efficiency but also how do you view the supply chain system as a piece of critical infrastructure for the global economy and how do you make sure that system keeps going no matter what…In one sense, [air cargo] is the most resilient because the infrastructure involved is a much more complex and distributed system. But air has this massive psychological component. It is difficult psychologically and politically to move away from the 100 percent mentality.
Making America’s critical infrastructure and supply chains resilient to manmade and natural disasters is a growing focus in homeland security efforts, and the strategy supports “increased resilience and flexible, dynamic capabilities [that] will improve the Nation’s ability to absorb shocks, save lives, and reduce the overall impact of a disruption.” But is America ahead of the curve or behind the times in terms of how it builds resilience into supply chains?
Stodder: I would call us leaders. Toward the end of the last decade, the World Customs Organization pushed the SAFE framework for global trade, which is essentially trying to implement globally the key principals we’ve been pushing since 9/11 – assessment and risk management…We are a leader both in international organizations and bilaterally, such as TSAs work with foreign governments regarding the 100 percent inbound screening mandate.
In President Obama’s forward to the strategy, he reveals the premium placed on government-industry collaboration in supply chain security. The President concludes:
The Federal Government cannot achieve this alone. Partnerships with state, local, and tribal governments, the private sector, and the international community are critical to realizing our shared goal of building a new framework to strengthen and protect this vital system.
Indeed, supply chain security is a collective imperative, and industry and government must continue working together to identify and use security approaches that best achieve security, efficiency, and resilience. As such, the strategy is an important step in the right direction.