Strengthening the Chain

At a moment when supply chains are more fragile—and more disrupted—than at any other time in recent history, there are few more pressing priorities for logistics professionals and executive decision-makers than understanding current trends, recognizing common blind spots, and embracing proven supply chain security solutions.

Problems…

The biggest risk to supply chains today are macro-level events: global trade wars, the impact of individual government policies, and economic trends. We’ve seen significant disruptions post-COVID, perhaps most notably with the ongoing chip shortage that is impacting everything from home tech to vehicle manufacturing.

Cargo theft is another significant (and growing) problem—especially in places like Latin America, where it was already a pre-pandemic issue. COVID-related demand spikes and shortages have only exacerbated the issue. Globally, hijackings and thefts directly from vehicles continues to rise, increasing 4% from 2019 to 2020. But facility theft is the real eye-opener, increasing 100% year over year, now representing approximately 25% of all cargo theft. In North America, insider theft coming from warehouses is much more prevalent than vehicle thefts. But supply chains are global, and a theft in Mexico can impact companies and prices across the globe. Overall, cargo theft is estimated to be a $15-$35 billion problem in the United States alone.

…and solutions

On a company level, the most effective way to protect your business against macro-level disruption is to diversify your supply chain with backup partners, alternative sourcing, or stockpiling in lieu of just-in-time shipping.

Mitigating cargo theft in transport means recognizing road and rail freight vulnerabilities and being smarter and more strategic about route selection, timing, and security measures.

Protecting against facility theft begins with recognizing weak points. All it takes is one compromised individual at the plant level to facilitate massive theft. One common mistake is waiting too long to take action once a potential issue is identified. The full extent and duration of a pattern of theft is often unclear. Even small companies can incur damaging losses, and relatively small thefts can add up. One box removed from each palette can add up to millions in annual loss.

Logistics professionals must be vigilant, using technology to help track and monitor shipments with rigor and precision. Don’t make assumptions or use the eye test: verify. Not only is that significant theft sometimes just written off as a loss, but missing units enter the marketplace, competing with your product and impacting pricing.

The most important security step any company can take is implementing smart policies and procedures—and making sure they are being followed—reinforcing commitment and consistency across the enterprise. Simple security tests for those procedures can be enormously beneficial: a relatively modest investment with a potentially dramatic bottom-line ROI. Accountability is key. Perform self-audits and surprise checks, using random sampling to look for red flags.

Companies looking for proven security guidelines can turn to the Customs Trade Partnership Against Terrorism (CTPAT) program, a DHS/CBP trade compliance certification program developed after 9/11. Whether you pursue CTPAT certification or simply use CTPAT standards as a model for developing effective policies and procedures, companies looking to mitigate supply chain risk should ensure that every partner in their supply chain is adheres to those standards.

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