Supply Chain Managers Must Leverage “Market Power” for Security and Profit

Decentralized criminal and terrorist networks are moving at the speed of 21st-century commerce.

According to a recent report issued by the Stimson Center in Washington, DC, new forms of global illicit trafficking threats, means that these partnerships are even more important. Nate Olson, a research associate for the Managing Across Boundaries Initiative at Stimson, maintains that reliable data on global contraband flows is “notoriously evasive.” One estimate, he says, puts the total annual trade in illicit goods, excluding money laundering, at $650 billion. Illegal narcotics, along with counterfeit pharmaceuticals and electronics, accounted for roughly half.)

But in quantitative and qualitative terms, there’s little doubt that the problem is serious and growing. Whether they deal in drugs, counterfeit products, or weapons, decentralized criminal and terrorist networks are co-opting the same physical and informational infrastructure that enables legitimate trade. “They’re moving at the speed of 21st-century commerce,” says Olson.

Stimson analysts add that this hasn’t stopped governments from trying to bring cross-border trade more within their reach through the usual countermeasures of customs enforcement, intelligence gathering, and industry mandates. Yet even when the policy objective is laudable, using the traditional tools alone are often inadequate, and the report indicates that they can have unintended consequences. For example, new disclosure requirements related to minerals from conflict-affected areas, impose what many regard as “unrealistic” diligence standards on firms far downstream in supply chains for electronics.

More tomorrow.

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