Supply chain security – what are we afraid of?

A recent report by PricewaterhouseCoopers (PwC) outlines a growing threat to supply chains from cyber, hacker, pirate and terrorist attacks.

The report, “Transportation & Logistics 2030, Vol. 4 – Securing the supply chain,” outlines the responses of 80 global executives to an extensive survey on what elements of supply chain security they believe will be most critical in the future.

Some highlights:

  • Total direct costs of piracy in 2010 are estimated to be between US$7 and $12 billion; indirect costs drive this figure higher
  • Terrorist attacks on key locations in the global supply chain — such as in Hong Kong, or chokepoints like the Panama and Suez Canals — can disable the immediate hub but can cause more widespread damage throughout the global supply chain (as recently seen with Japan post-earthquake and tsunami)
  • Cyber attacks designed to induce physical damage will be an increasing threat for the transportation and logistics industry

So what can the trade do?  According to PwC:

Companies have to find the right combination of preventive and reactive measures to achieve the optimal level of supply chain security…. [c]ompanies need to consider the possible, not just the probable.  Executive should keep an eye on so-called wild-card events too.  That means looking at the possible financial impact, the relative vulnerability of their business model and their company’s ability to react to low-probability, high-impact events…. Security audits along the entire supply chain will  become a requirement to maintain effective levels of security.

The complete report is available here.

2 thoughts on “Supply chain security – what are we afraid of?”

  1. On a related note, Algirdas Šemeta, Commissioner for Taxation of Customs Union, addressed the American Chamber of Commerce to the European Union yesterday about, among other things, the need for mutual recognition by both the US and European Union on each other’s trade security programs — the United States’ Customs- Trade Partnership Against Terrorism (C-TPAT) and
    the EU’s Authorised Economic Operator (AEO). As Šemeta stated, “I know that this project is of particular interest to the growing ranks of EU AEO operators. More than 3800 companies have already been certified for security, many of which are involved in transatlantic trade.”

    To see Šemeta’s entire speech, go to:

  2. An update from Broker Power:

    CBP Provides Update on C-TPAT Mutual Recognition with EU, Mexico

    U.S. Customs and Border Protection has issued revised information regarding the mutual recognition of Customs-Trade Partnership Against Terrorism (C-TPAT) program and foreign industry partner programs. CBP states that it expects to sign a mutual recognition arrangement with the European Union for its Authorized Economic Operator (AEO) program in late 2011 with implementation to follow in the first half of 2012. Additionally, Mexico’s pilot for its program Alliance for Secure Commerce or Programa Alianza para un Comercio Seguro (PACS) is expected to conclude at the end of 2011 with a fully operational program likely to commence in early 2012.

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