mitigating security threats and facilitating trade through the deployment of a global security...
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Mitigating security threats and facilitating trade through the deployment of a global
security network
Mr. Bruce Jacquemard
Executive Vice President
Savi Technology
Smart and Secure Tradelanes
• More then 40 SST Partners (ISO participation announcement 14 May, 03 – ISO/TC8 Chair)
• Current – 12 of the largest/busiest global tradelanes
• Global Information Network and Physical Infrastructure
• SST provides real-time visibility of location and security status tracking infrastructure from point of origin to destination
• SST compliments US (CSI, CTPAT, OSC) and other global initiatives
Key Drivers in Supply Chain Security
• Transparency and Visibility of Supply Chain– Improve visibility across entire supply chain for security and efficiency– Build capability to track and locate containers
• Physical Security– In addition to data layers of defense, we need physical layers of defense for
cargo, containers, ports, supply chain facilities, and people.
• Complete System Intelligence – Point/silo requirements, decisions, and/or solutions can sub-optimize the
entire network; address global supply chain security as network problem
• Regulatory Compliance– Implement US Customs Programs of CTPAT, CSI and 24 AMR in an integrated
approach
• Forensics and Restart– Isolate Recover Learn – Systems and networks need to be judged not only by how well they perform
but also “how well they fail” and restart.
Requires a “Smart Network”
• Transparency and Visibility of Supply ChainMake people smarter –locate containers with information from inside the system
(automatic reporting of location, status, routing, contents, etc.)
• Physical SecurityMake the conveyance smarter – integrate deterrence and automated detection
capabilities (location, security status, secure history and event log, automate manifest, sensing, etc.)
• Complete System Intelligence Make processes smarter –Manage what you measure - real-time information
drives optimization of processes leveraging all available information from within or from outside the logistics system
• Regulatory ComplianceMake enforcement smarter - Automated checks or information collection for CSI,
CTPAT, AMR. ( authorized access recorded/ linked to manifest, AMR stored with container at origin, Automated Seal verifications, etc.)
• Forensics and RestartAllow us to continue to learn and adapt -Analyze/diagnose event and respond
appropriately, ability to segment issues and restart
Road Transport
Consolidator /
Distribution Center
Road Transport
Port of Loading
Vessel
Transit Port
Vessel
Port of Discharge
Mfg Distribution
Center
Road/Rail Transport
Retail Store
Factory
Retail Distribution
Center
Goal: Secure the Supply Chain
Secure at Point of Container Packing
–Manufacture
–Consolidation
Reduce Shrinkage
•Identify Pilferage Points
Limit Terrorism Threats
•Dirty Bomb
•Contamination
Monitor at Key Choke & Transit Points
Road Transport
Consolidator /
Distribution Center
Road Transport
Port of Loading
Vessel
Transit Port
Singapore
Maersk, Hanjin, or
APLLong Beach
Memphis/ Menlo DC
Road/Rail Transport
Retail Store
Venture Mfg
Retail Distribution
Center
SST Deployment
Status Updates Availability:
– 100% Coverage
– Partial Coverage
– Not Available
– Not Applicable
Container Stuffing
International Security Status Update
Domestic Security Status Update
Container Unloading
Systems Framework For a Security Solution
Rather than securing a specific person, place, or thing as we have in the past – we now have to look at security of the process as a whole.
No single process change or technology device offers a complete solution by itself
Increased focus on containers vs. Vessels (container as message packet)
Integrating new processes or applying new technologies to facilitate efficient distribution of information Automated methods of collecting and distributing data further up the supply chain More real-time capabilities to link information flow to the physical flow
Software systems for identifying, analyzing and responding to real-time information
SST Network – End 2003
Hutcheson/Line HNN - Antwerp PSA - Singapore
HIT Hong Kong
Felixstowe UK
ECT Rotterdam
Yantian
Guilan Island
Seattle TTI Hanjin Longbeach TTI HanjinSavannahSeattle APL Eagle Marine
China Merch
Kaohsiung (Twn)
Shekou
Chi wan
Seattle
Tacoma
NY / NJ
LA Long Beach
New Orleans
Alaska
Jacksonville
Puerto Rico
Savi Hosted
Shippers
Federation
NJ – PNCT
NJ-Global Terminals
Baltimore
Houston
Guatemala
Tokyo
Indonesia
Laem Chabang
Genoa
Turkey
SAFMarine (SA)
Current SST Participants
75% of the world’s container trade
Category Participants
Supply Chain and Security Domain Expertise
Stanford Global Supply Chain Forum, King’s Point Merchant Marine Academy, MIT, Pinkerton Logistics, Georgia Institute of Technology, and Transportation Logistics Institute. These institutions are assisting in the security assessment, process analysis, evaluation, and the development of an economic model for efficiency and security
Shippers (Importers)
Target, Boeing, GE, Unilever, Michelin, Dow Chemical, Semblog Logistics, Transoceanic, LINE Logistics, PSA Logistics, Venture Mfg., and Batmindo Total of 15 shippers and service providers across 13 vertical industry sectors.
Global Port Operators
Stevedoring Services of America: largest terminal operator in the Western Hemisphere (16M teus’)Hutchison Port Holdings: largest port operator in the world, over 30% of world’s container trade (30 ports)PSA Ports: second largest port operator, 18 ports worldwide including ChinaP & O Ports: 20 ports worldwide, including many regional ports China Merchant: operator of 6 ports worldwide
US Port Authorities
Port of Seattle, Port of Tacoma, Port of Los Angeles, Port of Long Beach, Port of New York/New Jersey, Port of Houston, Port of Savannah, and Port of Charleston
US Terminal Operators
Stevedoring Services of America, Eagle Marine Services, Marine Terminals Corporation, Total Terminals Inc., P&O Ports, Georgia Ports, Charleston Port Authority, Port of Houston Authority
Carriers Mitsui OSK Lines, Evergreen, Hanjin, Yang Ming, K-Line
Service Providers Sandler Travis Trade Advisory Services, SembLog, Parsons Brinckerhoff, SAIC, Cotecna (3rd party shipment inspection), Pinkerton, and Boeing
Technology Providers
Oracle, Qualcomm, Savi Technology, OneSeal, Symbol, Intermec, Sun Microsystems, Compaq, Microsoft, IBM,, EXE, Manugistics, Vigilos (security integration: access contol, video surveillance, and perimeter security) Total solution approach combining 13 different technologies to enable supply chain security
Infrastructure CIMC (world’s largest container manufacturer), Transamercia (world’s largest container lessor), GE Capital Container Leasing, Savi Technology, and Qualcomm Prototyping new types of low cost, smart and secure containers
Container Stuffing
Manufacturing Facility - Malaysia
• Import containers from Malaysia are stuffed at contract manufacturer
• Container sealing performed by an authorized individual using an active RFID seal.
• Container data – manifest route, schedule, other required information – keyed into TSS application and made available to downstream trading partners and Customs systems. Future EDI integration to eliminate keying data.
• Future - Video associated to record container loading and biometric worker verification
• Automatic verification of seal status as container departs consolidation point
• Software application to manage change in control for container sealing
Transshipment Port – Singapore
Truck Entry at Gates/Arrival by Feeder• Automatic recording of arrival and status information
through RFID• Tie-in of RFID and application to truck profile, pre-
advisal, and reservation system to provide updates to terminal operator
• OCR/pressure sensor to check untagged containers• Monitoring personnel will have the appropriate
qualifications (e.g. TWIC)Yard Coverage• Seal status continuously
monitored through network of readers in yard
• Terminal areas distinguished as “safe” vs. “uncontrolled” zones
• Container inspection (either personnel or technology) for containers that give off alerts
• Software access control protocol for container seals/unseals in the yard
• Workaround solution of polling reader plugged into car battery used to scan containers in PSA yard while awaiting loading on mother vessels of Hanjin & APL services
Quay-SideAutomatic recording of
container departure and status information;
software application receives information
Non-Intrusive Inspection• Unsecured containers passed
through nuclear/gamma-ray portal
• Data passed to software application and appropriate systems and compared to previously captured container images and videos
Port of Discharge – Long Beach
Vessel arrival at Long Beach
Quay-SideAutomatic recording of container arrival and status information; software application receives information
Yard Coverage• Seal status
continuously monitored through network of readers in yard
• Intrusion detection enabled
Non-Intrusive Inspection• Unsecured containers are
passed through nuclear or gamma-ray portal;
• Data passed to software application and appropriate systems and compared to previously captured container images and videos
Truck Exit at Gates (For truck-modal transport)
• Automatic recording of arrival and status information
• OCR/pressure sensor as failsafe device
Data made available to Customs, Coast Guard, and INS & referenced with other incoming
intelligence data
Drayage- Rail/Long Haul to Distribution Center
Load to Train in LB• Automatic recording of
arrival and status information
Container
ContainerTag
UTR
UTR SignpostChassis
CONTAINER TAG IDUTR SIGNPOST ID
GPSUnit
UTR ID & LOCATION
Long haul• Automatic recording of
departure status and information
Container Arrives at Final Destination
• Automatic recording of arrival status and information
• Container unsealed by authorized party, tagged items deconsolidated and cross-docked (if appropriate)
• Software application monitoring
Container
ContainerTag
UTR
UTR SignpostChassis
CONTAINER TAG IDUTR SIGNPOST ID
GPSUnit
UTR ID & LOCATION
Drayage• Automatic recording of
arrival status and information at Railhead
Container
ContainerTag
UTR
UTR SignpostChassis
CONTAINER TAG IDUTR SIGNPOST ID
GPSUnit
UTR ID & LOCATION
Drayage• Automatic recording of
departure status and information at Rail Ramp
Satellite Link
In Transit • Instant Security Status Change
Notification
Software Application: Transportation Security System (TSS)
• The TSS software application:– Maintain audit trails of container security and route histories – Manage deviation alerts (including route and schedule) and tamper alerts– Provide sealing and unsealing functionality in a handheld terminal– Allow workflow configuration to enable management of business processes– Provide visibility of current container movements for further supply chain operational benefits – Provide a register of authority enabling selected personnel to perform seal/unseal activities– Sample “view” and drill-down functionality includes …
Global Views• Global visibility for containers in-
transit• Status and location listing for
selected criteriaFacility Views• Current facility inventory• Facility clearance verification• Yard location• Inquiry by container or by type of
assets• Inspection facilitation
• Container Views• Current container location• Container status• Routing information• Movement history• Associated manifest data• Inspection history• User & historical security info
Handheld Terminal
• Serves as localized application of software
“Drill Down” on Major Impacts of Security Infrastructure on Efficiency
Economic Benefits Substitution Cost Savings: direct and indirect cost avoidance attributed to the substitution of existing 24 Hour AMR
compliance processes with automated compliance & security processes. Reduction in Bill of Lading Surcharges , expedited freight Reduction of Safety Stock due to improved certainty
Scale Cost Savings: ‘across the board’ direct and indirect cost savings attributed to improved trade compliance, reduced U.S. Customs inspections, and cargo theft incidences.
Reductions in Direct Costs of Inspections Theft Cost Savings Safety Stock savings from reduced inspections
Structural Improvements: fundamental or ‘structural’ savings and margin increases attributed to the flexibility provided by improved container security transparency and visibility.
Reductions in Safety Stock from reductions in transit-time variations or inventory optimization or….. Margin increases from improved transparency and customer service Reductions in Risk man costs, Reductions Insurance, reduction in manual security processes
KEY DRIVERS Inventory Carrying Costs
High tech goods have high depreciation and obsolescence rates. The greater the depreciation, the greater the safety stock needed to cover variations in transit times. The greater the commodity value of the container, the greater the inventory carrying cost.
% Reduction in Transit-time Variation A 10% reduction in transit-time variation has a 65% increase cost savings and profit increase.
Margin Multiplier High Tech goods have sales multiplier effects. The opportunity cost of missed sales is a multiple of the actual retail value of goods, due to customer attrition and
missed sales of ‘add-on’ or complimentary products. The indifference point of this multiple in the inventory-service tradeoff is .4.
Service Target Rates v. Actuals Direct relationship between difference between the target and the actual in-stock service rate.
Two Representative Customer Benefit Scenarios Are Created
Scenario 1: Holding Customer Service Levels Constant while Reducing Safety Stock
Total Inventory Cost of Safety Stock
Inventory Cost Due to Inspection
Inventory Cost Due to 24 Hour AMR
Direct Cost of Theft & Pilferage
1.3%
Total: $20M
$1.8M
Total: $0
$2.9M
SST “To-Be”
Substitution
Scale
Structural
Scenario 2: Holding Safety Stock Constant while Increasing Customer Service Levels
Customer “As-Is”
% = Percentage of Total 75%
15.5%
15%
1.3%
73%
9%
.9%
Customer “As-Is” SST “To-Be”
Increase in Sales Margin from Improved Customer Service
$8.3M
Automated Compliance of Customs Programs
Empowers Shippers with Benefit Choices: Reduce Inventory or Increase Customer Service Levels
$Millions
SST gives Shippers flexibility to optimize their inventories and service levels based on data collected by security infrastructure
Analysis concludes that this customer should leverage security solution to increase service levels : $8.3M margin increase versus $2.9M cost savings
However, depending on firm’s market position they can align and optimize their benefits anywhere on the SST curve
10
15
20
25
30
35
80%
82%
84%
86%
88%
90%
92%
94%
96%
98%
100%
Current
SST
Margin Increase $8.3M
Cost Reduction $2.9M Customer Service
Level
Learning Points from Real World Experience
24 Hour Advance Manifest: – Initial results indicate that 24 Hour Advance Manifest is possible through a combination of automated processes,
technologies, and integrated messaging and enables better supply chain planning and execution.
Data: – Initial qualitative results demonstrate improved data accuracy, completeness, and timing through enabling
processes/technologies, upstream supply chain data, automated tracking, and leveraging the port or 3PL as the consolidator of information.
Automated Tracking and Physical Status-Location vs. EDI: – Automated tracking is inherently accurate vs. EDI (batch). – Example: an automated SST event showed a container had physically arrived at a US port whereas the EDI
transmission said it would arrive 2 days later.
Pattern Analysis: – Initial results indicate that routing mistakes and deviations happen and in SST are automatically detected through
an automated tracking network vs. legacy systems or EDI. This has security and efficiency implications. – Example: 2 containers from Thailand arrived in Singapore; prescribed routing did not include transshipment at
Singapore.
Network-based Problem Requires Network-based Solution: – The complexity and dynamic nature of global supply chains requires a common open architecture where multiple
processes and technologies can be tested and innovated upon rather than having to create and integrate point solutions.
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