Securing International Trade

September 8, 2006 by SwizStick  
Filed under 3PL, Education, Supply Chain Management

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“Global commerce is the single greatest engine in economic growth and it’s the single most important thing that raises the standard of living for every human being on the planet,” says James Carafano, Ph.D., senior fellow for National Security and Homeland Security at Heritage Foundation, Washington, D.C. “If there is one thing you are going to protect in this world, it’s the ability to conduct global commerce.”

World Trade Magazine has an absolute must-read article on the current status of trade security and comes to the conclusion that while the picture isn’t rosy efforts are being made and there are a number of things companies and government can do to improve the overall security of the global supply chain.

With today’s global economies more interconnected than ever as multinational trade grows, this increases the vulnerability of the global supply chain to disruptions and to terrorism, notes Timothy Brown, an expert in national security and international trade and a research fellow at the Hoover Institution, Stanford University.
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The global supply chain involves many, many players—governments, manufacturers and retailers, logistics companies and their personnel in ocean, rail and trucking operations. Given this much complexity, it’s not surprising there are so many different opinions about the state of security.
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…..most Americans—and even legislators—do not have a clear understanding of the mechanics of international trade, nor do they recognize that U.S. port facilities have been leased and operated by non-American entities for many years.

One of the themes brought out in this article that has been repeated by others is creating a resilient supply chain, something that Professors Yossi Sheffi and James B. Rice,Jr. from MIT have been preaching about since 2001 and the subject of numerous articles and presentations they have authored since then.

Experts advocate a global and system-wide approach to trade security to achieve a robustly resilient supply chain. There is a business case for this approach. Businesses could be more confident in the mechanisms of the global supply chain operating to minimize disruptions, which positively affects consumer confidence.

Flynn [ed.-Stephen Flynn is a Senior Fellow in National Security Studies at the Council of Foreign Relations] is concerned that today’s global supply chain is not designed to fail well. “When it does fail, it will go into gridlock and will result in severe economic disruption,” he says.

Professor Rice from MIT calls this “planning to fail smartly”, which involves designing your supply network to “…restore operations post-disruption without disruption to the customer…”. (See Professor Rice’s presentation on Corporate Response to Terrorism: Creating Resilient and Secure Supply Chains). I strongly recommend reading the book The Resilient Enterprise by Professor Yossi Sheffi from MIT, which is in our recommended reading list in the left hand sidebar of this blog.

There is a business case to be made for creating a resilient and secure supply chain, as has been pointed out by a study conducted by Stanford University and also in articles and presentations from Professors Sheffi and Rice from MIT.

This is a detailed article that breaks down the importance of global trade and supply chain, the risk of a terrorist attack, weaknesses of the current system, and what can be done about it. This is a subject that too many people don’t take seriously or even understand. Putting aside what the government can/can’t do or has/hasn’t done, there is much that the private sector can do to create resilient and secure supply chains and far too many companies are not doing enough.

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