Putting “Best Practices” into Practice

At a Glance: Supply Chain Custodians

Supply Chain Custodians Origin Factory Anjo City, Japan Inland Dray Inspect & Load Inland Dray Consolidation Port of Export Transmissions are loaded into containers Container sealed Packaging Stuffing Transmissions convoy to the Port of Nagoya Inspect, Stuffing Seal Controls Transfer Custodian from factory to terminal, Known or Unknown Partner Container storage at Port of Nagoya Gate in Process and visibility at Terminal Containers are loaded at the terminal Ocean Ocean Port of Seattle Port of Arrival Port of Arrival Truck Truck Inland Rail Vancouver, Canada CN Containers are unloaded at APL terminal Containers unloaded, out gate process and visibility at arriving terminal Container moves from Port of Nagoya to Port of Seattle Container moves from port to port to discharge port in US Drayed (in-bond) from terminal to rail or direct to factory Drayed (in-bond) via trucking company to Vancouver, Canada Containers are transferred to rail, in gate visibility Containers are transferred to Canadian National Railroad (CN) Containers are moved to truck Rail Rail Destination Terminal Toronto, Canada Truck Truck GM Factory CA Factory or RDC CN Containers are drayed via rail from Vancouver to Toronto, Canada Containers are unloaded at a railhead at Toronto, Canada Containers are unloaded, out gated visibility and status Containers are drayed from rail to factory, DC, Known Partner Containers are drayed from railhead to GM inventory yard Containers are shuttled in a just-in-time and in-sequence process to the General Motors plant Containers, seal removed, unloaded, products moved to factory Rail transit and visibility, arrival

The term “Best Practices” has become the “Change Management” of the 90’s

Although now, in the “00” decade, the ultimate question is this:

Although now, in the “00” decade, the ultimate question is this: What’s in it for me?

C-TPAT Benefits Tier One (Certified): Meaningful reduced inspection benefits Tier Two (Validated/Minimum Security): Greater examination reductions For former “Low Risk” importers, this represents a “Business as Usual” equation and seems to be in name only as a benefit.

C-TPAT Benefits Tier Three (Validated/Best Practices): Front of the line status for all exams Front of the line status in the event of a port shut-down Elimination of all but statistically selected cargo examinations This is where the real benefits are being realized, from the perspective of Trade

C-TPAT Benefits Quantifiable Examination Benefits: C-TPAT importers are 7 times less likely to receive cargo examination. Determine your company exam ratio, determine the cost per exam, then configure the amount of exams that you are not incurring due to C-TPAT

C-TPAT Benefits Quantifiable Examination Benefits: Annual exam ratio: 50 per year Without C-TPAT: 350 per year Average exam cost: $500 per exam Annual savings: $150K

“Best Practices” What are They and Suggestions on Implementing Them into your Supply Chain Processes

Best Practices Require the adoption of C-TPAT security measures throughout a company’s entire international supply chain through contractual means.

Best Practices WHEREAS Company X and its parent corporation joined the Customs-Trade Partnership Against Terrorism (“C-TPAT”), a voluntary program initiated by United States Bureau of Customs and Border Protection, a department within the United States Department of Homeland Security; WHEREAS the C-TPAT program is a voluntary program with mandatory requirements and is dedicated to increasing border security, preventing terrorist activities, and maintaining the free and safe flow of goods into the United States;

Best Practices WHEREAS Company X is committed to obtaining a compliance commitment by all parties involved in the international supply chain: (a) to comply with all laws; (b) to abide by all safety and security programs and inspections (hereinafter collectively “Security Programs”), whether mandatory or voluntarily requested by any governmental entity and/or by Company X and/or its parent corporation; and (c) to comply with the Statement of Business Ethics of Company X and/or its parent corporation and all Vendor Guidelines (all collectively referred to as “Vendor Requirements”);

Best Practices Active involvement in the security enhancement process by senior company leaders/management.

Best Practices From Statement of Corporate Policy: Additionally, as a participant of the Customs-Trade Partnership Against Terrorism (C-TPAT) program, Company X commits to working diligently in concert with its vendors and their factories, forwarders, consolidators, customs brokers, carriers, and any other relevant service provider to establish controls related to cargo security initiatives

Best Practices Hold quarterly or bi-annual meetings with Senior Management to brief them on C-TPAT initiatives, challenges, accomplishments, etc. Memorialize these discussions. Incorporate C-TPAT objectives into job responsibilities or annual goals.

Best Practices Use of GPS tracking devises, particularly in the trucking environment.

Best Practices Security escorts of trucks to the border/port, particularly in high risk environments.

Best Practices Perimeter fencing with magnetic sensors that activate if pressure is applied against the fence.

Now a requirement under the March 25 Importer Requirements Best Practices Measurement of empty trailers/containers prior to stuffing to identify false walls, ceilings, etc. Now a requirement under the March 25 Importer Requirements

Best Practices Create a “Container Inspection Form” for factory to complete upon loading of container, and require submission of same via letter of credit.

Best Practices Multi-level encrypted IT security systems which restrict employee’s access to only certain information based on their job responsibilities.

Best Practices Criminal background checks on all employees, to the extent permitted by foreign laws/regulations.

Best Practices Add to social compliance checks upon factory evaluation.

Best Practices Screening procedures for new clients, suppliers, manufacturers, etc. which go beyond financial stability measures to include security related indicators.

Best Practices Use of container sealing devises which exceed the current minimum PAS ISO 17712 standards, for example the use of cable seals around the “J” bars or “sea lock” devises; and the use of container security device technologies (as they become more mainstream and reliable).

Best Practices Electronic transmission of entry level import data as early in the importation process as possible, preferably prior to loading the cargo (i.e. at the 24 Hour Rule timeline).

Best Practices from CBP CBP has committed to compiling and distributing extensive “Best Practices” to C-TPAT members. In final approval process, soon to be printed and mailed to Primary C-TPAT contact. 100 plus pages