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Weekly UpdatesIn the past, ocean-going container security concerns once were focused on drug smuggling and product theft in the supply chain. Due to recent terrorist attacks around the world, there is heightened awareness regarding security of incoming and outgoing shipments and the threat that terrorists will use these containers to infiltrate the supply chain system. Firms must consider these implications in their entire supply chain design. Supply chain security is the application of policies, procedures, and technology to protect assets, product, facilities, equipment, information, and personnel from theft, damage, or terrorism and to prevent the introduction of unauthorized contraband, people, or weapons of mass destruction (Bowersox et al. 2007). Unfortunately, a comprehensive framework for securing the supply chain does not currently exist (Closs et al. 2008).
Businesses are using outsourcing as a competitive advantage and business strategy to reduce costs and expand their global reach. These businesses rely on container shipments on cargo ships to move their products around the globe. In fact, 90 percent of the world's cargo moves by container, with 46 percent of all goods entering the U.S. arriving by ocean-going containers (Holmes 2004). In 2007, 200 million container movements took place in world ports (Kelley 2007). Businesses leverage supply chains to meet or exceed many key performance objectives that impact the bottom line. The priorities of these objectives in international logistics are illustrated in Figure 1 (Lee 2004).
Along with the benefits of a high performance global supply chain, there are risks and challenges. The problems that businesses are experiencing are many in the global supply chain and are illustrated in Figure 2 (Lee 2004).
We believe that the problems businesses are facing are due to the lack of a standardized approach to the security of cargo container shipments. One container can move through up to twenty-five supply chain parties and involve thirty-five to forty shipping documents (www.apllogistics.com 2003). The standard container ship carries 4,000 containers (Kelley 2007). Based on this, the number of documents per container ship can be overwhelming. With so much worldwide commerce using shipping containers, a full security plan should be in place. Unfortunately, very little security has been mandated. In fact, much of the supply chain is largely unguarded and only the most visible elements are regularly protected (Closs et al. 2008).
After the 2001 terrorist attacks, more focus has been placed on these ocean-going shipping containers as the next possible avenue for terrorists. The United States was the first country to embrace and enact higher security standards due to these attacks. The U.S. Customs Service launched the Container Security Initiative (CSI) in early 2002, as well as the Customs-Trade Partnership Against Terrorism (CTPAT). Today, countries with nineteen of the world' s twenty largest ports--and other strategic locations--are working to enhance the security of the world's maritime trading system (Holmes 2004). Even with these efforts, very little progress has been made and a comprehensive framework for securing the supply chain has not been created (Closs et al. 2008).
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The purpose of this study is to illustrate how the Six Sigma DMAIC approach could be used to assist in the standardization of container security and thus help mitigate risks in supply chain design.
The motivation for this container supply chain study is to address the following questions:
(1) What are the major problems for cargo container shipments?
(2) What impact could a standardized security approach have on business results?
This note will provide the reader, first, with a short literature review to summarize the current contributions of literature to security considerations of supply chain and an explanation of the additional contributions of this study. The next section introduces the supply chain network and all of its layers and complexity. The third section introduces various Six Sigma tools used in the fourth section to analyze security considerations with respect to supply chain. The tools used will be the Six Sigma DMAIC method, failure modes, cause-and-effect analysis, and poka-yokes to make the container movement process more secure. The last section summarizes the major findings of this study.
LITERATURE REVIEW
Several articles have been written regarding supply chain security. Most of the early articles dealt with the specific concerns of drug smuggling and product theft in the cargo container shipment supply chain. But after the terrorist attacks of September 11, 2001, using commercial air transportation, all modes of transportation began to be scrutinized. After the attacks to the World Trade Center and the Pentagon, companies began to realize that the threat of terrorism does affect their ability to operate and successfully carry on their business. Almost every supply chain was affected by the closing of the U.S. airspace, grounding of the planes, and the closure of the borders that immediately followed (Sheffi et al. 2003).
Soon after, ocean-going container ships began to draw attention, for the minimal security requirements that were in place and the ease with which a terrorist could take advantage of the situation. There was also the realization that a world port shut-down would have a devastating effect on many businesses. Security experts believe it is only a matter of time before the United States or one of its allies is the victim of a terrorist attack using a shipping container, resulting in significant loss of life and widespread and/or global economic damage (Willis et al. 2004). Many more articles have since been written on these cargo container security concerns.
Many articles offer technology suggestions for better securing the supply chain, but there are roadblocks along the way. It is impossible to physically inspect each container in transit, even using modern scanning equipment, without bringing global trade to a grinding halt (www.apllogistics.com 2003). One goal is to implement security standards, while having as little impact as possible on the current system through the use of technology.
RFID could be a major technology that improves supply chain security and confidence (Lee 2004). Others feel that RFID is too outdated and potentially harmful to the supply chain. RFID signals can be used to detonate an explosive device when a container is interrogated (Giermanski 2008). New technologies are continuously becoming available. Smart containers-containers that use sensors and systems to track and report on much more than physical location-hold huge promise for improving supply chain efficiencies, and for strengthening U.S. national security, indeed security worldwide (Giermanski 2008).
In particular, most articles focus on the areas of the supply chain that require immediate attention. These areas include supply chain access control, supply chain facilities control, and supply chain security procedures. These articles offer suggestions on how to fix the security problems that exist. The suggestions seem to cover small portions or areas of the supply chain, but each of these pieces needs to be combined to create a successful security plan. The goal is shifting security efforts, from being a source of additional costs, to become the source of new benefits, increasing efficiency and providing competitive advantages (Sheffi et al. 2003).
Unfortunately, the supply chain is so vast that all levels in the public and private sector need to be equal participants to be successful in creating a secure supply chain. Success in securing the supply chain relies less on new methods and technology than it does on greater cooperation and information sharing among supply chain parties and between the public and private sectors (www.apllogistics.com 2003). All parties in the supply chain need to be active participants. Defense efforts of one firm can be nullified by the inattention or inadequacy of a single supply chain partner (Closs et al. 2008). Security steps need to be continuously monitored and improved to prevent new threats. There will likely be a never-ending challenge to secure the supply chain (Rice 2007).
This research contributes to the study of supply chain cargo container shipment security by focusing on a new angle. Specifically, using the Six Sigma DMAIC approach offers a way to potentially reduce the errors that lead to the problems and situations that negatively affect supply chain security.
SUPPLY CHAIN DISTRIBUTION NETWORK
Some 7.8 million loaded containers enter U.S. seaports annually--an average of more than 21,000 daily. Another 4.8 million containers pass through the same terminals and gates carrying export cargo. An end-to-end supply-chain move can involve as many as twenty-five parties and thirty-five to forty shipping documents (www.apollogistics.com 2003).
Figure 3 shows a high-level interaction between various stakeholders in the end-to-end global container supply chain (Barnes 2004). The cycle starts with a producer's need to export its product to a buyer. In between, the product and information is transferred between many stakeholders, including buying agents, road/rail/canal transporters, operators, freight forwarders, consolidators, customs, port operators, marine carriers, customs houses, brokers, and banks. There are different steps and interactions between them, giving some insight into the number of stakeholders, complexity, and potential risks throughout the supply chain. The sections that follow will examine the global container supply chain, specifically with respect to security risks and supply chain performance.
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