Frontline International Supply Chain Week

1
The Complexities, Necessities,and Possibilities
of Logistics Security

• Frontline International Supply Chain Week
• Logistics Security Forum
• September 18, 2003
• Michael Wolfe
• noriver_at_att.net

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• Making Sense at the Intersection of
• Supply Chain Systems
• Freight Operations
• Tracking Monitoring Technologies
• Business Economics
• Security

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Major TopicsMajor Messages

• The Context and its Implications
• The rules of the game are unstable
• Win/Win vs. Zero Sum
• Smart security measures can mitigate significant
  costs
• Role for Auto ID Related Technology
• Done well, AIT can be a boon but if done poorly
• Moving Forward
• Six complementary recommendations

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Main Topics

• The Context and its Implications
• Win/Win vs. Zero Sum
• Role for Auto ID Related Technology
• Moving Forward

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Threats, Countermeasures, and Impacts
Impacts
Threats and Assessments
Security Countermeasures
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Factors That Compound Economic Risks

• Potential for self-inflicted wounds
• How rational will we remain after a second or
  third major terrorist attack?

• Wolfes Paradox
• Overall logistics systems capabilities are
  growing simultaneously more robust and more
  fragile
• Complex Terrorism

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Threats, Countermeasures, and Impacts
Impacts
Threats and Assessments
?
Security Countermeasures
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Main Topics

• The Context and its Implications
• Win/Win vs. Zero Sum
• Role for Auto ID Related Technology
• Moving Forward

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Thoughtful Security Measures

• Drive variability out
• From manufacturing to the store-shelf
• 20-30 supply chain savings for the normal stuff
  of commerce
• Jonathan Byrnes

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Security Needs From Logistics

• Assured integrity of conveyance loading and
  documentation
• Significantly reduced risk of undetected
  tampering in transit
• Accurate, complete, and timely information about
  shipments

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Logistics Needs From Security

• Reliable, predictable processing times
• Protection of commercial information
• Globally harmonized security processes
• Security as a byproduct of supply chain management

• AIT technology can have great impact here

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Main Topics

• The Context and its Implications
• Win/Win vs. Zero Sum
• Role for Auto ID Related Technology
• Supply chain visibility and security
• Smart containers
• E-seals
• Moving Forward

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Improve Visibility and Control

• This is the most common recommendation to improve
  both security and productivity

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Visibility Discussion is Confusing

• Visibility of what?
• Visibility of items and assets
• By what means?
• Event-driven data and integrated systems
• In what timeframes?
• Timeliness keyed to needs
• From what sources?
• Data from shippers, carriers, and third parties

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Relationship of Visibilityto Supply Chain
SecurityRequirements

• Start with the requirements.

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Supply Chain Security Requirements

• Assured integrity of conveyance loading and
  documentation
• Significantly reduced risk of undetected
  tampering in transit
• Provide accurate, complete, timely, and protected
  shipment information

Plus support or enhance efficiency
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Potential Contributions to Supply Chain Security
Requirements

• Assured integrity of conveyance loading and
  documentation
• Significantly reduced risk of undetected
  tampering in transit
• Provide accurate, complete, timely, and protected
  shipment information

Plus support or enhance efficiency
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High Potential Technologies

• Auto ID tools for supply chain security
• Biometrics
• Electronic seals
• Sensors
• Auto-networking AIT devices
• Mobile communications platforms

The goal is smart containers and smart trailers
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Security Expectations Should Increase Over Time

• Now
• Hi security manual seals
• Auditable chain of custody

• Near Term
• Electronic seals
• Local reporting of tampering

• Intermediate
• Smart containers
• Global reporting of tampering

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Some Smart Container Initiatives

• Smart Container means many things
• Container of the Future IFTWG
• SmartCon CCDoTT
• Smart and Secure Container CIMC
• Smart Container Initiative - IICL
• Future Smart Container CWG

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Future Smart Container

• The challenge achieve breakthrough improvements
  in three areas
• Increased security against intrusion and
  undetected tampering
• Improved asset management
• Efficiency and service quality
• Affordability
• Net addition to the bottom line

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Characteristics of the FSC10 Categories, 44
Capabilities

• A. Sensors
• B. Choke Points
• C. Data
• D. Communications
• E. Power
• F. Security

• G. General
• Characteristics
• H. Commissioning Process
• I. Economics
• J. Network
• Integration

Smart containers require smart networks
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Major Value of the FSC Concept

• A tool to assess trade-offs
• Requirements/expectations
• Technical feasibility
• Economic affordability
• Timeframes

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FSC, Smart Containers, and E-Seals

• FSC concept sets the vision
• First generation smart containers are coming to
  market with built-in e-seals
• E-seals are a first step toward smart containers

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E-Seal Designs Vary
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Five Major Issues for E-Seals and Other Sensors

• Efficacy
• Do they work?
• Universality
• Can they be global?
• Reusability
• Should they be disposable, reusable or permanent?
• Inspection strategy
• Should there be a person-in-the-loop or not?
• Affordability

Most answers are works in process
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Main Topics

• The Context and its Implications
• Win/Win vs. Zero Sum
• Role for Auto ID Related Technology
• Moving Forward
• Six recommendations

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Address Constraints to Change

• Complexity
• Variability of business practices and needs
• Harmonization among 160 nations
• Bureaucratic friction
• Skepticism
• About requirements and solutions
• Concerns about cost
• Resistance to regulation

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Think About The Future Business Environment

• What is that environment likely to be
• after the time after next time?
• Access
• Reliability
• Cost

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Keep Technology in Perspective

• Technology is not magic
• Just because its electronic doesnt mean its
  better
• Good processes and discipline are critical
• Institutional challenges are toughest
• Technology is not irrelevant
• Just because its electronic doesnt mean its a
  mistake
• Smart technology can
• Enhance good processes
• Simplify demands on the workforce

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Tackle All Affordability Issues

• Identify complete costs
• Identify the bill payer
• Narrow, carrier focus tilts to no
• Broad, community-based focus tilts to yes

• Address potential business benefits
• Operating efficiency
• Customer service
• Theft and insurance costs
• Shipper logistics benefits
• JIT exposure to port closures

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Address Data Management

• Virtually every security innovation will expand
  the data management challenge
• For example
• 24 hour rule
• E-seals
• Smart containers
• Automated shipboard monitors

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Multi-task and Deploy

• For right now
• Mandate high security mechanical seals and chain
  of custody
• For near-term
• Press ahead on e-seal and sensor pilot
  deployments and standards
• For the intermediate term
• Exploit the Future Smart Container

Good security solutions sooner are better
than superb solutions some time in the future
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• Thank you for your attention

Mike Wolfe noriver_at_att.net 781-834-4169
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Sources References

• Security and productivity
• Freight Transportation Security and
  Productivity (2002)
• Summary is reachable under white papers from the
  freight security page at www.ops.fhwa.dot.gov/fre
  ight/transportation_security.htm
• Supply Chain Security Without Tears (2003),
  co-authored with Hau Lee of Stanford U.
• www.manufacturing.net/scm/index.asp?layoutarticle
  WebzinearticleidCA278114
• Defense Logistics trends and implications
  (2001)
• http//www.ops.fhwa.dot.gov/freight/theme_papers/t
  heme_paper_index.htm

• Technology for security and productivity
• Technology to Enhance Freight Trans. Security
  Productivity (2002)
• Reachable under white papers from the freight
  security page at www.ops.fhwa.dot.gov/freight/tra
  nsportation_security.htm
• Electronic Cargo Seals Context, Technologies,
  and Marketplace (2002)
• Same as prior
• Automating Security Do E-Seals Make Sense?
  (2003)
• www.eyefortransport.com/index.asp?news33911nlif
  reightch
• Target Capabilities for the Future Smart
  Container (2003)
• email from Mike Wolfe
• Trends in Freight Identification Technology
  (1998)
• Email from Mike Wolfe (noriver_at_att.net,
  781-834-4169)
• 
  Articles and papers by Mike
  Wolfe