Security convergence and global security practices help to cut billions in supply chain theft each year. Gerrit Wassink, Director of Strategic Accounts Logistics, ADT Fire & Security, takes a look at real applications.
In the good old days of the late 20th century, highway bandits never had it so easy. Global supply chains had security holes in them, large enough to literally drive stolen big rigs through.
Not that manufacturers hadn't noticed. Yearly losses were running in the tens of billions of dollars. Even today, the annual cost of cargo theft worldwide is estimated to be US$60 billion. The problem was that corporate security and logistics teams had not yet joined forces to systematically fight the crooks. Many legitimate stakeholders in the world's supply chains considered theft a cost of doing business.
Today that has changed dramatically, thanks to a call made in 1997 by a frustrated logistics manager at Compaq Computer (now part of Hewlett-Packard) in California's Silicon Valley. Gary Alton, then a Compaq divisional security manager who took the call, listened as the caller complained about thieves stealing truckloads of PCs and laptops. Not just a truckload — truckloads.
When Alton checked with his counterparts at other high-tech firms, they shared similar woes of tractortrailers stolen from everywhere — truck stops, loading yards and desolate highways.
Theft of a single truck's payload could cost $1 million or more. Alton's conversations with his colleagues led him to convene the security heads from 25 other local high-tech companies, resulting in the Technology Asset Protection Association (TAPA).
Global Problem, Global Solutions
Now, more than a decade later, TAPA has expanded its scope and name, calling itself the Transported Asset Protection Association. Its 600-plus member companies span affiliate organizations in Europe, the Middle East and Africa (EMEA), Asia and Brazil. Together its members have annual sales of nearly $1 trillion, with much of that value in goods of all kinds transported from one part of the world to another.
With that kind of shipping volume comes clout. Early on, TAPA set up a security certification program based on standards it calls Freight Security Requirements (FSRs). It forced freight forwarders, logistics and transport companies to hire outside firms to audit their security practices. The TAPA proposition was simple: Those who gained TAPA certification could qualify to gain more business from TAPA members than those who did not. Today, some commercial companies require TAPA certification for their logistics companies to do business with them.
But the FSRs, which focused on securing freight forwarding facilities, turned out to be just a start. TAPA members realized 85 percent of cargo is lost on trucks. As a result, it rolled out Truck Security Requirements (TSRs) in 2006 and plans to introduce Cargo Terminal Security Standards next.
New Era of Cat and Mouse
TAPA grew out of a need for theft protection by industries producing compact, high-value goods that are easy to steal and fence. A single box of specialized computer chips can cost hundreds of thousands of dollars. Apparel, smart phones, watches, jewelry, gaming consoles, pharmaceuticals and plasma televisions are other goods prized by thieves. Small wonder that the world's leading manufacturers of these products are TAPA members.
TAPA reported in 2007 that an independent audit of 24 members showed savings of nearly $500 million — about $20 million each — more than five years by applying TAPA standards. But the fact is that as the volume of world trade grows and as borders become more open, thieves have become more organized and sophisticated, able to steal goods seemingly at will. In fact, many gangs can "steal-to-order" digital cameras, athletic shoes or any other category of goods, depending on what their “customers” might want.
The European Union is a prime example. It now spans 27 countries with a forecasted $18 trillion in economic activity for 2008 and about one-sixth of that exported outside the region. TAPA estimates about $12 billion in goods will be stolen, much of it by criminal syndicates aided by insiders and loose security practices. That physical loss not only hurts the profits of the source companies, but also is a loss of irreplaceable sales opportunities.
In today's global economy, companies want to know where their goods are. They have increased expectations of accessing that information 24-7 — even being able to see their goods in transit. But highly organized gangs, who often work with insiders, want to know too.
Using increasingly sophisticated methods and technologies, both sides play a high-tech game of cat-and-mouse: to prevent theft on one side and to steal the goods on the other. The playing field is the entire supply chain. At any point along it — wherever goods sit, wherever they are transferred and wherever they change possession — they are at risk.
From Reactive to Proactive
Prompted by the TAPA standards, the logistics industry has made huge investments to thwart theft in recent years both in technologies and in processes. Some top logistic providers have gone much further than TAPA's standards. They find that providing tight security to the high-value goods of its customers today is a competitive edge. In the future, they assume it will be a market mandate.
In the meantime, security professionals have and will continue to deploy the usual prevention, intervention and investigation tactics and accompanying tools. Access control, surveillance, electronic article surveillance and tracking, unmarked boxes and pallets, fire and intruder alarms, monitoring and GPS devices are all part of the mix. What's changing in this tool set are the technologies inside them and the technologies networking them.
The components of these security devices, systems and solutions are becoming highly integrated, putting more “smarts” inside them. Network cameras can have video analytics, which can provide pattern recognition of boxes on a moving conveyer line and even facial recognition of logistics personnel. This is an advantage over analog cameras and DVRs without built-in intelligence, useful only for tedious forensic investigations.
To further illustrate, if the camera is monitoring the line and a box goes missing, it can send an alarm over the company's network (or encrypted via the Internet) to a centralized monitoring system or station for investigation. The facility's entire network of cameras could be connected with barcode scanning or RFID tag data of the moving packages. The converged data makes it easy to automate an ultrafast frame-by-frame video search of the entire video data pool in seconds to find the “last seen” scene of the missing package.
That kind of insight can help make catching the thief much more likely — or at least help prevent such theft from happening again.
As for networking, IP means the central station can be anywhere on the planet. From there, it can signal an on-site guard's smart phone to something amiss and provide the video clip to help investigate.
Among other examples of IP networking's applications are pan-regional access control systems. Until now, access control was typically localized. Drivers would need several badges to access different sites or borrow them from other drivers. Either way makes for security risks and big administrative overhead. A single IP-networked system can improve security and optimize operational efficiencies across the company.
This convergence of security and information technologies has many implications. One of the most profound is this: Convergence can enable security professionals to be less reactive to events such as alarms and more proactive in their fight against crime, via data-driven, predictive security models. This way, security professionals — teamed with their logistics counterparts — can neutralize risks before they happen, such as by designing loading patterns and processes so goods are not left exposed. They can use predictive security models to reduce the probability of risks and determine what levels of vulnerability are acceptable.
Keeping it Simple and Consistent
Logistics by its nature is a distributed enterprise. As such, it needs transportation, warehousing and material handling capabilities. But to scale globally, it needs extraordinary information management and communications capabilities to match.
Since logistics companies are in the business of moving goods, securing those goods from loss and theft is inherently part of what they do. It makes sense then that eventually — and inevitably — their operations people, information technologists and security professionals would meet at the table, as they have now.
While coming together has made strides in protecting valuable customer goods, logistics companies still have a primary mission of getting goods where they need to go, with delivery when promised on a daily basis. It helps to have strategic partners supporting their efforts.
These partners should be logistics sector experts who understand the market, and customer dynamics and solutions. They should know that service levels drive performance pressures and quality of service is a logistics company's key competitive differentiator. They should think beyond borders and time zones, but realize both can provide logistic challenges nonetheless. Most importantly, they should be able to imagine integrated solutions both across systems and business processes.
Along with technological advances, TAPA has helped the logistics industry take steps toward standardized security practices worldwide. Both technology and standards are important to keeping worldwide security as simple and consistent as possible. Both make the global application of converged security solutions not a cost of doing business, but an investment in the business — with payoffs in better operational performance and greater customer responsiveness and satisfaction.
Some day, we will look back at our present times and call them the “good old days” too. Thieves will be with us then just as they are now, ever adaptive. But with the continued evolution of technologies and standards, their take of the world's material value stream surely will be ever smaller.