The Leader - January/February 2008 - (Page 54) GloB a liz a tioN : GloB a l sUp p lY chai N s e cUri tY caN Be a do UBle -e dG e d s W o rd It is clear that supply chain security requires a global effort. Governments and organizations are likely to become increasingly cooperative in enhancing supply chain security, and, over time, this sharing of experience is expected to lead to less disruption and costs when introducing and implementing supply chain security measures. BreakiNG poiNt So, we’ve seen the benefits of globalization but what about the disadvantages? The smooth running of supply chains is indispensable for the proper functioning of most economies and companies. The increasingly global nature of supply chains has made them more and more vulnerable to disruption by external forces and events. If one link in the chain is interrupted, there are implications for all parties involved. In fact, disruption to the supply chain has been shown to have serious consequences on a company’s shareholder value, which typically plummets by about 8 percent in the first day or two after a supply chain disruption. There are a number of potential threats to supply chains, some of which have become extremely topical in the last few years. Physical risks include the ever-present threat of natural disasters or health epidemics such as SARS or the potential for an avian influenza pandemic. Other events such as strikes, political and economic upheavals, piracy, cargo theft, weapons smuggling, bankruptcies and food contaminations can also halt supply chains. Perhaps the most prevalent is the threat of terrorism. 9/11 really highlighted the vulnerability of global transport infrastructure to the terrorist threat, and, as a result, security emerged as one of the most important challenges facing the global logistics market today. The subsequent years have seen national officials and shipping industry leaders wrestling with the question of how to deal with this enormous threat. While many of the initiatives introduced to combat terrorism are simply not practical to the logistics industry, in the past five years, security has generally been stepped up with a number of new reasonable measures being introduced by both governments and organizations with a focus on prevention rather than final inspection. These include: n The International Ship and Port Facility Security (ISPS) n The Container Security Initiative (CSI) n The US Customs-Trade Partnership Against Terrorism (C-TPAT) n The Smart and Secure Tradeline Initiative SST Initiatives such as C-TPAT represent a good start and are likely to act as the backbone for future initiatives. New technologies such as smart containers (a smart box is able to communicate evidence of tampering and will record every legitimate, as well as unauthorized opening of the container) are seen as paving the path to the future of supply chain security. While new technologies such as this are being adopted by governments and large multi-national companies, it is important to add that the responsibility of cargo security cannot fall on in-transit players alone — co-operation and responsibility throughout the whole supply chain needs be engrained. Nevertheless, many consider current initiatives to be insufficient, and, sometimes, responsible for even greater disruption to the supply chain process, not least due to added costs and delays to shipping, particularly in the air cargo business, which relies heavily on speed. The challenge for companies: how to implement these policies and improve their supply chain security with minimum disturbance? It’s not all gloom and doom – improving security measures need not be seen as merely an extra cost. Complying with measures such as C-TPAT and CSI can increase a company’s reputation for security, thereby leading to improved partnerships and supply chain collaboration. In the long run, as these practices become the norm they are likely to become more efficient and may lead to a reduced risk of costly disruptions. impact oN propertY How has all of this affected the property market? To date, occupiers have borne the brunt of the wave of security measures introduced to the global supply chain. While there has been little impact on rents, the following have been identified as key issues: n Occupiers have had to pay for 2 0 0 8 the le ade r 54 J aN Ua rY / F e B rUa r Y
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