Excerpt from: China Supply Chain and Logistics Strategy
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| August 02, 2005 | | Linking Supply Chain Security with your China Sourcing Strategy | The growing importance of strengthening cargo security all the way down the supply chain to the point of origin cannot be ignored. In April 2005 the port of Shanghai became the 36th operational port to target and pre-screen cargo containers destined for U.S. ports. (Source: CBP.gov)
Naturally, security controls should be integrated into the strategic China sourcing process. Security should not be viewed as a standalone initiative. Rather, it should be embedded across the entire supply chain, from source to market. According to a study conducted by The Journal of Commerce and Unisys in late 2004, the greatest weakness in supply chain security lies within the first links to the chain, namely the point where cargo is loaded or en route to seaports. The weakest security gaps actually occur before cargo reaches the shipping docks. Thus, the impact on China sourcing strategies and contingency plans should not be overlooked.
Risks for the Complacent Importer
Changes in production, location, port, or material sources may raise security issues. How will your company compete with the proactive companies that already have well-defined China supply chain security strategies? Small changes in sourcing and logistics can create problems for the global supply chain since the US Bureau of Customs & Border Protection can conduct compliance audits.
Companies sourcing in China should identify areas where contingencies such as SARs may spur a change in location. For example;
- Changes in sourcing location or material sources could add scrutiny for security
- Using different ports but the same suppliers can lead to delays related to security
The bright side is that competitive advantage may be realized through a strategic supply chain security initiative. By going through the process of figuring out how to implement government guidelines, companies can identify opportunities for additional improvements in China sourcing. Improved supply chain integrity and data provided to comply with programs like CSI and the Trade Act of 2002 provide Customs with more visibility into importers’ activities. (Source: Logistics Today)
The CBT intends to provide a certain level of benefits depending on whether a company has been certified or validated or is exceeding minimum standards and has adopted C-TPAT best practices. (Source: tdctrade.com) Thus, becoming C-TPAT certified can help companies address many long-standing issues pertaining to global trade management:
- Incomplete, inaccurate, and late information
- Poor understanding of the end-to-end process, including shipment flows and identity of all the parties involved
- Lack of process controls and metrics (Source: ARC Advisory Group August 2004)
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