Technology, mobile and otherwise, has had a profound effect on the transparency of supply chains on the local level.

With little effort, and real-time GPS technology, logistics managers and fleet operators can easily see if a truck full of cargo has stopped for a suspicious amount of time, or been diverted from its planned route.

 Using simple push-talk phone technology, the manager can then quickly determine whether a problem exists or whether the driver is either stuck in traffic or gamely trying to avoid it.

As for the drivers themselves—a case in point being drivers for the Coca-Cola Bottling Company—wireless receipt printers help them avoid going back and forth to their trucks to complete a client’s order.

Some estimates suggest that simply cutting out that single trip to the truck allows Coke’s route managers to squeeze in as many as four additional stops per day.

On the other end of the supply chain spectrum, bar code and RFID technology has allowed major food companies to track dangerous or spoiled cargo back to its specific source, limiting their exposure to losses due to massive recalls.

“The applications and benefits of technology to supply chain management are endless,” said Mike Terzich, senior vice president of sales and marketing for Zebra Technologies, the Chicago-based manufacturer of thermal transfer bar code printers and related label design software.

But if such applications appear to have revolutionized supply chain management over the past decade, many experts concede much, much more has to be done in the realms of both technology and information sharing to truly ensure door-to-door visibility of the world’s goods and raw materials.

Key to understanding the true impact these technologies are having on supply chain transparency is to consider them as they exist in the real world: As both vast global networks and as more localized entities.

Scott Szwast, global freight services marketing manager for UPS, said regardless of how complex it becomes, a supply chain is always—in essence—goods in motion.

A key ingredient to real-time visibility

“The ability to monitor these goods in real-time is critical, both in terms of business planning and security,” Szwast said. “This real-time visibility would, of course, be virtually impossible without mobile technology, which has simplified processes and allowed for greater supply chain optimization. And of course, the more simplified your processes, the easier they are to secure,” he said.

What that means to people like Zebra Technologies’ Terzich, whose company has been expanding its portfolio to include RFID technology and software intended to addresses issues ranging from counterfeiting and diversion to food safety, is that they are constantly trying to fill a niche where people want to know more, and know it more quickly.

“Part of it stems from the fear of terrorism, part is borne of the desire of high-branded companies to protect their corporate image—and in the process the jobs of their employees—from knockoffs, and part of it stems from retailers and end users of the goods in transit, who are seeking a higher level of confidence in the quality of the products they receive,” Terzich said.

Between the terrorist attacks of Sept. 11, 2001 and the global economic crisis, which led to the current decline in world trade, some 48 million containers moved through global supply chains annually, Terzich noted.

Technological solutions have inspired governments and supply chain mangers in the private sector to look beyond the basic desire to understand what’s in a container, where it has been and where it is going, and to continually look for new ways to facilitate and expedite global trade.

UPS’ Szwast pointed to the Automated Commercial Environment (ACE) established by U.S. Customs and Border Protection as “a great example of government providing a framework for further connectivity and automation” for supply chain processes.

ACE, which has been rolled out over several years, has transformed the processing of cargo from a shipment-by-shipment approach to an accounts-based system. At the same time, Customs has created a centralized Web portal to connect the agency more directly with the trade community.

Over time, ACE has enabled the agency to compile profiles of all importers and exporters, as well as their shipment and payment activity.

“UPS pioneered a system in 2002—prior to ACE—called Target Search to assist the Customs officials inspecting shipments coming through Worldport, UPS’s largest international air hub in Louisville,” Szwast said. “Target Search provides electronic information to Customs officials so that they can effectively target and select shipments for inspection ahead of time, expediting the customs clearance process.”

Of course, developing a synergy with Customs officials is one thing, but what about sharing the cost? At the very least, what about spreading the cost of security across an organization?

Fortunately, Szwast said, many of the same technologies are employed on both the security and operational side of the equation.

“For example, at UPS our small package and ground freight drivers both use a wireless handheld computer that is key to tracking the goods being moved,” he said. “The device—called a Delivery Information Acquisition Device or DIAD—scans a barcode when the driver makes a delivery and, virtually in real-time, uploads that data to a mainframe where it is available to the customer for security and visibility purposes.”

Szwast adds, “The same is true of a comprehensive portfolio of visibility systems that UPS makes available to customers.”

Looking at the trade equation from a broader perspective, Szwast said standardization of processes and tools in support of international trade has been a key enabler of the growth in international commerce. 

“Incoterms are a great example of that,” he said, referring to the standardized international commercial terms promulgated by the International Chamber of Commerce.

It's not one-size-fits-all

But not everyone agrees that the wider proliferation of technology over the past decade has made international logistics quite so supple.

Among those with a deep perspective and perhaps a dissenter’s view on the global supply chain is David Fairnie, director of security for DP World, one of the largest marine terminal operators in the world with 49 marine terminals and 12 new developments across 31 countries.

“To be perfectly honest, in my opinion and experience, I’m not sure technology has improved the visibility of global supply chains,” said Fairnie from his office in Dubai. (DP World is part of the Dubai World, a holding company controlled by Dubai’s royal family.)

“While there are a wealth of technologies out there, we haven’t seen one technology emerge that’s been wholeheartedly embraced and adopted by logistics players,” he said.

Fairnie believes one of the barriers to coming up with a one-size-fits-all supply chain technological solution is that there’s always more to using technology as a tool than simply taking it out of the box.

“Before you get to the point [of selecting a technological solution to your supply chain challenges] you’ve really got to look at your people. ‘Do you have the appropriate people in the right positions?’ And only then look at the technology itself to determine whether it is appropriate to the environment, which in our case is heavy industry and dealing with trucks passing to and from our gates. The last step—before purchase and attempted implementation—is to then look at your processes.”

He continues, “In the latter case, what you need to look at is how we apply technology and our people in such a way that not only protects our assets, but adds to the value of our operations.”

As an example, Fairnie pointed to gate operations. In recent years, international legislation has mandated greater control over the access people and vehicles have to port terminals. Of course, a guard could check the ID of every individual who seeks access to the terminal, “but that’s a laborious process that would slow the flow of commerce,” he said.

Technology then must have a role, whether it’s a simple badge system or one that incorporates biometric information. But at a time when companies are striving to get everything they can from their supply chain dollars, is it worth the expense to go as high-tech as possible?

DP World didn’t just implement a biometric system at its gates and leave it at that. Its tech people realized that the cards could be a valuable tool for monitoring employee time and attendance.

“That’s what I think of when I think of security technology having a value-added role,” Fairnie said. “You’ve implemented a security measure that also serves a payroll function, ensuring that you’re not paying individual employees too much or too little.”

Another example Fairnie pointed to revolved around security surveillance.

“Companies that make up the global supply chain spend an awful lot of money on health and safety,” he said. “They invest in education, safety equipment, training, and yet many of them still have accidents, lost-time injuries and fatalities. It’s a byproduct of an industry where you are always trying to do things quicker and faster. And of course, it’s human nature to say, ‘Well, what is the chance, really, of that container hitting me on the head?’”

Nonetheless, “What we’ve found is that unless you truly follow up on this training, much of these investments are wasted,” Fairnie continued.

“What we did at DP World was to use our integrated security system as a means of advancing our health and safety objectives,” he explained. “From a security point of view, we need to know what’s happening at the perimeter of our facility, and so we have cameras and sensors that are looking for nefarious acts, and feed information to our command and control center.”

“However, we realized that this doesn’t have to be the focus of our system 100 percent of the time, and in fact, we could get more from the equipment by using it to identify when unsafe or unhealthy practices are occurring, and then reacting to it, by either contacting the person on his mobile device or actually responding to the scene.”

When an unsafe practice occurs, such as in the case of a worker wandering into an area restricted to heavy equipment, the individual will be briefed on what they’ve done wrong, and be asked to sign a note promising to not to do it again. The information is then turned over to DP World’s Health and Safety Department, which then schedules the individual for retraining.

“A single fatality can cost a company as much as $5 million, according to the insurance industry, and that’s not counting accident related delays and other intangibles,” Fairnie said.

But if a company’s failing to grasp the most comprehensive and cost-effective applications of technology is one barrier to greater transparency of the global supply chain, it is not the only one.

 “In simple terms, everyone is waiting for U.S. Customs to make a determination on what it believes the desired technology to be, and that’s preventing their adoption in the private sector,” Fairnie said. “That’s because uncertainty over what the standard will be has a direct correlation to the ability of the manufacturer to mass produce it at the price that makes good business sense to those engaged in moving cargo.”

According to Fairnie, “Until somebody mandates the use of a particular technology, whether it is an RFID or some other e-seal technology, movement in this area is going to be somewhat slow.”

And, while the Automated Commercial Environment (ACE) might be working well in the U.S., at least for UPS, Fairnie believes that on a global scale there’s a lot of information that’s being generated by logistics operational processes worldwide that is simply being underutilized.

 “If you could suck this information up and feed it into a global information hub, it could then be used in a coordinated manner by governments and individual agencies to provide a better assessment of the risks that are out there,” he said.

At present, two separate consortiums—the Smart Container Management Transportation Consortium (SCMTC) and the Integrity Project—both funded by the European Union in partnership with China, are evaluating differently approaches to creating just such a common user platform or information sharing exchange for governments, trading partners or both.

The integrity project, for instance, is looking at significantly improving the reliability and predictability of door-to-door container chains through the development of a so-called “Shared Intermodal Container Information System.”

In concept, authorized companies and authorities would have access through the system to planning and status information of selected transports.

Research funded by the SCMTC is ultimately intended to overhaul the door-to-door container transport chain on a worldwide basis, creating a more efficient, market-driven and secure cargo movement process.

But that’s not to say everyone is one board when it comes to the question of seeking a greater level of transparency in the supply chain through the implementation of technology.

In fact, Earl Agron, vice president of security at APL, a wholly owned subsidiary of Singapore-based Neptune Orient Lines, a global transportation and logistics company engaged in shipping and related businesses, said there is little justification from either a business or security perspective for real-time visibility at the container level.

“Today, ocean carriers, within hours of a container status change, record location data in their proprietary systems and make that data available to their customers,” Agron said. “The supply chain security benefit of real-time container visibility is negligible.

Further, he said, security must be risk-based.

“One size does not fit all,” he emphasized. “People, processes and training are the three keys that should receive initial focus,” Agron said. “We must also employ overlapping layers of security. Realizing the adversary is adaptable, the private sector should not pour all of its resources into one expensive technological solution thinking it is the silver bullet. I have seen few technological security gadgets that can be justified solely on security benefits,” he continued, echoing the perspective described by Fairnie, that, “The ideal solution is one that provides an enterprise with dual benefits—a commercial return on investment and improved security.”

In fact, Agron believes that advocates for end-to-end supply chain visibility through technology or other means are missing the point.

“End-to-end visibility does not provide improved security in and of itself,” he said. “In addition to detection achieved through technology, response to any alert must also be possible to achieve improved security.”

“What security is gained if, for example, a gadget sends an alert that a container door is opened but no immediate response by law enforcement is possible?” he said. “Similarly, since containers can be breached in less than 15 minutes, what security benefit is gained if a visibility gadget detects a 30-minute delay due to traffic congestion?” 

In addition, “Think of all of the nuisance alarms requiring attention that would be created,” Agron added. “If only 10 million of the world’s container fleet send data once every hour that is almost a quarter billion messages every day that needs to be analyzed. I am afraid we would be making the haystack so large that the probability of missing a threat would actually increase. This is one of the biggest issues in applying technological security solutions at the container level.”

But, Agron was far from complacent. In point of fact, he does believe that since supply chains initiate and transit through multiple sovereign nations, “an economic and interoperable international security standard is required. Without one international standard, the effectiveness of any technology would be undermined,” Agron said.

To get there, however, would be solving a whole host of daunting challenges. Agron, for instance, sees the proliferation of mobile phone, GPS and other technologies as adding more risk to the global supply chain because as the use of technology expands, so too does the number of people who have access to sensitive commercial information.

“Information security becomes a critical risk that must be carefully addressed,” he said. “Passwords, computer viruses, stolen laptops and lost thumb drives can result in serious security breaches that could result in significant direct and consequential damages.”

Keeping costs in check

But even in light of those concerns, Agron said there’s a broader question that has to be addressed—how does one create greater supply chain security without substantially driving up the cost of shipments and without slowing cargo movements?

“This is the million dollar question,” he said. “We always need to balance security with trade or we might cripple the economic system we are trying to protect. Probably the best means of improving security is increased collaboration between the private and public sectors at both the local, federal and international levels.”

This again gets back to the concept of getting everyone on the same page when it comes to implementing technology and crafting an international technology standard.

Fairnie said without an international standard or a compliance requirement for a specific piece of technology, like e-seals on cargo containers, people simply don’t see why they have to go to the trouble of securing such items.

“As we’ve seen in the past,” he said, “when the U.S. government says, ‘This is what we want,’ then the industry is quick to comply.”

To some, however, “mandate,” is a dirty word—a stick brandished without the industry having even been offered a carrot as enticement.

“Enticements?” Fairnie said. “Actually, I think there’s a fairly good one: customs facilitation.”

Fairnie holds that in addition to transparency what people want most in their supply chains is velocity, and one of the biggest inhibitors to making supply chains move faster is the requirement for U.S. Customs checks in the name of national security, and U.S. Treasury checks, as a means to tracking what kinds of goods are coming across the border.

“If U.S. Customs could reward investment in technology and a demonstrated commitment to greater transparency with a faster transit time through the inspection process, that would be a big incentive,” he said. “At the same time, I think they’d have to respond to those who haven’t taken steps to make their supply chains more transparent by saying, ‘In your case, we need to check every box.’”

Despite all this, Fairnie grew somewhat introspective when asked if the proliferation of technology over the past several years has made the supply chain more secure.

“In my personal opinion? The answer is ‘No,’” he ventured finally. “No, we are not in a secure world. In regards to visibility, and speaking in general terms, as a terminal operator, we don’t know what’s in the box when we accept it—other than what’s listed on the manifest.”

“If you don’t have some electronic or other means to verify the contents, you can’t know, definitely, that something else hasn’t been stuffed in the box. Right now, there’s still a lot of reliance on simple trust.” wt



Contributing writer Dan McCue lives in Charleston, SC where he writes frequently on global trade, foreign direct investment, and port-related issues.

Sidebar: A Layered Approach to Security

David Fairnie, director of security for DP World, likes technology, but doesn’t subscribe to the notion that any one tech tool will provide complete transparency to a supply chain or even an individual facility.

Nor should it, he said.

“Whatever individual technology you’re talking about, I think of it in terms of being part of what Michael C. Kostelnik, Commissioner with U.S. Customs and Border Control, described as the layered defense system for supply chain security and transparency,” he remarked.

“Yes, if a technology makes you feel that your supply chain is more transparent, use it, but also recognize that there are other layers, some of which you can put into place yourself, and others that for which you need to rely on others.”

In Fairnie’s view, true supply chain transparency and, by extension, security, can only be achieved through the combined efforts of the public and private sector.

“For instance, one layer is U.S. Customs using risk assessment engines to identify where the high-risk containers are and targeting those containers for inspection,” he said. “Now, that requires information to feed the engine, so another layer of protection for the global supply chain is the 10+2 rule that the U.S. has introduced, which requires importers and ocean carriers to electronically submit to Customs a total of 12 data elements including manufacturer, seller, consolidator and buyer information, as well as the container staffing location and container status messages.”

The next layer is inspections of cargo containers using X-ray and other screening that searches for weapons of mass effect. Then there’s the utilization of e-seals, RFID, and the like. Only then does the use of mobile devices, GPS, and other technologies come into play.

“There is no silver bullet when it comes to protecting the world’s supply chains,” Fairnie said. “I think there needs to be a combination of several, and I also think there is a value to identifying solutions that not only meet requirements on security, but also add value in terms of velocity and transparency.”

While some still argue against revising their technology regime, citing fears that such investments will drive up shipping costs or slow cargo movement times, Fairnie said paying attention to what one’s actual needs are is the best way to ensure future investments are in line with the company’s goals.

“The first thing you have to do is analyze your situation and determine what you really need to do,” Fairnie said. “One mistake people make is they throw money at technology and come away frustrated. Personally, I think it’s a poor choice to just automatically reach for a technology solution.”

He explained, “What we found at DP World is that it was not cost effective to just rely on technology,” he continued. “The most cost effective approach is to invest a bit in people and then to invest in technology as a tool, or extension of the human side, of your operation.”