A global perspective on supply chain risk management
22nd September 2009 by Richard Gunawan
All goods bought and sold move through supply chains of some description, making the security of goods in transit an issue that alerts everyone. While terrorism is a potential threat, theft is a clear and present menace; it erodes profitability and disrupts supply chains on an on-going basis.
The cost of theft is a major driver for improved security — in Holland alone, which produces less than 1% of world GDP, annual cargo theft losses have been valued at €300m.
For the food sector, tampering or poisoning of consumable goods represents a major risk. The US Department of Homeland Security and other government agencies have identified food establishments as a potential ‘target’ for terrorist attacks because this would damage food supply and the economy. Furthermore, it has the potential to cause physical and psychological harm to citizens.
For several industries, in particular pharmaceuticals, security issues include fake branded products and the substitution of goods with counterfeit or inferior quality replacements. Recent supply chain security initiatives are also designed to address security problems relating to the sale of counterfeit goods. In August of 2008, Hong Kong customs discovered 2.5m cigarettes in a container that was marked to contain other goods. If these items had not been identified as fake, they could have been sold as original brand goods, resulting in a substantial shortfall in excise income for the Hong Kong Government.
Currently there are too many variations of national and international security standards. The rules and legislation can be complex and eventually the international community will need to adopt frame work such as ISO 28000 to streamline these processes.
The wider official recognition of ISO 28000 and will confer a number of benefits to government executive agencies. The most significant benefit will be a better split of responsibilities. Whereas government agencies are responsible for law enforcement and administering legal compliance, the assurance industry can provide independent verification, certification and subsequent surveillances for certification maintenance.
LRQA’s commentary was published by Supply Chain Asia. To obtain the full article, please click here.
Richard Gunawan is Vice President for business and sustainability development for LRQA Asia. He has more than 15 years of commercial experience and is committed to assisting businesses in Asia to mitigate risks and to grow in line with CSR principles.