LP Magazine

JUL-AUG 2019

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

Issue link: http://digital.lpportal.com/i/1146652

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Page 38 of 76

38 JULY–AUGUST 2019 | LOSSPREVENTIONMEDIA.COM SUPPLY CHAIN Top Global Supply Chain Themes for 2019 F ive major themes that are most likely to impact the supply chain in 2019 are delineated in a new report from BSI in the UK. The analysis of how these five themes will affect supply chains forms the business improvement company's annual analysis of global supply chain risks. The five themes identified include: 1. Revision of the minimum security criteria under the US Border Protection's Customs-Trade Partnership Against Terrorism (CTPAT). 2. Supply chain growth in Africa increasing exposure to varying risks. 3. Ongoing mass migration posing both security and corporate social responsibility risks. 4. Dramatic shifts in geopolitics creating uncertainty in supply chain operations. 5. The continued threat to supply chains posed by cyber-security issues. Several key trends in supply chain risk from 2018 were also identified in the report: ■ Food and beverage remained the top commodity stolen. ■ Metal has now entered the top five commodities stolen worldwide. ■ Poor working conditions led as the top labor violation recorded last year. ■ Labor strikes most frequently disrupted manufacturing operations. Jim Yarbrough, global intelligence program manager at BSI, said, "We're seeing key shifts to global supply chains this year, driven by quite dramatic changes in the geopolitical landscape. The concern is that as supply chains change—with Chinese companies moving operations to Africa, for example, or the US sourcing goods from other Southeast Asian nations—major implications will also evolve." He added, "Increased exposure to labor exploitation, terrorism, corruption, and natural disasters must be a consideration for companies making changes to their supply chain, and best practices must be maintained in order to prevent threats to business continuity or corporate social responsibility." The report provides analysis of each of these top supply chain themes to help organizations increase their understanding of potential exposures. A sample of the analysis follows. CTPAT Minimum Security Criteria Within the United States, companies enjoying trade benefits under CTPAT will soon need to meet new criteria for certification in order to meet the evolving risks of today's operational environment. As the revised criteria for CTPAT are unveiled, companies will need to undertake new efforts to achieve supply chain security and mitigate emerging risks. In an article on the changes posted on the magazine website, Tony Pelli, supply chain risk consultant with BSI, said, "Management commitment to supply chain security is one of the major areas where the criteria are changing. Member companies are now required to have a documented security review policy to help ensure that they are maintaining supply chain security at all times. This will require oversight from a dedicated point of contact for supply chain security issues, with support from logistics, supply chain, procurement, and IT teams. Members are also required to assess where risks exist in their supply chains on an annual basis or as risks change, another task that will require management review and commitment." Pelli added that the new security criteria will also include changes to the physical security measures that members and suppliers are required to implement. Exposure to Varying Risks in Africa BSI's report reveals the potential for increasing movement of supply chains to Africa, particularly among companies based in China spurred on by the US-China trade dispute. Shifting manufacturing operations to Africa, where labor costs are lower and shipping to the US and Europe is cheaper, can be cost-effective compared to staying in China. However, the report warns that the relatively unchecked risk of terrorism in African countries, where 23 percent of all supply chain terror incidents take place, sets the operational environment apart from that of Asia. Companies whose supply chain moves to Africa must be wary of this increased risk, often compounded by corruption among security and customs personnel. Migration Continues to Pose a Risk As conflict together with political and economic conditions continue to drive mass migration, businesses must contend with the double-edged challenge of security and corporate social responsibility risks. This year's report records an increase in stowaway and labor exploitation risks stemming from migrants traveling along three major flows—Central to North America, Intra Southeast Asia, and Africa and the Middle East to Europe. BSI has also noted regression in countries such as Brazil where budget cuts are reducing the resources available to carry out inspections that could increase the risk of migrant labor exploitation. Jim Yarbrough Tony Pelli

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