Manufacturing security protects technology — and people
Managing your supply chain today requires more than securing your networks and your physical inventory and assets. It also demands paying close attention to your workflow and your people. This article discusses why your company's data security and physical security are equally significant concerns in the global supply chain.
In Summary:
| • | Work with your employees and those of suppliers to codify institutional knowledge around processes. |
| • | Use incentives to keep employees focused on the importance of security. |
| • | Consider the potential of repurposing technologies, such as RFID, for security. |
The notion of security in manufacturing has changed radically over the past few years. Increased terrorism threats have made port security critically important. Globalization has extended supply chains, leaving manufacturers vulnerable to potential interruptions beyond their control. For some cutting-edge companies, outsourced manufacturing means potential product-design theft.
As a result, companies are now applying risk-management concepts to supply chains. They are taking steps to ensure that product designs are not easy to copy and they pay more attention to workflow issues on their supply chain.
To ensure safe delivery, you not only need to track goods, but the data about those goods. You must also think about workflow and human-interaction issues in your supply chain.
Gain insight into processes to develop a risk management plan
A key part of security is risk management. You should be able to identify every step a component makes along your supply chain, according to Vince Kasten, managing partner of a team that oversees global development at computer equipment maker Unisys. "You need to know what connects with what, and then where, when, how, and how much. You need to build a blueprint of your business processes to get visibility into what's really going on," he advises.
Such visibility is critical for developing a risk-management plan, says Kasten, co-author of Get It Done: A Blueprint For Business Execution (Wiley, 2006). To get this blueprint, do what any good investigator would do: Model what you know, then go to the warehouse or plant floor or accounting department and talk to the people there to develop the full picture.
Eventually, you can map out a supply chain with an associated contingency plan — accounting for everything from lining up a second source for components, manufacturing, and transportation. For instance: Do you have a backup plan if the port of Rotterdam gets so congested, your parts are stuck somewhere on the North Sea? The financial implications of missing customer deadlines — or even losing a customer entirely — make it crucial to understand the risks inherent in your supply chain.
Reevaluate how you design and manufacture products
Protect your intellectual property to protect your competitive advantage.
Many high-tech companies simply don't give the latest designs to an outsourcing partner. Instead, they wait until the product has become more of a commodity. Once that occurs, they might shift manufacturing operations to countries that are less expensive for production, when the risks are lower for design theft.
In addition, you should install protective capabilities on laptops so that if one of your employees loses his or her device while out of the office, the data is blocked after a failed password attempt.
Security issues for the finished product
Workflow issues, such as logistics, are also a security concern. For instance, you must think about the protection of your merchandise while it's in transit.
Avnet Logistics is a division of Avnet, one of the world's largest electronics distributors, and is responsible for transporting materials around the world. Its president, Jim Smith, worries about security regularly, and he believes people relate significantly to security.
When Avnet was transferring to Phoenix the assets of a Nevada company it had purchased, Smith deployed 15 trucks, each one sealed upon departure. Each 54-foot truck had two drivers, so that one could stay with the truck at all times. Each driver had a cell phone, and they were called randomly on a periodic basis to ensure they were still in route. For areas where there was no cell coverage, the trucks also had GPS devices.
In an industry with high-value components, background checks on personnel are prudent and practical. Think of such tactics as insurance, he advises. Additionally, if you pay close attention to hiring, you have better retention, and lower costs in terms of retraining and business disruption.
Incentives are also important in terms of helping employees protect your goods and assets. Avnet Logistics compensates employees based both on their personal productivity and the cost of running the operation — measures that reduce temptation and decrease the chances of theft. For instance, if $500,000 worth of equipment is pilfered, it affects company profitability, which in turn afects employee bonuses.
You can't stop thievery, Smith believes, but you can take steps to reduce internal temptation and external opportunity. "Where we have those programs in place, we have a much better facility."
Security technology just for the supply chain
While the supply chain still has gaps in how it uses technology (especially, sources say, with small freight-forwarding operations), the situation is improving, especially with global transportation companies such as FedEx, UPS, and DHL working to serve midsize companies better. These providers can handle the 24-hour anti-terrorism rule set forth by the U.S. Customs Service, which requires detailed descriptions of the contents of U.S.-bound sea containers 24 hours before the container is loaded onto a vessel.
Smith also notes that electronic data interchange (EDI), RosettaNet, and other third-party communication systems include capabilities for advanced shipment notification, so you can be aware of when shipments are due.
Also, RFID has been promoted primarily as a tool for inventory management (see this article), because it expertly tracks pallets as they move from location to location. But proponents note that it can provide security and reliability information as well. "RFID is evolving to the point where we can get the status of a shipment rather than just location," says Jeff Cashman, vice president of business development at Atlanta-based Manhattan Associates, a Microsoft Gold Certified Partner. From a reliability standpoint, he adds, RFID chips will be able to sense and track temperature changes, which can affect the freshness of perishables.
While technology can help manufacturing companies deal with security, the extended global supply chain requires companies to expand their perspective regarding security. There's always an imperative to manage physical security and data security, yet manufacturers must also keep track of all the personnel that come in contact with their property, whether physical or intellectual.
Three steps to take
1. Understand every step along your supply chain, so you can determine contingency plans.
2. Engage your staff members to beware of physical security threats, such as a truck hijacking, and put into place efforts to increase alertness.
3. Deploy technology such as EDI and RFID to receive notification of and track location of merchandise.
