TAPA EMEA's Chairman on Solutions to Improve Supply Chain Security & Data Collection in 2014
A recent study by NEA Transport Research and Training, shows that cargo crime is up to €8.2 billion alone in the European Union, but these figures could be much higher according to Thorsten Neumann, Director Corporate Security Nokia & Chairman TAPA EMEA. In this Cold Chain IQ interview Neumann discusses the latest initiatives for utilising supply chain data collection and analysis to improve supply chain security, as well as current solutions for improving supply chain security. Neumann also shares his insights on what the life sciences industry can learn from other high value goods industries.
Cold Chain IQ: What is the reality of the cargo theft threat we are facing at the moment?
T Neumann: I think the threat of cargo theft has affected the entire industry. It is still increasingly tremendously if you take a look at the recent incidents and also from a statistical perspective, especially within the European Union, but also on a global perspective. From a number of perspectives, there is a statistic and there’s a number are really provided by the European Commission, which is linked to the NEA Transport Research and Training study on cargo crime within the 28 member states now, where they do believe that cargo crime is up to €8.2 billion alone in the European Union.
And if you take a look at other statistics, it’s estimated, up to €40 billion on a global perspective. The threat, it’s really increasing and the average loss value increased in the last five years by more than three times. So, the average loss value per incidence nearly trebled within five years, which is a clear indication that criminals are more targeting the big opportunity instead of going for petty theft.
Cold Chain IQ: And what can the life sciences industry learn from the rest of the high value goods industries in Europe and beyond?
T Neumann: I think they can learn tremendously and there’s no need to reinvent the wheel here because we, as, also as TAPA organisations, we are already doing that for the last 15 years—very successful—and you can see that our membership decreased their losses, as soon as they implemented our standards, by 40%. So, loss ratio within our membership decreased by 40% as soon as you start to implement the industry accepted standards.
And from a lifestyle and cold chain perspective, what we also have identified is that the risk is also now coming into their industry because there is a market for pharmaceuticals, which hasn’t been there five or six years ago on the black market perspective. So, that’s also quite important and again, I can only say that, if you implement the standards, which have already been accepted by more than 300 companies only in Europe, that’s the only thing what you should do.
Cold Chain IQ: We are going to be discussing this in more detail at cold chain and controlled room temp logistics in Luxembourg this January, but could you give us a brief overview of current possible solutions for improving supply chain security?
T Neumann: I think from a normal perspective, the biggest solution is really to protect your supply chain within an end-to-end perspective. So, we will start, for example, with your warehouses. You need to protect your warehouses where you store your products and one of the solutions would be the SSR, the freight security requirements, which is one of the oldest standards already and it’s in place already since 2001 and it has the continuous improvements process behind that. So, every two–three years, these standards will be updated completely to really ensure that the recent risk and the recent technology is always covered within this standard, really, to mitigate the risk, as I already mentioned, within this end-to-end supply solution.
From a trucking perspective, so as soon as the products will come on the road, which is the highest risk in Europe: more than 52% of our losses within the industry are linked to so-called unsecured parking places. So, goods at rest are always goods at risk. So, trucking security standards, which is called the TSR are another key component, really to close your weakest links and you close the gaps within your logistical processes and, of course, we also provide standards for air cargo security, which is called TACSS, the TAPA air cargo security standards.
And, as I mentioned, parking places is a key thing, especially, when we talk, when we take prior restrictions, but also, 52% are linked to unsecured parking places and more than 84% of our losses have been on the road. So, secured parking places, it’s super important that we are working together within our association, which the European Secure Parking Organisation, which is providing industry-accepted standards for secured parking places. So, it’s called ESPORG. And that’s important to mitigate your risks.
Cold Chain IQ: And what are some of the challenges that people are finding when trying to implement these solutions?
T Neumann: Yes, I think, one of the key challenges is that people and especially, companies are always driven by cost. So, and we don’t know that and we all live in this kind of environment, which is okay and we can deal with that and we also need to understand that sometimes there’s even no cost involved; it’s creating awareness and creating awareness and training your people and last but not least, creating a mindset within our entire supply chain is the key component to become successful and decrease the losses within your own logistical world.
If you do calculate, if you understand a proper risk mitigation process, you will not add any costs. You will create awareness and whilst you create awareness and implement the right standards, you will decrease cost of fuel quality and you will increase, tremendously, customer satisfaction. It’s also important to understand that you should not only look at your direct losses and your direct costs, you should not underestimate your indirect costs when you talk about the loss, because the indirect impact on your, on your company is three-five times higher and, of course, you can replace a missed opportunity related to when you are at a loss, but it’s not so easy to replace and to really build up again customer satisfaction and customer reputation. That’s quite important to understand that in the entire process. So, it’s very important to always look at the entire picture before you come to a decision.
Cold Chain IQ: Can you give us some insight into the latest initiatives for using supply chain data collection and analysis of improved security?
T Neumann: I think there are a lot of things on the market at the moment, I must say the world is looking at regulatory processes like AEO. But, as you can imagine, at TAPA, the Transported Asset Protection Association for Europe, Middle East and Africa, I can only say, learn from the people which are accepted in the industry as best known method or benchmark.
And if I take a look and I repeat myself, our members be in a successful position to decrease their losses by 40% average, whilst they also decrease insurance premiums by an average 19% due to the better loss ratio and from an overall perspective, if you calculate all these savings at the cost avoidance, you can see that you can turn your security from a cost centre in a profit centre on a very easy way. So, if you ask me, the best solution is here, really would be, let’s create a partnership and let’s ensure that industry accepted standards will be rolled out in a cold chain environment.
Cold Chain IQ: How is TAPA transforming your ideas around supply chain security into reality?
T Neumann: TAPA is the industry association, which means it’s not an association where one party is dictating standards to the other one. So, within our TAPA family, you have the entire chain is represented. So, we have manufacturers, shippers, tending agents, logistics service providers, trucking companies, airline companies, insurance companies, but we also have law enforcement agencies, which are part of the TAPA association, which means that we have also the intelligence related to, actual cases; what can we do? How we can really position ourselves better related to future risks?
And this is exactly how TAPA are doing it; we are sitting together at the same table and creating standards, first of all, which are affordable, which will clearly minimise your risks and last but not least, which are expected by the industry. So, there’s no need to reinvest a deal and secondly, there’s no need that I will do something on my own, because it’s not a company problem. This is an industry accepted and it’s industry challenged and that’s quite important. So, it’s not my company’s patent that’s challenged. No, it’s my entire competition. So, let’s work together, security should never be competition. We should share information and we should warn ourselves as soon as something is going on within my environment.
Cold Chain IQ: What are your predictions for the future of supply chain security?
T Neumann: It’s quite important to understand the risk. Unfortunately, we have seen the trend in 2012, 2013 and the forecast for 2014, from a risk perspective, relates to organised criminals that’s going still, completely into the wrong direction. So, the risk isincreasing tremendously . It’s more corrupt, it’s more organised and we know there are no business ethics, there are no rules; we talk about organised criminals. So, which means, we even need to be better prepared to exactly, you know, fight against this kind of challenges and this is what TAPA is doing.
Cold Chain IQ: Why are events like Cold Chain and Controlled Room Temperature Logistics Forum are important?
T Neumann: I think one of the key things is networking, it’s creating awareness and that’s the reason why this kind of events are so important. It is an opportunity to learn from the best and it’s not only linked to security, but, I think, it’s always important to listen to people and listening to people is really something, which makes a difference and, of course at the end of the day, execution of something, which is also super important here.
It is exactly what this kind of event will guarantee, that we are in a position to share this kind of information and also to ensure that people do understand and listen to what other companies really already identified within the supply chain. So, related to my presentation, you will see an inside view, how important the proactive partnership between the parties involved within the supply chain and how important this really is and how you can mitigate your risk, due to this partnership within an end-to-end supply chain and business resilience environment.
The Transported Asset Protection Association (TAPA) is a unique forum that unites global manufacturers, logistics providers, freight carriers, law enforcement agencies, and other stakeholders with the common aim of reducing losses from international supply chains.
Today, in Europe, the Middle East and Africa, The Americas and Asia, TAPA’s membership is at its highest ever level – and growing month-on-month. The Association’s 600+ members include many of the world’s leading manufacturing brands as well as their logistics and transport providers with combined annual sales of over US$900 billion.
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