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Freight Security and Productivity: Strategy, Technology, Costs, and Benefits

Freight Security and Productivity: Strategy, Technology, Costs, and Benefits. Freight Security: Effects to Industry Talking Freight October 19, 2005 Michael Wolfe noriver@att.net. Some Key NRCG Products. “Freight Technology Story: Intelligent Freight Technology Benefits”

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Freight Security and Productivity: Strategy, Technology, Costs, and Benefits

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  1. Freight Security and Productivity:Strategy, Technology, Costs, and Benefits Freight Security: Effects to Industry Talking Freight October 19, 2005 Michael Wolfe noriver@att.net

  2. Some Key NRCG Products • “Freight Technology Story: Intelligent Freight Technology Benefits” • “Smart Container Product and Market Reports”* • “The Dynamics of Supply Chain Security” • “Security Must Yield an Economic Benefit” • “Supply Chain Security Without Tears”** • “Freight Transportation Security and Productivity” • “Electronic Cargo Seals: Context, Technologies, & Marketplace” *Co-authored with HSRC **Co-authored with Hau Lee Talking Freight, 10/19/05

  3. Our Main Messages • Embed freight security in a corporate strategy of resiliency • Security costs are significant, but a narrow focus on security costs takes your eye off the ball – address overall economics • Effective implementation of well-conceived intelligent freight technologies can deliver simultaneous security and efficiency benefits Talking Freight, 10/19/05

  4. Outline • Resiliency, Risk, and Security • Security Costs • Intelligent Freight Technologies and Their Benefits • Wrap up Talking Freight, 10/19/05

  5. The Unholy Trinity of Cargo Security Threats • Theft Pre-9/11 • Contraband Pre-9/11 • Drugs • Customs evasion • Counterfeit and gray market goods • Stowaways • Terrorism Post-9/11 • High potential for trade disruption from attacks and countermeasures Talking Freight, 10/19/05

  6. Strategic Goals for Superb Supply Chains • The superb supply chain has • Reliability • Velocity • Value • Resiliency Resiliency is a new buzzword, but an old and valuable idea Yossi Sheffi, The Resilient Enterprise Talking Freight, 10/19/05

  7. Lean = Resilient • Lean supply chains • Focus on efficiency and timeliness • Lean for assets, lean for inventory • Can be brittle, with little reserve capacity • Resilient supply chains • Timeliness and efficiency remain important • Premium put on agility and flexibility • Balance alternative sources, modes, & routes Talking Freight, 10/19/05

  8. Resiliency for What? • Market shifts • Competitive initiative and response • Interruptions from • Natural disasters • Strikes • Terrorist attacks • Government overreaction Talking Freight, 10/19/05

  9. Framing Security • Security problems can expose lack of resiliency • The biggest impact may come after an attack, when governments change the rules of the game • Smart supply chain security is consistent with enhancing overall resiliency The foundation stones are technology and processes to enhance visibility and control Talking Freight, 10/19/05

  10. Outline • Resiliency, Risk, and Security • Security Costs • Intelligent Freight Technologies and Their Benefits • Wrap up Talking Freight, 10/19/05

  11. Security and Related Costs • Macro • “increased security costs have been large and added frictions to … trade” - Roubini • Maritime security, per year, $730M – OECD • Canadian border chokepoints cost US $4B annually – Ontario CofC • Micro • Medium-size chemical co.: • Seals & documentation €2.7M • Annual security training €4.5M Talking Freight, 10/19/05

  12. There are Two Types of Costs • Some security measures are direct costs • Fences, access controls, CCTV, etc. • Some security measures will change business processes • Smart container and trailer technologies Must assess positive & negative business impacts—not just costs! Talking Freight, 10/19/05

  13. The Leverage Point… • …is intelligent freight technologies and processes that enhance cargo visibility and control • Goods in transit • Conveyances and equipment • Assured chain of custody Talking Freight, 10/19/05

  14. Auto ID Technologies • Conveyance • Bar code & 2D labels • RF tags • Satellite & cellular communications • Container • Bar code & 2D labels • Optical cards, tags, labels • RF tags, satellite, & cellular transponders • Pallet • •Bar code & 2D labels • •Optical cards, tags • •RF tags • Multipack • •Bar code, 2D labels • •Optical cards, tags • •Embedded RF tags • Part • •Bar code, 2D label •Inscribed part # •Embedded RF tags Courtesy of The North River Consulting Group

  15. Technologies That Can Support Security and Efficiency • Tools for visibility and control • Smart trucks • Smart trailers • Smart containers • Smart cargo • Short- and long-range communications • RFID • Mobile cellular and satellite • Smart networks – the information highway Talking Freight, 10/19/05

  16. Profiting from Better Visibility and Control • Increased efficiency and productivity • Better assign people and equipment • Shorten processing time • Improved reliability and service • Better schedule adherence • Resiliency and flexibility • Enhanced shipment and service integrity • Protection against theft and terrorism Talking Freight, 10/19/05

  17. Quantitative Benefit EstimatesIntelligent Freight Technologies Talking Freight, 10/19/05

  18. Benefits of New Security Standards: An Industry View • WCO Framework of Standards for Supply Chain Security offers tangible benefits for Authorized Economic Operators (AEOs) • Uniformity and predictability • Simpler and faster processing • IBM sees competitive advantages • Efficiency, responsiveness, customer relationships – Theo Fletcher of IBM, at MIT, 9/05 Talking Freight, 10/19/05

  19. Outline • Resiliency, Risk, and Security • Security Costs • Intelligent Freight Technologies and Their Benefits • Wrap up Talking Freight, 10/19/05

  20. Critical Success Factors For Innovation • Well-conceived design • Grounded in reality and practicality • Practical economics • Sound business model for users and vendors • Excellent implementation • Must include vendors, users, and affected supply chain partners Talking Freight, 10/19/05

  21. Summary • Embed freight security in a corporate strategy of resiliency • Security costs are significant, but a narrow focus on security costs takes your eye off the ball – address overall economics • Effective implementation of well-conceived intelligent freight technologies can deliver • Simultaneous security and efficiency benefits • Support a resiliency strategy • There are tools available today and more coming on the market Talking Freight, 10/19/05

  22. Thank you for your attention • Mike Wolfe • noriver@att.net • 1-781-834-4169 Talking Freight, 10/19/05

  23. Sources & References for Supply Chain Security, Productivity, & Technology* • Technology for security and productivity • “RFID Technology and Container Security” (2005) • Cargo Security International, October/November 2005 • “Mobile Wireless Communications Enables Security” (2005) • National Safety Council (to be published, Fall 2005) • “The Freight Technology Story: Intelligent Freight Tech. Benefits” (2005, with Ken Troup) • http://www.ops.fhwa.dot.gov/freight/intermodal/index.htm • “Mechanical Seal Market Segmentation Study” (2005, with Ken Troup) • email from Mike Wolfe • “APEC Secure Trade Project Conceptual Plan,” (2005) • email from Mike Wolfe • Smart Container Technology, Market Forecast, and Product Reports (2004, with HSRC) • email from Mike Wolfe • “Technology Views and Issues” (2004) • Cairo Transportation Security Forum Resource Guide, www.tda.gov • “Automating Security: Do E-Seals Make Sense?” (2003) • www.eyefortransport.com/index.asp?news=33911&nli=freight&ch= • “Target Capabilities for the ‘Future Smart Container’” (2003) • email from Mike Wolfe • “Technology to Enhance Freight Trans. Security & Productivity” (2002) • http://ops.fhwa.dot.gov/freight/publications/Security Technology Appendix, 4-25-02.doc • “Electronic Cargo Seals: Context, Technologies, and Marketplace” (2002) • Reachable from the Intermodal Freight page at http://www.its.dot.gov/ifreight/ifreight.htm • “Trends in Freight Identification Technology” (1998) • Email from Mike Wolfe (noriver@att.net, 781-834-4169) • Security and productivity policy and analysis • “2005 Review and Outlook” • Journal of Commerce, January 3, 2005 • “In This Case, Bad News is Good News on Cargo Security” (2004) • Journal of Commerce, July 26, 2004 • “The Dynamics of Supply Chain Security” (2004) • G-8 Summit edition of The Monitor, Univ. of GA, Center for International Trade and Security • “Security Must Yield an Economic Benefit” (2003) • Journal of Commerce, December 1, 2003 • “Supply Chain Security Without Tears” (2003)** • www.manufacturing.net/scm/index.asp?layout=articleWebzine&articleid=CA278114 • “Freight Transportation Security and Productivity” (2002) • http://ops.fhwa.dot.gov/freight/publications/SecurExecSumm.doc • “Defense Logistics…” trends and implications (2001) • http://www.ops.fhwa.dot.gov/freight/theme_papers/theme_paper_index.htm *Articles and papers by Mike Wolfe **Co-authored with Hau Lee, Stanford

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