July 2010 | Commentary | Viewpoint

Digitizing the Global Supply Chain

Tags: Logistics I.T., Supply Chain Management, Security, Legislation, Public Policy, and Regulations, Global Economy, Global Logistics

Dr. Jim Giermanski is chairman of Powers Global Holdings, 704-825-4741

At one point, we all had a rabbit-eared TV or a clunky cell phone that took muscle to carry. Numerous electronics innovations have made life not only easier, but also more productive. So why are so many international supply chain professionals still living in the dark ages when it comes to supply chain efficiency and security?

Is it the government, specifically U.S. Customs and Border Protection (CBP) and the Department of Homeland Security, that lacks modern supply chain savvy? Paper manifests, commercial invoices, and other hard-copy documents are still required for imported cargo, even with an e-manifest. We know paper documents can easily hide and distort a product’s actual origin, especially if it is subject to quota. So why do we continue to use paper?

less than ideal solutions

While the United States has implemented electronic data transmission requirements as part of regulations such as the Container Security Initiative’s 24-hour rule and CBP’s 10+2 importer security filing rule, these data filings are not ideal. In fact, they fail to identify the contents of containers destined for the United States, because the electronic data comes from paper documents associated with the shipment, such as the motor carrier’s bill of lading and commercial invoice, which indicate what should be in the container, not what actually is.

Even CBP’s Customs Trade Partnership Against Terrorism (C-TPAT) does not require disclosure of the container’s contents at origin. In effect, we still don’t know what’s in the container, and the paperwork does nothing to change that. Fundamentally, the global supply chain is still in the analog world, when the digital supply chain is available and more efficient.

a better way

New digital-age smart container systems report what is in a container before it ever leaves origin. The process starts with an accountable person who physically verifies the actual cargo and quantity; identifies and reports the container number; arms and seals the container; and activates its monitoring systems to track location, internal condition, access, and movement from origin to destination. There, another identified accountable person opens the container to verify the cargo and quantity.

This process minimizes vulnerabilities, precisely predicts and controls arrival times, and accurately identifies cargo by holding an individual personally accountable and subject to company and/or government punitive action.

on the record

Additionally, the electronically stored information (ESI) becomes part of the shipment record in the computer servers of the shipper, consignee, container security system provider, and appropriate Customs authorities as arranged, becoming a single, verifiable electronic record discoverable as evidence in both criminal and civil proceedings.

The ESI data can also provide significant protection for international shipper obligations under the United Nations’ Contract for the International Sale of Goods.

So why are we still using paper documents? Paper, the analog TV, has no place in an HDTV, digital world. Global supply chain visibility and detail can only be achieved by modern electronic data transmissions that are already available and can reduce the costs of international cargo movement. It’s time to go digital.