C-TPAT: Staying Ahead of the Curve

John, the newly appointed Ohio Valley plant manager, arrived at his desk 6:30 a.m. Monday with a plan to organize the week. He was surprised when almost immediately the phone rang. It was a freight forwarder in Hong Kong wanting to speak with the plant’s logistics manager, Barbara.

The forwarder told John that some electronics components, which were critical to making next month’s production run, did not make their scheduled sailing.

The cargo had been declared a “no load” because U.S. Customs had not received the manifest information 24 hours in advance of container loading. Now the options appeared grim. When she got in, Barbara would face a decision to either rebook the container on the next available vessel, risking a shutdown of production, or pay $16,500 in airfreight charges, risking next month’s profitability.

Welcome to another lousy Monday morning.

How could this have happened? The failure to meet the new CSI 24-Hour Rule resulted in a “no load” or “1H” command from U.S. Customs. But this setback was just one cog in a very big security wheel. John soon realized that the way for his company to get up to date was through C-TPAT.

Organizing a C-TPAT Team

The Customs-Trade Partnership Against Terrorism (C-TPAT) program is a cooperative effort between U.S. Customs and individual manufacturers. This program establishes guidelines to standardize the processing and security of inbound cargo, and formalize the storage and security of goods within the plant and across the supply chain. Aspects of the program include physical, procedural, and employee security.

All importers, large and small, are encouraged to organize their own C-TPAT team. John chartered a five- member C-TPAT team. The mission of the team was to establish the processes necessary for the plant and its partners to become C-TPAT compliant within three months. The Ohio Valley plant also invited its Hong Kong forwarder to participate in the project.

The C-TPAT team first looked at the U.S. Customs guidelines as they relate to the manufacturing process, suppliers, and customers. They looked for potential breaches in supply chain security by using the following published guidelines to review the current facilities and procedures:

  • Is there a break in the yard fence or an unlocked warehouse door?
  • How is a difference in the quantity of material in and the quantity of material out reconciled?
  • Have employees been trained to identify unauthorized material?
  • How would someone be able to tamper with a manifest or access a secure computer file?

All aspects of security are extended to suppliers, freight forwarders, carriers and warehouses that ship, deliver and receive the physical goods. Prospective candidates are pre-screened, and employees are given periodic background checks and annual security training.

Employee access controls are strictly enforced, and high expectations are set around the company’s code of conduct.

Becoming C-TPAT Compliant

Once the C-TPAT team completed its evaluation, the Ohio Valley plant filed two original signed copies of the C-TPAT Agreement to Voluntarily Participate, the C-TPAT Supply Chain Security Profile Questionnaire, and a cover letter with the U.S. Customs Service. The Security Profile Questionnaire may be filed separately, but must be sent within 60 days of the voluntary agreement letter.

It is the intent of U.S. Customs to provide feedback to the importer within 60 days of the completed filing. U.S. Customs then has three years to conduct an on-site validation. Customs gives the importer advanced written notice of the validation meeting.

Approximately 90 days later, the Ohio Valley plant received its acceptance from U.S. Customs.

Becoming C-TPAT compliant wasn’t easy, but with U.S. Customs giving pass-through priority to C-TPAT partners, this will certainly benefit the company’s throughput. Staying ahead of the curve is important because while the C-TPAT program is voluntary today, it is likely to become mandatory in the future.

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