Quality & Supply Chain Security - the Critical Components for Driving your Business Ahead in the Logistics Industry
Hong Kong has been playing a key role in export and re-export trade for half a century. Tracing back to the economic performance of Hong Kong in 2003-2004, domestic exports of 1,108 products to the Chinese mainland are treated with zero-tariff because of the CEPA. Apart from mainland, based on information released from Trade Development Council, Hong Kong's major export markets are mainland China, the U.S., the EU and Japan. They respectively made up 44%, 17%, 14% and 5% of Hong Kong's total exports in 2004.
From Export to Security Issues
Back to the olden days of the 911 terrorist attack in the United States to the latest news, there are lots of cases about accidents in transportation, security measures imposed from overseas customs, such as information security and container security, and research papers working on logistics and transportation in the Pearl River Delta Region (PRD). It is time for everyone in the Southern China region, the key area of import/export trade in the world, to know the latest regulation imposed and the up-to-date research results released from countries of dominant power. Only through knowing more, we can assure our competitiveness in the global logistic industry and supply chain.
On 25 May 2005, we come to know that the U.S. is planning to levy peak-hour fees in the major seaport areas, such as the port of Los Angeles and Long Beach in order to unclog the cargo queue. Moreover, with effective on 25 March 2005, the U.S. Customs has also announced a three-phase criterion for existing C-TPAT (Customs- Trade Partnership against Terrorism) importer members. According to the new criterion, these C-TPAT importers need to:
(1) strengthen the physical supply chain (within 60 days starts from 25 March 2005)
(2) establish internal supply chain management practices (within 120 days from 25 March 2005)
(3) have a written and verifiable process for selecting their business partners which include manufacturers, products supplier and vendors (within 180 days from 25 March 2005)
Under this C-TPAT importer security criterion, Hong Kong probably will be influenced as these “business partners” are readily found in Hong Kong.
Security Control and Key Processes in Supply Chain Management
As we know, the meaning of supply chain management is to manage the flow of materials in the chain, that is, to ensure the right kind of materials arrive at the right time in the right place. Hence, the key activities involved are: in/out transportation, warehouse and inspection. Within these three main processes, suppliers need to add value in the logistics service in order to give confidence to their customers. “Security” is one of the value-added areas.
Security policies can be applied in the process of selecting suppliers, selection criteria, performance standard, contractual relationship, and control of lead time.
In order to minimize unnecessary time and effort in clogging materials, management should consider the following points:
- Do we have any security measures in controlling the internal staff members?
- Is there any process map to outline all the involved security measures and policies in the activities?
- What needs to be amended to achieve a smooth operation?
- Is there any relevant security training – information security, port security, container security, customs security etc. provided to responsible personnel?
- Are there any bottlenecks caused by security-related regulations existed in the workflow?
- Are there any emergency policies to prevent unforeseeable risks, such as methods to find out high-risk containers?
- What are the constraints on security policies for present performance and future development?
“Quality” and “Security” are complementary to each other. Without clear organisational policy, measurable quality objectives and security awareness, it is hard to maintain control in physical access, personal and procedural security, and information technology security. Hence, when selecting business partners, we really need to make sure they have quality culture and security mindset.