Safeguarding the Supply Chain

Whoever said getting parts from Point A to Point B was an easy task was probably born in the electronics industry's pre-Internet, pre-just-in-time days.

While software, mobile applications, and high-speed global connectivity have certainly made it easier to process orders, track parts, manage exceptions and ensure on-time delivery, all of these things have also added new complexity to the supply chain — not the least of which involves managing multiple levels of company-specific, regional, national, and international security checks.

Safeguarding the supply chain has become a top risk-assessment consideration among high-tech executives, and its importance shouldn't be underestimated. As noted earlier this year, more than 90 percent of those surveyed by the World Economic Forum and Accenture indicated that supply chain and transport risk management has become a greater priority in their organizations over the past five years.

Security breaches run the gamut from digital information fraud and product theft to counterfeiting components and using technology devices in acts of terrorism. Left unchecked, supply chain infractions could cost companies millions of dollars.

More frequently, too, governments are taking on a hard line on determining who's responsible for such infringements. They have established new customs protocols and programs and passed legislation meant to curb these activities. As a result, companies are shifting their own long-standing supplier requirements and more carefully selecting partners, opting for ones who have demonstrated compliance with these new standards.

C-TPAT is one such example. The Custom Trade Partnership Against Terrorism program was started 10 years ago by the US Customs and Border Protection a couple of months after the 9/11 terrorists attacks. The program, which aims to improve the overall supply chain and increase security along the US borders, is voluntary. However, the ripple effect of “I will do business only with companies that have C-TPAT certification” has influenced more than 10,000 companies to join.

A similar thing is now happening in the aerospace and defense industries. Since the US government last year passed the anti-counterfeiting National Defense Authorization Act (NDAA), many OEMs serving this sector are reevaluating their supply chain practices and on-boarding suppliers that have proven track records for secure and safe products.

Take {complink 3153|Lockheed Martin Corp.}, for instance. The giant aerospace company recently signed a new strategic enterprise agreement with top-tier distributor {complink 453|Arrow Electronics Inc.}, which will cover procurement of more than 22,000 electronic components used in advanced technology systems such as missiles, satellites, radar systems, tactical fighter aircraft, and unmanned surveillance systems, according to the company in a statement.

Although Lockheed officials said the agreement allows the company to improve product delivery performance, standardize parts selection, and increase internal efficiency and productivity, Arrow officials cited the industry changes as an influencing factor.

“The changes in the aerospace and defense industry are accelerating, and this agreement illustrates our value proposition,” said Michael J. Long, chairman, president and chief executive officer of Arrow Electronics in the statement.

It's likely that the value proposition will only increase as more companies prioritize security. That means the job of moving products from one place to another will only get more complicated. Are you ready for that?

2 comments on “Safeguarding the Supply Chain

  1. elctrnx_lyf
    July 26, 2012

    The use of Internet in electronic components supply chain is enabled everywhere. So the data is available to any one who can try and get it. This provides great security threat for any component transaction I believe the certifications and agencies like NDAA could help to ease out the tension and solve the counterfeit problems in suuply chain.

  2. Jennifer Baljko
    July 27, 2012

    elctrnx_lyf – right, the Internet is a key tool, but like you said “the data is available to any one who can try and get it.   That's the trick isn't it – make supply chain data accessible to the right people through the most secure channels in a way that doesn't slow down the supply chain.


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