In Part 1 we noted that Risk Management went much beyond Supplier Risk, and the primitive Supplier “Risk” Management application that is bundled in many S2P suites. Then, in Part 2, we noted that there are risks in every supply chain entity; with the people and materials used; and with the locales they operate in. In Part 3 we moved onto an overview of Corporate Risk, in Part 4 we took on Third Party Risk (in Part 4A and Part 4B), and then in Part 5 we laid the foundation for Supply Chain Risk (Generic).
As part of supply chain risk, we highlighted transport mapping and tracking as a key risk that the system should track, but noted that a generic supply chain risk management system would generally not be a full featured transport risk management system because such a system would also monitor and mitigate risks of goods in-transport. (Not just risks at nodes.) Such a system has a number of specific requirements beyond the basics outlined in our last article. In this article, we are going to discuss a number of those specific requirements.
|Cargo can travel by land, rail, sea, or air. As a result, an in-transport platform has to recognize each of these modes, the differences between them, the data that needs to be tracked, and the data that can be obtained from carriers providing each mode.
Such a platform should integrate with industry standard data feeds from TMS (Transport Management Systems), data feeds from major carriers, GPS systems, and other systems that provide data on your shipments, where they are, and when they are expected to get to the next location if the current leg of transport does not have a real-time GPS feed.
|Not all cargo can travel dry at room temperature. Some has to travel wet, some has to travel refrigerated or frozen, and some has to travel with special precautions for hazardous materials. It’s critical that such a platform be able to tag items with these tags, these transport requirements, and assess the risks associated with the transport based on carrier, route, geolocation, etc.
Such a platform must be able to detect when a risk materializes or escalates, such as the delivery time estimate being pushed forward by a week when the cargo was only expected to have a shelf-life of six (6) days when delivered, extreme weather phenomena suddenly materializing in the region of the transport vehicle, or dangerous (man-made) accidents occurring as a result of a leak, accident, or failure in transport.
|Manifests/Bills of Lading
|The system should be capable of accepting bills of lading and cargo / shipping manifests and ensuring that the bill of lading exactly matches the shipment that is expected from the supplier, the cargo/shipping manifest exactly matches the bill of lading, and the inventory at the dock/yard matches the cargo manifest. This is the only way to minimize the chance of theft and fraud during transport. And by fraud, we don’t just mean your goods disappearing, we mean your containers and your company being used to smuggle goods into one or more countries where the goods are prohibited in those countries.
The system should also be capable of identifying carriers who have had incidents in the past, the carriers who are most at risk due to the regions they operate in, and the carriers who are most at risk due to the products they are carrying, both for you and for others (based on public manifests).
|The system will track detailed information on the ports that are used in the supply network. It will maintain information on port capacities / throughput, the carriers that go in and out, the equipment, the security at the dockyards, and so on. It will maintain information on the labour situation (last strike, the date the contract ends, likelihood of a strike/slowdown, etc.) as well as the available workforce.
The system should be capable of tying in weather information, local geopolitical information, economic information, and other disruptions that could affect the port, as well as any other risk-based factors that are relevant.
|A lot of the world’s goods flow through canals (primarily the Panama and Suez) and straits to ports that are off of lakes and seas and not on the Atlantic or Pacific Ocean. While there are the risks of natural disasters just as there are on the high seas, there are also the geopolitical risks associated with all of the countries that border the canal or strait. (Especially if they are unfriendly to the country of origin, destination, or registration of the ship.)
The system must track all of the risks specific to the canals and ports that the organization, and its carriers, use in the ocean-based transport of goods.
|Most goods procured by an organization will live in multiple warehouses in their journey through the supply chain. The suppliers, the shipper’s local cross-dock, the port warehouse, the railroad cross-dock, your primary warehouse, and the regional warehouses that supply your local retail centers or manufacturing plants, as appropriate. These docks all pose a security risk.
The system should support all of the third party risk capabilities that are relevant for the owner/operator of the warehouse, the locale the work force is in, the third parties that provide the workers, and any other risks that can be identified and monitored for.
|Sometimes the goods are in a warehouse, and sometimes they are just in a yard at the dock or the (rail)yard waiting to be loaded on a truck or a train to be taken to a cross-dock or warehouse. The risk will be a blend of warehouse/cross-dock and port/rail risks, tailored to the relevant locale.
The system should support all of the associated third party risk capabilities that are relevant, and, as with the warehouse/cross-dock, support risks that can be identified and monitored for.
|Some goods will go by sea, some by rail, some by land, and some by air. Airports have their own class of risks — which can include hijackings, crashes, and way too many carriers and personnel in and out of shared warehouses.
Similar monitoring to in-yard, but expanded to meet the specific need of airports servicing your cargo.
|The biggest risks in transport are often not the third party carriers you deal with, but the people — are they appropriately vetted, trained, certified, and monitored? Who are they associated with? Can those associates pose risks? Do they need to be monitored? If so, when and how?
This system should integrate with an employee/contractor certification and monitoring systems to at least make sure all employees/contractors assigned to the organization’s cargo have appropriate licenses, certifications, training, and insurance.
And, of course, an In-Transport Risk Management system will also need a host of generic analytics/planning/monitoring capabilities, but since many of these are common, and since stand alone risk-focussed analytics applications are also part of the plethora of offerings out there, instead of discussing these generic features in this and every other article, as we noted in our coverage of Corporate Risk, we will instead discuss these capabilities in an article dedicated to Risk Analytics and Monitoring.