Compliance and CTPAT

Compliance and CTPAT
Theresa Sekula
Presenter
• Theresa Sekula – Manager, BDP Corporate
Compliance Team
• Joined BDP in 2005, various roles including marine
procurement, operations, and compliance roles
• Customhouse broker license holder
• Delivery and management of BDP internal audits, compliance
manuals, and comprehensive internal and external training
and audit programs.
Housekeeping
• Mute – save your questions until the end
• A copy of this presentation will be available at the end
of this webinar – when leaving you’ll be redirected to BDP
website where you can click and download the slides.
Agenda
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Compliance Changes
Supply Chain Challenges
Business Integration?
Summary
Compliance and CTPAT
“Every single link in the supply chain must be
made more secure, in essence expanding the
perimeter of security away from the border entry
point!”
Robert Bonner, US Customs
Commissioner
"The whole world will suffer if terrorists begin using the
global trade network to mount attacks," said Bonner. "The
economic repercussions of such an event would be severe.
Everyone involved in world trade has a vital interest in
protecting the channels of trade from terrorist infiltration."
Compliance – A changed world
• International transportation and logistics has been forever
changed in wake of the September 11th, 2001 terrorist
attacks
– Broader homeland and cargo security and inspection practices
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More stringent standards for regulatory compliance and cargo
security
Customs and Border Protection (CBP) has stepped up physical
inspection throughout all points of entry and arrival
CBP has added staff at multiple locations throughout the US port
locations.
CBP has expanded their reach beyond US ports
– Customs even more zealous about obtaining shipment
information (ABI, AMS, AES…now ACE)
Compliance – A changed world
– TSA has imposed additional requirements for air cargo carriers
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Additional requirements placed on “known”shippers
“unknown” exporters must travel cargo aircraft only
– Other Government Agencies have increased their presence in
the supply chain.
But help is on the way?
Compliance - Security Programs
 Customs-Trade Partnership Against Terrorism – CBP has expended this
security program and is working on phase 3 including foreign entities as
well as broadening the scope of the program to US exporters. Today,
there are over 11,000 C-TPAT members.
 Container Security Initiative -58 operational CSI ports now prescreen over
80 percent of all maritime containerized cargo imported into the United
States
 Trade Act 2002 Advance Manifest Rule - Reporting requirements to CBP
for imports and exports for air, truck, ocean, and rail carriers Electronically.
 ISF – Advance Data filing by the importer (Ocean) that completes the
security picture (Carrier & Importer)
Compliance – New Security Tools
 C-TPAT Supply Chain Specialist - These will be the principal advisor and
primary point of contact for industry members of C-TPAT.
 Regulatory Audit - Presently has 350 auditors plus support personnel.
Focused Assessment (FA) targets include importers with over $10 million
in imports. Importers must have audit trail from purchase order, shipment,
entry, invoice, receipt of goods and payment.
 Radiation Detectors - Customs has distributed over 7,000 radiation
detectors to inspectors at all major ports.
 Canada, EU, Korea, China and now Japan - have studied this new
business model of the 24 hour advanced manifest rule.
Compliance – New Programs
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Public Health Security - all U.S. and foreign facilities that manufacture,
process, pack, or hold human or animal food for consumption in U.S.
must register with FDA. Food Bio-Terrorism ACT
CPSC – Consumer Product Safety Commission – implemented new
guidelines that impact articles, Toys for children
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Export – Census has implemented new guidelines to Trade for
implementing advance information to US Government for all exports.
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AEO – Authorized Economic Operator – review of the financial and
global supply chain
Compliance – More Penalties
• New rules and regulations have been put into place based on
Security
– 24 hour manifest by the carrier prior to loading at foreign port, failure to
comply or misrepresentation will result in $5,000.00 for first offense,
$10,000.00 for second.
– Customs can seize Cargo/Container if information is incorrect or misdeclared. “Undocumented” Cargo or “mis-declared” Cargo will result in
intensive examination. (costs for examination and storage will be
introduced into the shipment. ($1,000.00 plus)
– New regulations for transporting Hazardous Materials as well as proper
record keeping, failure to comply with result in increased fines.
– 24 hour manifest rule for exports
More help?
Agenda
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Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
Supply Chain – Challenges
•Organizations are facing increased Global Supply Chain challenges
 Buyers and planners layer additional weeks of inventory into the
pipeline to account for unpredictable lead time
 A lack of reliable data at the proper level leads to poor planning in the
process (i.e.carrier, broker, distribution center.)
 An increase of excess inventory in the import pipeline causes the need
to store or hold the merchandise prior to arrival resulting in growing per
diem storage charges.
 There is little ability to identify and pinpoint the causes of service
failures in the import process (e.g. late bookings by vendor, late
documentation, delayed shipments, missing containers at ports).
 Customs even more zealous about obtaining shipment information in
advance of shipment.
Supply Chain – Challenges
 As new source points entered into existing supply chains, complexity
can start to creep into the supply chains (part here and a part there )
 Increased fuel prices
 Increased expedited freight
 Lack of a uniform, globally accessible, import / export system /
database
 The linking of Transportation department with Customer Service
departments
Supply Chain – Business Model
• Today’s global Supply Chain Business Model may not satisfy
the new world
Old Model
New Model
Strategy
Customs
Customs as
Police
Customs as
Partner
Infrastructure
Port of Entry
First line of
defense
Last line of
defense
People
Background
Check
Minimal
Mandatory
Process
Responsibility for
Partners
Minimal
Full
Technology
Tracking
At shippers
discretion
Mandatory
Companies that do not change may see a customs clearance process that will
reduce velocity, and increase variability which will translate into increased costs.
Supply Chain – Increased Costs
• The costs will creep into all aspects of the Global Supply
Chain
– Transportation delays
– Lane reductions as carriers exit lanes
– Revisiting supply chain strategies from “Just-In-Time” to “JustIn-Case”
– Port security fees
– Background checks
However U.S. Customs has developed CTPAT to
help minimize the impacts to your supply chain.
Supply Chain C-TPAT – What is it?
• Customs-Trade Partnership Against Terrorism (C-TPAT)
• Voluntary security program developed by Customs to partner
with industry in developing and managing secure supply chains
• Mandates enhanced security measures across the entire supply
chain
• A program that continues to expand to multiple parties in the
supply chain
• A 13 year program that has changed over time to keep security
concerns at the forefront
• Facilitates legitimate trade
• Understand your Risks in the Supply Chain
Built on existing programs to enhance and facilitate
legitimate trade.
US: Securing the Global Supply Chain
• Govt./Trade - jointly developed security criteria, best
practices and implementation procedures
• Goal - protect their supply chains from concealment of
terrorist weapons, including weapons of mass
destruction
• For its C-TPAT partners, CBP provides reduced
inspections at ports of arrival and expedited processing
at borders
Supply Chain CTPAT – Benefits
Partner
•Reduce threat assessment
•Access to FAST Lane
•Front of the line inspections
•Access to SVI
•Seminars and training
•Assigned SCSS
•Reduced no. of exams
•Shorter border wait times
•Eligibility for ISA
•Priority consideration at CEEs
CBP
•Increased supply chain
visibility
•Redirection of people and
resources
•MRAs
As a participant in CTPAT you will benefit from some or all of these.
On C-TPAT:
“Despite its nature as a voluntary program, this
Government to business partnership continues to
grow and to remain viable—a leading supply chain
security partnership program here in the U.S. and
across the globe. Now in its twelfth year, what started
soon after 9/11 with seven importer Partners is now
an initiative that has more than 10,650 certified
members in over 12 business sectors of the supply
chain.”
• —Thomas S. Winkowski, Acting Commissioner
U.S. Customs and Border Protection
Agenda
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Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
Business integration – CTPAT
• A structured business approach to
CTPAT, and compliance, will be the
foundation to minimize costs
…while maintaining velocity and minimizing variability.
Business Integration – Evolutionary
•New compliance requirements will be evolutionary.
Managing
Implementation
Development
Design
Value
Assessment
Security and compliance Requirements
Time
Business Integration – Assessment Activities
•The objective of the Assessment Phase is to get a snapshot of
the current process and a high level view of risks and complete the
U.S. Customs survey.
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Interviews
Surveys
Data collection
Cross functional meetings
Documentation review
Where am I and how far do I have to go?
Business Integration - Risk Profile
Where are my risks?
Business Integration - Value Profile
What do I work on?
Business Integration – Assessment Results
•Complete US Customs requirement for acceptance into
CTPAT
•Define the potential for cost reduction opportunities
associated with improved product and information flow
•More fully understand the level of supply chain risk
Where am I and how far do I have to go?
Business Integration – Our Observations
• Most companies have very good security programs for
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Procedural
Physical Security
Access Control
Container Security
Security procedures
Business Partner
• Some work might be needed in
– Personnel Security
– Education and Training
– Risk Assessment
Business Integration – Our Observations
• Challenges for this industry
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Contractors
High visibility of facilities to the public
Goods are hazardous in nature
Technology is not a key ingredient for these products
Suppliers while limited have not changed much
Agenda
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Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
Summary – Get Started
Some key questions:
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Do you do background checks for non employee personnel?
Are all employees trained in security?
Are procedures written?
Do you have self-audits?
Do your suppliers have minimum security requirements?
Do you control access to your facilities?
Are records accurate?
Are your systems protected?
Summary – Understand your risks
Deliverables
Activities
Interviews
Security
Profile
Information
Surveys
Survey
Value
matrix
Documentation
review
Risk matrix
Cross functional
Meetings
Self Assessment
Summary – Understand your Supply Chain
• Importers have shared some interesting stories
– Client commented that they hired a Chemical Engineer through a
temporary agency. Later that person was convicted of the first WTC
bombing.
– Manufacturer of components was told by one of their customers that
vendors who were CTPAT compliant would receive preferred status
– A multi-national stated they never knew their supply chain was so
complex. At the end of the project they were going to look at reducing
the number of LSP’s
– A Law firm at a security conference in Washington stated, that a
company that chose not to join could subject themselves to a large claim
against themselves for failure to secure their supply chain, while a client
that does join the program, could use that stated action in their favor.
Each shipper and service provider should develop a road map and set of action
plans which balances value of participation against risk management.
Last Word
• CBP encourages all companies to take an active role
in promoting security throughout your supply chain
• Take the time to evaluate the program – its fits all size
companies and all commodities
• C-TPAT has been expanded to the export side of the
business. Importers that also export
• Some trade benefits exists however the real benefit is
having a secure and safe supply chain that moves your
goods around the world
Agenda
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Compliance Challenges
Supply Chain Challenges
Business Integration
Summary
To register for any session, go to:
http://www.bdpinternational.com/about-bdp/customer-support/resource-center/
• Registration is required for each event.
• Upon successful registration, you will receive an email with logon
details.
• A copy of this presentation will be available at the end
of this webinar – when leaving you’ll be redirected to
BDP website where you can click and download the
slides.
Contact information
• Theresa Sekula
– Phone: 215-629-8210
– Email : theresa.sekula@bdpint.com
– 510 Walnut Street, Philadelphia, Pa. 19106
Compliance and CTPAT
Theresa Sekula
"Copyright 2014 BDP International, Inc. All rights reserved."