November 2005 
Volume 04, Issue 7 
Shared Services Group

A Partnership that works

Boeing works to secure supply chain, keep expedited import flow


Boeing recently achieved a major milestone in its efforts to safeguard its global supply chain. The company completed the validation phase of the Customs-Trade Partnership Against Terrorism (C-TPAT), an initiative that encourages U.S. importers to assess and bolster supply chain security voluntarily.

Ships, planes, trucks and trains

Parts for Boeing products are shipped to Boeing assembly plants through the use of different transportation methods. Because Boeing's global supply chain stretches to more than 90 countries, the company has an interest in the Customs-Trade Partnership Against Terrorism (C-TPAT), an initiative that encourages U.S. importers to assess and bolster supply chain security voluntarily. Here's a look at the import shipping sequence at the Boeing facility in Everett, Wash.

Ships, planes, trucks and trains

1 The goal of C-TPAT is to secure the entire supply chain, from the point of origin to the final destination. Ocean containers are used for some cargo, especially large airplane parts. But only 6 percent of the more than 40,000 import shipments received by Boeing each year come by sea.

Ships, planes, trucks and trains

2 About 76 percent of the shipments arrive by air. Overland transport accounts for the remaining 18 percent. Maintaining a reliable supply chain is important to the stability of Boeing production lines.

Ships, planes, trucks and trains

3 Oversized containers filled with large airplane parts arrive by sea at the Port of Everett in the Puget Sound region of Washington state. From there they move to the Boeing manufacturing facility in Everett, where twin-aisle commercial airplanes are produced.

Ships, planes, trucks and trains

4 Boeing thoroughly inspects containers and their cargo on arrival. Above, car unloader Diane Kaufman prepares to remove a pressure dome and tail cone for a Boeing 777 from an oversized cargo container at the Everett plant. The container, which is more than four times the size of a standard ocean shipping container, arrived from the Port of Everett after a voyage from Japan.

For implementing new measures to prevent terrorists from smuggling agents or weapons of terror into the United States through cargo containers and other imports, U.S. Customs and Border Protection will ease import constraints and help member companies recover faster in the wake of a terrorist strike.

"It just makes good business sense to safeguard our cargo and ensure it's delivered on time and is protected against threats. C-TPAT moves us a big step closer to those objectives," said Norma Clayton, vice president of Supplier Management and Procurement for Integrated Defense Systems and head of Boeing's Supplier Management Process Council.

Unchecked, a smuggled weapon of terror could trigger an economic catastrophe as devastating as any natural disaster. Worst-case scenarios envision foreign imports grinding to a halt, massive shortages and skyrocketing prices. U.S. businesses could lose $60 billion from a single incident, according to government estimates.

Even with C-TPAT protections, supply delays could disrupt production, making just-in-time inventory concepts—a linchpin of Boeing production efficiency—unworkable.

"If the worst-case scenario happens and cargo is halted, we need to have the tools to carry on," said Supply Chain Services Vice President Jim Wigfall, executive sponsor of Boeing's commitment to C-TPAT. "Being ready and knowledgeable could save Boeing billions."

Launched in November 2001, C-TPAT is the largest government-industry partnership to emerge from 9/11. Today, C-TPAT has nearly 9,000 enrolled companies, including importers, customs brokers, terminal operators, freight forwarders and carriers.

With more than 23 million containers arriving from foreign countries each year, C-TPAT is considered a national priority. It's the highest-profile program in the Customs system of layered defense of United States borders. "The threat of terrorist weapons entering the United States through shipping containers and other imports is a serious national security concern," said Ken Konigsmark, Boeing C-TPAT program manager. "As one of the nation's top 12 importers, we have a special obligation to protect our supply chain and join in efforts to ensure homeland security."

Greg Gwash, Boeing's chief security officer, said Security personnel are assigned overseas as well in the United States to support the C-TPAT objectives. "Boeing Security has been working hand-in-hand with our C-TPAT program to assure that our global supply chain is secure and our imports move quickly through U.S. Customs," he said.

Although C-TPAT is a voluntary, incentive-based partnership, participants must adhere to specific requirements to qualify for C-TPAT benefits.

According to Customs, shipments to C-TPAT members, compared to other importers, are six times less likely to undergo detailed security inspections and four times less likely to be subjected to trade-related examinations.

Most Boeing imports will pass quickly through a Customs "green lane" because procedures, processes and security measures are already in place to thwart tampering during shipment. Fewer inspections save time and money and lead to a more predictable supply chain. Customs is considering additional incentives for members who exceed minimum requirements.

Yet achieving green lane status does not mean Boeing can relax. "The benefits of C-TPAT membership have to be earned," Konigsmark said. "We are expected to self-assess regularly and show continuous improvement."

"Customs and Border Protection applauds Boeing for its commitment and dedication to the program," said Africa Bell, Customs' supply chain security specialist assigned to Boeing. "Boeing has invested a significant amount of time and resources into adopting C-TPAT's core principles."

She said Boeing's most notable best practice is the creation of a companywide C-TPAT Executive Steering Committee responsible for ensuring that supply chain security "is woven into every aspect" of Boeing operations.

"Terrorist threats involving cargo containers are very real, and Boeing must consider itself to be a prime target," Wigfall said. "The cost of making our global supply chain secure is less than the potential cost of a single terrorist incident involving a cargo shipment."

Boeing C-TPAT actions at a glance

To improve supply-chain security and efficiency while minimizing impacts for the nearly 3,200 import shipments Boeing receives each month, the company is

• Minimizing the number of import cargo routings, through fewer carriers, to improve security and lower transportation costs. (The number of import brokers has been reduced from 55 to two, and the number of freight forwarders has been reduced from 113 to 12.)

• Employing only C-TPAT certified carriers. (All current import brokers and freight forwarders are C-TPAT certified.)

• Initiating frequent dialog with the buying community on C-TPAT. (A process for mapping supply chain flow has been established.)

• Evaluating supplier and supply chain security via questionnaires and on-site assessments.

• Initiating a phased implementation based on risk ratings.

• Inspecting all trucks before allowing them to enter Boeing property.

—Bob Burnett


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