1st National Conference on Safe Trade and AEO

A Global & Business Overview on the

SAFE Framework of Standards
and the AEO Concept

Andrew Jackson
Chairman – Customs Working Group
US-ASEAN Business Council

13 May 2008

© 2008 IBM Corporation

 1st National Conference on Safe Trade and AEO

Global Import Compliance and Supply Chain Security

Mission:
 Enable a globally integrated world class import process
– Attributes of a world class importer:
– Compliant
– Secure
– Efficient

 Responsibilities  Daily Scope

– Identify and interpret regulations
– 2500 Customs Declarations
– Establish policies
– $68M in value
– Assess internal compliance
– Educate import network – 5.5M pounds shipped
– Develop government relationships

 IBM is a globally integrated enterprise

– 60% of revenue and 65% of our employees are outside the US and
growing

2 13 May 2008 © 2008 IBM Corporation

 1st National Conference on Safe Trade and AEO

Supply Chain Security Goals

 Implement a more secure supply chain that yields greater trade

efficiencies

 Create Industry/Government Partnerships in the development of security

and trade initiatives

 Achieve Global Commonality of Supply Chain Security Criteria, Customs

Declarations Data and Processes

 Promote voluntary industry participation that provides collateral benefits

3 13 May 2008 © 2008 IBM Corporation

 Why participate in Authorized Economic Operator programs?

 Reduce threats to ‘our’ global

supply chain from:
– Unauthorized materials
– Weapons of Mass
Destruction (MWD)
– Weapons of Mass Effect
(MWE)
– Unauthorized personnel

 Enhance supply chain operations

 Assure the safety of employees

 Maintain or improve brand image

4 © 2008 IBM Corporation

 A Chain is Only as Strong as its Weakest Link
Stakeholder Security Linked with its Predecessor and Successor

Port Authority Port Authority

Manufacturer Freight Distribution
“A” Carrier “B”
Distributor Forwarder Center
Customs Customs

Security has to be applied across the entire value chain,

across borders, and integrate an ongoing awareness in
every single point of interaction with the goods.

5 © 2008 IBM Corporation

 Mobilize to Execute

 Executive sponsorship

 Establish end-to-end team

– IBM
– International Service
Providers
– International Product
Suppliers

 Monitor for continual

improvement

6 © 2008 IBM Corporation

 Identify Key Stakeholders
 Import Compliance Office
 Security
 Integrated Supply Chain

– Procurement

– Manufacturing

– Global Logistics
 Human Resources
 Legal
 Internal Audit / Business Controls
 Customs / Government
 Service Providers / Product Suppliers
7 © 2008 IBM Corporation
 Project Milestones
 Gather data
– Identify gaps
– Propose resolutions
– Prioritize
– Approve and implement

 Draft response

 Engage and close with stakeholders

 Executive sign-off

 Customs Validation Meeting

– IBM
– Service Provider Locations

 Validation Report

8 © 2008 IBM Corporation

 Government Initiatives
Common global standards will drive supply chain efficiencies
 Customs Relationship Management Country Meeting Date

– Establish relationships with 20 Customs organizations United States On-going

that are considered most critical to IBM’s asset based Mexico 4/24/2004
supply chain EC HQ 3/07/2005
– Discuss support needed for common standards Germany 3/08/2005
– Create partnerships UK 3/10/2005
– Expedite implementation of programs Ireland 3/11/2005
Australia 3/17/2005
 World Customs Organization (WCO) Canada 3/29/2005

– Member of the Private Sector Consultative Group (PSCG) Japan 5/24/2005

Taiwan 5/27/2005
– Provide input regarding SAFE Framework or
Standards to Secure and Facilitate Global Trade and Singapore 6/15/2005
Authorized Economic Operator (AEO) program Malaysia 6/16/2005
– Benefits for industry participation Thailand 6/17/2005
– Mutual Recognition China 10/20/2005

– Participation by Small and Medium Enterprises Brazil 3/07/2006

France 3/28/2006
Hungary 9/06/2006
– Adoption of harmonized partnership programs will
prevent conflicting requirements and unnecessary Korea 11/09/2006
inefficiencies in a global supply chain India 2007
Russia 2007
9 © 2008 IBM Corporation
 Internal actions to improve supply chain security
Early Adoption of Government
Internal Security Actions Anti-Terrorism Trade Programs

Supply Chain Security education and training for

import compliance and security personnel
Free and Secure Trade (FAST) Program
Updated Asset Protection corporate standards US/Canada US/Mexico

Risk Assessment database for security Partners in Protection (PIP) Canada

monitoring and analysis of IBM facilities

Empty trailer / container / conveyance Business Alliance for Secure

inspection Commerce (BASC) Mexico

High level security seals on ‘stuffed’ trailers /

containers / conveyances
Participation in recent
Electronic door sensors on trailers transporting AEO Programs
product between U.S. and Canada

Global supply chain readiness assessment

Australian Authorised Secure Trade Partnership

Economic Operator Program Singapore

10 © 2008 IBM Corporation

 Participation in Australia AEO Pilot - Lessons Learned

 Completing partnership application and security profile requires:

– internal collaboration of multiple internal stakeholders
– engaging our supply chain partners

 Validation process with government is a two-way learning

experience, promotes sharing of industry best-practices

 Voluntary partnership:
– promotes stronger relationships and open communication
– enables flexibility to adapt program quickly ICO
Customs Govt
 Continual improvement process is Pgms

key to success ISC

End-to-End Focus
Sense of Urgency Legal
– new threats require a review of Continual Improvement
existing security processes Brands Govt
Agencies
Suppliers Security

11 © 2008 IBM Corporation

Participation in AEO Programs – Benefits Expectations
Measurable Benefits and Mutual Recognition are key

 Increased Efficiency
– Adoption of Common Requirements by other countries will prevent
conflicting requirements and unnecessary inefficiencies in a global supply
chain
– Mutual Recognition will reduce administration burdens for industry and
governments
– Less Intervention and Fewer Examinations will reduce cycle time
– Measurable Benefits will facilitate ongoing executive support

 Enhanced Business Continuity

– Business Resumption consideration following a security incident or
during increased threat levels will provide a competitive advantage

 Increased Productivity
– Recognition/prequalification for future Trade Facilitation programs (e.g.,
Accredited Client Program) will acknowledge company internal controls
while focusing customs’ resources on less known importers
12 © 2008 IBM Corporation
 Recommended Next Steps
Industry – this is your supply chain …
 Pursue common standards and processes globally
– Streamline processes to keep cost down
 Track and promote benefits of investing in supply chain security
– Return on Investment (ROI)/Collateral benefits
– Efficiency and productivity
 Be industry leaders
– Be outspoken
– Be a part of the process
– Be an influencer

Governments – this is an opportunity for valuable partnerships …

 Accelerate implementation of common APEC/WCO SAFE Framework
 Establish Government – Industry consultation groups to drive
Authorized Economic Operator (AEO) aspects of framework
 Begin pilot programs with trusted industry partners and major trading
countries

13 © 2008 IBM Corporation

 Questions?

ajackson@au1.ibm.com

14 © 2008 IBM Corporation