A federal border patrol initiative sparked by 9/11 terrorism may lead to an automotive industry breakthrough in mapping its complex supply chain.
The Automotive Industry Action Group of suburban Detroit is launching a new Web-based database for identifying the physical movement of finished goods, parts and materials through the automotive supply chain.
The initial phase of the program, Supply Safe-Supplier Security Assessment, will map shipments via the U.S. Customs-Trade Partnership Against Terrorism certification program.
The voluntary C-TPAT program was launched under the George W. Bush administration shortly after 9/11 to document and expedite processing of cargo through customs. Participants receive fewer physical inspections and quicker processing.
Using a government requirement
“The first casualty of globalization has been transparency,” said J. Scot Sharland, executive director of AIAG. “By using a government reporting requirement bolted on, we’re able to get this complex database off the ground.”
The database, which has been in development since mid-2012, will be filled with supplier information, provided to automakers through the system, such as plant locations, entry points of shipments to the United States and final destinations of those shipments.
The participants, including automakers and Tier 1 suppliers, will ask each of their suppliers to complete the information, and it will cascade throughout the entire automotive supply chain, Sharland said. Each supplier will maintain its own profile and authorize which customers can view information, he said.
Control in suppliers’ hands
“It’s arguably the worst-kept secret in Detroit, but nevertheless, companies view their supplier list as proprietary, so we knew that the command and control of the system had to be in the hands of the suppliers,” Sharland said. “We also know the scope of tracking the entire supply chain is enormous. You can’t really get there in one step. This is how we landed on the opportunity we’re launching right now.”
Sharland said the database will launch no later than March and will initially be used by General Motors, Chrysler Group, Toyota Motor Corp., Magna International Inc. and Johnson Controls Inc.
Jeff Gifford, C-TPAT and NAFTA compliance manager for Magna International, which operates its U.S. headquarters in suburban Detroit, said the Supply Safe program is the next evolution in border security for the industry.
“The collaboration on this is historical,” Gifford said. “Everybody is taking a significant look at their supply chain.
“Now we’ll have a standardized approach of reporting and how to resolve any deficiencies.”
Chrysler Group requires its supply base to fill out a 70-question survey to assess and comply with the C-TPAT program, but the process was cumbersome, said Mark Argenti, C-TPAT and export compliance manager for the automaker.
“Feedback from several of our business partners indicated that the other OEMs were requiring them to fill out similar versions of the same survey,” Argenti said.
Supply Safe “reduces redundancy,” he said. “It strengthens security within the automotive supply chain by developing a solution that presents a united commitment by the automotive community to work together.”
Bill Hurles, executive director of global supply chain for GM, said that while C-TPAT is the first installment of the program, broadening its scope is essential to reduce stress on the supply chain.
Could be broadened
“If successful, Supply Safe could potentially be broadened to include security programs in other countries and be a tool to collect other data needed by OEMs and automotive suppliers,” Hurles said in an e-mail. “Tools that facilitate traceability, communication and reduce complexity and duplication are extremely important in a global supply chain.”
The subscription Supply Safe service is being developed by Integration Point Inc., of Charlotte, N.C., which designs compliance software for many industries. AIAG is fronting the development costs, but declined to reveal the price.
Automakers will pay the subscription fee for their suppliers, Sharland said.
Even so, the system is expected to result in cost savings for the industry, Argenti said.
“Low-risk importers have the least number of inspections and access to benefits such as FAST lanes, which Chrysler utilizes extensively,” Argenti said. “This results in substantial time and cost savings for us.” U.S. Customs Free and Secure Trade lanes provide expedited processing through border patrol and fewer inspections.
Canada, Mexico, too
After integration and tracking of shipments to the United States, Sharland said AIAG intends to link Canada’s Partners in Protection program and a similar program in Mexico and track automotive shipments into those countries as well.
Despite an initial launch focus on border protection, the tracking and mapping aspects of Supply Safe have potential for far greater transparency in handling disasters with global automotive ramifications, Sharland said.
“Once we build this database, if there’s a typhoon that hits Asia, we will be able to find all the plants in our system that are affected,” Sharland said. “This is the first big step forward toward an uber-reporting system that can quickly get information in the hands of automakers and suppliers in the event of an upset.”
Expanding the scope of the database could, in theory, allow automakers and suppliers to track the location and route of each individual part, totaling in the billions, across the globe, Sharland said.
The March 2011 earthquake and tsunami in Japan left several automotive parts plants disabled, and the broad web of parts suppliers left the industry in a lurch, as logistics experts scrambled to identify which parts were coming from those plants and where they were headed.
The disaster and lack of transparency cost the industry billions.
Most of Toyota’s Japanese plants were closed for months after the disaster and its North American plants were operating at 30 percent capacity during that time.
Sharland said tracking the entire supply chain, including parts and parcels, is nothing more than a pipe dream -- for now.
“Trying to track the entire supply chain globally, it’s impossible right now,” Sharland said.
“We’ve given you Colonel Mustard in the library with a candlestick, but there’s opportunity to grow it in terms of scope and complexity in the future,” he said, “by greater minds than ours.”