1©MIT2003jrice@mit.edu“SupplyChainResponsetotheUnexpected:ResilienceandSecurity”ISCMResearchProjectUpdateWebExSessionJamesB.Rice,Jr.April8,2003©MIT2003jrice@mit.eduMITResearchProject–SCResponse•Prof.YossiSheffiinitiatedprojecttostudyterrorismandsupplychains•Howcancompaniesrespondtomaketheirsupplychainsmoresecure•Howcancompaniesrespondtomaketheirsupplychainsmoreresilient•Multi-PhaseProject•CurrentActivities–situationscantofocusnextphase,reportMarch2003•Literaturereviewonhowdifferentgroupshaveresponded•Government•Riskmanagementandinsuranceindustry•Industryandcorporations•Studyingpastdisasters/disruptionstoidentifyusefullearnings•Collectspecificdataviainterviewswithshippers.•Applyingrealoptionstodeterminevalueofdifferentresponses2©MIT2003jrice@mit.eduToday’sPlan•Reviewsomehighlightsofobservationsto-date•Notethattheworkisinprogress•Ourdatasetrepresentsexperiencesofshippersprimarily•Dataisanecdotal•Yourfeedbackandinputiswelcome•Howthevarioussegmentshaveresponded•Government•NewInitiatives,InterdependenciesandPublic-PrivatePartnerships•Riskmanagementandinsuranceindustry•FailureModes,NetworkRisk•CorporateResponse•LearningfromPastDisruptions•EmergingProgressivePractices•Watchouts©MIT2003jrice@mit.eduNetworkResilience&Security3©MIT2003jrice@mit.eduResilience&Security•Insightsfromunderstandinghowdifferentorganizationsrespondtodisruption(e.g.terroristattacks,naturaldisasters,unexpectedcapacityloss)•Howthevarioussegmentshaveresponded•Government•NewInitiatives,InterdependenciesandPublic-PrivatePartnerships•Riskmanagementandinsuranceindustry•FailureModes,NetworkRisk•CorporateResponse•LearningfromPastDisruptions•EmergingProgressivePractices•Watchouts©MIT2003jrice@mit.eduResponses4©MIT2003jrice@mit.eduGovernmentResponse(asitrelatestocommerceandthesupplychain)©MIT2003jrice@mit.eduGovernmentActionsSinceSeptember11•Legislation•Over100newlawspassedsince9/11/2001•PrimarilyaddressRecoveryandSymptoms•Budget•$40Bdesignatedsince9/11forrecovery&homelandsecurity•$2B+primarilydesignatedforrecovery•FederalEmergencyManagementAgency($2B,NY/DC)•DepartmentofHealthandHumanServices($126MM)•SmallBusinessAdministration($100MM)•DepartmentofHomelandSecurity•$36B2004budget,200kemployees,22Fedorganizations•FederalAgencyActions•Manynewinitiatives–Public-PrivatePartnerships5©MIT2003jrice@mit.eduInitiativesCurrentlyinPlace•Customs(DepartmentoftheTreasury):•Customs-TradePartnershipAgainstTerrorism(C-TPAT):•Certifiedcompaniesassumeresponsibilityforcargosecurityandaregranted“fastlanes”atCustoms.•ContainerSecurityInitiative(CSI):•Identifyandpre-screenhigh-riskcontainersbeforetheyarriveintheU.S.,exploitingthelatesttechnologies.•AutomatedCommercialEnvironment(ACE):•InformationtechnologysystemtoprocessgoodsandmerchandiseimportedintheU.S.•BusinessAnti-SmugglingCoalition(BASC):•Abusiness-led,U.S.Customs-supportedalliancecreatedtocombatnarcoticsmugglingviacommercialtrade.•Carrier,LandBorderCarrierandSuperCarrierInitiatives:•Anti-drugsmugglingtrainingtoair,seaandlandcommercialtransportationcompanies.•TheTreasuryAdvisoryCommitteeontheCommercialOperationsoftheUSCustomsService(COAC):•Representativesofthetradeindustryatlarge,includingimporters,ports,customhousebrokers,tradeattorneysandcarriers.©MIT2003jrice@mit.eduInitiativesCurrentlyinPlace•DepartmentofTransportation:•MarineTransportationSystemNationalAdvisoryCouncil(MTSNAC):•30senior-levelrepresentativesfromtransportation-relatedorganizations.•NationalInfrastructureSecurityCommittee(NISC):•OfficialsfromtheDoTandUSCustoms.•JointinitiativeoftheCustomsandtheCoastGuard(DoT):•OperationSafeCommerce:•TrackinggoodsfromthesourcetothedestinationintheU.S.•HomelandSecurity•HomelandSecurityAdvisoryCouncil:•Agroupof21leadersfrombusiness,academiaandstateandlocalgovernmentthatadvisetheBushadministration.•NationalInfrastructureProtectionCenter(NIPC):•RepresentativesfromU.S.federal,state,andlocalGovernmentagencies,andtheprivatesectorhousedatFBIHQ,focusedonprotectingITinfrastructure.•DoC–TechnologyAdministration•NationalInstituteforStandardsandTechnology(NIST)•ComputerSecurityDivision(CSD)6©MIT2003jrice@mit.eduInitiativesCurrentlyinPlace•AdditionalIndustryInitiatives•SmartandSecureTradelanes(SST):•AseaportoperatorsdriveninitiativetodeploytheTotalAssetVisibility(TAV)network(pioneeredbytheDoD),inordertoimprovetrackingandsecurityofshipments.•StrategicCouncilonSecurityTechnology(SCST)•CouncilofSecurity&StrategicTechnologyOrganizations(COSTO)•TechnologyAssetProtectionAssociation(TAPA)•BusinessExecutivesforNationalSecurity(BENS)•NationalPetrochemicals&RefinersAssociation(NPRA)•AmericanChemistryCouncil(ACC)•NationalIndustrialTransportationLeague(NITL)•…©MIT2003jrice@mit.eduGovernmentResponse–NewInitiatives•Newlegislation,spending,andinitiatives•Involvinggovernmentandindustrytoimprovesecurity•Newinterdependenciesbecomingevident•Businessdependentonthegovernment•Fastflowthroughcustomsforcargomovements•Technologyinfrastructureinvestments&secureinfrastructure•Governmentdependentonbusiness•Assessingvulnerabilityoftheextendedsupplynetwork•It’sa‘j