Process, technology and artificial intelligence
September 2017, This Week's Editor's Pick, Security Services & Risk Management, Transport (Industry)
Managing your warehouse to ensure your goods are received, stored and then dispatched in the time and in the condition required is no easy task at the best of times. When you take the logistics issues into account and add risk to it, such as the risk of staff helping themselves to a new smartphone or syndicate infiltration, you have a never-ending problem.
Massimo Carelle is the MD of the KMR Group, a new security company specialising in logistics security, as well as the risk manager for Brandian Logistics Solutions, which was previously an Ingram Micro business. He says the challenge of running an effective logistics operation is a complex task made up of different components, each as important as the other. The starting point, he says, is your processes.
“Efficient logistics relies on processes. You need a process that stipulates what happens when the truck arrives at the gate with the goods, and then additional processes that manage the goods until they are on the truck leaving the premises to their final destination.”
The trick is to ensure that those processes are followed to the letter all the time. There can be no slacking off, no boxes sitting on the floor unattended, no people from dispatch visiting their friends in receiving, no open containers unless it’s for a specific reason and so on. To accomplish this is easier said than done, and this is where technology plays an increasingly important role.
The ideal would be to have a supervisor or guard monitoring everybody in the logistics operation all the time, but this is obviously not practical nor is it feasible. Using technology, these businesses can better manage their processes, calling attention to irregularities and supporting investigations into losses and/or sabotage. Naturally, security technology will also boost investigations based on data supplied on these irregularities and the associated security data – such as video footage or access control records.
This is also where artificial intelligence (AI) enters the game. The security industry already assists in managing logistic operations via intelligent technology such as video analytics which can determine movement in no-go areas or after hours, or ensuring that no goods are loaded in the receiving bays while no goods are offloaded in dispatch without raising an alert. But by using data from security and other areas of the business and integrating it with your processes, Carelle says AI can be used to pre-empt shrinkage and proactively combat losses.
Detecting before deflecting
The key to securing your logistics is the ability to detect risk in its various forms, whether it’s crime or health and safety dangers, and prevent it from becoming a problem, Carelle says. “The security cliché of detect, defer and deflect (or detain) is still relevant in a warehouse environment, but with the optimal use of information in the form of AI, many issues can be detected and stopped before any further action is needed.”
Carelle says the Rational Choice Theory comes into play when planning your detection strategies. A person contemplating stealing a product, for example, will first ask themselves “Will I be seen?” Then they ask, “If seen, will my activity be noticed?” And most important of all, the final question is: “If I am seen and noticed, will anyone react?”
If they manage to get to the third question and the answer is no, the crime will take place because the individual is certain they will get away with it. A similar process takes place for syndicate crimes when more than a single product is targeted. A good security process will make sure the answers to all the Rational Choice questions make the would-be criminal think twice.
“If all you have is guards on site, detection is severely limited,” states Carelle. “When you add security technology and process control technology (in the form of a warehouse management system, for example), the company has more ‘eyes on the field’ and the potential for detection increases significantly.
“When you add in AI which can point you in the right directions as to where to look or where to focus your efforts, you reach a level of detection that the industry has not seen before.”
Of course, it’s easy to speak about how processes, technology and AI are creating an inflection point for logistics operations, but the rubber meets the road when the cost of these new systems is taken into account. Carelle says it is critical to remember that the expense of your risk management strategy must be commensurate with the value derived.
What many service providers don’t realise is that, while everyone knows spending on security and risk is a grudge purchase, there is a simple way to persuade management that spending will deliver the value required. Carelle has found that running a proof of concept (PoC) is the only sure way to validate what can be achieved.
Once the returns are clearly demonstrated in a small area of the operation, it doesn’t take management long to realise what the value of rolling out a similar project across the whole operation will deliver. And if the PoC is successful, it also demonstrates that returns can be achieved in smaller areas, making a phased approach to a full solution a viable option if money is tight – and it always is.
Standards make it simpler and more effective
When it comes to what processes to implement or how to implement them, Carelle is a firm believer in international standards, such as those developed and continually enhanced by TAPA (The Transported Asset Protection Association) to create a secure supply chain. TAPA’s standards cater for goods in transit, in storage and others, and include:
• FSR (Facility Security Requirements)
• TSR (Trucking Security Requirements)
• TACSS (TAPA Air Cargo Security Standards)
• PSR (Parking Security Requirements)
More information can be found at www.tapaemea.org
Prevent, not react
In concluding, Carelle observes that professional risk managers need to be more analytical in their approach to their jobs, as well as use more of the analytical capabilities of technology to help them prevent crimes. The natural consequence of this is that the organisation will automatically up its health and safety game at the same time, being able to prevent accidents that can impact efficiency.
Finally, he notes that even the logistics world is at risk from hacking and malware attacks, so cybersecurity should be part of the overall process. This includes company-wide defences such as firewalls and access control, through to smaller issues like blocking people from using USB drives on their computers unless previously authorised.
Securing your logistics operation is an ongoing process. Once you have your processes, people and technology in place, you need to continually refine it to find vulnerabilities and deal with them. The fact is, criminal syndicates have the time and resources to carefully examine everything you do over time, and act when they know they will achieve their goals. The risk manager’s job is to make sure the holes they discover are filled before they can act.
Carelle adds, “Everybody is responsible for security, it should be part of your corporate culture and instilled in every employee as they come on board.”