Security Management. How do we implement the Regulations? Marc Volders - MAY 31, 2006

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1 Security Management How do we implement the Regulations? Marc Volders - MAY 31, 2006

2 Theme Security in the supply chain How do we as a logistics service provider need to prepare ourselves as well as our partners in the supply chain to implement the various regulations, legislations on the international and national scene in our companies? DHL experience

3 Agenda Introduction to DPWN and DHL Logistics. Situation for DHL Logistics National and International Regulations. Supply Chain Security Program - Strategy Implementation Best Practices

4 Deutsche Post World Net and DHL MAIL EXPRESS LOGISTICS FINANCE Germany Biggest provider of mail services in Europe Delivering mail to about 40 million households in Germany More than 71 million shipments per day Worldwide No. 1 in cross border express services Strong presence in more than 220 countries and territories More than 4.2 million customers worldwide 120,000 destinations served Worldwide No. 1 in global contract logistics No. 1 in global air freight No. 1 in global sea freight Strong customer base (50% of Forbes 500 companies) Germany Leading retail bank in Germany 12.3 million customers 17.2 million savings accounts USA Worldwide finance services for logistics industry

5 Global Combined Coverage and Scale of DHL Logistics DHL Logistics is in Europe, Americas and Asia the No. 1 Pro forma Revenues 2005 Great Britain & Ireland 4.2 bn Asia Pacific Americas 4.9 bn 2.7 bn Continental Europe & Africa 6.4 bn Contract logistics and freight forwarding Freight forwarding only No presence Operations in all continents Facilities in over 3,000 locations Over 150,000 employees worldwide Pro Forma Revenues 2005: 18.2bn Pro forma EBIT 2005: 0.59bn

6 Agenda Introduction to DPWN and DHL Logistics. Situation for Logistics National and International Regulations. Supply Chain Security Program - Strategy Implementation Best Practices

7 Situation for DHL Logistics Acting in the global supply chain and having become a real global player, DHL Logistics and its partners are faced with increasing threats. The evolution and the importance of this threats were significantly influenced by external factors: The events of 09/11 and increasing global terrorism have dramatically increased security requirements from regulatory bodies. Organized crime and resulting enormous losses have consequently changed the customer and consumer expectations. The Globalization and the important role of DHL Logistics in the supply chain have made them a target for various activist groups (ARE). Worldwide, cargo theft account for estimated direct merchandise losses is about: $ 50 billion* (This does not include indirect costs for investigations, maintaining supply chain, impact on brand reputation, claims payment, etc.) *Sources: WCO ( World customs Organization); WHO ( World Health Organization); DOT (Department of Transportation US); DHS (Department of Homeland Security US) ; FBI (Federal Bureau of Investigations US); ICSC (International Cargo Security Council )

8 Agenda Introduction to DPWN and DHL Logistics. Situation for DHL Logistics International and National Regulations. Supply Chain Security Program - Strategy Implementation Best Practices

9 Increasing security requirements C-TPAT Program (Customs-Trade Partnership Against Terrorism); driven by U.S. Customs & Border Protection (CBP) BASC (Business Alliance for Secure Commerce) driven by private industry; supported by CBP and linked with C-TPAT Upcoming EU Regulation 648/2005 embedding the principle Customs 2007 project / Authorized Economic Operator (effecting security for all transportation modes) by EU Commission CSI (Container Security Initiative); driven by Department of Homeland Security DHS US AMS (Automated Manifest System); driven by Transportation Security Administration (TSA) US PIP (Partnership In Protection), ACI (Advanced Commercial Information); driven by Canadian Customs and Canada Service Border Agency (CSBA) EU Regulations 2320/2002 & 622/2003 (Airfreight security regulations) ISPS Code (International Ship & Port Facility Security Code); security standards for vessels & port operations; driven by International Maritime Organization (IMO) Chapter 1.4 for DG: security provisions of the UN Model Regulations on transporting in Dangerous Goods

10 Increasing security requirements The logistics industry faces challenges on organisational and financial level It is unclear what the ROI / benefits will be Or as usual: all costs charged to the consumer

11 Agenda Introduction to DPWN and DHL Logistics. Situation for DHL Logistics National and International Regulations. Supply Chain Security Program - Strategy Implementation Best Practices

12 Internal security program Internal security audit program Modern physical / electronical security systems Internal security reporting system Security manual for transport and warehousing Security nominee program Security Awareness For Employees (SAFE) Training program Specific security training for employees Procedures and guidelines on security intranet

13 Internal security program DHL Logistics has established a proven security program, which enables Management... To initiate pro-active measures To answer fast and flexible To identify future risks To provide advice and consultancy to our customers.

14 Strategy Regulatory security requirements will effect dramatically the today s supply chain and could contribute to an increase in shipping time and could therefore influence industries philosophy of outsourcing. Regulatory security requirements could speed up the development of new technologies like RFID The global terrorism organisations will still use the legitimate supply chain for their own logistics needs and will target them for theft and pilferage to finance their activities same as organized crime is also used to do. Expertise and experience in the field of supply chain security will become mandatory for logistics suppliers. Benefits for our customers: common security standards for all transportation modes, dedicated security manager as single point of contact, faster response to incidents; DHL Logistics Security will provide information, trends and feedback regarding crime and DHL activities in the different global security programs DHL Logistics Security takes leadership and will actively work with their partners on security solutions for the challenges of today and tomorrow. DHL Logistics Security will actively work with local and international law enforcement to develop effective solutions to protect the integrity of the supply chain.

15 Agenda Introduction to DPWN and DHL Logistics. Situation for DHL Logistics National and International Regulations. Supply Chain Security Program - Strategy Implementation Best Practices

16 Warehousing Implementation security Threats: Theft, burglary, robbery, hi-jack, Risks: - No Security Program - Information Security Management Temporally labour Forgery of documents Fraud Deception - Environmental risks Global Security Program Security management,, security Policy, security standards and SOP s with 3 rd parties Specifics: Check documents versus freight Inspect freight Secure freight and facilities Training for employees Incident reporting Information protection Procedures for Operations

17 Lane configuration Be sure that every operator in the Supply Chain is acting according agreed procedures and has the right security profile

18 Implementation Analysis of the network from origin to destination Each leg to be assessed for security requirements and risks Define best partners / alternatives Define additional security measures Usage of country, web, law enforcement and colleagues info sources Usage of risk assement tools

19 Agenda Introduction to DPWN and DHL Logistics. Situation for DHL Logistics National and International Regulations. Supply Chain Security Program - Strategy Implementation Best Practices

20 Best practices Security with clear expectations and roles Security as a function to Management Security as a Quality tool Security with focus on prevention / awareness Security approach from Macro to Micro

21 Thank You!

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