Steps to Improve Strategic CTPAT Vendor Management

Before we get started, a quick review of CTPAT

The Customs-Trade Partnership Against Terrorism or CTPAT is a voluntary trade partnership program for United States Customs and Border Protection (CBP) where CBP and trade community members work together to facilitate and secure the legitimate international trade movement. CTPAT is just one layer in the CBP multi-layered cargo enforcement strategy. Through this program, the CBP and the trade community work together to improve U. S. border security and strengthen international supply chains.

This public-private sector partnership program is voluntary and recognizes that CBP is capable of providing the highest level of security for cargo through the cooperation of international supply chain principle stakeholders. These stakeholders include carriers, importers, licensed customs brokers, consolidators, and manufacturers. The accountability and security for every Port Act of 2006 provide strict program oversight requirements and a legal framework for the CTPAT program.

CTPAT Partnership Growth Continues

CTPAT was officially launched in November 2001, and since then it has continued to grow. Today, it has accepted into the program more than 11,400 certified partners spanning across a wide range of the trade community.

How CTPAT Works

Upon joining CTPAT, members agree to work together with CBP to help protect the supply chain, implement security procedures and best practices, and identify security gaps. Applicants must address a wide range of security topics while presenting security profiles listing action plans that align with supply chain security. CTPAT members are considered low risk, and therefore, are less likely to get examined at a port of entry in the U.S.

Often the security gaps that your company will uncover are a result of utilizing external vendors in your supply chain.  As a CTPAT member, you are responsible for making sure these business partners keep up their side of the bargain and keep cargo secure.

Why You Need to Improve Vendor Management for CTPAT

As a business in a competitive environment, you need to ensure you maximize the value of your relationship with vendors particularly since this is required by the CBP as a prerequisite to the CTPAT program.  By building strong relationships with vendors and improving your vendor management process, you are helping to maximize your company’s value while achieving your CTPAT goals.

Your Supply Chain Stakeholders

Every company joins CTPAT for different reasons. These reasons are not always obvious, but they all involve the supply chain benefits.  When you let another business know you are CTPAT certified, it prompts a high level of trust and opens the doors to doing more business.

For example, sometimes salespeople are hidden stakeholders.  Some partners may demand you be CTPAT approved before they will consider doing business with you or allow you to participate in bid packages. Those responsible for compliance and personnel are also important stakeholders. Your CTPAT certification reveals to others that your company implements codes of conduct, performs background checks, and educates employees on different topics, such as financial risk, disaster preparedness, and IT Security.

In addition, those on the logistics and shipping teams understand that CTPAT certification ensures a supply chain security specialist (SCSS), fewer border inspections, and other benefits that help keep freight moving consistently across the border. Working with these groups while ensuring all vendors follow standard operating procedures (“SOPs”) leads to great success.

Steps to Improve CTPAT Vendor Management

Step 1: Establish Business Goals 

To get the most out of vendors, it is vital to establish business goals, allocate resources effectively, and understand different business unit requirements. With a complete overview of business requirements, organizations can create benchmarks for each vendor and select the best ones based on their company priorities. This helps to establish proper metrics and evaluate later stages of vendor performance.

Besides making sure the vendor meets your goals, one of the key components of vendor management is to set up an “onboarding checklist” to make sure you understand who is working for your company.  This should be used by every team member and tracked by electronic means in a database or vendor management software.  Here is a truncated example of a vendor onboarding checklist or vendor profile:

• Company Name
• Address
• W-9
• Contact Person for Services and Accounting
• Certificate of Insurance
• Dun and Bradstreet Number Check
• References
• Denied Party Screening Check
• What services are offered and where?

Step 2: Establish a Vendor Management System

To ensure you have the proper data available to make risk-based informed supply chain decisions, the CBP requires taking either of two approaches: creating, distributing, and recollecting an annual security questionnaire for each business partner/vendor or completing a hands-on annual site visit to each vendor or business partner. Creating a security questionnaire to assess risk is best for those who have more than a few business partners or vendors. This questionnaire is put together strategically to gather information required from business partners for risk assessments.  Learn more about the Security Questionnaire by clicking here to view a video posted about this subject.

Step 3: Develop and Document a Risk Mitigation CTPAT Strategy

Effective risk mitigation supply chain strategies use three resources: people, technology, and procedures (like CTPAT certification). Each has a part in processing information taken from inside stakeholders and outside partners, like clients and vendors. Therefore, organizations must form an infrastructure committed to gathering, interpreting, and using information continuously. To sum it all up, you need a strategic plan backed by supporting evidence.

The U.S. CBP refers to this as a “Security Profile”. This is a comprehensive plan outlining all processes that assist in risk mitigation within your company. It formulates answers to around 150 questions posed by the CBP known as “minimum security requirements” and delivers details to stakeholders on how they are enforced and implemented. A full security profile may include over 100 pages and can be fairly complex. It helps to outsource a professional consultant to help your organization author a security profile and assemble it. Part of the security profile is proving you have a viable business partner/vendor management program.

Step 4: Identify CTPAT Points of Compliance Risk

Understanding how your business partners and your company conduct operations is a part of risk identification. This includes establishing how everything works together with your supply chain, including warehousing, moving cargo, manufacturing, etc. When assessing risk, you must first dive deeply into how your organization is set up and managed. 

Moreover, you should understand the security technology being used to protect your business, like cameras, alarms, fencing, access control, and others. From both a “micro” and “macro” view, processes need to be documented to fully understand how cargo moves through your entire supply chain channels and who handles what.  The companies providing you with building management technology are also vendors that need to be managed as CTPAT vendors.

Step 5: Minimize Risk Exposure and Evaluate Performance

Whether vendors are new or have been in operation for years, companies need to review their performances regularly to determine if the vendor is providing them with value and maintaining the expected level of operations security. Also, they need to check regularly on risks related to financing, technology, and security. Risks such as data integrity, fraud, and cybersecurity are the most prominent risks companies face.

Step 6: Disciplined CTPAT Program Maintenance Practices

As noted, the CBP requires companies to regularly send security questionnaires to business partners, and hold internal meetings to track conformance of CTPAT. This can be quite a challenge using conventional methods, spreadsheets, network drives, email, etc. One way to keep things in check without much effort is to monitor CTPAT conformance using a software system. CTPAT compliance automation software can help gather and distribute documents between business partners and provide templated processes to conduct management reviews annually. 

Let the Experts Help With Your CTPAT Management

Veroot CTPAT can help you with CTPAT training, certification, and management with professional consulting and software solutions that bring your business partners and internal team up to speed on the CTPAT program. Our groundbreaking CTPAT software can help automate recurring required CTPAT tasks, streamline vendor relationship maintenance, and simplify CTPAT compliance across employees and your supply chain. It’s an all-in-one solution that helps manage risk assessment scoring, security questionnaire deployment, training, business partner monitoring, and more. We also provide full-service trade compliance solutions that include a complete library of supporting documents and custom-built security profiles to ensure you meet the CTPAT Minimum Security Criteria.