The Boardroom With...
Mr. Randy Koch
President and CEO
GE Security, Inc.
Thank you for joining us today, Randy. We understand that prior to GE
you led the cargo and port security consulting practice for Unisys. Please
give us an overview of your background and your role with CommerceGuard.
Randy Koch: Thank you, Martin, for this opportunity to talk about
CommerceGuard. It’s great to be here.
My current role as president and CEO of CommerceGuard is tightly linked
to my supply chain tenure at Price Waterhouse and Unisys. My role at Unisys
was to present the best supply chain security solution for each of my
clients. This required me to know the pros and cons of existing supply
chain security processes and solutions in order to make appropriate recommendations,
and it led to my team’s participation in Operation Safe Commerce
(OSC) where we were tasked to thoroughly test and evaluate all cargo security
technologies. We ran pilot projects at three of our nation’s largest
ports and, together with the ports and other pilot participants, gained
detailed understanding of the strengths, weaknesses, and future potential
of each technology. After these tests, we conducted supply chain security
workshops with importers, ports, and ocean carriers in order to develop
a supply chain security roadmap. www.securityunleashed.com/pdf/Secure%20Commerce%20RoadMap_.pdf
During this testing and stakeholder feedback process I became convinced
that the benefits of container security devices (CSDs) far outweigh other
in-transit security technologies. The CSD strikes just the right balance
of significant security improvements, affordability, and logistics benefits.
Coming from Unisys to GE Security, I like to say, was simply a matter
of voting with my feet. GE is thoroughly invested in applying innovative
technology for protecting people, assets, and communities. GE entered
the CSD market carefully, choosing the best technology after careful consideration
of various CSD proposals. And GE’s commitment to CSD solutions was
demonstrated by its undertaking a substantial re-engineering project to
change the device’s sensor, improving the CSD’s accuracy rate
and its ability to withstand unbelievably harsh maritime conditions.
Now, as president and CEO of CommerceGuard AB, I’m fortunate to
work with GE and partner with other multinational corporations (Siemens,
Samsung, and Mitsubishi Corporation) to ensure that this vital component
of supply chain security can be rapidly deployed around the world. This
is a once in a lifetime opportunity to impact global security and global
SecurityStockWatch.com: One will read on www.CommerceGuard.com
that, "CommerceGuard is the first global, cost-effective system that
deters and detects theft, smuggling and international terrorism by integrating
container security devices with a global information network." Please
give our audience an overview of CommerceGuard solutions.
Randy Koch: First, let’s discuss the vulnerability and problem
that we are solving…
CommerceGuard is a full security system that provides intrusion detection
for cargo containers. Shippers who have taken measures to use trusted
sources want to be sure their cargo remains secure along its journey,
especially during the vulnerable leg of transport between the factory
and the first seaport. CommerceGuard “fills a gap” in securing
today’s maritime shipments by alerting officials and cargo owners
if a container has been opened without authorization during its journey.
CommerceGuard’s CSD snaps onto a cargo container with a powerful
magnet, in a location where the container itself protects the device from
harsh conditions and from tamper attempts. It reports date, time, and
security status at key locations along a trade route. Shippers use the
reports to track a container’s progress, manage supply chain logistics,
and compare performance of separate trade lanes. Data security is ensured
with encrypted wireless communications and CommerceGuard authenticates
both users and hardware so there’s no way to clone devices or readers.
The CommerceGuard network is installed in more than 20 seaports and customer
locations on every major continent. Shippers using the system are enjoying
advantages in addition to detecting attempts at smuggling and terrorism.
They are focusing on analyzing trouble spots in their supply chains –
pinpointing areas where theft occurs; identifying locations where shipping
container progress has stalled; even understanding how often their containers
are opened for legitimate reasons.
SecurityStockWatch.com: What is your perspective on the market
drivers for CommerceGuard solutions at this time?
Randy Koch: One market driver is the continued sense
of urgency to bolster homeland security against a terrorist attack on
our seaports. The volume of container traffic is high and growing; freight
containers are poorly protected, if at all, from tamper attempts,
especially when they are in-transit from the manufacturer to the overseas
port; and the damage from a bomb at a major seaport would wreak havoc
on human life, transportation infrastructure, and the global economy.
The SAFE Port Act recognized that Container Security Devices can meaningfully
improve container security, and US Customs and Border Protection Commissioner
Basham has announced that performance requirements for container security
devices will be issued soon.
Another driver is increasing supply chain complexity. Importers understand
that they need to better monitor their cargo as it is transported to ensure
product quality and to protect their assets and employees.
The advanced technologies that are the foundation of the CommerceGuard
system allow it to be shaped by shippers for their individual needs. For
example, customized e-alerts can help with compliance issues – imagine
providing instructions to guide the response in the event that a container
carrying hazardous materials is breached.
SecurityStockWatch.com: Please tell us about CommerceGuard's
strategic relationships in this market with Samsung, Siemens, and Mitsubishi.
Randy Koch: The CommerceGuard AB company was founded specifically to
respond to the global nature of the supply chain and urgency of the security
issue. It’s a partnership of multinational corporations that bring
unique abilities and perspectives to the CommerceGuard table. Our customers
gain regional expertise, extensive local customer support, and technological
excellence in each region. The four CommerceGuard partners are GE Security
in the Americas, Mitsubishi Corporation in Japan, Samsung Corporation
in Asia, and Siemens Building Technologies in Europe.
SecurityStockWatch.com: Congratulations on the recent "wins"
for CommerceGuard at the Port Everglades Terminal in Florida and the Port
of Portland in Oregon. Without disclosing any confidential or proprietary
information, of course, can you tell us about the solutions CommerceGuard
Randy Koch: Both of these CommerceGuard deployments, in the Port of Portland
and Port Everglades, were developed in response to demand from commercial
shippers. The ports are committed to meeting their customers’ needs,
and now each of them can choose to extend its customer services with CommerceGuard’s
solution for supply chain security and visibility.
We are happy to see Everglades and Portland join the growing network
of ports represented in the CommerceGuard network. The system is appealing
to ports and terminal operators for several reasons – the readers
have small footprints and are simple to deploy. They can be located almost
anyplace and can cover several lanes of traffic, and the radio frequency
does not interfere with other wireless communications. CommerceGuard’s
regional business partners install and maintain the equipment and the
ports may often begin, or extend, an existing business partnership with
SecurityStockWatch.com: We understand that CommerceGuard also
has a niche in the commercial enterprise market with "wins"
at companies such as Starbucks Coffee. Care to discuss the solution CommerceGuard
provided the world's largest coffee retailer?
Randy Koch: Starbucks was CommerceGuard’s first commercial customer.
Their extraordinary diligence in asset protection, and their model of
enterprise security in which CSDs play an important role, are broadly
CommerceGuard works exceptionally well for companies with remote factory
locations, such as coffee plantations, because of its wireless communications,
ease of use, and ability to operate without relying on sophisticated infrastructure
arrangements such as PCs with Internet connections. Some benefits that
shippers experience with CommerceGuard include: assurance that trusted
containers have not been tampered after departing the factory, insight
into every container opening along a journey – even the legitimate
ones – and supply chain visibility, especially between the factory
Along with the security benefits of CommerceGuard, future capabilities
allow companies to monitor for quality control. For example, additional
sensors can be plugged into the CSD and pilots are already running to
test humidity and temperature sensors inside the container. This monitoring
capability will help companies ensure that containers reach their destination
without being tampered with and with the freshest product possible.
Stanford University and The Manufacturing Institute released research
results showing that companies who invest in supply-chain security measures
realize a financial return on investment, including reduction of customs
inspections, reduction in transit times, increased automation of handling
imports, and improved asset visibility in the supply chain. The results
are available at www.nam.org/supplychainsecurity.
SecurityStockWatch.com: What resources such as streaming video,
webinars, webcasts, podcasts, "white papers" and "case
studies" are available for end-users at www.CommerceGuard.com?
Randy Koch: Our website (www.commerceguard.com)
is the main repository of information about CommerceGuard. Product literature,
video demonstrations, and news can be found on the site. It leads back
to regional business partners for local information and solutions packages.
End-users can use the site to surf for information, send us an email,
or get the numbers to call the team -- all the contact information is
SecurityStockWatch.com: Care to comment on The 2007 Global Frost
& Sullivan Market Leadership of the Year Award in the field of container
security devices (CSD) which was presented to GE Security?
Randy Koch: It is an honor to receive the Frost and Sullivan award. Their
recognition of CommerceGuard highlights our advanced technology, robust
container security platform, and innovative business model.
SecurityStockWatch.com: Thanks again for joining us today, Randy.
Are there any other subjects you'd like to discuss?
Randy Koch: I’d just like to leave you with the sobering
thought that drives me and my team every day. There is still enormous
urgency to fill the large security gaps in the shipping industry and in
cargo containers that make our ports vulnerable. We are seeing an increasing
number of companies use CSDs to manage their risk and gain supply
chain visibility. We want to encourage all industry players to
support the steps these companies are taking and facilitate their efforts
by deploying container security and port security solutions today.
Thank you, Martin, for this opportunity to talk about my favorite subject.
It’s been a pleasure to meet with you.