Summary: This article presents a high-level classification of typical illegal activities in global supply chains, divided into 2+1 main categories: moving in the supply chain; acts against the supply chain; and crime facilitation. Within the CORE-project, this can provide “food for thought” at least in the Risk-cluster, possibly also in the Demo-cluster.

Crime taxonomies from Athens. We had an interesting Thursday-Friday (9-10.10.2014) of FP7-CORE project meetings in Athens, with philosophical discussions on “taxonomies on criminal and other illegal activities in global supply chains”. First I would like to thank several colleagues – including Inge, Wout, David, Yao-hua, Juha A, and Vladlen – of the dinner companions, as well as the interesting discussions we had last week in Athens. Besides discussing on pretty much anything between the heaven and earth, we touched a bit on definitions and taxonomies for supply chain security and criminal and other illicit activities in global supply chains.

When looking at literature – both practitioner and academic papers – one can observe quite some variety on what is included in “spectrum of illicit” when discussing about supply chain security policies, regulations, programs, standards and so forth. As one extreme, there are practitioner papers which consider only terrorist activities – including destruction of supply chain systems, as well as exploitation of supply chain systems to cause destruction at destinations – to fall in the scope of supply chain security. At the same time, there are academic papers which include a broad spectrum of regulatory violations – including fraud with indirect border taxes, smuggling of prohibited and restricted goods, cargo theft, distribution of counterfeit products and business-to-government corruption – within the scope of supply chain security. In addition – particularly in the context of some past FP7-projects – we see mixing of bad activities versus bad actors, with lists such as “theft, smuggling, counterfeiting, organized crime and terrorism”; quite confusing indeed, would you agree?

It is of course no problem per se to have different viewpoints and opinions on which types of illegal activities are to be tackled in the context of supply chain security – we can always learn from each other’s thinking, publications and so forth. However, it could be beneficial in the future if we were able to develop and agree on some common definitions – or, even taxonomies – to be able to communicate in a clear, robust manner about the relevant categories of legal violations which take place in global supply chains today; and ultimately improved regulatory, technical and other countermeasures.

Let me try to make one high level suggestion on this, initially with only two “main violation categories”: (i) Violations where the supply chain system is used to achieve illicit economic, ideological or other objectives; and (ii) Violations where the supply chain system is the primary victim.

The first one covers various smuggling activities of linked to prohibitions (e.g. cocaine smuggling), restrictions (e.g. imports of specific products without required licenses) and fiscal fraud (e.g. duty and excise tax fraud). In addition, the exploitation of supply chain systems to deliver “destruction materials” – anything from a minor letter bomb to a weapon of mass effect – to a target destination. In all these cases, there is no “automatic disruption” in the supply chain itself, as “both good and bad goods keep flowing, until detected” – instead, potential disruptions are very much in the hands of authorities, who can choose for example to increase levels of controls and inspections with specific operators which have had poor track-records in the past e.g. regarding duty payments or prohibitions. One could also consider these violations to fall in the scope of “customs risk management”, as they commonly take place in the context of cross-border supply chains, where customs administrations act as the traditional gate keepers.

Regarding the second category – Violations where the supply chain system is the primary victim – disruptions in the supply chain take place without any governmental agency involvement. Examples of such illicit acts include cargo theft; sabotage of transport vehicles; ship hijackings by sea pirates; as well as acts of terrorism against the supply chain. In all these cases, supply chain is the “immediate victim”, calling for replacement, recovery and other similar actions by the supply chain operators. Certainly in many cases police, customs and other governmental authorities will be informed – or, are in the forefront of detection on their own – but still, it is up to the damaged supply chain itself to deal with the “optimum instant recovery”, was it for example about re-shipment of stolen goods or replacement of damaged trucks or even hijacked ships.

Now, the intention of this blog entry is to act as a discussion starter for the complicated topic of “supply chain security versus taxonomy of illegal activities in global supply chains”. We didn’t get much further than this last week – while enjoying excellent food and wine at few Athens restaurants. In any case, I see it very important to use “best available taxonomy of illicit” in research and development projects such as FP7-CORE, while otherwise we will end up floating back and forth forever on this central aspect of our research.