Inspecting 100 percent of all ocean cargo for ‘weapons of mass destruction’ or other contraband sounds reasonable, unless you’ve worked in manufacturing and understand that the need for inspections is a symptom of poorly designed and controlled processes.

The call to inspect all inbound ocean containers began shortly after the 9/11 terrorist attacks, and the requirement was included in the 9/11 Act passed by Congress in 2007. The bill sets a deadline of July 1, 2012 for U.S. Customs and Border Protection (CBP) to implement 100 percent inspection of all inbound cargo containers. Yesterday, the U.S. Government Accountability Office (GAO) issued a report (“Homeland Security: DHS’s Progress and Challenges in Key Areas of Maritime, Aviation, and Cybersecurity”) underscoring its previous findings: it is highly unlikely that CPB will meet the July 2012 deadline. Here is an excerpt from the report:

In October 2009, we reported that CBP has made some progress in working with the initial SFI [Safe Freight Initiative] ports to scan U.S.-bound cargo containers; but because of challenges to expanding scanning operations, especially to larger ports, the feasibility of scanning 100 percent of U.S.-bound cargo containers at over 600 foreign seaports remains largely unproven. CBP and DOE have been successful in integrating images of scanned containers onto a single computer screen that can be reviewed remotely from the United States and have also been able to use these initial ports as a test bed for new applications of existing technology, such as mobile radiation scanners. However, the SFI ports’ level of participation, in some cases, has been limited in terms of duration or scope. While 54 to 86 percent of the U.S.-bound cargo containers, on average, were scanned at 3 comparatively low volume ports that are responsible for less than 3 percent of container shipments to the United States, CBP has not been able to achieve sustained scanning rates above 5 percent at 2 comparatively larger ports—the type of ports that ship most containers to the United States. Scanning operations at the initial SFI ports have encountered a number of challenges, such as logistical problems with containers transferred from rail or other vessels, and CBP officials are concerned that they and the participating ports cannot overcome them.

CBP has developed two initiatives related to SFI for improving container security; however, challenges remain as neither initiative will enable CBP to fully achieve the 9/11 Act requirement to scan 100 percent of all U.S.-bound cargo by July 2012.

Is 100 percent inspection necessary? Asked differently: Should the focus of be on inspections or on developing more transparent and better designed and controlled global supply chain processes? I vote for the latter.

Back in 2003, Hau Lee and Seungjin Whang from Stanford University published an excellent paper titled “Higher Supply Chain Security with Lower Cost: Lessons from Total Quality Management.” The authors describe “how the principles of total quality management can actually be used to design and operate processes to assure supply chain security,” and they outline how “the central theme of the quality movement – that higher quality can be attained at lower cost by proper management and operational design – is also applicable in supply chain security.”

What are some of these TQM principles? Here are a few that Lee and Whang highlight:

Quality assurance by final product inspection is the last resort. Inspection does not improve quality. Screening is expensive, and it is subjected to the usual Type I (labeling a conforming item as non-conforming) and Type II (missing a non-conforming item) errors.

In-process control, to assure that the process is functioning in an in-control state, is preferable to final product inspection. A process that is out-of-control will produce many more nonconforming items. Detecting the out-of-control state, identifying the assignable causes (the causes of the out-of-control state), and restoring the process to an in-control state in a timely fashion will always improve quality.

Quality should be designed in. Hence, products are designed so they are less likely to be built with defects. Processes are designed such that the process variation is at a minimum.

I started my career at Motorola, so these principles are hardwired into my brain. Whenever we started manufacturing a new semiconductor product, we would perform 100 percent inspections of wire bonds. But our goal was always to get rid of inspections as quickly as possible because it was labor intensive and time consuming. We eliminated inspections by conducting experiments to determine a process window that led to zero defects and by establishing controls to minimize process variability.

The U.S. Senate Committee on Commerce, Science, and Transportation discussed the results of the GAO report yesterday (you can watch the video here). It’s too bad Hau Lee or anyone else that understands the lessons learned from the quality movement was not invited to testify.

Implementing 100 percent inspection provides false comfort. This was in full display last week when Tareq and Michaele Salahi crashed a state dinner at the White House. The couple was not on the guest list, and although they went through a security screening just before entering the White House, their ability to reach that point was likely caused by “a breakdown at the ‘perimeter’ security for the event, which is the first checkpoint that guests encounter,” according to Fran Townsend, a homeland security adviser to former President George W. Bush. In other words, it didn’t matter that 100 percent of the guests were screened for weapons before entering the White House because the process was broken further upstream.

Absent a focus on developing more transparent and better designed and controlled end-to-end global supply chain processes, 100 percent inspection of cargo is a means to many ends, except a more secure supply chain.