Josh Green, Jim Psota, and Case Dorkey from Panjiva were invited to Washington D.C. earlier this week to give a testimony before President Bush’s Working Group on Import Safety. Below is a transcript of what Josh Green, Panjiva CEO, recommended to the committee.  

TESTIMONY TO PRESIDENT BUSH’S WORKING GROUP ON IMPORT SAFETY.

JOSH GREEN, CEO OF PANJIVA, INC. OCTOBER 1, 2007.

Good Morning. I realize I am standing between us and lunch, so I will be brief.

My name is Josh Green, and I am the CEO of Panjiva.  Panjiva is a New York based company that helps American businesses evaluate overseas suppliers. Our approach is technology driven…  We take lots of data, apply technology and business judgment, and draw conclusions about suppliers around the world.  At Panjiva, we make it easy for our customers to figure out which suppliers are good and which are bad.  Which are trustworthy and which are not.  Over the last few years, we have learned a lot about how businesses can best secure THEIR supply chains, and we want to share our thoughts on how you can best secure AMERICA’s supply chain.

Let me start by saying that I thought the Working Group’s initial report was strong.  In particular, your focus on risk management, and your acknowledgment that the private sector has an important role to play — all of this made a lot of sense.  As you move toward an implementation plan, I want to share some thoughts on how you can build on the framework you have laid out.

Fundamentally, I have two points I’d like to make. 1) Focus on the supplier of origin, not just the country of origin.  2) Share more data with the private sector.  Focus on the supplier, and share more data with the private sector.

So first focus on the supplier of origin, not just the country of origin. I’ll start with my recommendation and then I’ll lay out the logic behind it. My recommendation is that you develop a profile for every foreign company — every supplier — that is exporting to the U.S. market, and that you classify each of these suppliers as high risk, medium risk, or low risk.

What’s the logic? As has been noted, it’s impossible for authorities to inspect every shipment that crosses our borders.  Given this, it makes sense to focus our limited resources on those shipments that pose the greatest risk.  But which shipments pose the greatest risk?  Some focus on country of origin, and suggest that shipments from, say, China, pose the greatest risk.  But about 40% of our imported consumer goods come from China.  Can we really “focus” our inspections on 40% of our imports?  Of course not.  When you’re searching for a needle in a haystack, “focusing” on 40% of the haystack doesn’t really help you out that much.

No, if we’re really going to maximize our existing resources, we need to be much more focused. How do we do that?  By focusing on the supplier.  Some suppliers are riskier than others.  All else being equal, suppliers that have served the U.S. market for years without incident are less risky than suppliers that are serving the U.S. market for the first time.  All else being equal, suppliers that have been independently certified as living up to international standards of product safety are less risky than suppliers that have never been certified.  By weighing data points such as these, it’s possible to characterize suppliers as high risk, medium risk, and low risk.  And once we’ve done that, we can focus our limited resources on shipments that are coming from suppliers that have been deemed high risk.

Now using data to classify every supplier may seem like a lot of work — and it is — but I want to assure you that it’s well within the realm of possibility. I know this because, at Panjiva, we’ve already done it.  The government can do it, too.  And if you can’t, give us a call…  We’re happy to help.

So that’s my first of two points… to make the most of existing resources, focus on the supplier.

Now let me briefly make my second point… Share more data with the private sector.  Right now, Customs makes data on waterborne shipments to the United States available to the public.  This data is incredibly helpful to private sector companies that are seeking to secure their supply chains, because it helps them understand each supplier’s track record.  But there’s a problem…  This data only enables private sector companies to understand each supplier’s WATERBORNE track record.

Waterborne shipments represent only 25% of U.S. imports. Customs should be sharing data on the other 75% of America’s imports — the shipments that come in by air, by truck, and by train.  By sharing this additional data, Customs can empower private sector companies to better understand the landscape of global suppliers — and do a better job of securing their individual supply chains.

So that’s the second of my two points… Share more data with the private sector.

Now let me close with a quick story. A few weeks ago, I was talking with my six year old nephew, Jeremey, and Jeremey was very upset.  Why?  Because his mom had told him that some of his toys weren’t safe, and so he’d have to throw them out.

I took this opportunity to talk to my six yearl old nephew about the intricacies of the global supply chain. I think it’s fair to say that he had no idea what I was talking about.  But he did get the point that I knew something he didn’t.  And so he asked me, “Uncle Josh, can you tell me which toys I can keep, and which toys I have to throw away?”

Fundamentally, it is this question, Jeremey’s question, that we need to answer. What’s safe and what’s not?  By focusing on the supplier, YOU stand a much better chance of being able to answer Jeremey’s question.  And by sharing more data with the private sector, you give US a much better chance of being able to answer Jeremey’s question.  Bottom line…  By working together, we CAN figure out what’s safe and what’s not.

Thank you very much for your time, and for your hard work on this important issue. 

Your thoughts? Send them to josh@panjiva.com