Supply Chain Dirty Secret of Drug DiversionGP0|#cd529cb2-129a-4422-a2d3-73680b0014d8;L0|#0cd529cb2-129a-4422-a2d3-73680b0014d8|Physical Security;GTSet|#8accba12-4830-47cd-9299-2b34a43444652017-08-01T04:00:00Z, Lilly Chapa<p>​Controlled substances were going missing at Hennepin County Medical Center (HCMC), and the hospital’s security investigator, William Leon, was determined to get to the bottom of it. So, at 11 p.m. on a Friday, Leon settled in for a night of observation at the Level I trauma center in Minneapolis, Minnesota. He kept a trained eye on one registered nurse who was suspected of stealing hydromorphone, an opioid pain medication, for her personal use.</p><p>HCMC has cameras set up in the medication room to monitor controlled substances, and Leon watched as the nurse began gathering prescribed medication for a patient in the emergency department. The process, called wasting, requires the healthcare worker to take a fresh vial or syringe full of medication and then dispose of the excess, leaving only the correct dosage—all with a witness present. Leon observed the nurse dispense a syringe of hydromorphone from the medicine cabinet, and, while a fellow nurse was signing off on the withdrawal, she placed the syringe in her pocket and pulled out an identical syringe, which Leon later learned contained saline. The nurse held up the saline syringe and wasted the required amount, tricking her fellow nurse, and left the room.</p><p>At this point, Leon knew exactly what was going on, and watched with increasing alarm as the nurse headed to a patient’s room in the orthopedic area of the hospital. “In that area, I knew immediately, this patient could have a broken bone—they were in intense pain and requiring this medication,” Leon says. “I see a lot of doctors standing around and I’m thinking ‘uh oh, this patient is going to get saline.’”</p><p>Leon raced to the room and saw that the doctors had given the patient the saline the nurse had brought up. “The patient was still screaming in pain and the doctor was frantically asking the nurse, ‘Are you sure you got the right dosage? Are you sure it was hydromorphone?’ and she was insisting she had,” Leon says. He called the doctor and the nurse into the hall and explained that the patient had just gotten saline and still needed the proper pain medication because the nurse had diverted the hydromorphone in the medication room. The doctor went to properly treat the patient and Leon called the nurse manager and the local sheriff’s detective in to begin an official investigation into the nurse’s actions.</p><p>Drug diversion in the United States is a nebulous problem that is widespread but rarely discussed, experts say. Whether in manufacturing plants, retail pharmacies, hospitals, or long-term care facilities, healthcare workers are stealing drugs—typically for their own personal use—and putting themselves, patients, and coworkers at risk. </p><p>“I hate to tell you, but if you have controlled substances and dispense narcotics, you’ve got diversion going on,” says Cherie Mitchell, president of drug diversion software company HelioMetrics. “It’s just a question of whether you know it or not.”</p><p>The scope and frequency of drug diversion is almost impossible to grasp, due in large part to how diversion cases are addressed. A facility that identifies a diversion problem might bring in any combination of players, from private investigators and local law enforcement to state accreditation boards or the U.S. Drug Enforcement Agency (DEA). There is no overarching agency or organization that records every instance of drug diversion in the United States.</p><p>Controlled substance management is dictated by a number of laws, including the U.S. Controlled Substances Act of 1971, which classifies substances based on how they are used and the potential for abuse. It also dictates how the substances are dispensed, and a facility may be fined if it does not comply. </p><p>The closest estimates of drug diversion rates come from people or organizations who dig up the numbers themselves. The Associated Press used government-obtained data in its investigations on drug diversion at U.S. Department of Veterans Affairs (VA) medical centers. Reported incidents of diversion at about 1,200 VA facilities jumped from 272 in 2009 to 2,926 in 2015, the data revealed, and the VA inspector general has opened more than 100 criminal investigations since last October. John Burke, president of the International Health Facility Diversion Association, extrapolated data he obtained from facilities in Ohio to estimate the presence of 37,000 diverters in healthcare facilities across the country each year. </p><p>Mitchell points out that any statistic derived from officially collected data still wouldn’t accurately reflect the extent of drug diversion in the United States. “There’s a lot of people investigators really suspected were diverters but had to be chalked up to sloppy practice due to a lack of concrete evidence, so any statistic is talking about known diverters who are fired for diversion,” she tells <i>Security Management</i>. “Even if you did have a statistic, it would be off because how do you incorporate those so-called sloppy practicers, or diverters who thought they were about to get caught so they quit on you and left? No matter what number you come to, it’s probably bigger in reality.”​</p><h4>Addiction and Diversion</h4><p>Although more people are paying attention to drug diversion due to recent high-profile cases and the current opioid epidemic in the United States, experts say they have been dealing with the same problems their entire careers. </p><p>“I can personally tell you that I dealt with the same issues 15 or 20 years ago that the healthcare arena is facing today, specifically in the drug abuse and diversion by their own hospital healthcare employees,” says Charlie Cichon, executive director of the National Association of Drug Diversion Investigators (NADDI) and a member of the ASIS International Pharmaceutical Security Council. “There are different drugs today, of course, than there were 20 years ago.”</p><p>Susan Hayes has been a private detective for healthcare facilities for more than a decade and says the opioid epidemic has magnified the drug diversion problem in recent years. “The opioid addiction in America has lit my practice on fire,” she says.</p><p>It’s no secret that opioid addiction has reached epidemic levels in the United States. In 2010, hydrocodone prescriptions were filled 131.2 million times at retail pharmacies alone, making it the most commonly prescribed medication, according to the Mayo Clinic. However, those are just the numbers that were legally prescribed—about 75 percent of people who take opioids recreationally get them from a friend or family member. According to the U.S. Centers for Disease Control and Prevention (CDC), approximately 52 people in the United States die every day from overdosing on prescription painkillers.</p><p>Healthcare workers are not immune to the draw of opioids. In fact, up to 15 percent of healthcare workers are addicted to drugs or alcohol, compared to 8 percent of the general population, according to the Mayo Clinic. </p><p>“Healthcare providers are in very stressful jobs,” Hayes says. “They all have problems. Nurses have emotional attachments to patients that they see die. Even orderlies have very stressful physical jobs, they’re lifting patients. Pharmacists can make mistakes that mean life or death. You have people that are already in very stressful situations, and now you give them access to drugs…. I think the combination is almost deadly.”</p><p>While a bottle of 30mg oxycodone tablets can sell on the street for up to 12 times its price in the pharmacy, most drug diverters are addicts using the drugs themselves. Because of this, diversion shouldn’t be considered just a security concern but a patient safety concern, Cichon says. He references several high-profile diversion cases in which the diverters used the same syringe full of medicine on both themselves and their patients, spreading bacterial infections and hepatitis. In one especially egregious case, a traveling medical technician with hepatitis C would inject himself with his patients’ fentanyl and refill the same syringe with saline, ultimately spreading the virus to at least 30 people in two states.</p><p>Unfortunately, experts acknowledge that most diverters don’t get caught until they have been diverting for so long they start to get sloppy. “The people who are your real problem are the people who are hiding in the weeds, not doing enough to get caught, and those are the ones you want to find,” Mitchell says. “The people they are finding now are the people that have the needle in their arm or somebody has reported them. You want to try to find them before that.”​</p><h4>Out of the Loop</h4><p>Hayes details the path of drugs through a hospital: a pharmacy technician orders the medication from a wholesaler, who will deliver them to the hospital pharmacy. The drugs are sorted and stocked in the pharmacy, where they will remain until they are brought up to the patient floors and stored in various types of locking medicine cabinets. When a patient needs medication, a nurse goes to the medicine cabinet and dispenses the drug for the patient. </p><p>Another ASIS International Pharmaceutical Council member—Matthew Murphy, president of Pharma Compliance Group and former DEA special agent—describes this as the closed loop of distribution. “Once a drug is outside of the closed loop, when it gets dispensed from a pharmacy or administered by a doctor, it’s no longer in the purview of DEA rules and regulations,” he explains. Drugs are most likely to be diverted during those times when they are in transit or exchanging hands, outside of the closed loop.</p><p><strong>Wholesalers.</strong> When fulfilling a pharmacy’s request for medication, wholesalers have just as much of a responsibility to notice if something is amiss as the pharmacy does. Whether it’s a retail pharmacy or a hospital pharmacy, wholesalers are responsible for cutting them off if they start to request unusually high amounts of opioids. </p><p>In 2013, retail pharmacy chain Walgreens was charged $80 million—the largest fine in the history of the U.S. Controlled Substances Act—after committing record-keeping and dispensing violations that allowed millions of doses of controlled substances to enter the black market. Cardinal Health, Walgreens’ supplier, was charged $34 million for failing to report suspicious sales of painkillers. One pharmacy in Florida went from ordering 95,800 pills in 2009 to 2.2 million pills in 2011, according to the DEA. </p><p>Hayes says the fine against the wholesaler was a wake-up call, and now suppliers use algorithms to identify unusual spikes in orders of opiates. Wholesalers can even stop the flow of medication to pharmacies if they believe diversion is occurring—which can be disastrous to a trauma center, Hayes notes.</p><p><strong>Pharmacies.</strong> To restock the shelves, pharmacy technicians compile lists of what medications they are low on to send to the wholesalers at the end of each day. Hayes notes that many pharmacies do not conduct a retroactive analysis on what is being purchased—which is why wholesalers must pay attention to any unusual changes in orders. She stresses the importance of constantly mixing up the personnel who order and stock medications. </p><p>“If you’re both ordering and putting away drugs, that’s a bad thing because you can order six bottles when you only need five and keep one for yourself,” Hayes notes. </p><p>Similarly, it is important to rotate who delivers the drugs to the patient floors. “John the technician has been taking the drugs up to the floors for the last 20 years,” Hayes says. “Well gee, did you ever notice that John drives a Mercedes and has two boats and a house on Long Island? He makes $40,000 a year, did you ever do any investigation into why?”</p><p><strong>On the floor. </strong>Experts agree that the most egregious diversion occurs during the wasting and dispensing process in scenarios similar to the incident Leon witnessed at HCMC. Mitchell explains that all hospitals have different wasting procedures—some require nurses to waste the medication immediately, before they even leave the medication rooms, while others may have a 20-minute window. Other hospitals may prohibit nurses from carrying medication in their pockets to prevent theft or switching. ​</p><h4>Investigations</h4><p>Any company involved with controlled substances, whether manufacturing, distributing, or dispensing, must be registered with the DEA and must adhere to certain rules and regulations—which aren’t always easy to follow.</p><p>Murphy, who worked for the DEA for 25 years, now helps companies follow mandates he calls “vague and difficult to interpret.” For example, DEA requires anyone carrying controlled substances to report “the theft or significant loss of any controlled substance within one business day of discovery.”</p><p>“This hospital had 13 vials of morphine that ‘went missing’ and someone called me in to find out why,” Hayes says. “They asked me, ‘Are 13 vials substantial or not? Do I really need to fill out the form?’ I counsel them on what’s substantial because the language is very loose.”</p><p>Depending on the frequency or significance of these or similar forms, the DEA may open an investigation, Murphy explains. “DEA will look at these recordkeeping forms and determine if in fact everything has been filled out correctly, that they have been keeping good records,” he says. “If DEA determines that they are lax or have not been adhering to requirements, there could be anything from a fine to a letter of admonition requiring corrective actions.” In more serious cases, DEA could revoke the registration because the activity or behavior was so egregious that it was determined that the facility is not responsible enough, Murphy explains. If a facility loses its DEA registration, it cannot dispense controlled substances.</p><p>However, DEA does not get involved in every suspected case of diversion. “There are only so many DEA diversion investigators, so they have to prioritize what they get involved with,” Murphy says. “It has to be pretty egregious for them to get involved to seek a revocation or fine.”</p><p>That’s where people like Hayes come in. “They want me to come in instead of DEA or law enforcement,” she explains. “I’m a private citizen, I understand law enforcement procedures, and I can help them get at the root of the problem before they call in law enforcement.” </p><p>After an investigation into a diverter is opened, it is unclear what happens to the offender. Hayes says that she typically gathers evidence and gets a confession from diverters, at which point her client calls in law enforcement to arrest them. Leon, who was in charge of diversion in­vest­igations at HCMC for 20 years before becoming a consultant for HelioMetrics, was able to investigate but not interview suspected diverters. He tells <em>Security Management</em> that he would call in a sheriff’s detective to interview the suspect.</p><p>Although most diverters are fired when their actions are discovered, they are not always arrested—it’s often at the discretion of their employer. Depending on the diverter’s role, state accreditation boards—such as those that license nurses and pharmacists—would be notified and could potentially conduct their own investigations. </p><p>Cichon cautions that some hospitals hoping to avoid bad press and DEA scrutiny may look for loopholes. “We found out through the course of investigations that if someone resigns and was not sanctioned it may not be a reportable action,” he says. “If we allow this person to resign rather than take action against him, then we don’t have to report it.”</p><p>Murphy notes that DEA typically has no role in individual cases of diversion. “If the diverter has a license from one of those state agencies, usually it’s required that they be reported, and then it’s up to the board how they proceed with the personal license of the individual,” he says. The DEA doesn’t regulate the personnel—that’s up to the state and the facility. </p><p>Cichon notes that the lack of standards when addressing diversion makes it more likely that offenders could slip through the cracks and move on to continue diverting drugs at another facility. “Unfortunately, there are different laws and statutes in every state that set up some sort of reporting requirements,” he says. “There are medical boards, nursing boards, pharmacy boards, and not every worker even falls under some sort of licensing board for that state.” ​</p><h4>Staying Ahead</h4><p>Due to the stigma of discovering diverters on staff, many hospitals just aren’t preparing themselves to address the problem proactively, Cichon explains.</p><p>“This is something that is probably happening but we’re not finding it,” he says. “The statistics I’ve seen at hospitals that are being proactive and looking at this are finding at least one person a month who is diverting drugs in their facility. If a 300-bed hospital is finding one person a month, and Hospital B has the same amount of staff and beds and is finding nothing…”</p><p>NADDI has been providing training for hospitals to develop antidiversion policies. Cichon notes that many hospitals throughout the country have no plan in place to actively look for diverters. “As big as the issue is, many of them are still just not being that proactive in looking at the possibility that this is happening in their facility.”</p><p>Cichon encourages a team approach to diversion that acknowledges diversion as a real threat. “Not just security personnel should be involved with the diversion aspect,” he says. “Human resources, pharmacy personnel, security, everyone is being brought into this investigation, because the bigger picture is patient safety. The diverting healthcare worker typically isn’t one who’s going to be selling or diverting his or her drugs on the street, but they are abusing the drugs while they are working.”</p><p>Leon worked hard on diversion prevention at HCMC after discovering a surprising pattern: almost all of the diverters he investigated wanted to be caught. “What got me on this path of prevention was observing the nurses as they would admit to what they did,” he explains. “More often than not the nurses would say, ‘I wanted somebody to stop me. I needed help, didn’t know how to ask for it, and I was hoping somebody would stop me.’ That’s pretty powerful when you’re sitting there listening to this on a consistent basis.”</p><p>Leon implemented mandatory annual training for everyone in the hospital—from food service workers to surgeons—to recognize the warning signs of drug diversion. “If a nurse or anesthesiologist or physician is speaking with you and telling you they are having these issues, then you should say something,” Leon explains. “It’s not doing the wrong thing—you’re helping them, and that’s the message we sent out. Look, these individuals are not bad individuals. Something happened in their lives that led them down this path.”</p><p>Leon also had cameras installed throughout the hospital that allowed him to observe diversion but also kept his investigations accurate. “We had a nurse who was highly suspected of diverting,” he says. “With the cameras I was able to show that she wasn’t diverting, just being sloppy. The employees appreciated the cameras because it showed they weren’t diverting medication, they just made a mistake.”</p><p>Over time, HCMC personnel became more comfortable coming forward with concerns about their coworkers. Before the facility started the annual training, Leon caught at least one diverter a month. Before he retired, he says, that number had dropped to one or two a year.</p><p>“The success of our program at HCMC was the fact that we paid more attention to educating rather than investigating,” Leon says. “You have to keep those investigative skills up, but you have to spend equal amount of time on prevention and awareness.”</p><p>Mitchell points to algorithmic software that can identify a potential diverter long before their peers could. Taking data such as medicine cabinet access, shift hours, time to waste, and departmental access allows software to identify anomalies, such as a nurse whose time to waste is often high, or a doctor who accesses patients’ files after they have been discharged. </p><p>“Most people are using the logs from the medicine cabinets trying to do statistical analysis,” Mitchell explains. “You find out 60 days or six months later, or you don’t see that pattern emerge by just using one or two data sets. That doesn’t help. The goal is to identify these people as quickly as possible so they are no longer a risk to themselves or the patients or anyone they work with.”</p><p>Murphy encourages facilities to be in full DEA compliance to mitigate diversion. “If somebody wants to steal or becomes addicted, they are going to find a way to do it, and sooner or later they are going to get caught, but then there’s a problem because the hospital has to work backwards to determine how much was stolen and reconcile all that,” he says. He also notes the importance of following up internally on each diversion case and figuring out what went wrong, and adjusting procedures to address any lapses. </p><p>“Every entity that has a DEA program should have diversion protocols in place because if they don’t they are playing Russian roulette with theft and loss and their DEA registration,” Murphy says. </p>

Supply Chain Dirty Secret of Drug Diversion Most Resilient Countries in the World Chain Strategies Usual Suspects Review: Diamond Mine Security the Public Interest in the Supply Chain Protection Shrink Reduction Crime and Terrorism Chain Security: A Comprehensive Approach Food Imports Chain Resources and Loss Prevention: An Introduction, Sixth Edition Tracking Trends the Goods Retail Crime and Loss Prevention Trends Edition Cover Story: Uncovering Art’s Dark Past Fight Against Food Fraud Billions of Dollars Worth of Smartphones Lost Annually

 You May Also Like... Chain Strategies<p>​Take almost any product you have purchased in a store or used at home or work in the last week. Chances are, that object moved thousands of miles from where it was originally manufactured to the place where it was ultimately purchased or delivered to you. Organizations have intricate supply chain networks that are constantly moving every day around the world, and having an efficient supply chain security program ensures that movement of goods is not interrupted or compromised. </p><p>Security professionals must take a detailed look at the vendors who supply their assets and understand how those goods will be handled and ultimately implemented into their company’s operations or services. Following is a look at how a children’s hospital in Alabama applied supply chain security best practices to weather an unexpected storm, as well as provide for day-to-day operations. In addition, supply chain experts discuss lessons learned from their own experience of conducting risk assessments, following standards, and vetting suppliers and transporters to better protect company property. ​</p><h4>Alabama Children’s </h4><p>When a snowstorm hit Birmingham, Alabama, on January 28, 2014, the city was caught unawares. The snowfall, which quickly turned to ice, left thousands stranded on highways or in their offices. Children were stuck at school, their parents unable to pick them up. The event became known as “Snowpocalypse,” and news service called it “the winter storm that brought Birmingham to its knees.” </p><p>Hospitals were affected by the storm as well, including Children’s of Alabama. The pediatric center encountered vulnerabilities in its supply chain during that event it hadn’t previously considered, says Dennis Blass, CPP, PSP, director of safety and security at the hospital. </p><p><strong>Lessons learned. </strong>Every year the hospital conducts a hazards vulnerability assessment for its supply chain to find out where it can improve safety and security. “Once you identify your hazards and your vulnerabilities–the things that are dangerous to you or the things that you’re weak in–then you start peeling those back,” he says. “If we identify hazards that we need to correct, then we probably are going to create a management plan to correct those issues.” </p><p>Many displaced people in the community turned to the hospital for shelter when they had nowhere else to go. “We have a very prominent position in the Birmingham skyline, so if things look bad, the hospital looks like a place to go and get help–as it is,” Blass says. There were also clinic patients who had come to the hospital that morning for a routine checkup, planning to leave; many of them were stuck because of the snowstorm, which began around 10:30 a.m. local time.</p><p>Instead of being filled to the normal capacity of 300 people—the number of beds in the hospital—there were roughly  about 600 people who spent about 48 hours at the facility to ride out the storm.</p><p>The number of people at the hospital exposed one unforeseen vulnerability—obtaining clean linens from its supplier, which is separated from the hospital by a chain of mountains. “The supplier can wash the linens, but they can’t deliver them to us…we ended up making it, but that was a close call,” says Blass.</p><p>“We could handle supplies for patients, but we had a lot of people who just came to the hospital because it was a warm place to be,” according to Blass. “That had impacts on the amount of food that got consumed, and it had impacts on the amount of linens we went through. Just things that people need, supplies like toilet paper, things you don’t think a lot of.” </p><p>For those who weren’t patients, the hospital served smaller meals than normal; “sandwiches and soup, as opposed to meat and potatoes,” Blass says, to stretch resources. </p><p>The main drug supplier for the hospital is located in the same region, so obtaining critical medicine was not a concern during the storm. The hospital also has plenty of diesel fuel tanks, and can go for days without restocking. Only the insufficient linens, which must be sent off to a facility for proper sanitation before being returned to the hospital, turned out to be an issue.</p><p>“We did an after-action report on that experience, so we…put it in our emergency management plans for the future,” he notes.</p><p>The hospital’s emergency plans help ease any supply chain shortages. The institution follows the hospital incident command system (HICS) which assigns temporary duties to leadership during an emergency. For example, during the snowstorm, the chief operating officer of the hospital assumes the role of incident commander; an information officer is assigned to keep the community informed of hospital activities; and the plan also incorporates a medical officer, logistics chief, and planning chief. </p><p>During the incident, this system helped ensure proper patient care and as few gaps in the supply chain as possible. “Food was getting tight,” Blass says, and the food warehouses are not located near the hospital. “Because of the command structure, leadership can say, ‘okay you have a company credit card, we’ll contact the bank and raise your limit from $500 to $5,000 or whatever you need.’”</p><p>The U.S. Joint Commission, which certifies and accredits healthcare bodies, requires that hospitals have a group with representatives from various divisions that evaluates the standard of care they are providing to patients. Alabama Children’s has an environment of care committee that meets once a month to complete this requirement. “Our environment of care committee looks at things like safety, security, and resource management,” says Blass. “We have to meet the Joint Commission’s standard, and it surveys us every three years.” </p><p>Representatives on the team at Alabama Children’s include staff from the pharmacy, medical team, facilities, human resources, dining services, and more. This team ensures that there aren’t any gaps in the supply chain that would interrupt the hospital’s daily operations. As a rule, Blass says that having enough supplies for 96 hours will allow the facility to continue operating smoothly and efficiently. This includes a variety of items that the environment of care team must carefully think through and document. “You’re talking about water, fuel, basic sanitary supplies, and then you start talking about medicine and those things necessary for a hospital to run,” he says. </p><p>And there can be more than one type of each supply, a detail that, if overlooked, could mean life or death. “We have pumps that pump air, we have pumps that pump blood, we have pumps that pump saline, we have pumps that do many different things. You have to have all the things needed to make those supplies work for 96 hours,” he notes. </p><p>Keeping track of inventory is critical to determine whether the hospital has a sufficient supply of each item. Blass says that the hospital is moving toward a perpetual inventory system, where a new item is ordered as soon as one is pulled off the shelf. </p><p>There is a downside to stocking too many items, which is why it’s a delicate balance between having 96 hours’ worth of supplies and more than enough. “Space is expensive. And if you want to have enough water for four days, how much water is that? Where do you put it? How do you keep it fresh?” He adds that the hospital must be thoughtful in its policies and procedures on maintaining its inventory to avoid any issues.  </p><p>Thankfully, Blass notes, t​he 2014 snowstorm only lasted 48 hours. “The size of the surge exceeded our plan, but the length of the surge was shorter than our plans, so it all worked out,” he says. </p><p>And not every element of securing the supply chain is tangible; the information and communication pieces are also critical. “Every day we’re getting blood supplies in, and other kinds of materials that must be treated very carefully,” he says. Special instructions need to be followed in many cases. For example, there may be medicine that must be stored at a precise temperature until 30 minutes before it’s dispensed. That information must be communicated from the pharmacist to the supplier, and sometimes to security, who can give special access to the supplier when it delivers the drugs. </p><p>Blass is a member of the ASIS International Supply Chain and Transportation Security Council. He helped develop an American National Standards Institute (ANSI)/ASIS standard for supply chain security, Supply Chain Risk Management: A Compilation of Best Practices Standard (SCRM), which was released in July 2014. The standard provides supply chain security guidelines for companies, and has illustrations of what exemplary supply chain models look like.</p><p><strong>Best practices.</strong> Marc Siegel, former chair of the ASIS Global Standards Initiative, also participated in the creation of the ANSI/ASIS standard, which provides explanations of how to look at managing risk in the supply chain. “It’s based on the experiences of companies that have very sophisticated supply chain operations,” he tells Security Management. “The companies that put it together were really looking at having a document that they could give to their suppliers, to help them look at themselves and think of things that they should be doing and preparing for.” </p><p>Siegel is now director of security and resilience projects for the homeland security graduate program at San Diego State University. He promotes supply chain mapping, which takes a risk management–based approach to supply chain security. “Traditionally, a lot of security people have looked at supply chain as logistics security,” he says, “whereas companies with major supply chain considerations have been moving more into an enterprise risk management perspective.” These organizations take an across-the-board look at risks that could create a disruption in the supply chain, asking themselves what the specific things are that could interrupt or prevent them from manufacturing or delivering their product. </p><p>Siegel says there is a disproportionate focus on bad actors and intentional acts as threats to the supply chain, when more often it’s a natural disaster or accident that causes the most significant disruptions. “The broader risk management perspective is also looking at, ‘Is there a potential for a storm, is there a potential for political disorder, or instability in a region, that can cause a delay in processing?’” Only then, he says, are companies efficiently mapping out all the factors that could introduce uncertainty.</p><p>Maintaining a broader perspective will keep organizations from fixating on two of the most common hangups in supply chain security. “You have people who fixate on ‘everything is a threat,’ and you have people who fixate on ‘everything is a vulnerability,’ and if you only fixate on those two things you’re going to miss a lot of stuff,” Siegel says.</p><p>Blass agrees. “When we start that annual hazards vulnerability assessment, I’m going to look through the standard and notes I’ve written myself to make sure I’ve got everything covered,” he notes. “You can never rest and say, ‘well, we’re safe and secure and we don’t have to do anything else,’ because the threats keep changing.”   ​</p><p>--</p><h4>Sidebar: assess risk<br></h4><p> </p><div>​For the co​rporation that produces the F-35 fighter jet and other advanced technologies for the U.S. government, supply chain security is of utmost importance. “The threats that we face are universal in nature due to the size and the complexity of our supply chain,” says Vicki Nichols, supply chain security lead for Lockheed Martin’s Aeronautics business. </div><div><br> </div><div>Lockheed Martin Aeronautics assesses the supply chain in a number of categories, but Nichols works most closely with cargo security. “The threats there are cargo disruption, unmanifested cargo, and anti-Western terrorism,” she notes. </div><div><br> </div><div>The division conducts a risk assessment of its international suppliers. “We look at what type of products they provide us and how vulnerable that product is to manipulation or intellectual property theft, and we look at country risk,” she says.  </div><div><br> </div><div>The company sends a questionnaire to its suppliers, and comes up with an overall score for each of them based on 10 criteria, including country risk and transportation mode. In many cases, it also sends field personnel to evaluate the supplier’s facility. “If we know we have eyes and ears going in and out of the facility, and those people are trained to recognize red flags, then we know we have a lower threat because of our presence,” she says. </div><div><br> </div><div>After one such site check at a facility in Italy, Lockheed Martin Aeronautics determined that the use of technology was warranted to further enhance security. “The concern was that the area was known for introduction of unmanifested cargo—weapons, cargo disruption,” she notes. “We began to look at tamper-evident technologies, and track-and-trace devices that would allow us to know if someone had opened or tampered with the freight.”  </div><div><br> </div><div>Lockheed Martin has a corporate supply chain security council that meets at least once a month to provide updates and discuss any issues that arise. Representatives from the company include human resources, personnel security, physical security, and counterintelligence. Stakeholders from major partner organizations are also invited to participate.</div><div><br> </div><div>Lockheed Martin Aeronautics also works closely with law enforcement and federal intelligence sources who disseminate relevant information to the company. “We subscribe to some intelligence data that is cargo-specific, so we issue a spotlight report about three times a week just to keep people engaged and aware of the threats in the supply chain,” she notes. </div><div><br> </div><div>Supplier engagement is also critical, Nichols says, so the company stays in touch with about 120 suppliers internationally. </div><div><br> </div><div>Sometime in 2017, Lockheed Martin Aeronautics plans to purchase a software management tool that will release supplier questionnaires in the native language for countries it does business with. It will tap existing resources such as “Supplier Wire” to offer training to the supply base. “This will be another evolution on how we can engage, rather than just sending them to a website,” Nichols says. “I think it’s important for our supply base to see how seriously we take security, so they will take it seriously as well.”​</div><div><br> </div><h4>sidebar: consult standards<br></h4><p> </p><p>​Laura Hains, CPP, operations manager, supply chain security and consulting at Pinkerton, member of the ASIS International Supply Chain and​ Transportation Security Council, says that companies should research whether their partners and suppliers are following major supply chain security protocols, like those put out by ASIS, and others such as the Transported Asset Protection Association (TAPA) standards for trucking companies. “TAPA is one of the big authorities on trucking, so if a company says they are TAPA certified, that to me says that they follow protocol,” she says. </p><p>Other standards include the National Strategy for Global Supply Chain Security which U.S. President Barack Obama signed in 2012 and was designed to enhance public-private partnerships. Arthur Arway, CPP, author of Supply Chain Security: A Comprehensive Approach, says the framework seeks to combine input from government and industry on protecting the transport of goods to and from the United States. “I think the government is far more willing to seek out subject matter experts and all the different modes and companies that may transport goods into the United States for their help,” he says. Arway adds the document is relatively recent, and that it could take a while before it is widely adopted. </p><p>Though terrorism is an uncommon threat to the supply chain, it must always be a consideration. Hains gives the example of vehicular attacks. In Nice, France, on July 14, 2016, Tunisia native Mohamed Lahouaiej Bouhlel drove a 19-ton cargo truck into a crowd of Bastille Day festival-goers. That attack killed 86 people and injured more than 400. New York police also warned of possible vehicular terrorism against the 2016 Macy’s Thanksgiving Day Parade. “A small company truck—that could be a target,” notes Hains. “So everybody has to think about terrorism because it’s out there.”</p><p>Another standard at the national level seeking to combat terrorism within the supply chain is the U.S. Customs Trade Partnership Against Terrorism (C-TPAT). The program is voluntary for private industry, but Arway says the national standards as a whole are seeing global adoption.​</p><p>“Standards have come a long way in how they’ve been able to incorporate security into the movement of goods,” he notes. “Many countries have accepted these programs into their own supply chain security programs.”​</p>GP0|#cd529cb2-129a-4422-a2d3-73680b0014d8;L0|#0cd529cb2-129a-4422-a2d3-73680b0014d8|Physical Security;GTSet|#8accba12-4830-47cd-9299-2b34a4344465 an Antipiracy Program <p>​The indicators are all over company balance sheets: counterfeiting and piracy are siphoning off incredible amounts of revenue from legitimate businesses.<br> <br>The Organization for Economic Co-operation and Development (OECD) in The Economic Impact of Counterfeiting and Piracy, released in 2007, estimated that international trade in counterfeit and pirated products could have reached as high as $200 billion in 2005. The estimate does not take into account the number of domestically produced and consumed counterfeit products nor does it include music, video, software, games, and printed materials increasingly being distributed online. The United States Chamber of Commerce estimates that Intellectual Property (IP) makes up more than one-half of all U.S. exports, driving 40 percent of the countryメs growth. Clearly, as manufacturing jobs move to developing countries, intellectual property becomes more critical to the economic survival of developed countries. The FBI estimates that the theft of IP costs the U.S. economy $250 billion per year and has resulted in the loss of 750,000 jobs. <br>The loss of jobs and both tax and corporate revenues results in less money for critical research and development and funding for much needed government programs  and is especially harmful during the current recession. Unfortunately, the economic impact is only part of the problem: counterfeiting discourages innovation and undermines good governance, provides real risks to consumers in the form of dangerous and unregulated products, and generates profits that go directly to fund organized crime and terrorism.<br> <br>The Argument for Strong IP Enforcement<br> <br>Security managers need to provide a business justification to develop a brand protection program in any company, so the broader arguments in favor of enforcement are worth considering.<br> <br>Public perception and attitudes towards piracy pose a challenge in that piracy and IP infringement are often perceived as victimless crimes.  However, international research and the 2007 report by the OECD provides evidence to the contrary and shows that the negative effects of piracy are broadly distributed among rights holders, consumers, and government.  In addition to the legal considerations reflected in copyright and trademark laws, counterfeiting and piracy have economic and social consequences in that they discourage innovation and inhibit economic and technological growth.  Innovators are less inclined to devote time, money, and intellectual capital to developing new products if their ideas are likely to be stolen or copied by someone else. Investment funds will not be forthcoming if the business climate doesnメt protect IP, resulting in little or no return on investment.  Ironically, developing countries that are often the source of counterfeits are hardest hit in the long run by failure to enact and enforce IP protection laws.  <br> <br>Research and historical trends show that countries with effective IP protection regimes enjoy stronger and more rapid economic development than those that do not. Furthermore, counterfeiters do not pay taxes, are often connected to criminal organizations, and operate in underground economies.   When IP is not adequately protected, rights holders suffer from decreased sales and diminished brand value resulting in a loss of consumer confidence and commercial viability.  Consumers have fewer choices and often must choose between either very costly authentic products or cheap and inferior knock-offs that not only perform poorly but also carry inherit risks to health and safety.  The ever-expanding list of counterfeit products that ranges from pharmaceuticals to car and airplane parts has increased consumer risk with the rise of the globally integrated economy. After-market car or airplane parts manufactured in China, often without appropriate quality control, can end up in the U.S.<br> <br>The U.S. Department of Homeland Security reported an 83 percent increase in the number of seized items for 2005-2006 and a total value of $196.5 million for 2007 seizures representing a 27 percent increase over 2006. Between 2000-2006, the European Union reported an 88 percent increase in the seizures of counterfeit goods.  The World Health Organization estimates that 7-10 percent of all pharmaceutical products sold in the world are possibly counterfeit, with a rate as high as 30-40 percent in some African countries. The Business Software Allianceメs 2008 Annual Report asserts that the worldwide PC software piracy rate was 38 percent in 2007. Clearly the trend is toward more counterfeiting which poses higher risks to the public and has a significant impact on legitimate commerce.  Lastly, the impact of counterfeiting, often controlled by organized crime, on governments in the form of corruption and weakened public institutions disrupts global commerce and erodes public confidence in government.<br> <br>Making the Internal Business Case <br>Corporate security directors are often presented with a host of challenges when it comes to brand protection and IP enforcement.  In many cases, CEO, CFOs, and other corporate executives do not see the need to fund antipiracy programs, regarding them as an unnecessary cost rather than a priority to protect the companyメs brand and recover lost sales.  In todayメs climate of limited budgets, security managers are under pressure to articulate a sound business justification and a return on investment (ROI) for all programs.  <br>Demonstrating that counterfeit items in the market represent a potentially displaced sale of genuine product requires reliable data. An impact assessment that examines market potential, the availability of counterfeits, and current sales of genuine products can help to provide such data.  For example, the software industry estimates piracy rates by looking at the number of new computers shipped versus the number of genuine software operating systems sold and activatedラthe discrepancy is an indicator of pirated software installations since in most cases software operating systems (Original Equipment Manufacture  versions) are installed at the factory.  A sudden decrease in sales of a genuine product in a given market is another indication that piracy may be a factor and is often pointed out by sales personnel or distributors. Aggressive IP enforcement is not only a necessary deterrent but can also be a potential source of revenue to fund anti-counterfeiting programs through civil asset forfeiture and out of court settlements, while at the same time preserving brand integrity.  <br> <br>Often the sudden appearance of a particular counterfeit product on the market, a dramatic drop in sales, or a major seizure by law enforcement alerts the corporate leadership to the need for greater antipiracy enforcement. Unfortunately, when such an incident occurs, people often react by reaching for very costly モBand Aidヤ solutions. Instead, having an effective antipiracy program in place that consists of sustained enforcement effort and consumer education is a much better corporate strategy in the longer term. An added benefit of this approach is that law enforcement agencies are more inclined to work with companies that have well-developed programs and demonstrate a serious commitment to antipiracy enforcement.  <br> <br>The Assessment Phase<br> <br>Because most managers need facts and figures to support budget and resource requests, an initial assessment is recommended to determine the scope and magnitude of the problem. Depending upon the type of product and the brand, on-site visits to sales outlets as well as Internet searches for the companyメs products are critical. The latter has increasingly become a means of モdirect- to - customerヤ sales and has changed the business model for counterfeiters, by eliminating the need for wholesale distributors. <br>One large organized crime group that operated from Russia sold thousands of モburnedヤ or copied CDs of software programs directly to retail customers in the U.S. via the Internet, thereby circumventing wholesale distributors. They used thousands of affiliate sites as well as spam tactics to generate sales.  Pirated or counterfeit software and games are sold in shops, flea markets, or so called swap meets, which are essentially the same as flea markets.   Pirated goods are also offered on the Internet through independent web sites or auction sites. An online search for cheap software will produce hundreds of results. Other types of products such as batteries, razor blades, or car parts are often available on business-to-business (B-to-B) sites, while counterfeit or unapproved generic pharmaceuticals are sold on both B-to-B sites and illegal online pharmacies.<br> <br>Many sites selling pirated goods are hosted in countries where cybercrime and IP enforcement are almost non-existent, making it very difficult to identify, much less go after the criminals.  There are many companies that perform Internet searches, often called モweb crawlingヤ, to help locate where the imposter products are being sold.  The searches are based upon specific search terms or logos or both provided by the IP rights holder. One often finds that spamming and the sale of counterfeit items and pornography on the Internet are ultimately controlled by the same organizations. It is important to find a search company with expertise and reliable baseline data in a specific industry to avoid the expense and time in the learning process.<br> <br>In order to get an accurate picture of the size and nature of your companyメs piracy problem you should have an experienced antipiracy investigator conduct a series of test purchases (TPs) from sales outlets and Internet sellers.  Based upon guidance provided by the brand owner, the investigator should gather specific information regarding the seller, the product, the make, the model, the design, the title, the version, and other key characteristics, including product authenticity. <br>Proper product authentication by the IP holder is critical, since sales are not limited to counterfeits. So called モgrey marketヤ items that have been diverted from the intended distribution channel are one of the many challenging issues in the brand protection domain.  The TP is designed to obtain samples and to determine origin, price, quantity, quality, accepted payment methods, shipping, and return policies.  Once there is enough information to permit a good sampling of the products most often pirated, an analysis and interpretation of the data should be conducted with an eye towards identifying commonalities and vulnerabilities. They may be in violation of laws other than those related to copyright and trademark infringement.<br> <br>For example, is the seller of your companyメs pirated product also liable for wire fraud and money laundering offenses or involved with the sale of child pornography? These additional factors often make them more attractive targets for a law enforcement investigation. But it is important to remember that the initial goal is to assess risk and damages and not to conduct an investigationラthat can come later.  Some key considerations one should consider: Is there a health and safety risk? Are the products high-quality copies designed to deceive or cheap knock-offs?  To what extent are they displacing sales of genuine products? What are the estimated losses of legitimate sales and which products and markets are most impacted? Are the products perhaps original equipment manufacturer (OEM) versions or stolen or fraudulently obtained genuine items?  <br> <br>If so, this may be an indication of an integrity problem within the distribution chain and with third-party manufacturers, distributors, or transporters and at some point a complete audit of manufacturing plants and distributors may be advisable. One company, for example, uncovered a huge problem with モleakageヤ of genuine products from its supply chain because they were leaving the plant marked as モscrap.ヤ An investigation revealed that several warehouse employees had been compromised by an organized criminal group. Thanks to good liaison and private-public cooperation with the FBI, the case was thoroughly investigated and the organized criminal gang was brought to justice.  In addition, the company recovered some of its losses by bringing civil action against a third party manufacturer.<br> <br>This case also pointed to an internal management problem. The account representatives for the third-party manufacturing plant had failed to conduct regular audits as prescribed in their vendor contracts. Such audits would have discovered that the use of raw materials did not correspond with the amount of finished product and that the plant had failed to properly account for the destruction of surplus goods.   In another case, during the closing of a plant, numerous master モstampersヤ for digital media, each with a value in the hundreds of thousands of dollars, had gone missing and were being sold for a high price on the illicit market. Thanks to an FBI informant and good liaison efforts the stampers were prevented from getting into the hands of counterfeiters.<br> <br>One of the challenges in the assessment phase is obtaining reliable information concerning counterfeiting or piracy. Sharing and comparing trend information with various internal corporate entities can often provide useful information and insights. An internal company survey might also surface good information about piracy and lets employees know that the company is protecting its valuable IP. Coordination with the legal, sales, marketing, product development, packaging, and manufacturing teams is highly recommended and is indicative of a holistic approach to antipiracy.  Corporate stakeholders can also become allies in the quest for executive support and budget for antipiracy operations. As the program develops, an antipiracy advisory board comprised of key company players and stake holders ensures that proper information sharing and coordination across the company are being accomplished.<br> <br>Building the Team and the Program <br>Once the assessment is complete and executive sponsorship and budget are obtained for an antipiracy program, the next step is to build a good in-house team or to have a combination of in-house experts and external consultants devise an antipiracy strategy. Antipiracy programs can be costly, particularly with regard to investigative and legal support, and will inevitably involve corporate attorneys as well as outside counsel to develop legal strategies. Finding the right talent is crucial; many security managers have expertise in a variety of areas but not necessarily for antipiracy strategies and operations. Outside consultants can help develop the program in the early stages. Ideally, an in-house team under the Director of Corporate Security consists of a senior manager for investigations or an antipiracy manager, an attorney with prosecution or civil litigation and asset forfeiture experience, investigators with a physical and Internet investigations background, a paralegal, and a business analyst. <br>The analyst plays a critical role in analyzing and interpreting the information collected from the investigations, performing trend analysis, and preparing briefing materials.  It is important to ensure that the teamメs goals and brand protection efforts are in keeping with the overall company strategy. A monthly scorecard of metrics, highlights, and trends that can be shared with company stakeholders is essential in maintaining internal support for your teamメs efforts.  Often good work goes unnoticed because it isnメt properly presented and consumed at the right executive level.  I was involved in one situation where millions of dollars were spent on Internet Piracy programs which were well-documented in monthly progress reports that were apparently never read by the senior executive in charge of the program.  Not only was he unable to articulate the return on investment for the company, but also his subordinates who managed the program were unable to ascertain if the program was achieving managementメs desired goals and objectives. We often felt as if we were on the proverbial rudderless ship.<br> <br>While AP investigations are not vastly different from other types of investigations, there are some unique challenges. For example, identifying and prioritizing high-impact targets, managing a test purchase (TP) program and vendors, and analyzing data are key components.  In addition, product identification, data and evidence collection and analysis, and coordination with attorneys and law enforcement authorities for criminal prosecution or civil litigation are all part of the continuum of an antipiracy program.  Coordination of all of these program components towards the goal of protecting the companyメs brand integrity is the main objective. <br>In my experience as Director of Worldwide AP Investigations at a large technology company, a multi-faceted strategy was very effective and reduced piracy by at least 10-15 percent over a four-five year period.  It was a highly integrated approach and involved law enforcement referrals and prosecutions, aggressive civil litigation, asset seizures, and cease and desist notices.  Web site takedowns, and robust consumer education and PR campaigns were also part of the strategy. In one case in California in November 2001, then U.S. Customs (now U.S. Customs and Border Protection) made the largest software seizure in history of a container load of counterfeit software and cigarettes worth more than $60 million.  <br> <br>Cases such as these are the result of extensive law enforcement liaison and training programs that not only assist officers in identifying the companyメs products but also help build those all-important relationships that facilitate cooperation.  Through this approach, we were successful in getting a broad range of law enforcement agencies such as the FBI; ICE; and many state, local, and foreign law enforcement agencies to investigate and prosecute our cases.  <br>In addition to traditional enforcement measures, other program elements, such as legislation, are critical to support the effort.  My company successfully supported a legislative initiative to close a loophole that allowed counterfeiters to break open software packages and sell the genuine components used to authenticate counterfeits. Internally we worked with product and packaging teams to adopt the latest security features and counterfeiting counter-measures and leveraged public relations opportunities and the company Web site to reach consumers.  By employing all of these strategies in an integrated manner, over a five-year period the company saw a dramatic drop in the availability of counterfeit products and a shift towards the sale of genuine products. There were indications that counterfeiters were moving towards the counterfeiting of competitorsメ products. Anecdotal information filtered back to us that the sellers and distributors were reluctant to sell counterfeits of our products due to our strong enforcement posture.<br> <br>Measures of Success<br> <br>Measuring effectiveness and success can be the most challenging aspect of an antipiracy program. As in law enforcement, it is often difficult to know if your efforts are truly having an impact. Can success be measured in seizure and arrest statistics? A qualified yes, if they are strategically targeted. <br>However, random seizures of counterfeit products have little impact.  Does an increase in the seizure of counterfeits indicate that the strategy is working or does it suggest a greater availability of illegal product on the market? Focusing enforcement efforts on certain products, organizations, and markets can result in an increase in legitimate sales and should be measured in individual markets.  Information campaigns surrounding enforcement actions can also be very effective as a deterrent and lets consumers know that the company is protecting brand integrity and consumer interests. <br>Consumer comment and feedback can also be a useful measure of effectiveness especially with regard to anti-piracy technologies.  However, one must be careful about too much negative publicity that can result in a lack of brand confidence and rapid migration to a competitorメs brand. This may be particularly true in the pharmaceutical industry where there are often similar choices. <br>For example, Viagra is one of the most common counterfeit pharmaceutical products offered by illegal online pharmacies. Overexposure of this issue may lead consumers to think that they automatically reduce their risk by purchasing another erectile dysfunction drug. Changes in consumer behavior and buying trends can be another measure of success. <br>Target qualification and identification, case prioritization, and enforcement outcomes can be hard to establish and even harder to measure. Referrals to law enforcement agencies do not always yield immediate results and require patient liaison efforts. While federal agencies have broader jurisdiction and authority than state and local agencies, they invariably take longer to conclude the investigation. I know of numerous cases that were very successful in dismantling counterfeiting organizations but took in excess of one year to complete. In the meantime, counterfeits continue to flood the market and company executives are looking for results.  <br>In addition, enforcement agencies often have other priorities and want to avoid being seen as working for one company as opposed to an entire industryラfor these reasons, good  law enforcement liaison is critical for success. When I managed a worldwide anti-piracy program our active law enforcement liaison and training program paid great dividends in terms of cooperation and our law enforcement colleagues knew that we were 100 percent committed to supporting them. <br>A good antipiracy program must also balance customer satisfaction and public image with strong security and enforcement measures. For example, while encryption and product activation keys are effective software antipiracy measures, they often create user frustration and inconvenience.  Another consideration is how will strong enforcement affect the companyメs image and brand reputation?  Will it be seen as モheavy handedヤ in going after infringers? In recent years the recording Industry understandably took a very strong stand against unpaid digital downloading of music, but in the process it created a public relations problem by alienating its own customer base--- young music enthusiasts. Targeting large-scale counterfeiters and distributors helps to avoid that perception and reinforces the point that strategic enforcement protects consumersメ interests. <br>Good data management and retrieval is critical to the conduct and the analysis of investigations as well as to the ability to measure success. One pharmaceutical company with which I am familiar had a very robust Internet antipiracy program; however, during the program evaluation by an independent management consultant, the success was difficult to quantify due to the inconsistency and unreliability of the data that was collected. In addition, the cost of モcleaningヤ the data so that consistency could be achieved was high.  If data isnメt accurate and reliable the entire process and results are distorted and program effectiveness will be difficult to determine.<br> <br>Globalization has impacted both legitimate and illegitimate commerce. Criminals operate across national borders, thus to be truly effective, investigations and strategies must be coordinated on an international basis and targeted on the source of the problem. Admittedly there are challenges in transnational cooperation and enforcement, not the least of which is a disparity in IP laws. Success, however, can be measured in terms of investigations, prosecutions, and convictions of major violators, closures of illegal plants, civil lawsuits, and forfeited assets. The money recovered through restitution and asset seizure can help finance antipiracy operations and cause a decrease in availability of the most frequently pirated products and an increase in your companyメs bottom line.<br> <br>Rich LaMagna, CPP, is the former director of Worldwide Anti-piracy Investigations for Microsoft and is the president of LaMagna and Associates, LLC, a Washington, D.C.-based consulting firm.<br> <br> </p>GP0|#28ae3eb9-d865-484b-ac9f-3dfacb4ce997;L0|#028ae3eb9-d865-484b-ac9f-3dfacb4ce997|Strategic Security;GTSet|#8accba12-4830-47cd-9299-2b34a4344465 Course for Corporate Success<p>​Conventional wisdom suggests that businesses have a natural life cycle wherein new solutions, evolving markets, and misguided management play a significant role in the probable failure of the company. According to this model, every firm—from family businesses to the largest multinationals—falls into decline. Even those businesses that come back after one downturn may not prevail in the next one. These organizations are replaced by new companies that are born to meet evolving market needs, new technology voids, or changing business environments, and the cycle repeats. But some notable companies—IBM and Apple, for example—have overcome periods of decline and have emerged with a new focus, strong core values, and a powerful new leadership position. </p><p>There are many possible paths to this success, but for a large technology company, regaining its leadership position after a major decline requires several critical ingredients, including: </p><ol><li>A clear target-market focus with in-depth understanding of the customer</li><li>A strong, complete offering that cannot be easily duplicated</li><li>A clear market position and message</li><li>Strong organizational alignment with outstanding team commitment</li><li>A financial foundation that will support the necessary actions<br> </li></ol><p>While these elements may seem obvious to any start-up entrepreneur, they may be harder for an established, enterprise-level company to achieve. Here's a look at how these five key initiatives can be applied.</p><p><strong>1. Clear Target Market<br></strong>A statement of mission, vision, and values can help an organization create a roadmap of where it wants to go and how it will get there. A basic underlying tenet of the statement is that the organization, regardless of its nature (i.e., school, auto dealership, technology company, etc.) will provide a high-quality product or solution that the market needs. Organizations must also identify the right way to communicate to the defined market that their product or service has value and is the best choice. They must support that communication with a solid foundation in marketing, sales, and infrastructure. It's a broad "pull" rather than "push" approach that benefits not only the organization but the market as well. </p><p><strong>2. Strong, Complete Offering<br></strong>Businesses that have grown and prospered offer a strong, quality product line designed specifically for the defined market. Maintaining that portfolio is an ongoing process that requires both a commitment and a product roadmap that will position the organization not only as a product leader but also as a technology leader. </p><p>Crystal balls aside, listening and responding to a changing industry is necessary to ensure that the portfolio offers solutions as well as products. Offerings today must feature greater intelligence and performance capabilities that will make a difference to the industry. In the physical security market, for instance, some of these solutions include products with increased connectivity, cybersecurity features, and an understanding of the Internet of Things (IoT). The offerings should be positioned to work in combination with the expertise of select technology partners to deliver an integrated system that solves customer problems through meaningful innovation. </p><p><strong>3. Clear Market Message<br></strong>Successful companies have an aggressive integrated marketing program that combines the best of traditional marketing with new social media and digital techniques to get their message to the market. These companies have implemented and will continue to refine consistent and aggressive public relations, new print and digital advertising campaigns, and advanced inbound marketing. This is all in addition to updated websites that include significant support tools and search engine optimization. <strong> </strong><strong> </strong><strong><br></strong></p><p><strong>4. Organizational Alignment<br></strong>The successful business operation must fit the needs of the market as it exists today. Many companies start the restructuring with the sales organization to create a closer, more-direct line to the reseller and customer. This approach serves customers by ensuring more direct contact, feedback, and intervention. By listening carefully, understanding what the market needs, and giving value, the company, in return, will receive value.  </p><p>Along with a restructured sales organization, an updated marketing organization can better engage in highly strategic and integrated marketing efforts that are designed to reshape the company's image and drive new business opportunities. Populating the department with internal and external teams of experienced industry professionals who have proficiency in both traditional and digital marketing further helps in achieving company goals. </p><p>Finally, in any technology-based organization, the restructuring of the engineering organization is critical to meet the continual challenge of developing and delivering mainstream solutions with meaningful innovation. Ultimately, it is the close collaboration and alignment of these three primary functions—sales, marketing, and engineering—that will eventually drive the organization towards its new goals.<strong> </strong></p><p><strong>5. Firm Financial Foundation<br></strong>Although a company may have been profitable throughout its history, change is costly. Strong financial backing allows an organization to move forward with its redevelopment in a manner that better ensures success. As an example, the capability of sustained restructure has been a key component in the success of Pelco's reinvention. </p><p>Even when these five critical elements are implemented, success is still not a sure thing. Economic uncertainty, fast-moving markets, and competition from nontraditional sources can take a toll. Companies with entrenched or outdated business models are particularly susceptible to business failure. As it becomes harder to hit performance targets, virtually all organizations need to consider some type of strategic restructuring if they want to avoid the end-of-life paradigm. </p><p>If this sounds radical, it's likely due to the negative connotations associated with restructuring. For many, restructuring conjures up images of court-supervised negotiations with different classes of creditors trying to reach consensus. But when viewed more broadly, restructuring represents an opportunity for companies to examine their operating models with the ultimate goal of optimizing their business for the long term. Companies that follow this process can remain a dominant force for many years to come.​</p><p><em>Sharad Shekhar is CEO of Pelco by Schneider Electric.</em>​​<br></p>GP0|#28ae3eb9-d865-484b-ac9f-3dfacb4ce997;L0|#028ae3eb9-d865-484b-ac9f-3dfacb4ce997|Strategic Security;GTSet|#8accba12-4830-47cd-9299-2b34a4344465