Old Facts

Ethical coffee purchases green coffee from farmers in Colombia, Costa Rica, Yemen, Saudi Arabia, Ethiopia, and Papua New Guinea. After its local agents (all independent contractors) have sourced and purchased the coffee beans, Ethical Coffee contracts to transport the beans to the closest suitable shipping port. Ethical Coffee also contracts with port warehouses to store the coffee until the shipping date. Ethical Coffee enters into contracts with container ship companies to have the beans shipped to New York, San Francisco, or New Orleans. Once the beans arrive in the U.S., they are transported by truck and/or train to the company's 5 regional roasting plants.

After the coffee beans are roasted, they are packaged and shipped to grocery stores and to Ethical Coffee's 10,000 coffee shops.

As the supply chain and vendor risk manager for Ethical Coffee, Inc. you are working with Legal and Treasury/Finance to evaluate and eventually engage a new transportation vendor, Premier Global Transportation.

A former government figure in Saudi Arabia formed Premier Global Transportation in 2021 and currently serves as CEO. Due to the CEO's contacts within the Saudi Arabia government, Premier Global Transportation enjoys great perks, including but not limited to favorable exporting and customs terms.

Premier Global Transportation has established strategic hubs in not only Saudi Arabia but also Yemen and Ethiopia.

Premier Global Transportation has completed its proposal to transport and temporarily store at port green coffee from farmers in Ethiopia, Saudi Arabia, and Yemen.

Premier Global Transportation's proposal was financially appealing as the numbers were 10% less than Ethical Coffee, Inc.'s current transportation and hubbing (warehousing) cost for Ethiopia, Saudi Arabia, and Yemen.

New Facts

• After extensive due diligence and heated negotiations, Ethical Coffee executed a master service agreement with Premier Global Transportation and has used its transportation and hubbing services for over six months.
• Thus far, Premier Global Transportation has performed satisfactorily. Despite a shortage in drivers in the United States, Premier Global Transportation has a robust fleet of drivers.
• Ethical Coffee's Supply Chain Vice President manages the relationship with Premier Global Transportation and during a quarterly business review commented that he was impressed with Premier Global Transportation, noting that the deliveries were all timely and his experience with Premier Global Transportation is exceptional. "It is good to have a constant group of drivers. Domestically, we have experienced a shortage in drivers and are always looking for skilled and motivated drivers."In response to this comment, the CEO of Premier Global Concentration stated, "We always have drivers due to our phenomenal staffing partners."
• Ethical Coffee's Supply Chain Vice President researched this comment further and learned that Premier Global Transportation had a contract with a third-party staffing agency that placed new and seasoned drivers for both permanent and temporary work with Premier Global Transportation. The VP further discovered that Premier Global Transportation gave the staffing agency access to its logistics and human resources platforms to permit "seamless" onboarding.

Assignment

After learning that Premier Global Transportation uses a third-party for staffing and gives this vendor access to its systems, Ethical Coffee's Supply Chain Vice President schedules a follow-up meeting with the Premier Global CEO to discuss Premier Global Transportation and the third-party staffing agency.

1. The risks in having Premier Global Transportation continue providing services to Ethical Coffee, and the controls that are required to address the risks
2. The audit is needed to ensure that Premier Global Transportation is complying with the terms of the parties' agreement.
3. The cybersecurity risk associated with the staffing agency having access to Premier Global Transportation and how that may impact Ethical Coffee