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Innovators in Supply Chain Security

Study finds that heightened security brings better supply chain visibility, inventory management, reduced cycle times, enhanced customer satisfaction

In today's era of increasing realization that security in the supply chain is critical, Barchi Peleg-Gillai, Gauri Bhat and Lesley Sept of Stanford University have released an excellent new resource, this 38-page PDF "Innovators in Supply Chain Security" through the Manufacturing Institute.

This study is the latest in the institute’s "Innovation Series" and the third comprehensive report IBM has sponsored regarding supply chain security. In 2004, IBM partnered with Michigan State University to publish “Enhancing Security Throughout the Supply Chain” to help businesses better understand the threat to supply chains from disruptions. IBM partnered with the Massachusetts Institute of Technology (MIT) in 2005 to publish "Investing in Supply Chain Security: Collateral Benefits” that identified collateral, or indirect, benefits that companies may receive from security investments.

Companies traditionally find it challenging to justify security-related investments because they focus largely on the direct expenses and not on the collateral benefits (e.g., supply chain efficiency, improved customer satisfaction, improved inventory management, etc.) that may be realized.

Limited research has been completed regarding the creation of collateral benefits from security investments. To fill this gap, the institute and Stanford University have conducted a study to confirm and quantify the magnitude of collateral benefits received by a select group of companies that are considered innovators in supply chain security in their industries such as chemicals, consumer goods, food, information technology, automotive parts and logistics service providers.

Although the results of this study should not be considered as representative of the industry average, the findings clearly indicate that significant business value accrues from supply chain security investments.

The innovative companies participating in this study received the expected security benefits from their investments (e.g., reduced risk, less theft and pilferage, etc.), but also quantified numerous collateral benefits they received, such as: