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August 7, 2006
A Secure Supply Chain Equals More Than Just Security
It seems as though there has been little action on making supply chains more secure. Well, since many manufacturing executives think money is the motivator for pretty much everything, my guess is that a new Stanford University study, which essentially says a secure supply chain yields dividends, will raise some eyebrows.
The issue of just how robust supply chain security really is for today's manufacturers is definitely debatable. Immediately following the 9/11 tragedy there was much talk on the topic, but even to this day it seems as though there has been little action on making supply chains more secure. Well, seeing as many manufacturing executives think money is the motivator for pretty much everything, my guess is that a new study from Stanford University will raise some eyebrows, as it essentially says that a secure supply chain yields dividends. Of course, for manufacturers, it's about more than just a fatter bottom line.
"The study shows that investments in security actually help with respect to other performance variables, such as efficiency, consumer responsiveness and global flexibility," said Jerry Jasinowski, president of The Manufacturing Institute. "It's a counter intuitive result that most people didn't realize."
But Manufacturing.net is quick to point out that supply chain security is addressed for a multitude of reasons:
While there have been some highly publicized supply chain disruptions recently terrorist acts and Hurricane Katrina, for example the breakdowns can come in many forms: strikes at ports, product contamination, border closings, and supply shortages, to name a few. Completely avoiding the impact of these kinds of major disruptions on the supply chain won't always be the outcome, but minimizing the disruption can be, and indeed becomes even more important as global trade expands.
Among the findings that were tied to an investment in supply chain security:
- A 38 percent reduction theft/loss, and a 37 reduction in tampering;
- A 14 reduction in excess inventory, and a 12 percent increase in reported on-time delivery;
- A 50 percent increase in access to supply chain data, and a 30 percent increase in timeliness of shipping data;
- A 49 percent reduction in cargo delays, and a 48 percent reduction in cargo inspections; and
- A 29 percent reduction in transit time.
Pretty impressive numbers not gigantic but certainly interesting enough to make more those in the supply chain explore security benefits, like the ones involved in the study did. Here's a quick overview of the benefits and practices they've gleaned:
-Theo Fletcher, Vice President, Import Compliance and Supply Chain Security at IBM, said his company now regularly inspects empty containers to make sure there are no hidden compartments.
-IBM uses GPS systems for most of its shipments that travel over the roads, has security guards follow trailers, and can in some cases tell when doors on containers are being opened and closed, even while they're in transit.
-Dow is increasingly scrutinizing the background of its truck drivers, and uses two drivers so cargo is never unattended. He also noted the increased use of Radio Frequency Identification at the giant chemical company, the largest bulk chemical shipper in North America by rail and truck.
Speaking of RFID, Manufacturing.net also pinpointed how the Department of Defense is utilizing the technology "in every aspect of its supply chain." The move is raising concerns, however, because, let's face it. RFID has got quite a few bugs of its own to work out before it can be considered a secure form of technology. Anyhow, the DoD is marching forward with its RFID plans, outlined here:
RFID will become a key technology for the Department's logistics and will support long-term integration of the Unique Identification (UID) into the end-to-end supply chain. Both active and passive RFID systems are planned, and the implementation will provide "in-the-box" content-level detail for all classes of supplies, as well as provide accurate data collection for improved inventory management.
The Department is also requiring all suppliers to be "DoD ready" in order to bid on contracts dealing with the Department. The technology will be implemented through a "phased" approach on both the supplier and Department sites.
If manufacturing execs do ramp up supply chain security efforts, how will it affect your day-to-day work?
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