Researchers from Stanford University, in collaboration with The Manufacturing Institute and IBM (full disclosure: my employer, although I was not directly involved with this report) released a report yesterday entitled “Innovators in Supply Chain Security: Better Security Drives Business Value.” Forbes Magazine published a story about it today. The report surveys fourteen companies who have been “innovators” in supply chain security, and asks them to gauge whether these investments have delivered corollary benefits in a number of categories: product safety, inventory management, supply chain visibility, product handling, process improvements, customs clearance, speed, resilience, and customer satisfaction. The results of the survey find that companies have significantly received real benefits from these investments, above and beyond the primary intent of improved security. As a result of these findings, the authors conclude:
While the data provided in this paper should not be considered as any type of an industry average, it clearly demonstrates that security investments can be beneficial, and that these benefits can be quantified. We therefore recommend that companies not consider such investments solely as expenses that are required to meet government regulations and mitigate risk, but rather as investments that can have business justification, result in operational improvements, and ultimately may promote cost reduction, higher revenues and growth leading to positive ROI.
It is important to remember, however, that these benefits are not realized automatically. Companies should be creative in determining waysâ€”often times in collaboration with their business partnersâ€”to gain the most benefits from their security investments.
This is exactly right, and another point of evidence that the debate over whether certain security measures are harmful to the economy is more often than not a false choice. I even think that investments in the security of a company’s operations will increasingly be seen as a source of competitive advantage. Companies who participate in vetting programs such as C-TPAT will increasingly want to only deal with customers, partners, and suppliers who are also participants in these programs, not only for risk mitigation purposes but also these companies’ stronger internal controls will make them better partners.
Overall, a very good study, and one whose ideas deserve a serious hearing in corporate boardrooms around the world.