Supply Chain Security's Added Benefit

Savings can include insurance premium reductions

Let's face it. Industrial security isn't a topic that gets corporate executives pumped up. They're more concerned about the bottom line, and typically that means investing in technology that will help cut costs and improve efficiency. But according to some manufacturers, supply chain security doesn't have to be considered a cost burden.

Just ask executives at pharmaceutical company Purdue Pharma. The drug maker has invested in several types of supply chain security devices, including RFID, GPS tracking systems and biometrics to protect its products. Those measures have helped the company gain insurance premium reductions, according to Aaron Graham, vice president and chief security officer. "This has been very positive for the corporate security group when you can go to the CFO and CEO and demonstrate savings based on innovative security measures," relates Graham.

Indeed, a 2006 Manufacturing Institute study shows manufacturers achieved several collateral benefits from supply chain security investments, including improved inventory management and customer service, clearer visibility and increased productivity. The study shows that of the 11 manufacturers and three logistics services providers that participated, 75% report improved accessibility to their supply chain data by investing in supply chain security. All participants report an increase in the timeliness of shipping information. As for process improvements, 43% say they've realized an increase in automated product handling.

See Also
The Great Supply Chain Robbery
Such secondary benefits can make for strong selling points when trying to convince corporate officers that supply chain security is necessary, says Adrian Gonzalez, director of the logistics executive council for ARC Advisory Group. "If you go to the CEO and say, We can take two or three days out of our lead time and reduce our safety stock and inventory and [gain] other benefits by having better supply chain visibility,' that's easier to put a business case around and get approval for."
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