Study Finds That Investments in Supply Chain Security Can Improve Business Performance and Profitability
A Stanford University study released today by the National Association of Manufacturers (NAM) quantifies for the first time the significant business value of global supply chain security investments. The study, entitled, "Innovators in Supply Chain Security: Better Security Drives Business Value" found found that investments in supply chain security can help businesses improve internal operations, strengthen relationships with their customers and increase their profitability. The study notes that "investments in security should not be considered as a financial burden that should be kept to the minimum level necessary, but rather as an opportunity for improving business performance and profitability."
Although the study examined only a small number of companies (11 manufacturers and 3 ocean carriers/logistics service providers), the participating manufacturers came from a wide variety of industries, including chemicals, consumer electronics, consumer goods, engines and motors, food, information technology, semiconductors, software, toys, automotive parts and industrial and commercial process controls, and was determined to be a representative sample.
The study found that some of the more significant benefits of supply chain security efforts included:
- Improved product safety (e.g., 38 percent reduction in theft/loss/pilferage, 37 percent reduction in tampering);
- Improved inventory management (e.g., 14 percent reduction in excess inventory, 12 percent increase in reported on-time delivery);
- Improved supply chain visibility (e.g., 50 percent increase in access to supply chain data, 30 percent increase in timeliness of shipping information);
- Improved product handling (e.g., 43 percent increase in automated handling of goods);
- Process improvements (e.g., 30 percent reduction in process deviations);
- More efficient customs clearance process (e.g., 49 percent reduction in cargo delays, 48 percent reduction in cargo inspections/examinations);
- Speed improvements (e.g., 29 percent reduction in transit time, 28 percent reduction in delivery time window);
- Resilience (e.g., close to 30 percent reduction in problem identification time, response time to problems, and in problem resolution time); and
- Higher customer satisfaction (e.g., 26 percent reduction in customer attrition and 20 percent increase in number of new customers).
The study also notes that "it is important to remember . . . that these benefits are not realized automatically. Companies should be creative in determining ways—often times in collaboration with their business partners—to gain the most benefits from their security investments."
The PDF version of the study can be found at the following link: www.nam.org/supplychainsecurity.
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