Who Pays for Security?
In the course of the public discourse on trade security, various estimates have surfaced that suggest beefing up supply chain security for goods entering the United States ultimately could cost billions, or even trillions, of dollars. Not surprisingly, much of the discussion surrounding trade security has centered on who exactly is going to cover those costs. "There is a fundamental tension right now," says Gerald Woolever, a 35-year U.S. Coast Guard veteran who is now senior vice president for homeland security operations at supply chain consultancy INNOLOG, "between the people in the ports, the carriers and transporters, who don't necessarily want to bear the expense of buying the technology and putting these procedures in place, and the government, which is trying to pass the cost down to the people in the supply chain."
Fortunately, as Woolever and others note, many of the processes and technologies that can help companies secure their supply chain against terrorist threats are the same solutions that enterprises have had at their disposal to fight theft and product tampering, to comply with existing customs and other regulations, and perhaps most importantly, to streamline their supply chain. Gerald McNerney, a senior research analyst and supply chain specialist with technology consultancy AMR Research, says that the systems companies might use on a day-to-day basis to manage a secure supply chain could include a transportation management systems (TMS), solutions for connecting to trading partners for inventory visibility, international trade and logistics systems, and any tracking systems such as wireless or radio frequency identification (RFID) devices that a company uses to collect information on the location of goods in its supply chain, that is, solutions that were likely in place or under consideration before security cast a renewed spotlight on them. (See the sidebar, "New Threats, Same Old Tools," for a rundown of new applications for existing supply chain solutions.)
The change has been one of focus, says Neiman Marcus' Howell. He notes that the retailer has always focused on the security of its merchandise as it moves through the company's supply chain. "However, after 9/11 our focus broadened beyond just the physical security of our goods to include an understanding not only of our company's facility and personnel security procedures but those of our supply chain business partners as well." And the company has found that sound security practices are not incompatible with good supply chain processes.
Security in Practice
For example, after Neiman Marcus implemented a global logistics control system from the software company Qiva (recently purchased by TradeBeam), the new system not only began providing information critical for security, it also just plain made good supply chain sense. "The system provides visibility to supply chain events before the goods leave the foreign country," Howell says. "This provides much-needed lead time to identify security or other compliance-related issues before the goods reach our border. We believe the capabilities of this Internet-based system will allow us to keep pace with both the logistics and compliance sides of the global supply chain."
The same principle applies to various supply chain processes, with certain procedures requiring only minor modification to produce heightened security. For instance, for several years Neiman Marcus has visited its foreign business partners' facilities with a focus on labor and human rights issues. Now the company has enhanced those facility reviews to include security issues as well.