Better Security Drives Business Value

By Barchi Peleg-Gillai, Gauri Bhat and Lesley Sept
Stanford University
Sponsored by the Manufacturing Institute and IBM Corporation

Companies traditionally find it challenging to justify security-related investments because they focus largely on the direct expenses and not on the collateral benefits (e.g., supply chain efficiency, improved customer satisfaction, improved inventory management, etc.) that may be realized. Limited research has been completed regarding the creation of collateral benefits from security investments. To fill this gap, the institute and Stanford University have conducted a study to confirm and quantify the magnitude of collateral benefits received by a select group of companies that are considered ``innovators” in supply chain security in their industries such as chemicals, consumer goods, food, information technology, automotive parts and logistics service providers.

Although the results of this study should not be considered as representative of the industry average, the findings clearly indicate that significant business value accrues from supply chain security investments.  The innovative companies participating in this study received the expected security benefits from their investments (e.g., reduced risk, less theft and pilferage, etc.), but also quantified numerous collateral benefits they received, such as:

  • Higher supply chain visibility;
  • Improved supply chain efficiency;
  • Better customer satisfaction;
  • Improved inventory management;
  • Reduced cycle time and shipping time; and
  • Cost reduction following the above-mentioned collateral benefits