How to sell the value of security

How to sell the value of security

In my June column, I addressed the strategic advantage of broadening cargo-security education and awareness training to encompass the larger picture of supply-chain "optimization." I cited the added value that can be produced by taking a more holistic approach to supply-chain security.

The piece obviously struck a receptive chord. The feedback I receive continues to be strongly centered on strategies for making trade security a cost-effective program. This is particularly true in responses received from corporate security or trade-compliance personnel who may find themselves having to create a value proposition to help sell their company on investing in an enhanced security program. While one would like to think that the events of Sept. 11 would have been enough to make the approval for any updated corporate security program a given, the sad reality is that too many companies either still do not believe in the threat or economically find it too hard to commit the resources.

I have always believed that, given the enormous consequences at stake, trade security should join compliance as an equal and enforceable requirement for engaging in international trade. You would think that of all the trade-related regulations and requirements in effect today, those associated with trade security would be by far the easiest for companies to understand and support, and that even making trade security mandatory won't be enough. Unfortunately, there will always be those who somehow remain ignorant of the laws - or consciously choose to ignore them until it becomes absolutely unavoidable, usually when they have been caught and are threatened with a penalty.

I have witnessed similar behavior firsthand as a trade and customs consultant. Trade compliance is typically a tough topic in which to interest companies, even those that desperately need it. Let's face it, trade compliance isn't sexy or exciting, and it often means spending dollars to prevent something bad that "might" happen. Selling your company on trade security may be no different. Like it or not, the bottom line with security is that it must prove to have viable economic benefits if it is to win support from senior management (not to mention incentives for third-party participation).

Adding to the challenge is the growing realization that new anti-terrorism security measures simply aren't generating the savings necessary to create much excitement in corporate boardrooms. The Customs-Trade Partnership Against Terrorism's touted "fast lane" appears to be inconsistent and marginal, while "smart containers" and other emerging technologies are still largely on the drawing board. This basically leaves only traditional cargo theft - hardly a new issue - as the sole security-related target capable of generating meaningful savings. Therefore, building a truly impressive return on investment will need to come from other areas of the supply chain.

If you find yourself in the position of having to build a compelling value proposition for security, I would offer the following approach:

-- Start by creating a flow-process "blueprint" of your current international trade process - usually by product type or geographic trade lane - identifying all of the corporate departments, vendors and third-party service providers who play a role. This exercise is typically cited as the most important step because it not only identifies all of the "touch" points where your cargo is most vulnerable, but forces an awareness to potential inefficiencies and/or department disconnects.

-- Create a joint trade-security task force comprising representatives from the departments and service providers identified above, as well as risk management, legal, procurement-sourcing, research and development, and others. Be sure to get a corporate officer or other senior manager to "sponsor" the committee.

-- Approach trade security as a quality-enhancing program. (See also "Supply Chain Security Without Tears," by Hau L. Lee and Michael Wolfe).

-- Drive trade-optimization and risk-management considerations "upstream" into the earliest stages of make-buy and material-sourcing decisions where proactive input for duty-tax minimization strategies, regulatory-admissibility issues, logistics optimization, security risks and other cost factors can be identified and weighed together. (Be prepared for education and awareness training, as many of these individual disciplines typically operate in separate corporate "silos.")

-- Seek out and evaluate industry best-in-class processes and enabling technologies.

The result will be a more cohesive, efficient and inherently safer international supply chain.

William G. "Jerry" Peck is president and founder of Global Trade Management Solutions. He can be reached at (815) 462-1732, or via e-mail at wgpeck@global-trade-ms.com.