On the morning of September 11th, 2001, the United States
and the Western World have entered a new era - one in which
indiscriminate terrorist acts of all kinds are to be expected.
Many if not most of the expected impacts of the new era
will affect the supply of goods and services in ways we
currently do not understand. Interestingly, many of the
negative outcomes can be expected to be due to the government
response to the threat, as happened after 9-11-01. This
research will examine the challenges of preparing the supply
chains of manufacturers, retailers and distributors in the
Western World for new attacks as well as new methods of
ensuring security within the transportation system.
CURRENT
The research group has addresses many of these issues and is currently working on various aspects of applying resilience to supply chains, to the maritime transportation system, and developing secure supply chains.
PROJECT FOUNDATION AND PREVIOUS WORKPLAN
Previous work in transportation and logistics security
has focused on the prevention of theft. Relatively little
published research exists on transportation security in
relation to the global threat of terrorism that the world
is now facing. Further, there is little published on the
criteria needed for good transportation security solutions.
With both the public good and private business interests
to consider, it is likely that any solution for transportation
and logistics security will need to meet multiple criteria
for a successful outcome. The study of supply chains security
represents a new area of research and this work will make
an important initial contribution to the field.
As suggested in Prof. Sheffi's award-winning article "Supply
Chain Management under the Threat of International Terrorism"
published in the International Journal of Logistics Management
(v12, no. 2, 2001), we have entered a new era for supply
chains. The assumptions underlying current systems analysis
and design have changed, necessitating a re-assessment of
transportation systems design in light of vulnerability
to external disruptions. Given this, the research initiative's
contributions are expected in the following areas:
· Threat assessment. An estimate of possible threats
· Scope of possible impacts. An estimate of the
possible impact on corporations, of each one of the threats.
· Corporate response:
o Rethinking inventory policies.
o Rethinking procurement policies.
o Rethinking customer service commitments.
o Reorganizing to meet the challenge.
o Dealing with the cost of extra security, including insurance.
o Deciding how much security is "enough."
o Strategic Thinking and organizational restructuring
o Designing a secure IT infrastructure for global supply
chain management
· Collateral benefits. As companies look at instituting
new security measures and paying for them, the researchers
will look at "collateral benefits." Clearly strategies
designed to deal with greater uncertainty will influence
positively supply chain operation in general as these are
faced with mounting uncertainty even without considering
the impact of terrorism. In addition, tighter controls can
lead to reduced theft and better relationships with suppliers,
customers and the government.
In looking at the business response, the research addresses some of the critical trade-offs that businesses
are facing:
· Efficiency vs. redundancy. Clearly part
of the response is to build redundancy into business. Such
redundancy may involve extra inventory, extra capacity,
dual sourcing for components, etc. After two decade of focusing
on "lean operations' business are faced with the challenge
of not losing the benefits of lean operations (such as Just-in-Time
manufacturing), including low costs and high quality, while
building some redundancy in anticipation of disruptions.
· Collaboration vs. secrecy. One of the ways
businesses can tackle the threat is to collaborate with
each other (creating better transparency in the movement
of goods) and collaborate with government, both local and
national. Such openness, however, involves its own hazards
- for example, required placards on each hazardous cargo
give the information about the content. Terrorists can naturally
also use such information.
· Centralization vs. dispersion. One of the
ways to counter increased uncertainty is through 'risk pooling."
When applied to inventory management such strategy may call
for central inventory location. A central facility, however,
leaves the enterprise more vulnerable to a physical attack.
Distributing inventory and other operations, however, may
mean that the enterprise is more vulnerable to an information
technology attack.
· Lowest bidder vs. known supplier. In the
ever-continuing quest for cost reductions many enterprises
have opted to use internet-based auctions and other means
to get new low cost suppliers. On the other hand known suppliers
may mean that security risks are lower. Thus companies may
need to factor in new considerations in bidding for raw
material, components and services.
· Security vs. privacy. As companies are
tightening their security procedures they will be faced
with many of the issues facing society in general such as
the legal limitations of profiling, hiring of people with
certain backgrounds, etc.
The research group has addresses many of these issues and is currently working on various aspects of applying resilience to supply chains, to the maritime transportation system, and developing secure supply chains.
Copyright©
2000 Massachusetts Institute of Technology