Asking the Right Questions: Balancing Security vs. Supply Chain Efficiency Given Terrorist Threats

Dan Gilmore recently posed an important issue in a column over on Supply Chain Digest about balancing the need to consider security and safety in our supply chains relative to supply chain efficiency given what is clearly a rising threat level. On Monday, we tackled the subject as well by talking about the steps companies can take to reduce the threat of terrorist activity impacting their own supply chains. Yet I think the broader philosophical trade-off here is just as worthy and important a topic to call attention to. In no particular order, I thought I'd list a handful of questions that can highlight some of the country (and global) trade-offs we need to start thinking more seriously about as both business stakeholders and members of a society under threat:

  • Should we consider reducing the speed with which we can process the entry of containers at ports to allow for greater inspections, detections, quarantine periods, etc.?
  • Is the added cost (and time) to scan and test all airfreight to the same level as commercial aviation passenger baggage and freight worth it?
  • Are there nations that we should not be allowed to directly trade with and accept shipments from? Are places like Yemen, Pakistan and other countries simply too risky to maintain an open flow of cargo from? And if so, how can we contain the transshipment threat posed by those seeking to circumvent new restrictions?
  • Should shareholders get used to companies operating with higher inventory levels (and hence, weaker balance sheets) to hedge against potential terrorist threats causing disruptions?
  • As a society, would we consider accepting longer product lifecycles to help companies hedge against inventory obsolescence given the inherent risk of carrying greater inventory?
  • Given the increased threat of nuclear, chemical and biological material making its way into low-tech (and potential high-tech) terrorist weapons, are we willing to make the investment as a society in detection equipment (not to mention the additional delays such checking might entail)?

I don't have answers to these questions, yet like you, I have my opinions. I personally think that it's time for Western nations to take supply chain security from terrorist threats more seriously. It's time for all of us to ask the hard questions and come up with solutions that challenge the status quo (and potentially make trading partners unhappy). For example, perhaps as a means of encouraging greater domestic sourcing (which reduces the threat from overseas containers), we should consider taxing imports, especially from high-threat regions, to offset the new infrastructure costs required to monitor against risks.

Jason Busch

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