What is Supply Chain Security?

Several incidents over the past nine years—especially the terror attacks on 9-11-01, the West Coast port lockout in 2002, and the state of recent natural disasters such as hurricanes Katrina and Rita—have exposed the vulnerability of current supply chains to disruptions. As a result, managing vulnerability has emerged as a crucial and central competency for business leaders worldwide.

Managing vulnerability

CTL research has identified the impact of such disruptions on specific businesses, and offers a framework showing vulnerability as a function of both the probability and the consequences of a disruption. This research suggests building a resilient enterprise as a critical method for reducing the consequences of disruptions, noting that resilience implicitly generates collateral benefits on a daily basis. While this prior work offers constructive methods for reducing firm vulnerability by decreasing the consequences, it does not fully address methods for mitigating firm vulnerability by lowering the probability of disruptions.

Increasing the importance of secure supply chains

The clear threats made by terrorists to disrupt Western economies have heightened the importance of securing supply chain operations. While this includes internal operations, equally important is the entire supply network—that collection of upstream suppliers, carriers, and handlers as well as downstream customers, carriers, and handlers that serves to procure, convert, and distribute materials and products for end customer use. With firms procuring materials from sources around the world and shipping to customers across the globe, transportation linkages are complex, require many passages across borders, and involve dozens of independent parties for successful shipments. Greater attention is required to make the operational aspects of supply chains merely work—and even more involvement is needed to secure the entire system. Cargo security warrants special attention as cargo moves through the many modes and locations that collaborating businesses create to ensure an integrated and efficient extended supply chain operation. Freight moves freely but frequently without necessary oversight to prevent security threats or even unintended disruptions.

As such, firm vulnerability could be reduced by focusing on how to lower the probability of disruption and by securing the supply chain. This would include hardening facilities, making hiring and performance review practices more robust to prevent internal sources of disruption, extending supply chain security initiatives to include upstream suppliers and downstream customers, and collaborating with carriers, handlers, and customs organizations to facilitate unimpeded freight movements. One of the lingering problems associated with making supply chain security investments is the difficulty in quantifying a return on investment.

Taken together, these supply chain issues remain outstanding. These challenges will be addressed by the research conducted as part of the Supply Chain Security studies.

How does it work?

CTL currently serves as an integral member of the Department of Homeland Security (DHS) Center of Excellence – The National Center for Secure & Resilient Maritime Commerce. Additionally, CTL researchers are studying ways to make supply chains more secure by considering various threats that range from cargo theft to counterfeit materials. This includes studies suggested and funded by CTL partners as well as studies initiated by members of the research team.

What are the key benefits?

Participants in the various studies may access early versions of the reports and engage one-on-one with the researchers. Custom studies may be conducted as well.

How to participate

Companies may participate by volunteering to support ongoing research initiatives within the project or by suggesting and funding new studies in this area.

Key members of the team

Jim Rice
Deputy Director, MIT CTL

Kai Trepte, trepte@mit.edu, Research Associate
Øyvind Berle, berle@mit.edu, Visiting Student

The team is supported by researcher affiliates Mr. Philip Spayd and Mr. Dan Purtell.