Managing Supply Chain Security

Warehouse Security Professionals (WSP) provides private security guards for warehouses, construction sites, and commercial properties. WSP has grown from a New England-based private security firm with 250 security guards to providing over 10,000 highly trained private security personnel on sites across the United States within just the last five years. Early in this rapid growth period, WSP was forced to address high turnover and costly liability insurance issues. With turnover almost twice the industry average and liability insurance costs increasing yearly, WSP developed a proprietary background check system named Secure Check. Secure Check uses an extensive screening process that includes application reviews and text analysis, interviews, criminal background checks, general background checks including social media searches, and integrates other streams of data that develop a "Best Performer Profile" using big data analytics. The initial impact of Secure Check for WSP was the improved quality of their new hires including advanced technology skills in monitoring and protection.

WSP's success in reducing turnover, employee theft, and insurance claims using Secure Check developed into a new revenue stream for WSP. They began marketing Secure Check to their existing customer base of warehouses, construction companies, and commercial and industrial complexes. The marketing team for Secure Check has recently been focusing on selling Secure Check to large manufacturers of consumer electronic products whose extensive supply chains include logistics and transportation, warehousing, wholesalers, third-party logistics firms, and retailers.

One consumer product manufacturer, Global Electronics (G-E), is developing their supply chain integration planning to integrate employee background check procedures across their supply chains as identified in their key process objectives for managing supply chain security. With the help of WSP's Secure Check implementation team, Global Electronics has developed internal performance security measures of turnover, theft, and insurance claim losses. They will use the next six months to assess and improve their internal integration for security measures. Upon completion of G-E's internal application of Secure Check, they will develop external supply chain security performance measures for their first-tier suppliers. As part of the assessment and improvement of supplier partners' security performance, Global Electronics will offer Secure Check to meet compliance with the new security performance targets.

Secure Check uses a process for collecting background information and makes use of an interactive algorithm-based model. The predictive modeling uses company specific information and data streams from a variety of sources, recommends the appropriate background check level as well as detailed information to be collected, and reports the best performer profile representing the ideal candidate. The basis for Secure Check is twofold: Secure Check is first a security risk detector for screening in human resources for a supply chain partner. The second purpose for using Secure Check is to facilitate the hiring of best performing candidates. The system provides direction as to who not to hire as well as which candidate in the remaining pool is the best fit to hire. Secure Check reduces the risk of a "failed hire" and a "bad hire." The failed hire is an aborted hire (i.e., a final candidate does not accept the position or does not make it through the probation period) or a hire that leaves before full performance expectations are realized. The associated lost costs include increased unemployment taxes, supplementary costs for overtime or contingency workers, additional promotion, recruitment, and hiring costs, drug testing and background check fees, and orientation, training, certification, and on-boarding costs. The bad hire is an employee hired who does not meet performance expectations. Associated costs for a bad hire include reduced productivity and quality of work, increases in training and overtime costs, and increased supervision costs. More significant costs that a bad hire may cause include lost time accidents (employee and others), customer property loss, and theft or other illegal activities that contribute to increased legal and insurance costs.

Both Warehouse Security Professionals and Global Electronics have calculated the average cost of a failed hire to be approximately 25-30 percent of salary and a bad hire to be almost 130 percent of salary. To mitigate the failed and bad hire risks, Secure Check inputs information about the position including risk factors (employee and customer safety, insurance and liability issues, etc.), skills (technical), and any legislative requirements including job-relatedness of conviction, time since conviction, and evidence of rehabilitation.

Questions

1. Identify the levels of security system response Global Electronics is trying to address by collaborating with Warehouse Security Professionals and with the integration of Secure Check. Explain how the use of Secure Check would meet the level objectives.
2. What challenges will Global Electronics incur in integrating the use of Secure Check throughout its supply chain?
3. What advice would you offer to Warehouse Security Professionals to advance their supply chain security portfolio of products and services?