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A conceptual model for crime prevention in Supply
Chain management
Ahokas, Juha (juha.ahokas@tkk.fi)
Aalto University, School of Science and Technology, BIT Research Centre
Laiho, Aki
Aalto University, School of Science and Technology, BIT Research Centre
Hintsa, Juha
Cross-border Research Association, CBRA, Lausanne, Switzerland
Männistö, Toni
Aalto University, School of Science and Technology, BIT Research Centre
Holmström, Jan
Aalto University, School of Science and Technology, BIT Research Centre
Abstract
This article explores five supply chain security standards from crime prevention, quality
and supply chain management perspective. The study proves a resemblance how total
quality management and situational crime prevention approaches affect supply chain
security. However, these approaches are not embedded in supply chain security standards,
thought they are often regarded as good practices when aiming at better security. As a result
of the study a new conceptual model is presented, which confines operational, quality
management and crime prevention theories under the same conceptual model.
Keywords: Supply chain management, Situational crime prevention, Supply chain security
Introduction
Financial and performance impacts of various types of crime are significant in supply
chains. For instance, the Transported Asset Protection Association (TAPA) has estimated
economic losses in terms of cost of replacement, re-shipping, and reputational damage to
reach up to 8.2 billion Euros in 2009 in Europe only, and according to International Anti-
counterfeiting Coalition approximately 5%-7% of the world trade is in counterfeit goods.
According to the latest study, the crime concerns and the number of actual crime incidents
have increased in European supply chains (Hintsa et at, 2010). Exemplary crime types in
supply chains include: Theft, violations of customs fiscal and non-fiscal regulations,
intellectual property right violations, terrorism, and illegal immigration.
The management of supply chains and logistics processes considers security and crime
prevention very seldomly. Supply chains are managed and measured with focus on a
handful of key performance indicators, most typically time, cost, quality, customer value
and customer satisfaction (e.g. Christopher 2005, Menzer et al 2001, Lee & Billington
1992, Lee 2004). Security measures are commonly seen as additional requirements and

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costs to operations. However, based on Lee and Whang (2003) it can be argued that crime
and necessary prevention measures are not only important but should be primarily based on
process control instead of relying e.g. on costly inspections or border controls. The central
theme of the quality movement––higher quality can be attained at lower cost by proper
management and operational design––is also applicable in supply chain security. The
security equivalent to final inspections for quality is to rely on inspection of inbound goods
at destination ports and border crossings (Lee and Whang 2003).
This paper reports recent research performed in area of security management and crime
prevention in global supply chains. The research questions are:
RQ1: How are the principles of situational crime prevention theories covered by supply
chain security initiatives?
RQ2: How can continuous improvement approaches be taken into consideration in supply
chain security initiatives?
We analyze several security initiatives and standards in supply chain management area
and compare the findings with typical supply chain management practices. Furthermore,
we introduce a new conceptual model, which seamlessly integrates the essential crime
prevention aspects with supply chain management principles and practices.
Supply chains as a facilitator of economic growth
By definition, supply chain as a concept captures a broad range of activities. As stated by
Menzer et al (2008): “Supply Chain encompasses the planning and management of all
activities involved in sourcing and procurement, conversion, demand creation and
fulfillment, and all logistics activities”. Briefly, Supply Chain management addresses the
fundamental business problem of supplying product to meet demand in a complex and
uncertain world – from the point of view of the entire supply chain (Kopczak 2003).
Supply Chain design decisions relate to the structure and control practises of the chain:
number of echelons in the supply chain and their location, management practices of the
material flow (Christopher et al 2006), location of order penetration point and value
offering point (Olhager 2003, Holmström et al 1999), approach to flexibility, lead time and
postponement (Naylor et al 1999, De Treville et al 2004, Lee 2004) and supplier selection
and relationship management (Lee 2004, Gelderman & van Weele 2005). Furthermore,
many of the decisions involve also strategic business model and product decisions, for
instance make or buy questions, postponement strategies (Pagh&Cooper 1998) and the
alignment between product, process and supply chain (Fine 2000).
The same supply chains, which enable efficient legal sourcing, production and
delivering of goods, have offered a platform to exploit them for illegal purposes. Typical
supply chain crimes are e.g. theft and pilferage, counterfeit manufacturing, drug and
weapon smuggling, infringements against custom law, human trafficking and illegal
immigration. According to the Stockholm International Peace Research Institute (SIPRI) 90
per cent of the air cargo companies identified in arms trafficking-related reports have also
been used by major UN agencies, EU and NATO member states. As globalization develops

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and world comes more interconnected the opportunities grow commensurately (Laycock,
2010)
Supply chain security programs are regarded as good international norms and practices
when aiming at better security without impeding international trade. Norms are generalized
rules governing behaviour that specify appropriate means for pursuing goals (Scott, 2003).
Standards are based on consensus reached in a formal process of hearing objections until a
general agreement can be observed. By means of standardization companies can
demonstrate conformance to common security requirements.
According to supply chain security standards, processes and procedures should be
established to assure the integrity of the goods’ reception, unloading, storage, production
and loading processes (European Commission, 2007). The standards consist of the
requirements concerning a broad range of operations supply chain aspects (APEC, 2005):
• Access control (prohibit unauthorized access to facilities, conveyances, vessels,
aircraft, shipping, loading docks, and cargo areas)
• Personnel security (screening of employees and prospective employees), education,
training and awareness (education and training of personnel regarding security
requirements, motivation to take actions in response to deviations)
• Visibility of products in a supply chain, documentation process security (protected
against the loss of data or introduction of erroneous information)
• Business partner security (appropriate compliance record with legislative
requirements, security coordination)
• Conveyance security (protection against the introduction of unauthorized personnel
and material into the supply chain)
• Crisis management and disaster recovery (advance planning and process
establishment to operate in extraordinary circumstances)
Security initiatives and possible benefits
After 2001 several international supply chain security programs and standards have
increased government involvement and customs-trade collaboration to secure global supply
chains. Supply chain security standards are e.g. European Authorized Economical Operator
program, ISO 28 000 Security management systems for the supply chain and IRU
International Road Transport security guidelines. Supply chain programs aim at providing
guides and tools to initiate measures for preventing the exploitation of enterprises for
criminal purposes. The implementation of security measures is expected to decline risk for
unauthorized access to facilities, conveyances, cargo areas and cargo related information
and for unwittingly activities with dubious companies. Additionally, they emphasize
awareness, co-operation and rapid reaction when coinciding imminent threats.
Security measures are under same financial constrains than any other investments.
Several reports imply that security measures can have direct and collateral benefits (Singhal
et al, 2005). They may reduce number and/or value of actual crime incidents, facilitate
customs clearance, promote company brand name, lower inventory levels by increased trust
and supply chain reliability and enhance capabilities to react to sudden unwanted events
(Lee et al, 2003). However, there is an uncertainty how to manage security measures in a

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way they accrue to companies and governments. Security programs give very limited
information, if at all, concerning efficient security strategies or conditions/prerequisites
under which they work most efficiently.
Theory of Crime
Merriam-Webster dictionary defines crime as an act or the commission of an act that is
forbidden or the omission of a duty that is commanded by a public law and that makes the
offender liable to punishment by that law (Merriam-Webster dictionary, 2010). Individuals
and companies are often willing to widen the definition to encompass all action or omission
that causes harm in a situation that the person or group responsible ‘ought’ to be held
accountable and punished, irrespective the legislation. The International Organization for
Standardization defines crime risks as an intentional, unauthorized act(s) designed to cause
harm or damage to, or by, the supply chain (ISO 28 000 Specification for security
management systems for the supply chain).
Crimes are intertwined in multiple ways in business operations. Individual employees
can commit occupational crimes against their employee for their own gain like theft, fraud,
embezzlement. Employees can act on a behalf of the company itself to commit thefts,
fraud, pilferage, illegal property right violence (Clinard et al, 1986). Organised crime
groups pursuit illegal activities carried out by structured groups of three or more persons
existing for a prolonged period of time and having the aim of committing serious crimes
through concerted action by using intimidation, violence, corruption or other means in
order to obtain, directly or indirectly, a financial or other material benefit (Council of
Europe, 2002). Crime can have very opportunistic nature or it forms very commercial or
business-like structures (German Federal Crime Intelligence).
In this paper we co-opt a crime definition as an intentional acts designed to cause harm
or damage, irrespective the legislation, by exploiting any activity in the supply chain to gain
unfair financial measurable benefits or political targets in the form of terrorism. This
includes e.g. opportunistic theft and robbery, purchasing, manufacturing and transportation
of illegal products, human trafficking, counterfeiting documents and product relating
information (source, quality, amount etc.), smuggling, violation against customs’
regulations and terrorism. The common feature for the most crimes is the motive to benefit
undeserved from the state, companies, individual people or environment. The benefit is
often financially measurable.
Criminal rationality and situational inducements
Rational Choice Theory is a framework for understanding social and economic behaviour.
Rational Choice Theory means that all action is fundamentally 'rational' in character and
that people calculate the likely costs and benefits of any action before deciding what to do
(Scott, 2000). In criminology the main elements of the Rational Choice Theory comprise
individual perpetrator’s background, prevalent conditions, direct motives and intentions,
mood and feelings, moral assessments, insights into crime opportunities, benefits and cost
of committing a crime (Clarke, 1995).

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The degree of rationality varies case by case. Often incomplete information and
constrains of thinking limit the rationality of choice (Farrington, 1995, Felson et al, 1998).
Organized crime definition implies very rational measures to facilitate their endeavours.
Some transnational and poly-crime oriented organized crime groups are aiming at
controlling the whole production and distribution processes of entire criminal markets,
optimizing profits and cutting out local and minor competitors, on a very rational way
(OCTA – EU Organised Crime Threat Assessment, 2008). This implies that the organized
crime prevention measures should be based on very rational decisions.
Crime prevention means all measures directed to minimize crime rates and
consequences by reducing crime opportunities and influencing possible perpetrators or
citizens (Kaiser, 1993). Situational crime prevention focuses on the management, design
and manipulation of the build physical environment, in order to reduce the opportunity to
commit crime and increase the risk of detection if deterrence fails (Gilling, 1997).
According to Ronald V. Clark crime opportunities and situational inducements or direct
environmental factors play a significant role when making choices to start committing a
crime (Cornish, Derek B. and Clarke Ronald V., 1986). The techniques of situational crime
prevention fall under five main headings: increase perceived efforts, increase perceived
risk, reduce anticipated rewards, reduce provocations and remove excuses for the crime
(Bullock, 2010).
Crime prevention approaches are applied in SARA –model (Scanning, Analysis,
Response, Assessment). SARA is a problem solving approach, which makes use of data to
establish the existence and extent of a problem, to analyse its nature and source, to plan
intervention measures to reduce it, and to monitor and evaluate the effectiveness of the
selected (Read T., Tilley N., 2000). SARA consists of four phases: 1) carefully define
specific problems, 2) conduct in-depth analyses to understand their generative mechanisms,
3) undertake broad searches for solutions to disable causes, 4) evaluate the result (Clarke V.
C., Eck J., 2003).
There is a resemblance between total quality management and security management.
Personnel and business partners must be motivated to mitigate crime opportunities in daily
operations through actions to the plans, specifications and measurements covering product
and process planning, logistics operations, customer and supplier relations, accounting and
sales organization. The following table commensurate total quality management approach
based on Deming (1991) and SARA approach (Read & Tilley, 2000).

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Table 1: SARA –model compared with TQM
SARA Total quality management
Long-term focus: A problem-solving approach will
include feedback processes where definitions of
problems are refined and improved on the basis of
developments in understanding.
Create constancy of purposes for improvement of
product and service. Innovate. Allocate resources for
long-term planning.
Problem solving: A systematic problem-solving
approach.
A systematic approach to improving the process.
Learning: Replicating with past projects is fraught
with difficulties. It requires an understanding of how
the original measure brought about its effects in the
context in which it was introduced.
Experience alone, without theory, teaches
management nothing about what to do to improve
quality and competitive position, nor how to do it.
Role of leadership: Problem-solving is enabled by
presence of a committed, enthusiastic, knowledgeable
and involved leadership.
The job of management is not supervision, but
leadership. There is no substitute for good leaders of
teams to bring consistency of effort, along with
knowledge.
Focus of corrective action: Focus on behavior and
practices that are generating, facilitating or sustaining
the problems. Considers what can be done most
effectively to change conditions generating the
problem
Eliminate the cause so that the problem does not
recur. Determine where mistakes a likely to occur
and try to prevent them. Give problem definition
careful consideration.
Information: Information, training and experience to
inform problem-solving is essential
Emphasize institution of training
Involvement: Considers all stakeholders’ perspective
(offenders, managers, personnel, subcontractors,
customers etc.) and their relationship
Total management and organization involvement
including suppliers and customer relationships
Method: Develops alternative hypothesis to explain
the problem and tries to falsify the explanation
Generate potential solutions using methods like
brainstorming, interviewing and surveying
Decision making: Exploits incident data in defining
and analyzing the source and distribution of
problems. In selecting responses it is crucial to work
out in detail how they are expected to produce their
intended effects
Decisions based on facts rather than opinions.
Management gathers and analyzes data as a basis for
decisions making.
Use of teams: Problem solving is facilitated by the
establishment of multi-disciplinary/multi-agency
teams and enthusiastic, knowledgeable and involved
leadership
The use of teams for problem solving and to achieve
consensus takes advantage of group synergy, gets
people involved, and promotes a spirit of cooperation
and shared values among employees.
Methodology
The empirical data of the research consists of the findings in a European-wide supply chain
security standardization feasibility study, initiated by European Committee of
Standardization (CEN) (Hintsa et al, 2010). Methodology for this in-depth analysis was
developed by the aid of an extensive literature review where over 50 relevant academic,
practitioners and governmental publications on the studying fields of SCS (supply Chain
Security), TQM and crime theory were examined. This desk-exercise provided insight to
formulate a two phase analysis template, whose objection was to reveal possible
weaknesses in contemporary SCS initiatives. The analysis template focused on two themes:

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continuous improvement and situational crime prevention. Following standards were
analyzed:
1. EU AEO: based on Regulation EC No 648/2005 of 13 April 2005 amending Council
Regulation No 2913/92 establishing the Community Customs Code. Based on the
EU legislation non binding EU AEO Guidelines were established containing Section
5 Safety and Security (dated 1.7.2007, pages 20-40) Authorized Economic Operators
Guidelines (29.6.2007, 82 pages) Part 2, I.2.5 Section V Safety and security
requirements (pages 58 – 74) with 64 requirements, is to be covered in the analysis.
2. ISO 28000 series: ISO28001 - Security management systems for the supply chain —
Best practices for implementing supply chain security, assessments and plans —
Requirements and guidance (10.15.2007, 28 pages). Table A, Performance review
list (pages 12-14) with 31 requirements, is to be scrutinized in the study.
3. TAPA: Freight Suppliers Minimum Security Requirements (1.1.2009, 19 pages).
Section 2 – Specifications (pages 11 – 18), with 79 requirements, is to be included in
the analysis.
4. IRU: Road Transport Security Guidelines (2005, 45 pages) Chapter 3:
Recommendations for shippers/consignors (pages 22–25), with 53 requirements, is
to be covered in the study.
5. EU Port security directive, Directive 2005/65/EC of 26 October 2005 on enhancing
port security (OJ 25.11.2005, 12 pages). Annex II Port Security Plan (pages 9 - 10)
with 16 requirements, is scrutinized in the study.
The first phase of the analysis utilized the Deming cycle (PDCA) (Deming 1991) and its
four cyclical steps as a grouping tool. Each security requirement (i.e. measure) of the five
initiatives was scrutinized and categorized exclusively to one of the four groups.
This analysis is done on security requirement level for each of the five SCS initiatives,
i.e. each requirement / question / sentence or paragraph is analyzed separately. One
requirement can fall only in one cycle step category. Continuous improvement analysis
gives a good understanding of how four cycle steps are covered by the five SCS initiatives.
We carried out an analysis whether the five SCS initiatives take into account the concept of
continuous improvement. Additionally, attention was paid to the extent initiatives support
strategic supply chain network, postponement or product design.
Results
When we analyze the good principles of continuous improvement, we can clearly identify
that the security initiatives are not consistent with the PDSA-cycle. Over 95 % of overall
242 security requirements of the five standards can be categorized to Do -step. Plan step is
in a minor role in the standards whereas Study and Act -steps seem to be nonexistent.
Dominant Do -step indicates that implementation of security measures is in the focal point
in the standard. Nevertheless, emphasizing exclusively to Do -step on the detriment of other
three steps can be short-sighted and lead to eroding security in the long run.
Supply chain security programs are not self-explaining and self-executing programs.
Quite the contrary, they just build a framework, where the compliance with requirements

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can be attained in several ways. Thus, analyzed security initiatives give very limited
amount of information about how security measures should be planned in different context
in order to pursue maximum benefits. There is a need for a model, which support strategic
and operational design and planning and confines operational, quality management and
crime prevention theories under same conceptual model.
Additionally, as a result we observe that the theoretical body of knowledge on crime
prevention in supply chains is scarce, and that practitioners´ awareness on crime
prevention theories is very limited. Traditional physical and informational security
measures are in use, however leaving supply chain (re)design and crime reward
decreasing measures virtually untouched. This can be considered as a paradox, because
without crime reward a number of motivated offenders are nearly non-existent. By
product and supply chain planning the value of crime reward can be controlled in supply
chains.
Based on our analysis, the SARA –model appears to be a very promising approach to
apply in supply chain context. It examines specifically defined crime types, identifies crime
sustaining factors and blocking mechanism. SARA –model strives to identify the pinch
point at which security measures might be expected to have the longest term and widest
impact (Read T. et al, 2000). Rational choice theory gives good ground for strategic supply
chain security decisions when combating against organised crime. Additionally, situational
crime prevention approach gives tools to assess every-day operational decision focusing on
modifying the environment where crime occurs. Following table depicts SARA –model in
supply chain security framework.
Table 2: Supply Chain security initiatives in SARA -model
Scanning Analysis Response Assessment
Crime incidents and
opportunities in business
processes
Audits and desktop
analyses
Strategic and
operational responses
Outcomes
1. Vulnerabilities or
crime incidents in
supply chain
processes or
networks
2. Unclarity concerning
prospective
employees and other
human resources
3. Discrepancies in
accounting and in
financial
assessments
4. Vulnerabilities in
supply chain
information
management
5. Unclarity concerning
suppliers’
Audits
1. Availability and
appropriateness of
security technology
and measures
2. The capabilities of
the security provider
to observe and
respond to
anomalies
3. The capabilities of
own personnel to
observe anomalies
4. Security culture
supporting reasons
in organization
5. Security culture
eroding reasons in
organization
Strategic responses
based on rational choice
theory
1. Re-design of supply
chain network
2. Re-design of
transport routes and
units
3. Postponement
4. Enhanced
information security
5. Crime reward
decreasing product
and process
planning
Operational decisions
based on situational
crime prevention
Outcomes
1. Reduced crime
opportunities and
actual incidents
2. Reduced insurance
premiums based on
reduced claims
3. Less inspections and
other fiscal duties
obliged by customs
4. Improved tools and
methods to manage
crime risks
5. Promoted brand
image and
reputation as
reliable trader
6. Improved
operations due to

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background
6. Violations
concerning fiscal or
other customs
regulations
7. Unclarity concerning
customer
background
8. Perceived IPR –
infringements
9. Fast and easily
copied product
features or
production practices
6. Crime opportunities
sustaining
environmental
factors
Desktop analyses
1. Supply chain
vulnerability
analysis
2. Supplier analysis
3. Logistic operator
analysis
4. Customer analysis
1. Increase the efforts
of crime
2. Increase the risk of
crime
3. Reduce the rewards
of crime
4. Remove excuses for
crime
5. Reduce
provocations
better control and
visibility
7. Increased resilience
against any supply
chains threatening
events
8. Improved
contingency
planning and faster
response time
9. Improved awareness
and organizational
culture
Discussion
The research reported in this paper contributes to supply chain management (SCM) theory
by highlighting the situational crime prevention aspect in SCM. Conceptual model enables
systematic development of supply chain management theory towards more reliable, crime
preventive direction. The findings bridge the gaps between supply chain management and
crime theory, and thus increase also the level of knowledge of situational crime prevention.
The research reported in this paper contributes to supply chain management (SCM)
theory by highlighting the situational crime prevention aspect in SCM. Conceptual model
enables systematic development of supply chain management theory towards more
reliable, crime preventive direction. The findings bridge the gaps between supply chain
management and crime theory, and thus increase also the level of knowledge of
situational crime prevention.
From practitioners’ perspective the paper presents tangible guidelines for how to
prevent crime in supply chains. By introducing the topic of situational crime prevention to
broader audience in companies the paper makes crime prevention a general management
topic instead of being something that security specialists handle in isolation.
Acknowledgements
The authors would like to express their gratitude for receiving research funding from: Aalto
University and Tekes in Finland, European Union Framework Program 7 (FP7), project
LOGSEC; Swiss Science Foundation (SNF)
.
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