Security Solutions. Results. ROI. Clearly, Clareo.

Clareo, Inc. is a value-based, internationally experienced, premium security solutions provider. We distinguish ourselves from the market by providing world class, relevant experience with a primary focus on tangible ROI for our customers. Clareo delivers global, multi-sector experience and provides solutions based on best practices in the industry, the cultural climate of the customer and, most notably, with an eye on maximum value for your security program investment. Clareo is a privately held company with no vendor or product affiliations; our revenue comes from the value our clients place on our solutions. We measure - and earn - our success by bringing tangible results to our clients.

Services

v Contract Value Analysis
Our most recognized service. We offer a unique breadth of global industry experience in negotiating contracts with security vendors. This service encompasses everything from negotiating more favorable rates with existing security providers, bundling key services for maximum value add, developing the RFP process for vendor change, and providing your team with a financial analysis to clearly demonstrate justify program value to your company.

We have extensive experience in the industry on both sides of the contracting table (as a vendor developing proposals for prospective clients and as the client receiving bids from a multitude of vendors). We clarify each element of vendor proposals, including their operating margins and true cost to the client. This experience uniquely qualifies Clareo to provide our customers with a transparent, unbiased view of the vendor’s costs and profitability – positioning you in an excellent negotiation position.

Finally, we are confident in our contract negotiation process to the point of offering a very low risk investment to our clients. We establish our fees based on your perceived program value. C-TPAT, contract negotionations

v Metrics Based Analysis
Are you satisfied with your current security providers but want to demonstrate what value they are providing to your company? How can you measure their efficiency or productivity? You may be receiving pressure from within your company asking for value proof. Perhaps you are encountering resistance from other departments to changing major policies or vendors. We help develop tangible, relevant metrics to assist in any decision making process. The bottom line is effective demonstration of true ROI to your company.

v Logistics Security Solutions
Our team has the logistics security expertise to not only identify any “weak links” in your supply and distribution network, we also bring clarity and tangible solutions to the often complex web of cargo transportation and associated loss coverages. We seek to understand all elements of your logistics security program and develop solutions that will reduce pilferage or catastrophic loss.

With the financial impact of cargo crime estimated to be as high as 60 billion dollars annually in the US alone and with more companies expanding into foreign markets, it is critical that your carriers follow strict security practices to mitigate loss during transport. We strive to clarify who is actually carrying your product and what reputation and success rate this carrier has. Many companies are not even aware that their primary cargo carrier often subcontracts two or even three levels, sometimes to un-vetted carriers, in order to meet their delivery requirements. Why is this insight important to our customers? First, understanding these intricacies (carrier vetting, risk management programs, facility security, etc.) allows you to develop the most secure network available. Secondly, it is important to know what type of insurance coverage the actual carrier of your product has. If they claim “whole coverage”, what does that really mean to you? (See sidebar.)

Sidebar: What Does “Whole Coverage” Really Mean?
First, understand that with “whole coverage” policies, where the carrier fully covers the invoice (as opposed to retail) cost of any lost product, the increased coverage for their claims is passed back to you in their bill rates. In other words, you are paying for your stolen goods yourself, via bill rates from your carrier, over the life of the contract.

Next, it is important to clearly understand the indirect costs of a cargo loss to your business; those elements insurance will not address. In any cargo theft, the customer will experience at least 3 areas of indirect and unrecoverable loss. First, the salaries of the employees, cost of raw materials, and other overhead needed to manufacture the original order is lost. Second, the poor customer experience could compromise future sales. Third, potential sales are lost from those who have purchased the stolen goods, no longer needing to buy the product directly from you.

How can you reduce your insurance costs? Ask us at info@clareo.biz.

With your increased understanding of your carriers and their own security programs, you will save your company money in reduced shrinkage as well as in cost avoidance of exorbitant insurance premiums. By leveraging our logistics security experience and taking the time to understand your business processes, we can offer you solutions that are tailored and effective for the nuances of your supply and distribution chain.

Physical Security Consulting
new facility design
have our experienced design team work with facility planners, architects or management. Let us help you develop your facility with a keen eye on security. Proper initial design is far more effective and cost efficient than retrofitting after security problems arise. An upfront investment in these services can also help to limit the liability that may be experienced due to ineffective physical design.

physical security vendor management
let our team analyze the myriad of physical security options and recommend the best fit for your organization. Not only can we help you choose the security solution that is right for your organization, we can also provide expertise in integration of your security design with the policies and procedures to appropriately support it. This is one area where money is often wasted by lack of integrated management and planning. Working together with you, we will examine the future implications of selecting a certain solution and assess what capabilities the selection will give you down the road.

Contract Conversion
we offer the additional and often neglected service of managing the transition period following vendor selection. This service can be especially important when the selection committee chooses someone other than the incumbent, creating a need for careful and sensitive management of everything from the award notification to independent and effective operations by the new contractor.

Negotiation teams, managers and vendor representatives tend to quickly “exit” the project once the negotiation is complete, leaving the interim security team to manage their own hand-off; or worse yet, have no hand-off at all. By providing proper management of this transition, Clareo helps our customers prevent costly management headaches, negative perception of the company by unsuccessful bidders, and even security lapses that can occur when focus is elsewhere. Seamless transition is critical and it is part and parcel of what we do best.

Contingency planning
Our specialized contingency planning services help customers “take in stride” situations they would otherwise not have the manpower or expertise to address (e.g., strike preparation, job force reduction planning, workplace violence planning, shareholder event planning, etc.). Our team offers a variety of specialized and customizable programs to help you prepare for unexpected or one-off situations requiring an immediate security solution.

Cargo Crime

In the past couple of years, cargo crime has taken an enormous toll on the consumer. Between $30-$50 billion dollars is the annual guesstimate given by authorities when it comes to overall loss value. This range is extremely vague for a number of reasons but one thing that the security industry can agree on is that the true cost to the consumer is well understated. Despite this seemingly enormous figure, cargo crime continues to be the “silent killer” within the manufacturing industry. I refer to this epidemic as a “silent killer” because there are very few companies who recognize the long-term impact of this crime, the overall cost to the consumer and the loss of product integrity to the market. What companies have also failed to grasp is the total financial impact to their stock value each time a container of their product is stolen. For instance, how many companies effectively measure these factors as “expenses” when cargo crime occurs:
1. Operational costs to manufacture the product the first time – items within this category would include items such as wages of the personnel. One could take the argument even further when speaking of things like rent, utilities, etc. For each box of product that is produced, companies gauge their efficiencies when comparing revenues to expenses. If 100 boxes of widgets are produced for distribution and they are stolen in transit, it will take twice the operational expenses to produce the same amount of product. The manufacturer will have a lower “revenue to expense” ratio. This amount is rarely if ever factored into the total impact to companies and thus contributes to the cumulative effect of the “silent crime”.
2. Percentage of Invoice value versus retail/market value - – when cargo is stolen, the value of the product is rarely a “projected market/retail value”. In fact, only a known invoice value of the product is generally factored by companies who have had product stolen. When one factors in the amount that is actually recovered through insurance, we see a large delta between the retail value and the amount recovered. In essence, we have lost visibility to the actual profitability on the product and therefore do not report the total impact from the loss.
3. Loss of customer base – a portion (albeit possibly small) of the market that would have purchased the product legitimately, would it have not been stolen, is now lost…they were able to buy the product at a drastic reduction through other channels.
4. Increased insurance premiums through the carrier. Very similar to our health insurance, the more times the cargo insurance carrier covers claims involving the same manufacturer, the higher the future premiums will be. These increases are incrementally charged back to manufacturers by 3PL (3rd Party Logistics Provider) and will further erode the Revenue to Expense ratio. Insurance, as it relates to cargo crime, is one of the key components to the “silent crime”. This is not to suggest that insurance providers are to blame; obviously insurance has value in certain instances. However, if a company is shipping thousands of widgets in a given year, the actual cost of insurance per container will seem low. In fact, some manufacturers may not even ask for their carrier to itemize all costs per container. The point is that the overall cost of insurance can continue to increase year over year without companies having sticker shock to that one line item. Companies are not willing to pay for counter-theft measures in the 3PL network and do not have an incentive to decrease the cost factor if the customer continues to pay for this cost of doing business.
lost time for product on market. If your product is not on a distributor’s shelf because of a container theft, a percentage of customers will purchase a similar product commodity that is available. This is probably the most difficult aspect to gauge overall impact but there is no question that this situation certainly exists. Companies who employee a direct build model have the most at risk with a container theft as it relates to customers. Since their customers have effectively already chosen and paid for the product, they have an expectation for that product to arrive on time. Not being able to follow through on this commitment can only impact future sales.

What factors Contribute to Overall Cargo Loss?

There are numerous factors that contribute to cargo loss but I believe factors can be broken down into two basic categories: 1) primary risk factors and 2) secondary risk factors.
Primary Risk Factors - these are inherent risks that the manufacturer or 3PL does not necessarily have control over. One such example of a primary risk factor is the “High reward/low risk” ratio that cargo crime offers. Each container may contain up to $2, $5 or even $15 million in product in some cases. One theft of this particular container provides a huge reward. Couple this with the fact that container theft, if well orchestrated, sometimes does not require interaction with a true “victim” in a traditional sense. It is often (in the case of the United States) without driver interaction, violence or weapons and is then subject to much more lenient sentencing. Finally, everyone has heard for years about the war on drugs and well known task forces targeting this segment of crime. Federal funding, political platforms and attention have been assigned to this issue; however, compare that organized inter-agency effort with the lack of funding or political attention that has been given to cargo crime. Some policing agencies have recognized the obvious need for a specific, well trained unit targeting this epidemic. The TOMCATS of Miami, Florida is one example of an extremely effective department focusing on cargo crime. However, to this day there is not a federal, inter-agency focus on cargo crime. The combination of these primary risk factors has drawn numerous hardened criminals away from more risky drug trafficking to cargo theft.
Another example of a primary risk factor would be that of geographical or language barriers. Cargo criminals operating in Europe understand the various degrees of complexity agencies face when trying to deal with cargo crime. While Europol is making headway in collating data, there is a difficulty in communication and responsiveness that enables cargo crime to proliferate in areas. A criminal who has stolen cargo in Europe has the ability to cross three or four countries in less than a normal workday! That factor in and of itself makes for very difficult tracking and follow up with multiple agencies.
Secondary risk factors are ones that 3PLs and manufacturers do have more immediate control over. These are aspects that collectively can make an impact on overall cargo loss and therefore, increased profitability for all. An example of a secondary risk factor would be the “commoditization of the LSP” as an industry. The concept that all carriers or 3PLs have identical risk mitigation processes, similar technology for tracking shipments, identical secured staging points and identical driver training programs, as it relates to counter theft measures, is false. While manufacturers are constantly seeking ways by which to reduce overall costs of their products, they are driving 3PLs to reduce cost, and in essence, utilizing less capable carriers in doing so. What companies fail to realize is that front end investment in technology, training and processes would have an overall impact on long-term losses. When delivery contracts or “lanes” are bid to 3PLs, frequently the Requests for Proposal are extremely detailed in every area except security expectations. Generally, few companies are including requirements such as secured staging locations, asset protection plans in place for each staging location, specific rules as it relates to the brokering of loads, solo vs team driver specifications, etc. A comprehensive list of industry standards should not only be included in the RFP but also evaluated prior to agreeing with a 3PL. Specific attention should be given to the quality of their programs; this front end cost may be more expensive in the short term but as a long term investment will certainly provide a lower overall cost.
Another secondary risk factor would be one way communication flow from the manufacturer to the 3PL. At first glance this would appear very similar to the commoditization aspect of the industry. In fact, they are similar but this issue is slightly different. Think about the breadth of experience that a large 3PL might have as it relates to transporting product. Think of any aspect when it comes to shipping product – the type of product, the value of product, the roads by which they travel to deliver the product, the flexibility of various carriers to deliver product, the known success they have had with various carriers as it relates to getting product delivered on time and in its entirety, etc. There is no question that the 3PLs are the resident experts when it comes to getting product to your end customers. However, how often does a manufacturer consult with the 3PL and understand all these variables when estimating shipping costs and delivery times? How flexible does the manufacturer become when the 3PL may have a safer, but slightly altered, recommendation as it relates to carriers or delivery schedules? Chances are, this is not ever discussed and it is one part of the process that could benefit from an open discussion as it relates to the security of the product. These secondary risk factors are ones that companies should actively target when asking themselves how they can mitigate the risk associated with transporting their product.

Cargo crime by region

Some general comments can be made concerning cargo crime as it relates to various parts of the world. For instance, in the United States, cargo crime is very much an opportunistic crime. Because of the limited attention this crime has been given as it relates to funding and overall driver awareness training, the M.O. in the US is quite simple: the cargo criminal will conduct a thorough reconnaissance on a manufacturing facility or distribution center and will observe full loads departing these facilities (evident by the trailer door seals). After they have learned the tendencies of each carrier, ,they will then simply follow the trailer and wait for the driver to stop. Areas that are notorious for cargo crime in the US would be restaurants and fuel stops. The driver will leave the load unattended and will return to find their truck gone. Criminals, who have already leased warehouse space, will secure the stolen merchandise until they can then introduce it into a legitimate supply chain for their end destination. Their European counterparts could be considered “more advanced”. Their years of narcotic smuggling have provided this group with a comprehensive understanding of the supply chain and distribution process. Various methods have been employed to steal containers: some reports have shown the use of “gas” released into the air conditioning systems while the driver sleeps. The driver is rendered unconscious while the criminals are then free to pilfer the container. Another method is for criminals to actually acquire police uniforms and weapons; they then employ mock “police checkpoints” along certain roads. One other item worth mentioning is that the Europeans, more so than any other area, will utilize the firearms and violence as part of their M.O. Finally, Asian crime syndicates are similar to their European counterparts in terms of their infrastructure. Most of the attacks committed in this area are actually “theft to order”. While the line haul FTL (Full Truck Load) may not be as rampant in this part of the world, one thing is certain: warehouse robbery and supply chain leakage is very high. The report of violent attacks and the use of firearms is increasing at an alarming rate in this part of the world.
Until all regions take a proactive approach when dealing with this epidemic and the criminals that engage in this activity, the opportunities for quick financial gain are too enticing to ignore. Additionally, companies that do not recognize the value in front end risk mitigation will continue to contribute to the record losses year over year. Another way to put it: those companies who do utilize creative risk mitigation opportunities that are available will be less desirable from a criminal’s point of view. This in turn will ultimately give that company a competitive advantage in one area of their product pricing.

Security Solutions. Results and exceptional value. Clearly, Clareo INC

Clareo Inc. is a value-based, internationally experienced, premium security solutions provider. We distinguish ourselves from the market by providing world class, relevant experience with a primary focus on tangible Return on Investment for our customers. Clareo Inc delivers global, multi-sector experience and provides solutions based on best practices in the industry, the cultural climate of the customer and most notably, with an eye on maximum value for your security program investment. We are a privately held company with no vendor or product affiliations. Our revenue comes from the value our clients place on our solutions. We measure-and earn-our success by bringing material results to our clients.

Executive Bio: David Serafine, President and Chief Executive Officer

David is a corporate security professional with 15 years of strategic and tactical experience applied in over 30 countries to date. He has a wealth of experience in all aspects of the security industry including global supply chain security, facility security design, investigations, contract security negotiations, risk assessments and consulting applications. David received his Certified Protection Professional designation in 1998 and became a member of the International Association of Professional Security Consultants in 2005. He attended the Indiana University of Pennsylvania and graduated with a Bachelor of Arts in Criminology.
David was published by the American Society for Industrial Security in 2005 with a book titled “Value Based Security Procurement”. The publication provided a global perspective on how companies can more effectively design their requests for proposal and properly select the best vendor for their needs. The book was a featured publication at the 2005 global ASIS conference in Orlando and went on to become the book of the month for the publisher. The book was one of the first of its kind to bridge the negotiation gap between the security vendor and the client.
David’s second publication “Cargo Crime, the Silent Killer”was published by Security World International magazine and reached print in 20 countries. The article challenged the readers to question the total impact of cargo crime, beyond the invoice value of the cargo lost. Discussion points concerning the loss of product integrity, the negative and contributory impact of insurance on cargo crime and the lack of federal funding to target the growing problem were raised . David has made a career of designing progressive asset protection programs that have made a positive impact on bottom line profitability.

Services

**Contract Value Analysis – this is a progressive approach to analyzing the “value” of a security department’s spend. This methodology is a culmination of designing RFPs, analyzing proposals, reviewing core competencies of each vendor and negotiating final security agreements in all regions of the globe. The unique breadth of experience allows for negotiating more favorable rates with existing vendors, facilitates improved services for maximum value add, teaches the proper manner in which to design an Request for Proposal and finally provides your team with a financial analysis clearly demonstrating the program value to your company.
We have extensive experience on both sides of the contracting table (as a vendor developing proposals for clients and as a client receiving bids from all types of security vendors. This unparalleled experienced is but one distinguishing characteristic of our company and our corresponding value. Most companies utilize a few methods to select a security partner entrusted with the protection of their company’s assets and people. Ask yourself how your company selects their security service providers and be wary of the words “commodity manager, e-sourcing, reverse auction, purchasing agent, etc”. Why are these words detrimental to your program? ((click a link here and provide the top 10 list of harmful actions caused by ).. We clarify each element of a vendor’s proposal, including their operating margins and true cost to the client. Having both a vendor’s perspective and client’s perspective allows for a transparent and unbiased view of the vendor’s costs and profitability- creating a favorable security agreement that not only works today but is sustainable for the life of the contract.
We are confident in our contract negotiation process to the point of offering a very low risk investment to or clients..we establish our program fees based on your perceived program value..ask for details on this service!

**Metrics Based Analysis
Are you satisfied with your current security providers but want to clearly articulate what “value” they are providing to your company? How can you measure their efficiency or productivity? These questions often are posed by departments who either own the security budget, external vendors who do not have a vested interest in security or the procurement department. Perhaps your security department is encountering resistance from other departments in changing vendors or major policies impacting your security objectives. In any case, we help develop metrics and proposals to help effectively communicate your message at a critical juncture. This is particularly helpful for departments that are brand new and are charged with developing a strategy for their programs or are starting operations in an emerging market where there is limited onsite experience. This service is also helpful for long-standing departments who have lost the objectivity they need to critically evaluate themselves and their effectiveness. The bottom line is that we want to help your department perform their roles more effectively and help communicate that productivity to your company.

**Supply chain risk mitigation
Our team has the supply chain security expertise to not only identify any “weak links” in your supply and distribution network but also but also bring clarity and tangible solutions to the often complex web of cargo transportation and associated insurance coverage (***link to talk about insurance and its weaknesses). We seek to understand all elements of your logistics security program and develop effective risk mitigation practices that will help reduce pilferage and catastrophic cargo loss.
With the financial impact of cargo crime estimated to be as high as 50 billion dollars annually in the US alone and with more companies expanding into foreign markets, it is critical that your carriers follow strict security practices to mitigate loss during transport. We strive to clarify who is actually carrying your product as well as what reputation and success rate they have had in various markets. Many companies are not aware that their primary carrier often subcontracts the cargo to two or three separate companies in order to meet the delivery requirement. Each load that is brokered generates additional risk and less control over your product.
In addition to understanding your supply and distribution network from a security perspective, Clareo Inc will recommend best practices and technology to mitigate the risk of loss. As an added value, we will analyze portions of the shipping charge that impact security (freight insurance) and make appropriate recommendations for the use of the investment. Let us explain how much cargo insurance is contributing to your likelihood of theft. (linik for Cargo insurance article in security world international). With a better uunderstanding of your carriers, their risk mitigation programs and their associated insurance charges, a more proactive approach can be taken with your supply chain security program.
**Physical Security Consulting
Have our experienced design team work with facility planners, architects or management to help you develop your facilities with a keen eye on security. Proper initial design is far more effective and cost efficient than having to retrofit facilities after security issues arise. Millions of dollars are wasted by organizations annually with an improper front end design. Ask our team about specific examples we have seen in manufacturing, high rise and data center applications and we will explain in detail how the design lost money, negatively impacted security and would have failed an even rudimentary risk assessment.
Let our team analyze the myriad of physical security options that exist and recommend the best fit for your organization. Not only can we help choose the proper solution for your specific needs but we can also provide the expertise to integrate your security design with the appropriate policies and procedures to appropriately support it. The most expensive and elaborate security system is rendered useless with an improper set of company policies, no mechanism to monitor the policies and a poor sense of security awareness among the employee population. Working together with you, we will examine the future impact of the technology choices and assess what capabilities the option will give you in the future.
**Contract conversion – we offer the additional and often neglected service of managing the transition period following a vendor selection. This service is especially important when the vendor selection committee chooses someone other than the incumbent, creating a need for careful and sensitive management of the award notification and an effective “start-up” period by the new contractor.
Negotiation teams , managers and vendors representatives tend to quickly extricate themselves from the project once the negotiation is complete, leaving the “lame duck” security team to manage their own transition to a competitor. Even worse, the exiting vendor removes all of their “quality” employees to other sites and you are left with the management headaches, negative perception in the employee population and increased risk to your company. Our team can help make that transition more seamless and manage the asset protection program to an acceptable level.

The impact of non-security minded functions selecting a security vendor

Companies around the world have “commoditized” everything they purchase. From supplies to security guards, everything has been lumped together and given to a “commodity manager, a “purchasing agent”, etc. This starting philosophy means the only true value most companies assign to a professional security outfit is “bill rate” and therefore, the low bill rate wins the bid and is deemed best value. Here are some things to consider when your procurement department is assigning a value to your security vendor and then starting a negotiation:
How many procurement agents are responsible for the long-term (life of the contract) effectiveness of the vendor and the long-term “savings” they originally projected based on the final negotiation?
How many departments accurately factor the “savings” of the transition to a new vendor? Do they understand lost productivity, increased overtime hours, a shorter contract term (due to poor performance), the cost of the procurement process itself, open posts, etc?
How many departments, procurement or security, completely understand how to assimilate a “regional” agreement? Are they completely familiar with the various companies in each region, familiar with the union requirements, understand the costs of a startup in certain locations?
How many companies use e-sourcing, reverse auctions, internet bids, etc and never even visit a vendor’s office or meet their personnel?

David Serafine, CPP devoted a book on this topic published by the American Society for Industrial Security entitled “Value Based Security Procurement”. Clareo utilizes all aspects covered in the book as well as their customized approach for each client to ensure the best selection of your provider. Next time you are bidding your project, make certain you call us first.