Supply chain cyber security is a growing need for just about every company. By the time the average person takes a picture and uploads it to Instagram, the next cyber attack has already occurred. This number has only continued to grow over the past few years. That’s why it’s important to understand what you can do to help mitigate the risks of your company falling victim to supply chain cyber security threats.
In this blog, we’ll explore the importance of cyber security for your supply chain, how to identify risks, how to build a strong defense, and how partnering with a 3PL can help mitigate some of the risks that haunt so many modern businesses.
What Is the Supply Chain?
With all the moving parts, it’s important for us to first define what a supply chain is. The supply chain comprises the entire process of making and selling goods, supplying materials, manufacturing, and distribution and sale.
In the modern world where consumers expect to receive goods faster than ever before, optimizing your supply chain is a crucial component if you’re looking to compete. Disruptions in any part of your supply chain can mean lost revenue and frustrated customers.
What Is Supply Chain Cyber Security?
Basically, supply chain cyber security focuses on the management of information technology systems, software, and networks for both a business and its third-party vendors. It’s designed to minimize and prevent risks driven by threats of cyber-terrorism, malware, and data theft.
Examples Of Supply Chain Cyber Security Threats
Supply chain attacks are focused on exposing supply chain vulnerability and attacking areas lacking proper security. These threats are often executed by hackers looking to make money.
By compromising a businesses’ security system and locking a company out of its own network or holding sensitive data for ransom, a business that falls victim to a serious cyber attack will have to pay to have the issue resolved or suffer an indefinite disruption to their supply chain.
Some examples of supply chain cyber security threats include:
- Vulnerabilities in networks and software within the supply chain that are discovered by hackers
- Improper methods of sharing sensitive company or client information across company emails and servers
- Counterfeit hardware or hardware with pre-installed malware
- Lack of or improper employee training on BYOD (bring your own device) procedures
- Improper use of company work devices by employees
- Poor information security practices
- Software security vulnerabilities in third party’s systems
- Third-party vendors with a breach in their IT security
The average cost of data breach in 2020 alone was around 150 million dollars, making proper supply chain cyber security more important than ever.
Benefits of a Supply Chain Risk Management Plan
With a cybersecurity attack happening about every 39 seconds, it’s important to mitigate supply chain vulnerability wherever possible. An effective way to do this is through a risk management strategy.
A supply chain risk management plan helps you feel prepared to respond to as many circumstances as possible and minimize disruptions to the supply chain, should they occur. Many companies will often have a risk management plan in place for events like natural disasters and weather-related issues, but the growing risk of cyber attacks makes prioritizing supply chain cyber security in a risk management assessment equally important.
SCRM (Supply Chain Risk Management) Best Practices
When preparing a supply chain risk management plan, it’s important to prepare for the worst and hope for the best. Supply chain risk management plans aren’t in place to scare you; they’re there to help you create a contingency plan and get you back on track if a disruption occurs. Some best practices to consider when developing a risk management plan are outlined below.
1. Identify Known Risks
Stary by addressing internal safety measures with your team, like proper computer use. From there, the next step is to speak with the third parties you partner with. Just because you don’t consider your business a prime target for hackers doesn’t mean your suppliers, distributors, manufacturers, or retailers aren’t at risk.
It only takes one of your partners to suffer an attack that disrupts their process for your entire supply chain to get knocked off course.
2. Acknowledge Unknown Risks
Also known as “unknown unknowns,” risks classified as impossible to find or imagine in advance can come up. While you can’t predict everything, you can put plans in place that will retroactively lessen the effect of supply chain disruptions.
For instance, it isn’t possible to identify all the risks that can affect the third parties you work with. But by partnering with companies that have conducted their own strategic risk management plan, you can have greater confidence knowing you’re working with a third party that has the proper safety measures in place.
3. Assume a Breach
Many business owners wrongly assume their business isn’t large enough to be the target of a cyber attack. However, it’s not so much the size of the company that hackers look for but the amount of money they can get by compromising that business’s data.
With this in mind, it’s safe to say that no business is off-limits, and it’s best to assume you or the vendors you work with will be the target of an attempted cyber attack at some point.
Mitigating Third-Party Risks In Supply Chain Cyber Security
Part of your company’s risk assessment will include taking into consideration the risks associated with the companies you partner with. You can help mitigate your risks by addressing the following with each of the parties you partner with:
- Reasonable levels of security. By requiring vendors, sub-contractors, and supply chain partners to meet or exceed standard terms and conditions of compliance, you better ensure the third parties you partner with are covered in the case of a cyber security breach.
- Vendor risk assessments. In addition to conducting your own risk assessment, it’s a good idea to conduct a thorough risk assessment of each of your vendors on an annual basis.
- Incident response plans. Should a supply chain cyber attack occur, it’s important to establish a strategy by which parties can notify one another when their network, systems, or data have been compromised.
- Trusted vendors. Partnering with third-party vendors isn’t the time to opt for the cheapest or most convenient option. Be sure to do your due diligence to find partners with a proven track record of meeting or exceeding compliance requirements across the supply chain. For instance, when looking to outsource fulfillment, look for a 3PL that is PCI certified. A PCI certification ensures the security of card data through best practices like the installation of firewalls, encryption of data transmissions, and use of anti-virus software.
Three Ways a 3PL Helps Mitigate Supply Chain Risk
Perhaps one of the biggest third parties a company will work with is the warehouse or 3PL they outsource shipping to. By partnering with a 3PL familiar with the ins and outs of supply chain vulnerability, you can help leverage their expertise and protocols to your benefit. A few ways a 3PL can help a mitigate business’ supply chain risk include:
- Stability. Through trade wars, natural disasters, and cyber attacks, a 3PL can help bring balance to your supply chain by leveraging their existing relationships with suppliers.
- Solidarity. A logistics provider is aware of the intricacies of the supply chain and is able to bring a level of expertise and experience to fulfillment that is otherwise missing. A secure 3PL is a third party you count on regardless of the ups and downs of external factors.
- Risk Management Solutions. A 3PL that offers risk management solutions powered by analytics and machine learning can help you track risks and provide you with a clearer picture of future disruptions.