What are Digital Supply Chain Cybersecurity Risks?

Any product's supply chain has a number of dynamic components. The flow that starts with locating the raw materials for a product and concludes with delivering the completed items to a client involves each operation in the supply chain.

Supply chains are changing as a result of digital technologies, just like many other aspects of contemporary industry. As technology advances, cyber dangers also rise. Digital supply chains are described in this article, along with their advantages and cybersecurity dangers.

Traditional vs. Modern Supply Chains

As commodities go from suppliers to customers, the traditional supply chain includes a number of significant actions, including −

  • Estimating a product's demand through study.

  • The buying of raw materials for producers.

  • Producers create and deliver a final good to retailers.

  • Distributors move the goods to various merchants.

  • Retailers that sell and deliver the goods to customers.

The main tasks and product flow in a digital supply chain are the same; the approach is different.

In a typical supply chain, precisely established workflows are required for the chain to operate in a linear and reactive manner. The chain is governed by historical transactions from older systems, not by real-time conditions. The absence of interaction between the network's various components restricts visibility inside a conventional supply chain.

In order to create a supply chain that is more connected, dynamic, and predictive, the digital supply chain employs a network approach. These innovations make it possible to identify issues early and proactively address interruptions based on the current situation rather than predetermined routines. To break down silos and offer insight throughout the supply chain, connectivity is essential.

Digital Transformation in the Modern Supply Chain

To accomplish the agility, visibility, and velocity promised by a digital supply chain, several innovative technologies collaborate.

Internet of Things (IoT)

Internet-connected sensors, appliances, and actuators are examples of IoT (Internet of Things) devices. By 2021, projections indicate that there will be 25 billion of these devices worldwide.

IoT gadgets keep an eye on the vehicles, machinery, equipment, and operating environment used in the supply chain. IoT devices share data inside the network of the digital supply chain, which has the following effects −

  • Warehouse managers and merchants, among other supply chain participants, have more visibility into the movement of goods.

  • The downtime of machinery and other equipment is significantly decreased thanks to predictive analytics and maintenance.

Artificial Intelligence (AI)

Prediction-making skills and decision-making power are not solely derived from facts. Artificial intelligence developments aid in the conversion of real-time data into wise business choices. Without particular human input, those decisions are made by machine learning algorithms. In the following areas, these algorithms aid in prediction and decision-making −

  • Predicting demand

  • Arranging for maintenance

  • Spotting product anomalies

  • Minimizing expenses

  • Control of inventories

Digital Supply Chain Cybersecurity Risks

A digital supply chain strategy's optimization also broadens the potential target base for cyberattacks. Attackers try to exploit this ecosystem of contemporary technologies, which spans the entire supply chain, in supply chain attacks.

Risks associated with supply chain cybersecurity include −

  • Human Risks − People are capable of making expensive errors or even purposely compromising an entire supply chain. These human dangers may result from behaviors like emailing login information to a third party or failing to secure an Internet of Things sensor.

  • Third-Party Risks − Each participant inside a digital supply chain becomes more vulnerable to bad cybersecurity practices by third-party businesses, such as suppliers or logistics firms, with several parties involved in even the simplest supply chains. Over 1,000 third parties are used by 60% of enterprises, according to Gartner.

  • Vendor Risks − A large portion of this digitization increases reliance on technological solutions developed by software and hardware suppliers. Threat actors in the supply chain frequently feed on finding and exploiting weak software to compromise valuable data. In the supply chain, some hardware items could be fake or tampered with.

  • Compliance Risks − There is a risk of breaking industry standards managing this data in a networked supply chain when information is routinely shared across several systems. If an audit reveals non-compliance, there are expensive reputational consequences and harmful fines to take into account.

Several cybersecurity incidents that occurred during the global pandemic increased the danger of supply chain technology threats. The Kaseya assault, which targeted network monitoring and remote management software and had an impact on up to 1,500 enterprises, was one of the most notable. Due to the effect of the Kaseya attack on its operations, one Swedish grocery chain was forced to close all of its 800 locations.

Managing Supply Chain Cybersecurity Risks

Securing the supply chain must be a top priority while planning. The following are some top recommendations for managing cybersecurity threats in the supply chain −

  • Include security clauses in crucial supply chain agreements and documents, like RFPs for procurement.

  • Implementing fundamental security measures throughout the supply chain, such as changing device default passwords, limiting user rights, and encrypting communications.

  • Research providers more thoroughly to make sure they can sufficiently meet cybersecurity standards. To do this, thorough security questionnaires must be completed, and vendors must be questioned about crucial physical security measures, access restrictions, malware prevention and detection techniques, and safe coding procedures.

  • Monitoring the risk exposure from various vendors in the software supply chain as necessary. This should include a specialized software solution that automates vendor risk management in complex digital supply chains.

  • Increasing supply chain employees' understanding of cybersecurity hazards. Security Education, Training, and Awareness (SETA) programs that address supply chain risks should be made available to everyone in the workforce that works across all of a company's supply chain operations.

Digital supply chain management works well with a variety of business formats, from manufacturers to retailers. Utilizing emerging technology, all essential parties may easily track physical products and information flow by creating an integrated and transparent network. Nevertheless, it's imperative to remain aware of the rising risk of supply chain threats. If enterprises desire both functionality and security inside a digital supply chain, prevention is the greatest form of protection.

Updated on: 05-Aug-2022


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