How to Protect your Digital Supply Chain?

Around the world and across industries, the integrations between businesses and third-party technology providers are growing. Third-party tech providers enable businesses to scale their supply chains, add capabilities, and enter new markets.

Organizations that experience data breaches, even if those data breaches were caused by external companies, often suffer significant reputational, financial, and regulatory consequences.

However, while working with third parties is necessary for the logistics business, each of the parts of the supply chain comes with the opportunity for cyber risk. Besides, nowadays, consumers, investors, and regulators are no longer allowing businesses to pass the buck when something goes awry.

All the steps that compose a digital supply chain

On the contrary, now more than ever, businesses can be held responsible if they’re using unsafe or unethical supply chain practices. This poses a question: How can businesses protect their digital supply chains from cyberattacks and other threats?

Let’s dive deeper into the subject and answer this question!

Principles of Digital Supply Chain Security

Supply chain security is not an IT problem only. Digital supply chain risks touch sourcing, vendor management, continuity, quality, transportation, and security across the enterprise, and requires a coordinated effort to address all the potential issues.

  1. Develop your defenses based on the fact that your systems will be breached
  2. Cybersecurity is not a problem of technology only
  3. Security is security; physical and cybersecurity go hand in hand

How to mitigate digital supply chain risks?

First off, it all starts with monitoring and managing risks, both physical and digital.  

Risk professionals have to overcome limitations to their visibility, authority, and resources. Luckily, supply chain professionals have plenty of strategies and tools at their disposal to overcome these hurdles and help supply chain professionals and IT departments understand the inherent risks of digital supply chains.

But, what are these tools and strategies we’re talking about?

Start with Awareness

The first step to protect your digital supply chain is to become aware of all the service providers within it. A strong, technology-based risk management strategy is the key to gaining and maintaining the awareness you need to protect yourself against risks.

To get started on the awareness train, think of your supply chain’s technology stack as a three-tiered technology architecture.

Typically, your supply chain technology stack is composed of:

  • GRC software
  • An ERP system
  • EERM risk management packages

In other words, you need a comprehensive digital supply chain risk management program that includes an ERP solution that helps you manage all your third-party tools, risk management software, and specialized tools for threat detection and data processing.

Why is awareness so important?

First of all, working for a comprehensive list of vendors enables smarter resource allocation. Besides, tracking the importance of certain vendor relationships helps retailers identify points of failure, prepare for outages, and reduce downtime. Ultimately, gaining awareness of your supply chain’s ecosystem helps organizations understand where your data flows, reduce redundancies, and save money.

Assess the security posture of your digital supply chain

Now that you’ve raised awareness of your organization’s data and systems, you need to assess the cybersecurity posture of every part of your supply chain.

However, while many organizations already do this as part of their own compliance and risk management programs, chances are that the third parties involved in your supply chain might not be protecting their end of the chain.

These are some things you can do to assess your security standpoint:

  • Questionnaires to get a good insight into your vendors’ security policies
  • Continuous monitoring solutions to fill the gap and get observable data
  • Penetration tests that help identify hidden risks about your vendors

Simply put, to protect your digital supply chain, you need to get a complete picture of the cybersecurity risks posed by third parties. With that in mind, you need to leverage a mix of assessment methods in order to truly see the big picture of all your potential digital supply chain risks.

Why is your security posture important?

Since not all of your assessment methods can provide a complete picture of the cybersecurity risks posed by a third party, it’s fundamental for your business to leverage a mix of methods to truly see the big picture of every part of your digital supply chain and gain better insights on the weakest links of your supply chain.

Establish better pre-procurement standards

Pre-procurement is all about minimizing risks of procurement contracts, which is often a critical part of the supply chain. When you pre-procure, you compare the pros and the cons of different products, vendors, and security solutions with the hope that it will minimize risks and maximize profits.

When it comes to protecting your digital supply chain, you need to spot weak links quickly. Otherwise, your whole operation might be at stake. But spotting weak links might be easier said than done, which is why one of the priorities for companies should be to establish strong cybersecurity due diligence practices prior to vendor procurement.

Check out these facts about procurement

These are some tips to establish better procurement standards:

  • Strengthen your vendor relations
  • Introduce a standard cybersecurity metric
  • Alert your vendors about your cybersecurity standards

Why is pre-procurement important?

As supply networks become increasingly complex, risks grow larger. With that growth, the visibility of supply chain activities becomes all the more distant. Pre-procurement enables companies to source and purchase goods and services only from compliant companies that take the necessary steps to fill every cybersecurity gap and reduce the possibilities of cybercrime.

Solve the fourth-party problem

Let’s say that you’ve identified all of the third parties in your digital supply chain and assessed them using all the tools we’ve shown you. Maybe you might have remediated the risks associated with pre-procurement and doing your due diligence.

Now that you’ve done that, you need to solve one last problem: keeping an eye on your fourth parties.

Simply put, your fourth parties are the subcontractors of your contractors. And while they don’t seem to be your responsibility, once a fourth party has been compromised, it’s just a matter of time until the rest of the pieces of your supply chain fall like dominoes.

Take a look at these ways of protecting your fourth parties:

  • Enforce compliance from every part of your supply chain, from top to bottom
  • Give your contractors a set of rules they need to follow when hiring
  • Advise your contractors to implement cloud solutions

Key Takeaways

Digital supply chain security is now part of a company’s long list of responsibilities.  Consumers, investors, and regulators have made sure of that, which is why organizations are no longer able to pass the buck when their data or systems are affected by threats coming from their third-party technology providers.

Fortunately, if you develop and implement a smart, technology-based digital supply chain risk management strategy, you can now protect your company from these threats — and make your entire digital ecosystem, and your supply chain, safer in the process.

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