The trail of a supply chain is vast with multiple players and parties in between. What if there was a breach of trust that led to the leaking of information or cyber threats sabotage or theft? Businesses cannot completely rule out such possibilities when they have a supply chain. This answers the question “Why is supply chain security important?”
A study predicts that by 2025, approximately 45% of organizations across the globe may fall prey to software supply chain attacks, marking a threefold surge from the figures observed in 2021. This calls for supply chain security. But before implementing it, let’s understand it.
What is Supply Chain Security?
Supply chain security is a part of supply chain management that mitigates potential risks of a company’s vendors, suppliers, logistics and transportation. Supply chain security can effectively identify, analyse and mitigate all risks that arise when companies work with supply chains.
Categories of Supply Chain Security
You can categorise supply chain security into two categories to further understand “why is supply chain security important?” There is physical security- related to products and cybersecurity- associated with software and services.
There is no ‘one-size-fits-all” when it comes to mitigating supply chain cyber security threats. Strategy to mitigate risks includes a combination of risk management principles and cyber defence while also adhering to government protocols. But before getting into details let’s see what is the importance of supply chain security.
Importance of Supply Chain Security
Wondering why is supply chain security important? Businesses must prioritize supply chain security as their systems can suffer compromisation at any time. Vulnerabilities in the supply chain can lead to extra costs, delivery inefficiency and loss of property as well.
- Prevents Extra Costs
It might also lead to lawsuits and extra costs that will bear heavily on the expenses of the company and other parties involved in the supply chain. With the help of security management systems, supply chains can shield themselves from cyber and physical threats.
- Make the Supply Chain More Secure
While you cannot eliminate threats, you can make your supply chain more secure and efficient when it comes to the flow of commodities. This also allows companies to quickly recover from interruption.
- Data Security
One reason for “why is supply chain security important” is the data. Data security is of utmost importance as any breach in data will lead to compromise in their supply chain and even misplacing of items. It provides both physical and cybersecurity.
To understand the importance of supply chain security and risk management, we have to look at its two divisions. Each of them has specific functions to help you understand “why is supply chain security important?”
2 Branches of Supply Chain Security
- Physical Security
The first among supply chain security solutions is physical security. Even up till a few years ago, the supply chain was only about physical security and integrity. Theft, sabotage and terrorism are a few of the threats that this industry still faces from both internal and external sources.
Physical attacks occur due to compromise of shipment details. When information about shipment and regulatory documents leaks, it leaves the entire supply chain compromised.
Solution
Therefore, it is important for vendors to only secure shipments by quality criteria. The company might have multiple vendors to ensure that there is a consistent supply of commodity products.
External auditors or inspectors or auditors might visit the factory to do background checks on employees. Now you know the answer to “Why is supply chain security important?”.
It prevents tampering or theft of data and materials, allows logging of shipments and secures and scrutinizes them before and after shipping. Apart from physical security, cyber security is important as well. Find out why below.
- Cyber Security
Cyber Threats are the new age problems that supply chains have to face due to the increased use of AI-related tools and the internet. Malware assaults and piracy and illegal ERP access, open-source or proprietary software are all examples of cyber threats.
In such cases, cyber chain security largely entails avoiding risks associated with employing software that another company builds and securing organizational data that a third party can access in your supply chain.
Enhancing Supply Chain Security
To establish a secure risk management program, businesses that rely on supply chains must conduct a thorough assessment.
- Firstly, they need to assess the supply chain- scrutinize the key suppliers and investigate their origins. They also need to assess the associated risks with such suppliers.
- Monitoring supplier behavior allows them to monitor irregularities. It also allows companies to see potential areas of red flags and deploy supply management risk tools as a necessity.
- Another reason that answers “Why is supply chain security important?”- is its ability to review the physical security and the supplier sites. It helps to mitigate theft or breaches.
- Implementing software and hardware security measures and educating employees on how to use them, mitigates the risk of the companies getting cybersecurity threats.
Therefore, vigilance and proactive risk management are the backbone of supply chain security. To ensure this process of supply chain risk has proper resolutions, companies need to follow a few steps. Below are a few steps that answer “Why is supply chain security important?”
5 Steps to Improve Supply Chain Security
Organizations can undertake several tactics to improve their supply chain security. Here are a few suggestions that will help them to strengthen their security level.
- Establish a Risk Management Network
A risk management network aids businesses in complying with data protection regulations. It also mitigates any risk of data privacy breaches. Through audits, background checks, and security assessments, identification and assessment of potential threats, companies set minimum requirements for accredited vendors and suppliers.
- Encrypt Data and Devices
Companies should use tools and devices that have end-to-end encryption. This does not allow a third party to gain access to the supply chain information as it could otherwise lead to fraudulent activities and theft.
Usually, devices are on the cloud and have multi-factor authentication to ensure sufficient protection of their data. Apart from that strong password policies, biometric verification, secure VPN access and regular updates and patching also protect them from threats.
- Implement Security Controls
In addition to encryption, you will learn “why is supply chain security important?”- as hackers can exploit digital loopholes.
A highly effective approach for pinpointing vulnerabilities and obtaining comprehensive guidance is to engage professional third-party penetration testing services or consider 24/7 managed network threat detection solutions.
This empowers businesses to establish protocols for incident identification, containment, and investigation.
Apart from installing all possible security measures, the people in charge of the systems must know how to use them. Otherwise, how can you ensure security for the supply chain without the operations of humans?
- Training Employees
Employees must have adequate security training protocols. They must know how to identify and report suspicious activities. Training can help them to understand and identify malicious activities and be aware when they do occur.
Training also helps to raise awareness on how to protect the data. By protecting the organisation and client data, companies can ensure optimum safeguarding of the supply chain.
Through this process, companies can ensure that only qualified or accredited employees can access data and systems at higher permission levels. This limits the chances of the data falling into the “wrong” hands. Apart from employees, businesses should also keep an eye on their suppliers.
- Collaboration with Suppliers
So, why is supply chain security important when it comes to suppliers? Employing various suppliers to source materials might lead to a leak of information that can compromise the business. Therefore, it is imperative to ensure that the business can trust the suppliers.
They can do so by exercising transparency. It involves sharing information with the company regarding possible threat detections and suspicious activities, so they can have adequate protection and preparation in case of any leaks so they can effectively mitigate them.
FAQs: Understanding Why is Supply Chain Security Important
What is supply chain security?
Supply chain security involves protecting a company’s products, information and operations within its supply chain from risks and threats. This ensures integrity, reliability and safety of the entire process.
How do you protect your supply chain?
Some of the ways to protect your supply chain are by implementing cybersecurity measures and conducting regular risk assessments, fostering transparency and vetting vendors and creating contingency plans to mitigate disruptions and enhance security measures.
Why is supply chain management important?
Supply chain management is crucial for optimizing efficiency, reducing costs, ensuring product quality, meeting customer demands, and mitigating risks. It enhances competitiveness and drives business success.
Is supply chain security a multi-disciplinary problem?
Yes, it is a multi-disciplinary problem. Keeping supply chains secure involves teamwork among different parts of a company, like business, customer support, and IT. This teamwork can be tough due to various challenges.
Is your supply chain at risk?
Can you say that your supply chain is risk-free? Your supply chain faces many threats like economic security and IT threats. There are also risks of bankruptcy or recession. To assess such risks you need expert supply chain management to review such risks and offer effective and long-term solutions.
Conclusion
To give a concise answer to the question- why is supply chain security important?-it is crucial as it prevents breaches, ensures reliability, and safeguards against threats.
With the rise in software supply chain attacks, maintaining supply chain security is essential. It involves physical and cybersecurity measures to protect data and materials. Through risk management solutions from Qodenext, companies can establish a robust defense, ensuring smooth operations, and maintaining customer trust.
