Cybersecurity Considerations for Supply Chain Management: How to Keep Your Warehouse Secure

Reduce exploitable weaknesses in your warehouse to keep your supply chain secure

In an increasingly globalized world, Supply Chain Management (SCM) is vital to the delivery of products and services and the overall continuity of the global economy. The value of the SCM market is projected to reach $45.2 billion by 2027, with more and more industries recognizing the importance of integrating the entire flow of information, goods, and services into a hybrid of hardware and software systems.1

As companies begin to undergo digital transformation in response to unprecedented changes like the pandemic, however, some appear to have a blind spot in securing the information and technologies they use in their supply chains. Both by themselves and with the help of cybersecurity service providers, companies must integrate cybersecurity measures into their SCM—thus becoming more comprehensive and proactive in addressing vulnerabilities from procurement and warehousing to sales and distribution.

Cyber risks in supply chain management

Many think that cybersecurity only applies to governments possessing confidential information, or that it only involves the networks and digital assets of companies. But cyberterrorism threats have evolved, as reflected in the increasing number of attacks on supply chain software.2

Driven by an ideological, social, or economic motive, cybercriminals take advantage of unsecured data processing and lists of suppliers and vendors in order to disrupt large distribution networks.

What makes cybersecurity particularly crucial is that cyberattacks or data breaches often remain undetected for months. Such was the case with IT company SolarWinds, where hackers compromised software used by over 18,000 customers, including high-profile companies like Microsoft. The scale and magnitude of this attack points to looming supply chain threats, mostly due to corrupted computer cleanup tools and compromised open source software.3 Some hackers also employ social engineering to steal login credentials and to distribute malware or ransomware via phishing attacks.

Cybersecurity measures for supply chain management

Prevention is always better than cure when it comes to supply chain security. This is because cyber-attacks do not only affect one company but can also spread the threat across networks of vendors and clients. Cybersecurity in SCM thus demands investment in the following areas: reduction of exploitable weaknesses; supply chain risk assessment; and compliance standards.

  • Reduction of exploitable weaknesses

    The oversight in SCM cybersecurity stems from only focusing on information technology (IT), when in fact, cybercriminals can also target operational technology (OT) concerning industrial control, physical access, warehouse management, and the like. Internal threats to data processing and information sharing can also occur when there are no safeguards in place for data backup, or when employees are not comprehensively trained on cybersecurity awareness. Standard IT solutions like anti-virus and firewall software can be complemented with advanced DNS filtering and zero-trust security.

    Meanwhile, the increasing adoption of the internet of things (IoT) in logistics and transport prompts companies to better monitor their facilities and distribution centers. In warehouse management for example, cloud-based pick-to-light systems increase efficiency and productivity with scalable, flexible, and collaborative aspects. User authentication and encryption of sensitive company and client data used in pick-to-light can prevent internal and external actors from intercepting order fulfillment.4 Pick-to-light systems and other IoT components with proper safeguards can help address threats from cyber thieves who launch physical attacks to delay shipment or sell information on real-time order volume to competitors.

  • Supply chain risk assessment and mitigation

    Organizations must take the time to perform internal risk assessments on the devices, software, and systems that they use. They must also assess third-party vendors to identify what the vendor might need in terms of control and monitoring, whether this means upgrading the technology or replacing the supply chain software. Controlling shadow IT purchases can also help manage cyber risks and vulnerabilities; any purchased technology must undergo a standard security check before implementation.

  • Compliance standards

    Companies and their partner suppliers must comply with or even exceed security standards and provisions. Information security standards vary depending on the specific industry or sector, such as PCI-DSS for retail and HIPAA for healthcare. In SCM, it is also crucial to adhere to the NIST cybersecurity framework for vendor assessment and requirements.5 This helps companies maintain standards not only in the acquisition of the final products, but also in the identification of where various components are derived, especially when vendors utilize open source data.

    The contracts must state a clear understanding of data ownership, access, and use, as well as a stakeholder communication process so that all parties can notify supply chain partners regarding any data breach or cyber-attack on their end. If within budget, companies can also implement periodic audits to assess compliance.

Industries can no longer opt out of improving cyber security and resilience, especially in this age of information and technology. Taking a focused and multi-pronged approach to supply chain security allows companies and their partners, suppliers, vendors, and contractors to maximize their assets without fear of losses or breaches.

— Contributed by Raine Journey

Notes:

  1. “Supply Chain Management (SCM) Market Worth $45.2 Billion By 2027.” GlobeNewswire News Room, Aug 29, 2022, https://www.globenewswire.com/en/news-release/2022/08/29/2506106/0/en/Supply-Chain-Management-SCM-Market-Worth-45-2-Billion-By-2027-Report-by-MarketsandMarkets.html.
  2. “Cyber Terrorism: What It Is and How It’s Evolved.” Maryville University, Jan. 20, 2022, https://online.maryville.edu/blog/cyber-terrorism/.
  3. “A Year After the SolarWinds Hack, Supply Chain Threats Still Loom.” Wired, Dec. 8, 2021, https://www.wired.com/story/solarwinds-hack-supply-chain-threats-improvements/.
  4. Voodoo Robotics protects data using state of the art security mechanisms with the same level of encryption that banks use. All communications are encrypted between the parts of the Voodoo Robotics system. Only authorized users can see data relating to customer orders and inventory items.
  5. “Software Security in Supply Chains: Enhanced Vendor Risk Assessments.” National Institute of Standards and Technology, May 5, 2022, https://www.nist.gov/itl/executive-order-14028-improving-nations-cybersecurity/software-security-supply-chains-enhanced.

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