Data security issues have become a new frontier for supply chain disruptions in 2024. While much of the recent discussion around supply chain volatility has focused on international conflict, disturbances in key shipping lanes and ongoing trade tensions, those who work in international logistics have started to sound the alarm on the scale of cyber threats for supply chains.
Data disturbances and risk aversion
It is easy to see why supply chain managers are so concerned. The modern supply chain ecosystem thrives on data exchange between trading partners. But the exchange of important and often sensitive data between disparate systems and different trading partners leads to risk. What’s more, in today’s supply chain ecosystem the use of IT systems to optimise delivery is all but a given. However, this means when things do go wrong businesses are uniquely exposed to IT outages or data breaches. The CrowdStrike outage, to take a recent example, had a ripple effect across global supply chains, causing many companies’ operations coming to a near standstill.
However, technological backsliding or a retreat from the use of cutting-edge technology in supply chain ecosystems should not be the lesson taken from the increased prevalence of cyber threats.
Data sharing and collaboration do not come with data security issues by necessity. The important thing is for businesses to take a more considered approach when integrating data sharing technology into their supply chain operations.
The case against technological backsliding
To understand why technological retreat is far from the optimal strategy for companies worried about data breaches and cyber threats in their supply chain ecosystems, we need a better sense of the problems at hand.
Most companies are understandably wary of exposing sensitive data like intellectual property, pricing strategies, or production details through a data exchange platform. And this sort of anxiety does not stop with data exchange platforms.
To take another example, the recent experiences of many OEMs and LSPs with Transportation Management Systems (TMS) and visibility platforms have eroded trust. These solutions, intended to enhance collaboration, have in many instances collected information and data without explicit approval. Some organisations end up using this data, even if anonymised, for purposes beyond the original scope of the agreement, or even sold to third parties. This raises critical questions about data ownership and transparency within the supply chain ecosystem.
Clearly, hesitation surrounding data security is a valid concern for supply chain managers and the natural reaction might be to retreat from using any platform, building data fortresses to insulate from risk.
This would be a mistake, however. Limiting data sharing hinders collaboration and reduces flexibility within supply chains. Without good data on the status of each linkage within a supply chain ecosystem, companies and their trading partners are running blind. This means that if data security issues do arise, they are even harder to diagnose and deal with. The key, therefore, lies in finding the right balance between data security and collaboration.
Setting up secure supply chain ecosystems
At its most basic level, a data exchange network with enhanced security features improves cyber security compared to traditional visibility platforms, offering robust security protocols, access controls, and audit trails. It is worth going the extra mile when integrating these processes. However, securing the data exchange network is just one piece of the puzzle for supply chain managers.
A truly secure supply chain ecosystem requires a multi-layered approach. Ultimately, building trust through transparency is key. Companies need to understand how their data is being used and protected within the supply chain ecosystem. And IT systems that have interoperability at their core are central to that objective.
Interoperability for supply chains means secure and seamless communication and data sharing between different systems applications and trading partners, technologies, and organisations. This reduces bottlenecks and provides the sort of data that stakeholders or security partners need to respond to issues in real time. What’s more, it enables the integration of diverse security protocols, ensuring that organisations can more consistently protect their data (and that of their partners) as it moves through various stages of the supply chain. Interoperability also facilitates collaboration and trust between trading partners by standardising data security practices, minimising vulnerabilities caused by isolated or incompatible systems. Ultimately, it strengthens the overall resilience of supply chain ecosystems, making them more agile and better equipped to mitigate risks.
As always, there’s no silver bullet
Of course, it is important to remember that interoperable systems are not a silver bullet against cyber threats and that a multi-layered security framework remains essential.
However, supply chain managers need to reach a stage where they are confident in that technology that their systems are using. This is key to avoid technological backsliding and less efficient supply chain ecosystems, but also to ensure systems are secure in the face of modern cyber threats.
- Digital Supply Chain
- Risk & Resilience
