9 Supply Chain Security Best Practices
It seems like everyone’s talking about the supply chain. Worse — they’re talking about how it’s never been so disrupted. Supply chain disruptions are up by 46% from the first half of 2021, and experts say we won’t see relief anytime soon.
While no one entity can change the face of the global supply chain, there are changes you can make within your own organization to help shield you from disruption. It starts with heeding supply chain security best practices:
What Is a Supply Chain?
A supply chain encompasses all the processes involving producing goods/services and their ultimate delivery to the end customer. These processes often include multiple enterprises that may directly or indirectly influence the goods/services of different partners, vendors and suppliers.
Ultimately, a supply chain is all about getting customers what they need at the right place, time and price.
What Are the Four Types of Supply Chains?
More specifically, the supply chain can be broken up into four main types: products, facilities, vehicles and routes. Each of these entities must operate in concert to successfully produce goods/services and deliver them to the customer.
- Products: the goods in demand
- Facilities: where products are made, stored, sold and/or consumed
- Vehicles: how products are transported between facilities
- Routes: how vehicles travel between facilities to efficiently move products
What Is Supply Chain Security?
While supply chain security is becoming a more talked-about topic, it lacks a singular definition.
Essentially, supply chain security is all about managing the risks that threaten each part of the supply chain and its participants. For an enterprise, this means identifying, analyzing and figuring out how to mitigate the risks of working with different vendors, suppliers and other service providers.
Supply Chain Security Examples
Supply chain security encompasses both physical security and cybersecurity, with the latter taking on an increasingly bigger role.
For example, threats to physical supply chain security include theft or sabotage. These can be mitigated by running background checks on personnel or requiring vendors to secure shipments with specific guidelines.
On the other hand, threats to supply chain cybersecurity include malware attacks, piracy or maliciously injected backdoors. Organizations can minimize these threats by subscribing to supply chain security best practices.
Importance of Supply Chain Security
Supply chains are becoming increasingly global and, thus, increasingly at risk of attacks.
A supply chain attack is any attack that targets elements of the supply chain with the intent to damage departments, enterprises or even entire industries. These attacks can range from data breaches to ransomware attacks to a host of other malicious activities from bad actors. And the effects of such attacks are dire: For example, the global average cost of a data breach is estimated at $4.35 million.
To carry out a supply chain attack, attackers often target the weakest links in the supply chain. Usually, these are small vendors or open source communities that lack robust cybersecurity postures. Target, for example, infamously suffered an attack that cost $61 million, which began when their air-conditioning supplier was compromised.
While it may seem insignificant, even a single security incident with a small third-party supplier can wreak havoc on the greater supply chain. By comprising just one party, attackers can set off a domino effect to destabilize the greater supply chain.
How to Design a Complete Supply Chain Security Strategy
Without proper supply chain security, organizations risk falling pretty to an attack and suffering delayed deliveries, damaged products, compromised personal data, and even a tarnished reputation, among many other operational and financial consequences.
Creating a complete supply chain security strategy is paramount to staying safe from would-be attackers.
What Is a Supply Chain Security Framework?
To do so, many organizations are turning their attention to supply chain security frameworks, such as the NIST framework. In fact, for federal agencies and contractors, President Biden’s Executive Order on Improving the Nation’s Cybersecurity makes the use of a software supply chain security framework mandatory.
These frameworks are designed to help organizations understand the main pillars of supply chain security so they can identify cybersecurity risks and take steps to mitigate them, as well as prepare for what to do in the event of an attack.
Supply Chain Security Best Practices
While cybersecurity frameworks provide a good overview of general supply chain security requirements, they offer little in the way of a detailed plan for execution.
What organizations need is a guide for a multifaceted approach to supply chain security — but there is no one playbook that can suit the needs of every organization.
Instead, as organizations develop their own approaches to security, leaders should heed supply chain security best practices:
1. Get to Know Your Data
It sounds simple, but it cannot be overlooked: You must understand your own data, i.e., what kind of data your organization stores and how sensitive that data is.
To do this, use discovery and classification tools to locate databases and files in your organization that have sensitive data, like customer data, financial information, health records, etc.
Next, consider the following:
- What data needs to be protected?
- Who has access to this data?
- What security measures are already in place?
2. Conduct a Supply Chain Security Risk Assessment
Just understanding your data isn’t enough. You also need to know your supply chain through, and through so that you can identify possible security risks and take steps to prevent them.
Start by gathering information about your third-party partners. What cybersecurity measures do they have in place? Consider each partner’s vulnerability level, breadth and depth of access to your data, and the effect on your organization if their security is compromised.
Next, assess the software and hardware products that your organization uses. What are their weakest points?
And don’t forget about compliance. Evaluate the existing security governance and consider where your organization may need to pivot.
3. Establish a Detailed Security Program
Supply chain security frameworks are helpful, but they don’t constitute a complete plan of how your organization will handle supply chain security.
Take the time to develop a complete program — and put it in writing.
Create a document that describes all objectives and tasks for your supply chain security posture and outlines all policies, processes, procedures and tools your organization will use. Ensure accountability by assigning specific roles with clear responsibilities.
Again, pay attention to compliance — and not just to your own. Ensure that all your partners understand what standards and requirements they must uphold to access and use your data.
4. Strengthen Your Data Management — Now
Supply chain security management is an ongoing task, but as you get started designing a new program, there are things you can do right away.
For example, you can immediately mitigate some vulnerabilities by updating poor password policies and eliminating default passwords.
It’s also a good idea to conduct penetration testing. By working with penetration test specialists, you can pinpoint vulnerabilities in all applications across your organization and IT infrastructure that pose a grave risk to the greater supply chain.
5. Evaluate Your Third-Party Partners for Risk
As your connections to third-party organizations grow, so do your supply chain security risks.
This means third-party risk management must always be top of mind.
Start by connecting your internal team with your organization’s third-party partners and vendors. Work together to identify major risks, such as a system shutdown or data breach. Then, prepare for the inevitable by discussing the potential damage to your organization if one of these events occur and how you can mitigate the effects.
6. Communicate Continuously with Your Partners
As supply chain security is an ongoing challenge, you’ll need to collaborate closely with your partners.
Throughout the life of your relationship, you must continuously work with your partners to monitor security risks, assess their severity and plan ways to prevent them.
Maintaining regular communications with your partners will go a long way in ensuring that everyone is on the same page when it comes to security.
Consider using service-level agreements (SLA) to make communication clear from the get-go. This will help ensure that all supply chain security requirements are standardized across all third parties, which will help with compliance and also hold teams accountable. Along with all necessary security requirements, an SLA should include the duties of each party, the metrics that will be used to measure compliance and the stipulated fines for each violation.
7. Limit Your Partners’ Access to Your Data
Communicating with your partners is an important component of good supply chain security. But above all, the number one supply chain security rule — Don’t trust your supply chain.
After all, the more people who have access to your data, the harder it is to ensure its security. Limiting all third-party partners’ access to your organization’s sensitive data can reduce the chance of data breaches and other security risks.
To decide where to limit access, start by conducting an audit. Determine which partners have access to what data — and why. Do they really need access to this data? To keep partners’ access streamlined, consider employing the rules of least privilege or adopting zero trust security.
8. Monitor Your Partners’ Activity
The importance of maintaining good communication with your partners can’t be overstated. But supply chain security best practices also recommend continuous activity monitoring for all suppliers, vendors, and other third-party partners. While it may sound obtrusive, monitoring third-party activity is actually a common IT compliance requirement.
By monitoring all external users accessing your organization’s network, you can help prevent bad practices and actors from slipping through the cracks.
Monitoring also proves useful in the event that there is a supply chain attack, as it can help your organization identify where the attack originated so you can take steps to patch up the weak point.
9. Develop an Incident Response Plan
No matter how robustly you prepare your organization’s supply chain security, attacks will happen, and your system will be compromised.
That’s why supply chain security best practices are about more than just prevention — they’re also about preparation.
A key part of your supply chain security program should include an incident response plan. This plan should detail everyone’s roles and all the procedures to follow in the event of a security incident. Make sure you have distinct plans for data breaches, system shutdowns and other security disruptions.
And don’t just write down these procedures. Test them, practice them and ensure that they are ready to be executed.
The supply chain is fragile, making maintaining solid supply chain security a dangerous game.
While you can never be sure to eradicate all threats, following supply chain security best practices will position your organization to prepare for them and mitigate their effects.