A clear disconnect between Suppliers and Manufactures indicates a critical breach point that must be addressed
Over the last several years, we have seen “cybersecurity” climb to the top of the list of major risks faced by heads of Supply Chain at manufacturing companies. In our most recent survey of Chief Supply Chain Officers, it was the #1 risk in the short term, (48% of the respondents said it was a “high risk concern”) and it likewise was the #1 risk in the long term (41% at “high risk concern.”)
Cybersecurity for the Supply Chain exists as a complex and fragmented problem. There is not even universal agreement that the term “cyber” adequately captures the combinations of virtual and physical threats to the modern Supply Chain. In our recent research note
(Available to Gartner Supply Chain members)
we offer a comprehensive new framework for approaching these threats through the holistic lens of “Digital Security,” which looks across a Supply Chain’s Data and IT, Operations, and Product capabilities. In this research we examine the nature of the threats, identify the major challenges with instituting a Digital Security approach, examine where SC leaders are focused right now, highlight some of the tools being used, and lay out a timeline that Supply Chain leaders are following as they look to protect their supply networks from malice, upstream and downstream.
Of the challenges we discuss in the note, our research highlights a particular worry amongst manufacturers, focused squarely on their supplier base. As they instill more rigor to their product security, they told us that they are struggling with the change management involved, specifically with their suppliers. They indicated in our interviews that the Digital Security risk was not taking priority with these partners, which was leaving them feeling exposed to not only data leaks (cost, parts detail, IP) – but, more increasingly, the actual code itself that is embedded in the componentry these suppliers provide.
A just-released survey from 3M puts a resounding exclamation point on this disconnect.
In this survey “cybersecurity” was defined as the absolute bottom risk facing their business, from the suppliers’ point of view. As the study says, “Despite the recent prevalence of headline-making security leaks and breaches, cybersecurity did not resonate as a major concern for suppliers, a potential oversight that could have far-reaching implications for the supply chain.”
Indeed. As 2017 proved, the Supply Chain Digital Security risk is real. We witnessed actual Supply Chain operations come to a screeching halt. We must close this gap with our suppliers, with the stakes so high: disruption of the actual operation of the Supply Chain, with the associated rise in costs and reduction of service levels, can devastate a company’s financial results. Additional downside includes significant damage to brand and reputation, product safety and integrity issues, privacy violations, trade and compliance implications, loss or theft of intellectual property, and substantial fines and fees. With numerous exposure points along the lines of data and IT, operations, and product, suppliers must join manufactures (now!) to combat the Digital Security risk.