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Transparent supply chains: IT security moves into focus

by Editorial Office

Those who manage complex supply chains must keep an eye on all ongoing activities. The use of digital technologies promises transparency in real time – the vision of the transparent supply chain is close at hand. However, maximizing digital interconnections also increases the risk of cyber attacks. Transparency and IT security should therefore go hand in hand – a fact that is also confirmed by the Hermes barometer “Transparency in the supply chain”.

Tracking freight as well as information about the current whereabouts or the estimated time of arrival are important success factors of a well-founded supply chain management. With the increasing digitization of supply networks, forecasts are also becoming more accurate.

After all, modern algorithms draw increasingly accurate conclusions from a wealth of data and enable companies to achieve supply chain transparency in real time. For example, Big Data and Artificial Intelligence (AI) can be used to predict freight arrival times so that delays no longer necessarily lead to long waits at loading docks or disrupt production chains, causing unnecessary additional costs.

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Smart Logistics: The “Digital Champions” lead the way

Improving ETA forecasts is just one example of many. Digital technologies and AI are regarded as the key to greater efficiency, customer focus and sustainability throughout the supply chain.

This is also confirmed by the current PwC study “Connected and autonomous supply chain ecosystems 2025”. According to the study, 82 percent of the digital champions, meaning leading companies when it comes to digital transformation, have already implemented intelligent logistics systems. As a result, they have managed to save an average of 6.8 percent of costs annually. “Fifty percent of supply chain cost savings are due to smart logistics,” the experts claim. Also noteworthy: Supply chain transparency is considered a “top priority” for every other digital champion.

More transparency? Every other company has security concerns

Especially in the Corona crisis year 2020, the relevance of the “transparency in the supply chain” has once again increased significantly. According to the 13th Hermes Barometer, a survey among 200 logistics decision-makers in Germany, every other company confirms this trend. In addition, three quarters of the decision-makers surveyed believe that digital technologies are crucial to having a resilient supply chain in the event of future crises. Digitization in the industry is, in fact, advancing. However, innovative technologies such as blockchain or AI are currently used by only 10 percent of the companies surveyed. Alas, what is holding logistics decision-makers back on their way to a transparent supply chain? No less than 46 percent of respondents express security concerns. They are reluctant to share data with their partners.

Cyberattacks increasing worldwide

This concern is not entirely unjustified, as cyberattacks on supply networks are increasing with the rising level of digitization. The Allianz Risk Barometer 2020 even sees cyber incidents as the most important business risk for companies worldwide. And often, it is not only the company’s own supply chain that provides a target for criminals; poorly protected IT infrastructures of networked partner companies or suppliers can also become a gateway for cybercriminals. The endpoints of the Internet of Things (IoT), for example, are proving to be particularly vulnerable. According to expert reports, IoT-based cyberattacks are increasing dramatically.

IT security requirements for suppliers and partner companies

Logistics decision-makers are faced with a difficult task: on the one hand, they need to digitize the supply chain, make it more transparent and thus as crisis-proof as possible – on the other, this is precisely where new risks arise. They can only be contained if IT security is taken into account in all decisions from the very beginning – even beyond the scope of the company itself.

Systematic cyber supply chain risk management therefore includes not least the careful selection of business partners according to IT security criteria. International standards such as ISO/IEC 27036:2013+ have already addressed the issue and deal with basic IT security requirements for suppliers. The standards and best practices described offer a good starting point for improving the cybersecurity of one’s own supply chain.

The market is also seeing an increase in professional solutions designed to help create transparency and at the same time implement resource-efficient security concepts. However, a one-time investment is usually not enough, as systems must be kept permanently up to date in order to provide effective protection.

Nevertheless, even small steps can close IT security gaps: The use of shared SCM software, for example, which allows access rights to be defined and data to be shared securely, facilitates communication with suppliers and creates trust in the exchange of sensitive information: This is an important requirement for driving forward the interconnection of the supply chain to the benefit of all parties involved.

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