Why Is Supply Chain Security Important

Supply chain security should be a focus for businesses across all sectors. But what is it, and why is it so important?

Supply chain security is an integral part of your supply chain management. Since 2019, supply chains have become increasingly unstable, with the Office for National Statistics’ (ONS’) Quarterly Stocks Survey finding fluctuations in inventories throughout the UK and across sectors

When businesses can not rely on their usual supplier relationships or processes, they open themselves up to potential breaches within their chain security. It seems more important than ever to ensure that supply chain security is in place and that organisations have a robust strategy for minimising supply chain attacks.

What Is Supply Chain Security?

Supply chain security refers to the business processes to minimise supply chain security concerns. They may improve security management systems around handling data protection or mitigate physical threats throughout the supply chain. Supply chain security is crucial as it reduces risks to both internal and external sources across supply chains or value chains, such as terrorism, piracy and theft.

What Are Some Examples of Supply Chain Security?

In the construction and manufacturing sector, supply chain security may include:

• Risk assessments and risk management
• Contractor and supplier (i.e., third parties) prequalification 
• Fraud and bribery protection
• Information security
• Trust, transparency, and provenance of supplies/raw materials

Construction and manufacturing supply chains are particularly vulnerable to risks associated with third parties. This is where prequalification schemes such as the Common Assessment Standard come in, providing a uniform set of compliance standards contractors can demonstrate certification against. 

Why is supply chain security important?

Supply chain security prevents disruptions that lead to lost business or a loss of value to a company. There are consequences of varying degrees due to supply chain attacks. The most common ones in the construction and manufacturing sectors are:

• Stolen data breaches/data loss, leading to GDPR violations
• Compromised quality management protocols
• Construction project delays
• Loss of stakeholder trust
• Theft, fraud and bribery
• Poorly manufactured goods
• Delayed delivery of raw materials

The Best Practice For Supply Chain Security

If a business feels it may benefit from increased supply chain security, some guidance provided by the National Cyber Security Centre applies to online and offline supply chains and is also outlined below. 

1. Understand The Risks

The first step to implementing best practice supply chain security is understanding the risks and where they lie within a supply chain. Consider any sensitive data or contracts and the value of information or assets.

Organisations should also outline their suppliers and ask them their current security arrangements. For example, software that handles sensitive data should provide certification proving the correct security. A physical supplier may employ supply chain security to protect physical assets at a particular point in its journey.

Once the suppliers and their security vulnerabilities are understood, many organisations may wish to conduct a risk assessment that outlines potential breaches and what they can do to avoid them.

2. Establish Control

If a business finds that a particular supplier is constantly letting them down, there are several steps they should take:

• Firstly, identify whether you can employ some similar external suppliers or contractors to reduce reliance on a single source.
• Secondly, an organisation should communicate their security concerns and needs across the supply chain. This may include documenting criteria for any third party supplier, ensuring they are aware of any limitations and minimum security requirements. This may include things like sub-contracting, particular freight routes or particular checks that must be in place.

These requirements may differ depending on the supplier and where they are within the supply chain. Evidence may be required from all parties involved that minimum requirements have been met.

This may not be possible for some suppliers, but you may maintain supplier relationships by providing support and training where necessary. It is also good practice for a business to adhere to their processes and make them as simple to follow as possible — ensuring clear communication channels and that any documentation is sent out regularly.

3. Check Arrangements

This part of the process is based on maintaining a business’s good practices across the supply chain. At this point, we will have identified any non-compliance by vendors. Companies may have adjusted their supply chain security to either accommodate those suppliers or have found new partners to work with.

It’s vital to implement contracts with these partners and build any security processes into the contract, along with “the right to audit”. These procedures may be cyber security like software or certification requirements or a particular process to protect products and services.

Establishing key performance indicators across supply chains encourages good behaviours in suppliers, leading to reduced cyber threats and physical threats, improving overall physical security in offline supply chains.

4. Continuous Improvement

Any smart organisation should have supply chain security that’s constantly evolving. Just as a business changes, the risk management of a supply chain will change along with it. A further risk assessment should take place each time something changes in a business’s supply chain and include close collaboration with the vendors involved.

By working closely with suppliers, companies can understand any limitations that a supplier encounters and make allowances within their timelines for adjustments. You should clearly communicate timelines along with any concerns. The better the lines of communication are, the more likely companies and suppliers will work together to improve security. This may require flexibility in some cases. Communicating regularly will build trust and understanding of the expectations at each step of supply chain security.

If an organisation values the safe arrival of goods, the protection of products and services and ensuring that customers’ data is secure, then supply chain security is essential. This begins with supply chain management, a hugely valuable service for maximising the efficiency and ROI of a supply chain.