China-Linked Hackers Cyberattack
The Wall Street Journal reported that China-linked hackers breached U.S. internet providers. This hacking campaign termed Salt Typhoon is the latest attack into valuable computer networks. Recently, U.S. officials disrupted an attack from China hackers of a network of more than 200,000 routers, cameras, and other internet-connected consumer devices. More concerningly, earlier in the year, the U.S. disrupted another China-linked campaign to infiltrate critical U.S. infrastructure.
Cyberattacks are serious business. As our supply chains are interconnected with ERP systems and related technologies such as devices connected to the internet of things, vulnerabilities are highlighted.
Supply Chain Vulnerabilities
Manufacturers must get on top of their end-to-end supply chain. You are only as strong as your weakest link in your supply chain. If your weakest link is a bad actor, there is clear trouble. On the other hand, most of the time, your weakest link won’t be a bad actor. Instead, they can let bad actors into the equation through their weak defenses. Your links can be suppliers, suppliers’ suppliers, outside manufacturers/ contract manufacturers, outside processing suppliers, 3PL/ 4PL partners, transportation providers, trusted advisors, etc. It can easily be a house of cards.
In talking on the Lou Desmond radio show with guest host, John Tulac, we had an engaging yet concerning discussion on the state of risk in the supply chain and its impacts. Check out the 10/17 show here. Executives must be concerned about how well they know their suppliers’ suppliers, related security protocols, the countries their suppliers are producing in, and key chokepoints and potential chokepoints in the end-to-end supply chain. The bottom line is the need for an immediate assessment of their supply chain
What to Do: Path Forward Supply Chain Vulnerabilities
Most manufacturers are overloaded just getting by and dealing with customer and supplier volatility, focusing on their people, investing in the business, designing and developing new products, upgrading their processes etc. However, that will no longer suffice. We must step up our game to mitigate these vulnerabilities while maintaining a razor-focus on profitable growth.
Start by assessing your supply chain. Dig into your supply chain partners, and identify your risks. Prioritize your risks and assess the impact. This will give you a starting point to determine focus.
There is little doubt that smart money is on taking control of your supply chain. For example, according to an INVERTO Nearshoring Study, 90% of the participants see nearshoring and reshoring as key ways to safeguard their supply chains. Proactive clients are expanding manufacturing facilities, improving processes and their use of technology to increase output to scale profitability, formalizing partnerships with key suppliers, ensuring contracts are in place to protect their supply chain, and pursuing vertical integration.
For example, a lighting manufacturer vertically integrated almost every aspect of their production process with the intent to beat the competition with flexibility and quick turnaround lead times. What they purchased, they purchased from a U.S. manufacturer and kept tight control over the process. Their strategy was successful as they increased their market share with their responsiveness with an engineer-to-order product to become #1 in the industry.
Another critical strategy clients are pursuing that better predicts customer demand, allows them to stay ahead of changing conditions in their supply chain, and ensures that they better plan and monitor their manufacturing operations and end-to-end supply chain is rolling out a SIOP (Sales Inventory Operations Planning) process. SIOP keeps a weekly and monthly focus on demand, supply, and associated risks and costs.
For example, an industrial equipment manufacturer rolled out a SIOP program to better predict revenue. Although that was an important goal to navigate board meetings and ensure sustainable sales growth, it also allowed them to proactively address supply chain issues. When Russia invaded Ukraine, they could quickly assess the impact and spring into action. They put together formal agreements to purchase a critical material and pursued the appropriate sourcing and supplier actions to secure stable supply at a reasonable cost to support growth plans. To learn more about how to roll out the process, read our book, SIOP: Creating Predictable Revenue and EBITDA Growth.
We discuss supply chain vulnerabilities and risks in depth in our special report on how to craft tomorrow’s supply chain today. Download your complimentary copy, and please share your feedback and insights. There has never been a better time to stay on top of what’s going on in the world, your largest risks, and strategies to overcome these issues.
If you are interested in reading more on this topic:
Medical Supply Chain Optimization: The Solution to Non-Stop Disruptions