Digital Supply Chain – the hype and the risks | KPMG | LU

Digital Supply Chain – the hype and the risks

Digital Supply Chain – the hype and the risks

While every business wants to harness the speed to market that new supply chain technology can offer, they are also opening themselves up to malicious cyber-attack if they don’t take the right precautions.

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Customers of today are connected, informed and empowered, and continually demand more choice of product, greater flexibility in delivery options and faster service from the businesses that they deal with. These expectations, combined with rapidly changing business models and channels to market, are putting previously unseen pressure on supply chains to be agile, flexible and adaptable to customer demand signals. As a result, organisations are making significant supply chain technology investments but are they secure?

The hype

Some of the most hyped supply chain technology enabled improvements include:

  • Robotics – enabling personalised and customised order, returns and claim management with Chat bots and optimising warehouse flow and processes
  • Auto replenishment to home – consumers no longer need to keep a shopping list and trudge through the supermarket for pantry staples
  • Facial recognition technology – designing meals for consumers based on previous orders and the consumers’ perceived mood
  • Driverless vehicles, drones and on-board technology – GPS and track and trace devices are optimising transport routes to reduce congestion and enabling major efficiencies for the economics of last-mile delivery.
  • Smart labels, QR codes and blockchain technology – enabling consumers to scan products and harness specific information to better understand product provenance and supply chain performance.

The risks

Cyber criminals and hackers are always looking for the easiest route into an organisation’s systems and data. The shortest way is often not through the front door, but through the ‘weaker links’ that make up a digitally enabled supply chain.

Organisations that understand and manage the breadth of their interconnected supply chains and their points of vulnerability and weaknesses are better placed to prevent and manage issues. Key issues include:

  • trust is regularly handed over to third party providers without proper due diligence, risk assessment or examination of controls
  • customer expectations of companies to demonstrate compliance with security standards are rising
  • machinery and equipment which is reliant on old, legacy technology can be difficult to secure.

Importantly as of the 22 February 2018 there will be increased legislative requirements for organisations to report data breaches. The Privacy Amendment (Notifiable Data Breaches) Act 2017 established a Notifiable Data Breaches (NDB) scheme in Australia. From 22 February 2018, data breach notification will become mandatory for all entities required to comply with the Australian Privacy Act. By some estimates 44 percent of Australian business are not fully prepared for these changes.

Key learnings

  1. Effective cyber security needs a holistic approach
  2. Board level buy in is critical
  3. Prioritise budgets to ‘Protect what Matters’
  4. Collaboration with industry peers is key
  5. Use experts.

© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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