In today’s digitally connected world, a majority of global economic activity is serviced electronically. With impacts on the logistics industry, digitalisation has affected how businesses, such as small and medium-sized enterprises (SMEs), view mobility and the movement of goods from point A to point B.
While this digital shift of the logistics industry is able to bring about a multitude of benefits, it also brings along a barrage of available data and a rising number of cyber threats. In increasing the agility of the supply chain experience, more personal and commercial data are stored digitally, thus allowing for greater vulnerability to cyber attacks. This, in turn, affects both the security of individuals and the integrity of SMEs and their logistics operations.
What are some of the common challenges awaiting SMEs in the digital logistics era and how can SMEs better address security in the supply chain?
On its own, the supply chain is a complex ecosystem involving a multitude of players from production, distribution and eventual last mile delivery. As the industry continues to embrace the usage of digital sensors in shipping vessels and smart warehouses, we will see an increase in intelligent supply networks and the number of data touchpoints through the digital supply chain.
In the context of meeting changing demands, logistics data solutions can provide SMEs with information on their shipments in real time, from where the shipment is located, to any potential delays. Data analytics can also help SMEs gain better market visibility, streamline resources and optimise productivity.
During a time of growing cyber attacks and the COVID-19 pandemic, maintaining business continuity through intelligent data insights has become even more pertinent for SMEs. This is especially so as many are now dealing with disrupted supply chains, frustrated customers and rising costs.
Data-driven supply chains powered by predictive analytics, Artificial Intelligence and the Internet of Things could mitigate efficiency gaps and allow SMEs to establish smarter, leaner and more agile logistics networks.
While the rise of online logistics management platforms and e-invoices have benefited the supply chain by simplifying and speeding up communication, it has also increased the vulnerability of sensitive information to cybercrime.
Research has shown that cybercrime could place the logistics industry at risk of accumulating damages amounting to S$9 billion this year.
Embedding cybersecurity into every step of the digital transformation process is imperative for SMEs, especially those looking to embrace a modern logistics system as part of their critical infrastructure.
If the goal is to set up feature-rich digital touchpoints to improve business partners’ and customers’ experiences, then these touchpoints need to have security built in throughout the platform’s life cycle.
If the goal is to become more data-driven, SMEs need to have a think about data storage, security management and information flow across the organisation and amongst their third-party network.
Additionally, even with the most advanced data security systems, individuals with inadequate knowledge of cyber threats could inadvertently cause lapses in an organisation’s cybersecurity defences.
Phishing emails and security shortcuts, for instance, can make even the most secure supply chain a prime target for cybercriminals. Training programmes to equip staff with proper cybersecurity hygiene are essential when operating a modern supply chain.
SMEs in Singapore are subject to data compliance regulations and over the last few years, the government has been introducing guidelines and initiatives for SMEs to implement best practice frameworks to protect both business and customer data.
To better prevent hackers from accessing critical data, SME owners must ensure that third-party service providers, such as logistics vendors, are in agreement about what data is available, who has access to it and how it will be used.
For example, if a logistics vendor requires access to customer data to process shipping faster, both parties should take precautions to ensure that data systems are robustly protected against malicious software.
SMEs can also outline their expectations for security controls within vendor contracts to ensure that selected providers meet a high level of security standards. For example, the contract can mandate that the appointed logistics partner reflect business continuity plans by stress testing logistics procedures periodically.
In addition, be sure to back up company databases regularly. This ensures that important data is saved in the event of a cyber attack.
Many SMEs believe that working with a third-party logistics company (i.e. 3PL) could incur high costs for the company, but that may not always be the case. By leveraging the services of specialised logistics partners, SMEs could stand to secure optimal delivery rates and efficient warehousing services.
More importantly, 3PLs possess the necessary visibility and collaboration tools to help SMEs digitalise and safely protect their supply chains.
A recent study found that more than half of 3PLs (58 per cent) are investing in predictive analytics, while the rest of 3PLs viewed data protection as a growing “must-have” for customers. Such changes in 3PLs’ strategies offer SMEs a leg up when building a competitive supply chain that takes into account cybersecurity and data protection risks.
Furthermore, SMEs will be able to tap on the integrated technology platforms used by these 3PLs, thus exposing them to a wide range of services, from specialised logistics to business intelligence insights.
This helps SMEs reap the benefits of a digitalised supply chain without costly capital investments. Going a step further, such technology platforms also boast robust cyber defences, affording an additional peace of mind for companies looking to protect their logistics network.
This article originally appeared in the Entrepreneur's Digest print edition #92 and has been edited for clarity, brevity and for the relevance of this website.
About the Author
Shawn Chen | Commercial Director, Asia & Regional Director, Southeast Asia | C.H. Robinson
In his role at C.H. Robinson, Shawn Chen is responsible for overseeing the Southeast Asia offices of C.H. Robinson. Shawn also focuses on the development and training of C.H. Robinson’s client acquisition and retention process across North and Southeast Asia. With more than 16 years of experience in the company, Shawn has worked in the United States and Hong Kong, leading sales and business development efforts. Previously, Shawn worked in the heavy industrial sector. He has a Bachelor’s degree in International business and Spanish language studies.