What is the digital supply chain? 2 Definitions
You may have heard the term “digital supply chain management” (SCM) being used to describe an emerging business function. But what exactly is a digital supply chain, and how is one supposed to manage it? Depending on the context in which it’s used, the term “digital supply chain” could have one of two different meanings. The term can either refer to:
- The digital aspects of a physical supply chain
- The chain of technology companies involved in the delivery of digital products
1. Supply chain + digital
In the first definition, “digital supply chain” refers to how the development and implementation of advanced digital technologies (IoT, blockchain, machine learning, artificial intelligence, predictive analytics, etc.) can drive improvements to traditional supply chains.
For example, in McKinsey’s concept of the “next-generation digital supply chain,” supply chain leaders ought to “place sensors in everything, create networks everywhere, automate anything, and analyze everything to significantly improve performance and customer satisfaction.”
Who’s responsible for managing the digital supply chain? Within this definition, the team responsible for digital supply chain management is the same as the team responsible for any supply chain functions (which could be sales, manufacturing, logistics, etc.).
These teams are tasked with finding new ways to accomplish the same goals they’ve always had: improving efficiency and increasing margins. In other words, “digital supply chain management” is really just supply chain management with an added layer of digital technologies. These technologies include:
- Predictive analytics to optimize inventory allocation and forecast demand
- Automated replenishment solutions
- Robotics to speed up assembly or picking
- IoT sensors to gather real-time feedback from manufacturing equipment and vehicles
2. Digital product ecosystem
The second definition — that the digital supply chain is the chain of technology companies involved in the delivery of digital products — originally referred to the supply chains of digital products that initially existed in physical form, such as ebooks and mp3s. This term was coined in a 2001 paper.
Now, the definition has expanded to include the supply chains that help deliver any digital product, such as a website or software platform.
Take an e-commerce website, for example. Its digital supply chain includes the website’s developers, its administrators, the cloud services company that hosts the website’s data, the CMS provider, and the devices that consumers use to access the website. In addition, every third-party technology provider whose code provides functionality to the website — e-commerce plugins, personalized recommendation engines, advanced analytics services, inventory tracking solutions, custom product builder, chatbots, etc. — should also be considered part of the digital supply chain.
Digital supply chain attacks examples
Looking closely at any digital product, whether it’s an e-commerce website, B2B software product, or something else, one can discover the long list of providers upon which the product relies. Viewing this list as a supply chain can help technology companies improve their own security, and can help customers decide whether or not a technology vendor is secure. Below are notable examples in recent years of supply chain attacks that underscore digital supply chain risk:
DDoS attack on Dyn
The 2016 DDoS attack on DNS provider Dyn that took down a large portion of the North American internet (including Spotify, Reddit, and the New York Times) for nearly a day. This is a typical example of a digital supply chain risk. The relationship between Spotify and Dyn is comparable to the relationship between a clothing retailer and a wool supplier — one relies on the other in order to deliver their product.
Ticketmaster breach
In 2018, card skimming malware was added to the Ticketmaster website via a vulnerability in the code of a customer support software company. In other words, a threat was introduced through Ticketmaster’s digital supply chain.
NotPetya
Although supply chain-based attacks have grown tremendously in the past year or two, one of the more notable ones happened in 2017. A Petya ransomware variant called NotPetya was used to target a Ukrainian accounting software package -- using a vulnerability previously exploited in the WannaCry supply chain attack as well as a credential-stealing technique for non-vulnerable machines -- before deploying ransomware.
The malware quickly spread beyond Ukrainian targets, affecting numerous multinational corporations, resulting in extensive financial losses, operational disruptions, and data destruction.
SolarWinds
In 2020, a Russian hacking group infiltrated SolarWinds' Orion platform, injecting malicious code into Orion software updates. That allowed the hackers to gain access to some 18,000 SolarWinds customers, compromising government agencies, technology firms, and other high-profile entities, resulting in unauthorized access and exfiltration of sensitive data.
MOVEit
File transfer solutions are frequent targets of cybercriminals, due to their role in facilitating the exchange of sensitive data across the supply chain. In June 2023, three critical SQL injection vulnerabilities were discovered in Progress Software’s MOVEit Transfer platform, a tool designed to securely transfer sensitive files used by close to 1,700 organizations. Zellis, a UK-based payroll and HR solutions provider, was affected by the MOVEit vulnerability and targeted by the Cl0p ransomware gang.
This attack resulted in unauthorized access to sensitive personal information of both Zellis and its clients. The MOVEit supply chain attack also affected dozens of other organizations, including British Airways, the BBC, and the Minnesota Department of Education, and posed a significant risk to millions of individuals globally.
