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Editor’s Choice: Fortifying Warehouse and Distribution Centers Against Cyberattacks

By November 30, 2023Uncategorized

Note: Today’s post is part of our “Editor’s Choice” series where we highlight recent posts published by our sponsors that provide supply chain insights and advice. This article is from Patrick Byers, DevOps Engineer at Lucas Systems, and looks at fortifying warehouse and distribution centers against cybersecurity attacks.

The warehousing and distribution industry is highly reliant on technology for its operations. As such, it is vulnerable to devastating cyberattacks. Cybercriminals are increasingly targeting this growing sector due to the large amounts of data stored in these systems and their potential value. This article will explore some of the key impacts of cyberattacks in the warehouse and distribution industry, as well as strategies businesses can employ to protect themselves from these threats.

Why are warehouses and DCs so vulnerable to cyberattacks?

In today’s interconnected world, the distribution industry has become increasingly complex and reliant on technology to manage inventory, track shipments, and communicate with suppliers and customers. This dependence on technology also makes the industry vulnerable to cyberattacks, which can disrupt operations, compromise sensitive data, and cause financial losses.

One of the primary reasons for this high-level of vulnerability to cyberattacks is the sheer number of interconnected systems and third-party vendors involved in the entire distribution process. Warehouse and DC operations can involve hundreds of suppliers, manufacturers, and logistics providers, each with their own network and security protocols. Any weak link in this chain can be exploited by cybercriminals, who can use malware, phishing scams, or other tactics to gain access to sensitive data or disrupt operations.

The rise of the Internet of Things (IoT) and other connected devices has created new opportunities for cyberattacks. These devices can sometimes be poorly secured, making them easy targets for hackers who can use them to gain access to other systems or launch attacks. For example, the rise of RaaS (Robots as a Service) within the warehouse means that 3rd party devices (robots) are integrated into your environment and actively streaming your data while actually owned and maintained by an outside party.

Additionally, the global nature of supply chains means that companies are increasingly exposed to cyber threats from overseas. Many suppliers and manufacturers have operations in countries with weaker cybersecurity laws and regulations, making it easier for cybercriminals to exploit vulnerabilities and steal data from links across the supply chain, including warehouses and DCs.

What are the true costs of a cyberattack?

The financial cost associated with recovering from an attack can be immense, climbing into the millions of dollars including costs related to restoring systems or replacing lost technical infrastructure or data. Companies may also suffer losses due to downtime caused by an attack, resulting in disruption to operations and delays in shipments. These side effects of an attack could lead to customer dissatisfaction and reduced profits. Furthermore, companies may incur fines or legal fees if they fail to comply with regulations related to data protection following a breach.

A 2020 cyberattack at TFI International, one of the largest trucking and logistics companies in North America, forced them to resort to manually sorting. It ended up costing TFI about $6 million in quarterly operating revenue.

In another case, CMA CGM, one of the global leaders in cargo shipping, ultimately disabled its entire core IT systems in response to a cyberattack. Most of the disruption happened within e-commerce operations. Some functions were down for two weeks, but the impacts reflected the global scope of the company. CMA CGM disclosed that the cost of the attack was up to $50 million.

If customers become aware that their data has been compromised through a security breach, they may choose to take their business elsewhere out of fear that their information could be at risk again in future transactions. This loss of trust in your company’s ability to provide secure services and effectively manage confidential information could clearly result in real costs via loss of customers or additional friction when gaining new ones.

Keep in mind as well the cost (or loss) of cyber-security insurance if you have a breach or do not have a solid security posture. Many customers will not do business with you if you do not have cybersecurity insurance or do not have a certain level of coverage.

To read the full article, click HERE.

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