Blockchain Protects Third-Party Providers from Supply Chain Attacks

  • Supply chain attacks are growing substantially as the movement of products is usually in a vulnerable state, with multiple outsiders having access to data.
  • This results in attackers exploiting the third-party software to gain access to sensitive data or injecting malware to cripple the entire system.
  • Blockchain, with its real-time traceability, provenance, immutability, and decentralized ledger, can be a very useful solution in this territory.

Supply chain attacks are notoriously plaguing various industries, as most of them currently rely on third-party providers prone to security breaches. This is risky because it means trusting a single party with the company’s manufactured goods and services. There has been a never-seen-before record increase in hacks of industrial products while on the logistic pathway. Blockchain provides an excellent solution in this case- a decentralized system that is secure, traceable, tamper-proof and highly efficient.

An attack on a single service provider leads to losses for several client companies, which in turn has implications for stakeholders across the board. Furthermore, the intertwined nature of the supply chain between multiple sectors makes losses adversely affect many industries linked to the product.

Hence, neglecting supply chain security puts not just one company but the entire system at unprecedented risk. A secure, hack-proof process entrusted with the distribution and transfer of products across multiple channels is paramount to the profitability of economies.

What is a Supply Chain Attack and the Existing System?

The transport of a company’s products or elements of the finished product may be facilitated by physical deeds or with the assistance of digital means. In either case, the company may involve its players or third-party providers to facilitate the service. There is a risk factor attached to the site of motion, as it has become quite fragmented and digitized. It is a weak link as it enables more outside parties and service providers to access the system and data.

Malicious parties may identify them and try to take advantage of their vulnerability.

A supply chain attack occurs at the sites of vendors, suppliers or logistics partners. They may infiltrate the system either by obfuscating the network, committing plain data theft, or infecting the software with malicious bugs. 

They may gain access to sensitive information, lead to substandard delivery, operational downtime, or introduce malware for long-term destruction. Sometimes, it could even put the company at risk of legal complications due to compliance issues, leaving an immense blot on the suppliers’ reputation.

The traceability of the source of corruption is very difficult, given that the products and various elements change custody numerous times. The product’s organization will ensure the security of its systems, but there’s a natural leniency when it comes to outside suppliers maintaining the security of their custodial systems. These could be a software vendor, a cloud provider, a network facilitator or a warehousing and inventory partner.

Recent Prominent Attacks on Logistics and Supply Chain

  • SolarWinds attack

It’s one of the biggest attacks on software supply chains. In 2020, SolarWinds saw a major cyberattack when its cybersecurity provider, FireEye, reported a trojan horse in its Orion software update. SolarWinds is an American SaaS (Software as a Service) company that provides its services to many Fortune 500 companies, the US Federal Government, and many state governments.

The attack was reported to have affected over 18,000 customers, including dozens of US government agencies, penetrating data, software operations and sensitive government information. It is reported that the attack cost America’s cyber insurance companies more than $90 Million. It was claimed to be Russia’s state-sponsored attack to disrupt America’s blockchain and acquire government data.

  • Mimecast

Mimecast, a joint venture between America and the UK, is an email security company. In January 2021, it reported an attack similar to SolarWinds.

  • Open-source software projects

The open-source code also poses a vulnerability to malicious acts because the project’s vulnerabilities can be easily identified and leveraged. The American credit reporting agency Equifax suffered a loss of nearly $2 Billion in 2017 due to a vulnerability in the Apache Struts program.

Kaspersky and Crowdstrike are two multinational cybersecurity companies. Both reported, in March 2023, a supply chain attack in software used across the globe when they detected infection in a software communications app called 3CX.

This software is heavily used for logistics and supply chain management on multiple continents. It has multinational corporate giants as clients, including American Express, Coca Cola, Honda, BMW, McDonald’s and many more. The threat actors are suspected to be North Korean state-sponsored cybercrime groups, Labyrinth Chollima and Lazarus.

  • Kaseya attack

In July 2021, an American IT solutions company, Kaseya, suffered a ransomware deployment attack directly on the company’s customers. The company’s clientele includes over 1,500 small and medium-sized businesses across 17 countries.

  • Target Data Breach

Target’s data breach in 2017 is a classic example of ripple effects from supply chain effects that reach multiple sectors. Target is an American retail company that has corporate retail stores and logistics services. The attack resulted in the leak of 40 Million credit card and debit card numbers from its database and the personal data of over 70 Million customers.

How Can Blockchain Help?

Blockchain technology brings many benefits to the multi-party heavy network-involving supply chain industry. It helps mitigate risk through a decentralized ledger that distributes responsibilities, as opposed to a single point of entry. The information is immutable and remains encrypted in the blocks. The entire trail of the product can be traced right from its origin, courtesy of blockchain’s provenance nature.

Besides, the smart contract functionality can be deployed to execute processes automatically and rectify minor errors at certain sites. It also helps prevent errors, as the operation will not be executed if the conditions are not fulfilled.

There’s complete transparency in the system, with real-time tracking of the products. Payment security is enabled as they are recorded with a time stamp in each block and will only be executed when the product safely and soundly reaches a channel.

However, it’s important to remember that an efficient blockchain for all supply chain operations cannot be established by a single organization. It will take an entire ecosystem to develop a robust network, allowing for incentivized propagation of the chain. The good news is that the supply chain industry itself is so interlinked that network development will not take a long time.

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