By Maria A. Vasilas,
Imagine that you have a pharmaceutical company and you want, as an ambitious company, to produce and release a vaccine for COVID-19. As an experienced CEO, you make a plan for the design and execution process of your product. The implementation of a complex process as well as the corresponding interaction of all the factors involved with it -from the initial idea to the creation of the perfect product for the consumer-, are summarized in the term of Supply Chain Management. Supply chain management is the management of the flow of goods and services and includes all processes that contribute in the transformation of raw materials into final products. It requires the active streamlining of a business’s supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.
It is common that an efficient supply chain management can facilitate the rapid completion of complex execution processes and contribute to the complete production of the vaccine. However, the risks and threats that may arise against a service in this chain are capable of causing incalculable damage not only to it but to the entire production system.
Supply chain security can be threatened by natural hazards such as physical threats, for example sabotage, theft and piracy. Despite the piracy risk, which can be considered an external security threat caused by criminals, sabotage and theft are implemented usually by ex or current employees of a service within the chain. The motivation behind an employee’s actions are, most of the time, corruption, revenge or financial benefits.
In addition to the natural hazards that can endanger the product and its production process, cyber and internet threats play an important role in the violation of the supply chain security. Social engineering, cyber attacks, malware and phishing are commonly implemented in the context of cyber criminology. The initiator of the attacks and threats, targets the smallest or weakest links of the supply chain as they hope to gain access to the entire network system. If this expectation becomes a reality, the consequences that may occur can lead to an abrupt cessation of production. Other consequences may be the loss or theft of personal data; the destruction, alteration or disuse of software and the damage to the business reputation. At a preventive level, Risk Management and Business Continuity Management can prevent the threats but also eliminate the consequences.
Under these circumstances, both the EU and countries with a significant trade presence such as China, South Korea, India and the US, encourage the development of controls aimed at mitigating risks and consequences. In fact, in order to ensure the effectiveness of this effort, they have enabled companies which comply with international compliance standards to qualify as Auhorized Economic Operators (AEO). Businesses that have been able to be qualified as AEOs have a number of advantages such as fewer controls, speeding up transfer processes and improving their reputation in the case of due diligence.
References
- Supply Chain Management III/ 2007, Supply Chain Security-Sichere Lieferketten als Wettwebsvorteil, Available here
- AEB, AEB-Experten Rainer Hackstein gibt Tipps zur Supply Chain Security, Available here
- Microtech, Was ist Supply Chain Management (SCM)?, Available here
- Redwood, Protecting your Supply Chain: Security and Risk Management, Available here
- IHK Stuttgart, Der AEO: Grundlagen, Voraussetzungen, Nutzen, Available here
