It was a typical work morning like any other for Bonnie, a supply chain manager in the retail apparel industry. She filled her coffee cup to the top with some steaming office brew, logged on to her computer while she quickly scanned her to do list and then decided to check her favorite social media account to satisfy her daily pop culture craving. She smiled when she saw that one of her friends had posted an interesting video.
Bonnie took a sip of coffee, clicked the video ... and inadvertently allowed malevolent access to her company network. Yes, it was that easy.
Intellectual property (IP) protection and confidentiality in the global supply chain is a significant risk issue and most companies are underestimating this threat. Large companies with strong legal knowledge typically have policies in place to manage internal IP and lock in IP protection and confidentiality agreements with critical prime suppliers. But how do these companies actively protect IP throughout the extended supply chain?
Often on a wing and a prayer.
I recently led a seminar on supply chain risk for experienced supply chain and procurement professionals. They represented large global companies in the pharma, military and industrial sectors.
Their companies all had extensive capabilities to track and manage most elements of risk, including the treatment of IP, and they were quite confident that their top suppliers had systems in place to protect their IP.
But as the conversation shifted to second and third tier suppliers, I was met with some grimaces. They clearly were uncomfortable realizing their IP may be at risk in the extended and often opaque supply chain. It was next to impossible to track IP protection from top to bottom.
Supply chain managers first need to get their own house in order and educate line and staff around the importance of protecting IP.
Supply Chain Dive
Crossed-fingers is not a viable strategy for managing IP and confidentiality.
Scale is important. The headlines of global companies stealing trade secrets, along with the requisite political intrigue, are not realistic when dealing with our common day to day supplier interactions. However, minimizing or ignoring these issues with an ‘It won’t happen here’ philosophy causes ambivalence and the careless treatment of important information. We need balance and sensitivity to the issue of IP theft.
The real work to protect IP and confidentiality begins in the supply chain. Supply chain managers first need to get their own house in order and educate line and staff around the importance of protecting IP. Bad actors, including suppliers, will take the path of least resistance, often taking advantage of an engineer or other internal functionary that is careless with IP. Too many employees share company financial and business strategies that may not reach the level of an IP breach but may be valuable to a competitor. It can be as simple as leaving information on your desk or on your screen. I’ve had suppliers who brag about their ability to read upside down.
On the other hand, our suppliers can be an ally in the fight against IP theft. One of my specialized metal fabricators blew the whistle on a gray market company trying to undercut my company’s spare parts and consumables business. Blueprints fell into the wrong hands, the title block was replaced in a botched copy job and the counterfeit print was sent for a quote to the supplier who made the original, as that supplier had the tooling to make the part. A quick phone call to legal and a subsequent cease and desist order solved the problem. But I’m sure others sailed under the radar.
It is important to add a measure
Supply Chain Dive
Supplier performance is typically measured in a matrix related to cost, delivery, service and other objective and subjective criteria. It is important to add a measure around confidentiality and IP protection. Make it an issue, not an afterthought.
Set supplier expectations in writing. Require evidence from suppliers of how they treat your IP and how they manage confidentiality and IP with their own suppliers. Implore your suppliers to stress the importance of IP management throughout their supplier communities. Reinforce these topics during contract reviews and negotiations. Train them as necessary, and test them as appropriate.
For high impact projects, take responsibility for the entire supply chain. Identify every critical supplier node and reinforce, in action and writing, the importance of managing confidentiality and IP. This may be the only way to ensure your bases are covered. Be sure to identify key tangential suppliers, like service providers and logistics companies, as well.
And beware of that new planner who comes to work and clicks on a questionable social media link, allowing unfettered access to your entire network.