With the recent surge of data breaches, government enterprises such as the Department of Defense and the Department of Homeland Security, as well as their suppliers, have increased their focus on IT security. Their protocols did not include the tracking and tracing of your supply chain, but that’s about to change.

New regulations are going to require you to maintain greater supply chain security. With this security shift, the question is no longer if you should improve your supply chain assurance, but when. For most organizations, the public sector included, the answer to this question cannot be determined by the potential risks but by the potential return.

New regulation for increased protection

Government offices know all too well the threat that counterfeit parts can bring to a supply chain. In 2014, the Defense Department warned against the use of counterfeit parts because they may contain malicious code that could support a cyberattack. Legislation was enacted requiring government contractors to establish and document supply chain security protocols to detect counterfeit electronic parts. These compliance protocols included features such as using trusted suppliers, tracing parts to original manufacturers, and quarantining counterfeit parts so they cannot re-enter the supply chain.

ROI of securing your supply chain

Ultimately, the greatest driver for improving supply chain risk management is ROI. While mitigating risks and maintaining compliance are important, the ensured product quality protects the brand from risk, resulting in a form of competitive advantage. Valuable ROI from supply chain compliance appears in a few forms:

• Increased supply chain visibility can result in sourcing, manpower and insurance cost reductions.
• The reduced risk of counterfeit, poor quality or compromised products or components increases customer satisfaction.
• Greater supply chain insight allows you to anticipate and respond to changing demands.
• Limiting failures from defective or vulnerable components increases the profitability of your organization.

A one-size approach doesn’t fit all

With the growing risks and the new regulations, changes to supply chain risk management are happening, but not fast enough. Government enterprises have enormous supply chains that require them to proceed with caution before implementing changes to comply with the new rules. Large contractors are improving their anti-counterfeit practices, but smaller vendors  are not legally required to adhere to the new requirements.