Data Security: What Do You Need From Your 3PL?

The last thing you want to think about is a data breach in your organization. Unfortunately, hackers pose a very real risk. In 2021, we saw giants like Amazon, Microsoft, and T-Mobile all face data breaching, proving that no matter the size of your company, you can be hit.

When you intake your customers' data, you are making a promise to them to protect their information. If you don't have the proper data security system set in place, you could very well be gearing up to break that promise if a hacker decides to look your way.

As warehouse management and logistics systems become more and more integrated across organizations and even between partners, people’s fear of data breaches is also growing. Clients worry that using a 3PL (or another collaborative partner) might open them up to another avenue of attack.

When it comes to data security, it is important to look past the headlines and the hysteria and ask: What is really at risk? And what positive steps can we take to protect ourselves?

Financial Data is Not Likely at Risk

First, it is important to realize that most news stories about data breaches involve third parties scraping financial data from payment systems, usually using malware. This means that both personal information and financial information (think credit cards numbers) are stolen in mass.

This threat does not exist when using a 3PL. When an order is accepted through a shopping cart, the vendor receives all the information so the payment can be processed and the order started. When this data flows to the 3PL for fulfillment, only the recipient's personal information gets passed – name, address, etc. So, even if a would-be hacker intercepts the data or somehow hacks the 3PL’s systems, no financial information would be stolen.

It's important to keep in mind that the companies most likely targeted are large retail chains (like Target and Home Depot) or websites that store large amounts of user data (dating websites, social media, etc.) These companies have tons of data and many points of access to that data, making them prime marks for hackers. Most 3PLs are not even on the radar for hackers.

Privacy Might Still be an Issue

Just because a hacker might not turn their attention to you, that doesn't mean you are immune from any attack. An enterprising criminal could still get away with hundreds or thousands of customer entries–including where they live and what they ordered. This would be a massive breach of consumers’ privacy. That information could have value on the black market, and it's your job to protect it.

As a vendor, you should be concerned about data security when contracting a 3PL. You will want to know that your customer’s data is safe and secure, at all times, so that you can guarantee their privacy when ordering.

To that end, there are certain questions you should ask your 3PL to ensure that your customer’s data is safe. Granted, you cannot simply ask about their security measures. Sharing those measures would, itself, be a security risk. But there are roundabout ways that you can ask about data security without fishing for the exact details.

Use the following questions as a guideline for how your 3PL should treat security:

• Does your 3PL follow standard procedures for upgrading software, installing patches, and keeping anti-virus and anti-malware software up-to-date? Frequent updates and documented procedures signal a tighter, more secure system.
• Are security procedures routinely audited? Frequent audits mean that your 3PL takes information privacy seriously, as they are continuously improving their security. This audit should also include operational tracking. Being able to view who did what and when makes troubleshooting easier and prevents problems from growing out of control.
• How many people at your 3PL’s facilities have access to the entire database of customer data?
• Have those with full security visibility had the proper training?
• If credit card processing is required, is the 3PL PCI compliant? It's important to know if any vendor will process cards on your behalf.

What Happens When Disaster Strikes?

If a data breach happens, what then? Companies should always be ready for the worst, especially when your customer's information is on the line. Your 3PL should have a written, documented plan which governs all the aforementioned points. Even if the exact steps of that plan are kept confidential, understanding that there is a plan set in place for when disaster strikes puts customers' nerves at ease and can give you peace of mind in that assurance.

But your 3PL shouldn't be the only one with a plan. If the hackers were able to breach your organization, that means you could use a plan of your own to prevent this from happening again. Take a critical look at your own data security and reanalyze how you can improve your own security measures.

Protecting Your Privacy

Materialogic takes data security very seriously and honors the privacy of your customers. If you would like our answers to the questions listed above, feel free to contact us.