The Software Risk Hiding in Modern Supply Chains

When we talk about supply chain resilience, the focus naturally falls on physical risks such as supplier shortages, transport disruption and geopolitical uncertainty. 

Those challenges haven’t gone away, but there’s another dependency that has become just as important: the software that keeps modern supply chains running.

That shift is already well underway. Gartner's latest Future of Logistics Survey found that 86% of supply chain leaders now operate using mainstream logistics technologies integrated with custom systems, illustrating just how dependent modern supply chains have become on interconnected software.

That interconnected technology has transformed the way organizations operate, providing real-time visibility and faster decision-making. At the same time, every software update, integration and application change introduces another potential point of failure if it hasn’t been properly validated.

That’s why software quality has become a fundamental part of supply chain resilience. When a critical business application stops working, the impact quickly spreads beyond IT. Procurement can’t place orders, warehouses lose visibility, suppliers can’t respond and customers are left waiting. It comes back to a simple point: Your physical supply chain is only as resilient as the software that enables it.

The Changing Risk Landscape

One of the biggest changes over the past 20 years has been the way business systems have evolved.

Organizations used to run a small number of relatively isolated applications. An enterprise resource planning system might have been connected to a warehouse management system through overnight uploads, giving businesses time to react if something went wrong.

Today, everything is connected, and customer orders placed through an e-commerce platform flow automatically into an ERP system before triggering warehouse operations, supplier communications, transport planning and invoicing. We’ve become dependent on that real-time visibility because it allows organizations to make better decisions, reduce inventory and respond more quickly to customer demand.

The downside is that when one application fails, or one integration breaks, the impact is immediate, rather than something businesses have hours or days to recover from.

That’s why software has become one of the biggest hidden risks within modern supply chains. Many organizations have done an excellent job of reducing physical supplier risk by introducing dual sourcing or multiple suppliers. 

However, if every supplier connects through the same procurement platform or supplier portal, the resilience only extends so far. If that platform goes down, or an update disrupts a critical integration, it makes very little difference whether you have two suppliers or 20 because none of them can receive or process orders.

We’ve already seen how quickly software failures can spread beyond a single organization. The global disruption caused by the CrowdStrike software update in 2024 affected airlines, retailers, financial institutions and healthcare providers around the world, demonstrating how a single software issue can have immediate operational consequences across entire industries.

Imagine an e-commerce platform continuing to accept orders while an integration failure prevents those orders from reaching the ERP system. Customers think everything is working as expected, but the business never receives the information it needs to fulfil those orders. By the time the problem is identified, customers may already have gone elsewhere. That's how a software issue quickly becomes a commercial one.

Software failures rarely remain technical problems for long. They very quickly become operational problems, financial problems and, ultimately, customer experience problems.

Software Quality Is a Business Responsibility

One of the biggest challenges is cultural in nature. For years we’ve viewed software quality as something that belongs to IT. That made sense when technology largely supported the business, but it no longer reflects the way organizations operate. Software now governs how businesses receive orders, manage suppliers, maintain compliance, process inventory and deliver products to customers. It underpins almost every critical business process.

The people who understand those processes best aren’t necessarily the IT team. Procurement leaders know how purchasing should work. Supply chain managers understand how products move through the organization. And warehouse teams know what happens when a process changes unexpectedly. That’s why they need to be involved whenever business-critical software changes are introduced.

This is about recognizing that software quality is everyone's responsibility. IT teams understand the technology, but business users understand how the organization actually operates. Bringing those two perspectives together creates far greater confidence that changes have been properly validated before they reach production.

We’ve already seen this cultural shift in other areas of quality management. Years ago, quality was often viewed as the responsibility of a dedicated quality manager. Today, everyone is expected to take ownership of the quality of the work they perform. Software quality needs to follow exactly the same path, because technology now underpins the way every department operates.

Ultimately, boards should also be asking different questions. Rather than focusing solely on supplier resilience, they should understand which digital systems keep the business running, where the critical digital dependencies exist, and what confidence the organization has that software changes have been properly validated before they go live. Those are business questions just as much as technology questions.

Building Resilience Through Validation

The first step toward improving software resilience is understanding which business processes are genuinely critical to keeping the organization operating. Receiving customer orders, processing invoices, managing inventory and communicating with suppliers will usually sit at the top of that list, because if any one of those processes stops, the impact is felt immediately.

Once those critical workflows have been identified, organizations can begin validating the software and integrations that support them. That includes validating how internal systems interact with external suppliers and partners, rather than simply checking whether individual applications appear to be working in isolation. 

The objective is to focus on the areas of greatest operational risk first, before gradually expanding that approach across the wider application landscape.

organizations build confidence, validation should become part of everyday software management, rather than something that only happens before a planned change. The aim is to understand what has changed and the impact it will have before it reaches the live business. 

Automation will increasingly support that process, allowing business users to focus on validating the outcomes rather than carrying out repetitive manual checks.

The organizations that build the most resilient supply chains over the next decade will be the ones that recognize that every physical supply chain now depends on a digital one. 

When software works, nobody notices because the business simply operates as expected. When it doesn’t, disruption is immediate, and the impact is felt right across the value chain.

That’s why software quality is no longer simply an IT metric. It’s a strategic business capability. If we’re serious about building resilient supply chains, we need to be just as rigorous about validating the software that runs our operations as we are about managing the suppliers that keep them moving.

Carl Andrews is chief executive officer of Original Software.