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1. Supply Chain Security, Resilience & Emerging Industry Trends

1. 1. Executive Summary

Supply chains have become a strategic risk area for electric utilities and critical infrastructure operators. Recent industry assessments have identified risks associated with globally sourced Inverter-Based Resources (IBRs), Battery Energy Storage Systems (BESS), software supply chains, and increasingly interconnected vendor ecosystems.

At the same time, organizations are investing heavily in technologies that improve visibility and resilience, including Artificial Intelligence (AI), Supply Chain Control Towers, Digital Twins, and enhanced supplier risk monitoring capabilities.

1. 1. 1. Why This Matters

Modern utility and energy-sector supply chains are increasingly:

• Digitally connected
• Globally distributed
• Dependent on third-party suppliers
• Exposed to cyber and geopolitical risks

As a result, disruptions originating from suppliers, software providers, logistics partners, or overseas manufacturers can directly impact operational reliability, cybersecurity posture, and business continuity.

1. 1. 1. Key Industry Priorities

• Supply Chain Cybersecurity
• End-to-End Supply Chain Visibility
• Supplier Risk Management
• AI-Enabled Decision Support
• Supply Chain Resilience & Diversification
• Secure Procurement & Asset Assurance

EPRI Supply Chain Model

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1. Industry Context

Historically, supply chains were primarily viewed as procurement and logistics functions. Across the utility and energy sectors, they are now recognized as critical operational systems that directly influence reliability, regulatory compliance, cybersecurity, and grid resilience.

Industry organizations such as EPRI, DOE, NERC, and major utility operators continue to increase focus on supply chain assurance due to concerns regarding:

• Hardware provenance
• Software integrity
• Third-party access
• Remote communications capabilities
• Geopolitical dependencies
• Critical component availability

Organizations are therefore shifting away from cost-focused procurement strategies toward risk-informed supply chain management programs that improve visibility, resilience, and operational assurance.

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1. Key Supply Chain Risks

1. 1. Hardware & Technology Assurance Risks

Industry assessments have identified instances where deployed equipment contained capabilities not fully represented in product documentation or utility inventories.

1. 1. 1. Examples

• Cellular communications modules
• Wi-Fi connectivity
• Bluetooth interfaces
• Remote management functionality
• Maintenance access ports

1. 1. 1. Why It Matters

For utilities and critical infrastructure operators, undocumented capabilities can create uncertainty regarding:

• Remote access pathways
• Asset inventory accuracy
• Network trust assumptions
• Security monitoring coverage
• Incident response planning

For example, an undocumented cellular modem could allow communications pathways that bypass traditional network monitoring controls.

1. 1. 1. Industry Response

Organizations are increasingly:

• Performing hardware validation assessments
• Conducting spectrum and wireless surveys
• Requiring Hardware Bills of Materials (HBOMs)
• Expanding supplier assurance programs
• Implementing independent product testing

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1. 1. Software Supply Chain Risks

Modern energy infrastructure increasingly relies on firmware, embedded software, cloud platforms, and third-party applications.

1. 1. 1. Examples

• Compromised software updates
• Vulnerable open-source components
• Unauthorized firmware modifications
• Third-party remote support tools
• Software dependencies with limited visibility

1. 1. 1. Why It Matters

A single software compromise can affect thousands of deployed systems simultaneously.

Utility operators are increasingly concerned with understanding the origin, development, maintenance, and security posture of software incorporated into operational technologies.

1. 1. 1. Industry Response

• Software Bill of Materials (SBOM) requirements
• Secure software development reviews
• Vulnerability disclosure programs
• Vendor security assessments
• Software integrity validation

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1. 1. Geopolitical & Supplier Dependency Risks

Global supply chains remain vulnerable to geopolitical events, trade restrictions, transportation disruptions, and regional conflicts.

1. 1. 1. Examples

• Semiconductor shortages
• Export controls
• Critical mineral availability
• Shipping route disruptions
• International trade restrictions
• Manufacturing concentration in specific regions

1. 1. 1. Why It Matters

Many utility technologies rely on components that have limited alternative suppliers or long replacement lead times.

Supply disruptions can delay:

• Grid modernization projects
• Substation upgrades
• Renewable energy deployments
• Battery storage projects
• Critical maintenance initiatives

1. 1. 1. Industry Response

• Supplier diversification
• Multi-sourcing strategies
• Nearshoring initiatives
• Strategic inventory reserves
• Regional manufacturing partnerships

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1. Supply Chain Cybersecurity

Digital transformation has expanded the attack surface across modern supply chain ecosystems.

Compromise of a supplier may have direct or indirect consequences for utility operations, information technology environments, and operational technology systems.

File:SupplyChainCyber.jpg

Cybersecurity Within Connected Supply Networks

1. 1. Common Threat Areas

• Third-party compromise
• Ransomware
• Software supply chain attacks
• Vendor remote access misuse
• Connected IoT device vulnerabilities
• Operational Technology (OT) targeting

1. 1. 1. Utility Sector Relevance

Successful attacks against suppliers or technology providers may affect:

• Grid operations
• Distributed energy resources
• Enterprise applications
• Customer systems
• Critical business functions

1. 1. 1. Leading Practices

• Zero Trust Architecture
• Multi-Factor Authentication (MFA)
• Supplier Cyber Assessments
• Continuous Third-Party Monitoring
• Network Segmentation
• Vendor Access Governance
• Incident Response Coordination

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1. Artificial Intelligence in Supply Chains

AI-Enabled Supply Chain Analytics

AI is rapidly transforming supply chain operations from reactive planning toward predictive and data-driven decision making.

1. 1. Current Applications

• Demand forecasting
• Inventory optimization
• Supplier risk monitoring
• Predictive maintenance
• Transportation optimization
• Procurement analytics
• Supply disruption analysis

1. 1. 1. Utility Sector Benefits

AI can help organizations:

• Identify supplier risks earlier
• Improve forecasting accuracy
• Prioritize operational disruptions
• Automate repetitive analysis activities
• Improve inventory planning for critical assets

1. 1. 1. Emerging Trend: Agentic AI

The next phase of supply chain technology is expected to include Agentic AI systems that can autonomously execute approved workflows while operating within established governance controls.

Potential applications include:

• Automated supplier identification
• Procurement recommendations
• Inventory rebalancing
• Logistics rerouting
• Risk-alert investigation

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1. Supply Chain Visibility & Control Towers

Supply Chain Control Tower

Organizations increasingly seek centralized visibility across suppliers, inventory, transportation, manufacturing, and risk information.

A Supply Chain Control Tower provides a common operating picture that enables decision makers to monitor disruptions and take corrective action more quickly.

1. 1. Benefits

• Real-time situational awareness
• Supplier performance monitoring
• Shipment tracking
• Inventory visibility
• Risk event detection
• Executive reporting
• Faster decision making

1. 1. 1. Questions Industry Leaders Should Ask

• Do we have visibility beyond Tier-1 suppliers?
• Can we identify supplier concentration risks?
• How quickly can disruptions be detected?
• Are critical dependencies documented?
• Can we rapidly assess the impact of supplier disruptions?

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1. Digital Twins & Scenario Planning

File:DigitalTwinSupplyChain.jpg

Supply Chain Digital Twin Example

Digital Twins create virtual representations of supply chain ecosystems, allowing organizations to evaluate the potential impact of disruptions before they occur.

1. 1. Example Scenarios

• Supplier failure
• Transportation interruptions
• Port closures
• Severe weather events
• Material shortages
• Regulatory changes

1. 1. 1. Business Value

Digital Twin technologies can help organizations:

• Evaluate operational impacts
• Analyze alternative sourcing strategies
• Assess recovery timelines
• Support risk mitigation planning
• Improve resilience decision making

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1. Recommendations for Utilities & Critical Infrastructure Operators

1. 1. Procurement

• Require Software Bills of Materials (SBOMs)
• Require Hardware Bills of Materials (HBOMs)
• Assess supplier cybersecurity maturity
• Validate secure development practices
• Review remote access capabilities
• Define contractual security requirements

1. 1. Visibility

• Maintain comprehensive asset inventories
• Map critical supplier dependencies
• Conduct wireless communications assessments
• Identify undocumented communications pathways
• Improve supplier transparency

1. 1. Monitoring

• Implement continuous supplier risk monitoring
• Track geopolitical developments
• Review supplier security advisories
• Monitor critical component dependencies
• Assess concentration risks

1. 1. Security

• Eliminate default credentials
• Restrict unnecessary remote access
• Implement MFA where practical
• Segment operational networks
• Validate firmware integrity
• Monitor vendor access activity

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1. Future Topics to Watch (2026-2027)

1. 1. High Priority

• Agentic AI
• Supply Chain Control Towers
• Digital Twins
• Third-Party Cyber Risk
• Software Supply Chain Security
• Supplier Resilience Programs

1. 1. Emerging Technologies

• Autonomous Logistics
• Robotics
• IoT-Based Asset Tracking
• Advanced Supplier Intelligence
• Digital Product Passports (DPP)

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1. Digital Product Passports (DPP)

Digital Product Passports are emerging as a regulatory and traceability initiative, particularly within European markets.

A DPP creates a persistent digital record that travels with a product throughout its lifecycle.

1. 1. 1. Potential Benefits

• Product traceability
• Component transparency
• Compliance reporting
• Supply chain visibility

1. 1. 1. Industry Relevance

While not currently a primary focus area for most utilities, Digital Product Passports may influence future supplier reporting, asset traceability, and procurement requirements.

Organizations that manufacture, export, or procure globally sourced equipment should continue monitoring regulatory developments.

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1. Key Questions for Leadership

• Do we understand dependencies beyond Tier-1 suppliers?
• Can we detect supply chain disruptions before operational impact occurs?
• How are supplier cybersecurity risks evaluated and monitored?
• Are software and hardware supply chain risks included in procurement decisions?
• Do we have visibility into communications capabilities across critical assets?
• Can we rapidly assess the operational impact of supplier disruptions?
• Are resilience investments aligned with the organization's highest-risk dependencies?

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1. Additional Resources

• EPRI Supply Chain Assessment Research
• DOE Cybersecurity and Supply Chain Guidance
• NERC Supply Chain Risk Management Resources
• CISA Supply Chain Risk Management Frameworks
• NIST Cybersecurity Supply Chain Risk Management Guidance