Understanding Supply Chain Attacks: A Complete Guide

Supply chain risk remains one of the most pressing and often least controlled challenges facing CISOs today. 

As Philip Reitinger, former CISO at SONY, says, “It’s the greatest area of unmanaged or hard-to-manage risk.” 

The concern is no longer hypothetical. Modern organizations rely heavily on third-party vendors, cloud services, and software integrations. This creates a complex and often opaque ecosystem where a weak link can expose the entire chain.

Supply chain attacks exploit exactly that. They target trusted third-party tools, software, or services to compromise a broader network. Also known as “value-chain” or “third-party” attacks, these incidents have surged in scale and sophistication over recent years. 

In fact, Gartner predicts that by 2025, 45% of organizations will have experienced an attack on their software supply chain, tripling the rate seen in 2021.

So, what exactly makes these attacks so effective and hard to contain? In this article, we’ll explain how supply chain attacks work, why traditional defenses fall short, and what practical steps organizations can take to stay ahead of the threat.

What Are Supply Chain Attacks?

Supply chain attacks occur when cybercriminals infiltrate organizations by attacking third-party vendors, service providers, and software dependencies. The attacker avoids direct attacks on the organization by targeting less secure supply chain partners to access sensitive systems, networks, and data indirectly.

These attacks succeed because modern digital ecosystems rely on built-in trust relationships.

Attackers understand that they can bypass your organization's defenses by finding one vulnerable vendor instead of attacking your defenses directly. They only need to find one vendor that hasn’t.

After entering a vendor's network, attackers begin to shift their movements. The attackers use existing network permissions to disable security measures while they proceed to their actual objective.

How does a supply chain attack work?

A supply chain attack targets vulnerabilities outside the organization through one of its trusted third-party providers. The vulnerable links in this extended network include software vendors, IT service firms, hardware manufacturers, and logistics partners.

The attacker locates the most vulnerable point in the expanded network to gain access to the actual target.

A supply chain attack progresses through the following sequence of events:

Step 1: Identify a third-party vendor: Attackers search for vendors maintaining poor security standards yet providing trusted access to primary targets.

Step 2: Exploit a vulnerability: Attackers look for vendors that maintain poor security standards yet provide trusted access to primary targets.

Step 3: Inject malicious components: The attackers gain access to the vendor system through phishing attacks combined with outdated software and insecure code repositories.

Step 4: Delivery to the target: The attackers embed harmful code into software updates and firmware and hardware products at manufacturing and distribution stages.

(The compromised product or update reaches its target organization through standard operational procedures.)

Step 5: Gain access and escalate: Attackers start lateral movement across the target network to elevate their privileges while stealing data and installing additional malware.

Types Of Supply Chain Attacks (And Why They’re Hard To Catch)

There are different forms of supply chain attacks through software updates, hardware components, or even people you work with. What ties them together is that attackers exploit trust. They know your business depends on third parties and use those connections to sneak in the back door. Here are some of the most common types:

1. Third-party software attacks

This type of incident occurs with increasing frequency today. An attack occurs when an attacker penetrates software products or vendor updates that users trust. System access occurs when users perform their standard installation process without realizing the security risk.

For example, in the SolarWinds hack, attackers slipped malware into a routine update, eventually gaining access to thousands of organizations, including government agencies.

2. Counterfeit hardware attacks

Attackers produce counterfeit parts, including microchips and cables, which appear authentic but contain malicious code inside. These devices become compromised after installation, leading to complete system failure.

3. Insider attacks

These aren’t always hackers on the outside. Sometimes, it’s someone on the inside. An employee or contractor and people whose access was compromised become potential insider attackers. These individuals have deep knowledge of system weaknesses, which helps them bypass security protocols.

For example, in the Colonial Pipeline case, attackers reportedly used compromised insider credentials to launch the attack and shut down critical fuel systems.

4. Open source dependency attacks

Open-source libraries and frameworks serve as the base for many existing software products. Attackers take advantage of this situation by inserting malicious code into widely used packages that lack proper maintenance. The execution of malicious code occurs directly inside the target environment after integration.

For example, the event-stream NPM incident involved a widely used open-source package that was hijacked and used to steal Bitcoin wallet credentials.

5. CI/CD pipeline attacks

The development process uses automated testing tools that enable rapid code deployment. When attackers infiltrate these pipelines, they can sneakily embed malware throughout the build phase before the software release.

For example, in the Codecov breach, attackers modified a script that was part of many companies build systems, exposing credentials and internal tools.

6. Attacks via Service Providers

Your organization maintains secure operations, but have you considered the security risks of your IT service provider or cloud partner? Attackers who breach a trusted service provider obtain authorized access to your environment.

For example, the Kaseya attack is a textbook case. Ransomware was pushed through a remote monitoring tool used by managed service providers, affecting hundreds of downstream customers.

7. Physical Supply Chain Tampering

Attackers intercept hardware deliveries to install physical implants, small devices used for remote access after product use.

Notable Examples Of Supply Chain Attacks

Supply chain attacks are no longer rare edge cases; they're becoming a preferred strategy for attackers. And it’s not hard to see why. 

A compromise with just one vendor or tool in a software supply chain will allow threat actors to quietly access thousands of downstream targets. 

According to the ReversingLabs State of Software Supply Chain Security 2024 report, malicious packages uploaded to open-source repositories increased by 28% in 2023 compared to the previous year. 

These numbers reflect a troubling trend: supply chain attacks are getting easier and more dangerous. 

Below are some of the most significant real-world examples, each illustrating a different weakness in the modern software supply chain.

1. SolarWinds Orion Breach (2020)

Method: Compromise of software update mechanism
Impact: 18,000+ customers, including U.S. federal agencies and Fortune 500 firms

Attackers gained access to SolarWinds’ software build environment and inserted a backdoor later named SUNBURST into an official update of the Orion IT management platform. 

Because the update was signed and distributed through official channels, users trusted it and silently deployed it across thousands of organizations.

Why it worked: Even trusted software updates can be Trojan horses if attackers enter the development pipeline. This is a reminder that security has to extend back to the source code and build systems.

2. CCleaner supply chain attack (2017)

Method: Malware injection into legitimate software
Impact: 2.3 million users downloaded compromised versions

Attackers infiltrated Piriform's systems (the company behind CCleaner) and injected malicious code into the CCleaner installer before it was published. 

The malware was distributed through trusted channels, affecting millions of users worldwide, including major tech firms targeted in the second stage of the attack.

Why it matters: This case shows that even popular, trusted software can be used to deliver malware if no one is watching the code during development. Code signing alone isn’t enough; you also need secure processes behind it.

3. Equifax data breach (2017)

Method: Unpatched vulnerability in the third-party web framework
Impact: 147 million consumer records exposed

The breach occurred because Equifax promptly failed to patch a known vulnerability (Apache Struts CVE-2017-5638). Attackers exploited this to access sensitive data, including names, Social Security numbers, and credit card information.

Why it matters: It was about something simple: a missed update. Even one unpatched software in your supply chain can have serious consequences.

4. XcodeGhost (Apple, 2015)

Method: Tampered development environment used by app developers
Impact: Dozens of infected iOS apps, millions of downloads in China

Attackers created a malicious version of Apple’s Xcode development tool, XcodeGhost, and distributed it through unofficial Chinese sites. Developers unknowingly used the altered tool to build their apps, which were then submitted to the App Store. These apps included embedded malware that could collect user data and send it to remote servers.

Why it matters: If your development tools are compromised, so is your final product. This case highlights how attackers can poison the well before your app is written.

5. Panasonic data breach (2021)

Method: Unauthorized third-party access to internal servers
Impact: Unknown volume of sensitive data exposed

In this lesser-known but significant incident, attackers exploited a third party’s access to Panasonic’s servers, gaining unauthorized access to data related to business operations. While details remain limited, it’s believed the breach occurred through poor access controls or insufficient vendor oversight.

Why it matters: This one reminds us that vendors with access to your systems can become your weakest link. Even if your security is strong, someone else's lapse can open the door.

6. Dependency confusion attacks (2021, multiple companies)

Method: Publishing malicious packages to public repositories
Impact: Targeted companies included Apple, Microsoft, Netflix, and more

Security researcher Alex Birsan exploited how some build systems prioritize public over internal packages. The uploading of maliciously named packages to public repositories like npm and PyPI, internal systems mistakenly pulled them in during builds.

Why it matters: Open-source code is powerful. But it’s also risky if you don’t manage dependencies carefully. Your internal code shouldn’t be easily overridden by what’s in public.

Best Practices Against Supply Chain Attacks

Here are some steps you can take against supply chain attacks:

• Your incident response plan should include vendor-related breaches, and your team should perform regular simulations of supply chain attack scenarios
• Ensure your Zero Trust Architecture continuously verifies all users, devices, and requests that access the network
• Perform detailed vendor evaluation procedures to assess security policies, past breaches, certifications, and access management practices before vendor onboarding
• Restrict vendor access to only necessary functions through time-limited permission structures with defined roles
• Enforce VPN use, endpoint protection, regular patching, and device compliance checks for remote work endpoints
• Restrict sensitive information disclosure through regular audits to determine access permissions and their purposes
• Provide security awareness training to employees and third-party users, conduct phishing simulations, and secure handling best practices sessions.
• Encrypt and protect all sensitive data during both storage and transmission

Defend Supply Chain Attacks With Atlas Systems’ End-to-End TPRM

Supply chain attacks aren’t going away; they’re getting smarter. And if your vendors or third-party tools aren’t secure, neither are you. That’s why managing supplier risk needs to be part of your day-to-day security strategy.

Atlas Systems helps make that possible. Our Supplier Risk Management solution takes the guesswork out of third-party security. Here’s how:

• Automated vendor assessments to continuously evaluate security posture
• Centralized risk dashboards for complete visibility into your supply chain
• Real-time alerts and monitoring to flag emerging vulnerabilities
• Custom workflows and compliance mapping to align with your internal policies and regulatory needs

Atlas Systems helps you avoid threats by making vendor risk visible, manageable, and easier to act on. 

FAQs On Supply Chain Attacks

1. What tools can help detect supply chain attacks?

Security Information and Event Management (SIEM), threat intelligence platforms, and software composition analysis (SCA) tools enable the detection of abnormal system behavior and vulnerable dependencies.

2. Are there regulations addressing supply chain security?

The NIST framework and ISO 27001, DORA, and EO 14028 regulations force organizations to handle third-party risks through cybersecurity programs.

3. Can supply chain attacks affect small businesses?

Yes. Small businesses' lack of robust defenses makes them attractive targets for attackers who seek to access larger partners or clients.

4. Are hardware components vulnerable to supply chain attacks?

Yes. Attackers can introduce threats into your systems by tampering with chips and firmware and physical devices at manufacturing sites or during transportation before the hardware reaches your systems.