State and Local Governments spend an estimated $4.5 trillion annually on procurement. While third-party vendors, such as contractors and software providers, are vital for essential Government services, each introduces potential risks, necessitating robust supply chain security measures.
That’s where applications of artificial intelligence (AI) offer value. As the number of vendors and risks increases, State and Local organizations can no longer rely solely on legacy systems to manage supply chain risks. Some are turning to AI to monitor their supply chains, detect anomalies and respond to potential threats.
However, because State and Local Governments are accountable to the public, decision-makers must balance AI’s potential benefits with strong governance, transparency and risk management strategies to promote trust. Here’s a look at the applications of AI in supply chain security to inform your decision-making.
AI Applications in Supply Chain Security Management
AI systems are not a foreign technology in Government operations. Dearborn, Michigan, uses generative AI-powered translation tools across its digital services to boost accessibility, while Raleigh, North Carolina, uses machine learning to predict municipal water breaks.
These technologies are also making their way into risk management, with leaders increasingly using AI in Government programs to enhance supply chain security. Here are several common AI use cases.
State and Local Government supply chains are often extensive and interconnected. For example, vendors providing automated vehicle solutions to Government agencies may rely on networks of sensor manufacturers and software developers. Cloud service providers (CSPs) often partner with infrastructure providers to expand their capabilities, while software vendors may outsource parts of their operations, such as IT support.
AI tools help review such vendors’ disclosures, highlighting dependencies that might go unnoticed when relying solely on manual analysis. This level of visibility can support more informed decision-making. For example, if a review reveals that a potential software provider partners with a vendor with a history of cyberattacks, you’d know to consider other options for your organization’s cybersecurity.
Continued Vendor Risk Assessments
With State and Local Governments facing rising cybersecurity risks, organizations can’t afford to wait for periodic vendor reviews. Risk assessments need to be continuous, which AI-powered tools can facilitate.
These tools use natural language processing (NLP) to analyze large volumes of incoming data from vendor contracts, security ratings, vulnerability disclosures and compliance information. Machine learning systems can also score vendors’ risk profiles and highlight suppliers whose risk levels change over time to promote early intervention.
Cyberattacks often have early warning signs. For example, you might experience unusual login activity from your vendors’ accounts, unexpected software updates or unnecessary data transfers if hackers compromise a system in your supply chain.
AI systems are now helping organizations catch such red flags. They scan vendor systems for anomalies and provide early warning signals before attacks escalate.
Speed is everything when it comes to security threats. The faster your organization responds to an identified threat, the lower its risk of disrupting operations and jeopardizing sensitive information, such as constituents’ personal details.
State and Local institutions are using AI-powered security solutions to speed up their responses. These solutions can scan numerous vendor systems simultaneously, identify affected areas and initiate containment efforts.
For example, if the tools detect unusual supplier traffic, they can isolate compromised vendor endpoints or restrict the supplier’s access to your data. AI-supported responses are especially valuable for State and Local Governments because budget constraints force many to operate without dedicated cybersecurity teams.
Some State and Local organizations respond to supply chain security threats only after incidents occur. The problem with reactive responses is that they can jeopardize Government services and data security if they’re too slow.
Agencies are moving from a reactive to a more proactive approach by using AI. AI tools can analyze huge volumes of historical data to identify patterns that signal risk. They can then scan your systems for these patterns and bring your security team’s attention to potential threats before they materialize. With essential Public Sector operations, such as transport and emergency services, riding on how well State and Local Governments operate, the ability to detect threats before they affect systems has a direct impact on the public’s wellbeing.
Addressing Transparency, Governance and Risk Considerations
State and Local Governments are accountable to the public. Therefore, they need to balance innovation with transparency, accountability, responsible governance and regulatory obligations. AI can assist in these areas.
Limited transparency is one of the biggest ethical concerns around AI use in Government. To alleviate this unease among stakeholders, avoid “black-box” AI systems. Instead, use solutions that offer clear explanations for their outputs or recommendations.
If your AI-powered platform flags a vendor in your supply chain as high-risk, it should highlight the factors that led to that assessment. This level of transparency improves decision-making and makes it easier for your procurement and security teams to defend their actions whenever questions arise.
AI vendors are also part of your supply chain. To reduce your risk exposure, conduct due diligence, just as you would with other suppliers. Key features to look for in an AI-powered supply chain management solution include strong security protocols, automated regulatory framework mapping, real-time end-to-end supply chain visibility and automated alerts. Also check for integrations with third-party applications, such as project management tools and regulatory knowledge repositories.
Establish Strong Governance Frameworks
State and Local Government institutions manage sensitive constituent data and infrastructure, necessitating clear policies for AI use. To establish strong governance:
- Map AI initiatives to established frameworks: Align your AI policies with frameworks such as the National Institute of Standards and Technology Risk Management Framework (NIST RMF) to provide greater structure to your processes. NIST RFM establishes guidelines for vendor evaluations, risk monitoring and oversight, which can lend credibility to your AI-powered processes.
- Create data tiers: Classify data into distinct levels and establish clear policies on the tiers AI systems can access. For example, you could classify data by confidentiality (public, internal, confidential or critical) and restrict AI’s access to highly sensitive datasets, such as those involving military applications.
- Form an AI review board: Establish a team consisting of IT, cybersecurity, finance, legal and procurement experts to vet potential AI vendors and continually monitor tools.
The presence of AI systems doesn’t have to mean the absence of human input. In fact, it shouldn’t. An ideal supply chain security management system balances AI with human expertise:
- Ask human experts to determine acceptable risk levels for your vendors, and use AI to assess their exposure.
- Leverage AI capabilities, such as deep learning, for large-scale document processing and threat pattern recognition, but maintain human input in decision-making.
- Have your risk management and security teams review AI tools’ output and recommendations before acting on them.
For smooth AI-human collaborations, provide AI literacy training to your teams. Successful and responsible AI adoption depends on your workforce’s understanding of the technology’s capabilities, limitations and governance requirements.
Strengthen Supply Chain Security With AI
With State and Local Governments relying on vast networks of third-party vendors, AI-powered supply chain security management has become invaluable. AI tools enhance everything from supply chain visibility to risk and fraud detection, enabling institutions to continually offer smooth services to their communities.
Some stakeholders might have ethical concerns over the applications of AI. To alleviate these concerns, it’s crucial to implement strong transparency, governance and accountability measures.
Learn how AI can strengthen Public Sector supply chains with Onspring’s platform and book a demo today.
Carahsoft Technology Corp. is The Trusted Government IT Solutions Provider, supporting Public Sector organizations across Federal, State and Local Government agencies and Education and Healthcare markets. As the Master Government Aggregator for our vendor partners, including Onspring, we deliver solutions for Geospatial, Cybersecurity, MultiCloud, DevSecOps, Artificial Intelligence, Customer Experience and Engagement, Open Source and more. Working with resellers, systems integrators and consultants, our sales and marketing teams provide industry leading IT products, services and training through hundreds of contract vehicles. Explore the Carahsoft Blog to learn more about the latest trends in Government technology markets and solutions, as well as Carahsoft’s ecosystem of partner thought-leaders.
