SR-3: Supply Chain Controls and Processes

The sr-3: supply chain controls and processes requirement is easy to misread as “do third-party risk management.” That’s only part of it. SR-3 is broader: it expects a repeatable way to surface and correct weaknesses across supply chain elements (third parties, products, services, components, logistics, build pipelines) and supply chain processes (sourcing, contracting, onboarding, change management, incident response, offboarding).

For a CCO or GRC lead, the fastest path is to treat SR-3 as an operational workflow with clear ownership, defined triggers, and measurable closure. You need to answer three exam questions without hand-waving: (1) how you discover supply chain weaknesses, (2) how you decide what to do about them, and (3) how you prove you coordinated the work across the right stakeholders.

This page translates SR-3 into requirement-level implementation steps, with specific artifacts to retain and common audit hangups to avoid. Source references are limited to the NIST SP 800-53 Rev. 5 control text and its catalog representation. ¹

Regulatory text

Control requirement (SR-3): “Establish a process or processes to identify and address weaknesses or deficiencies in the supply chain elements and processes of [the organization] in coordination with [organizational personnel/roles].” ²

Operator translation (what you must do):

1. Establish one or more documented processes (a single end-to-end workflow is fine) that cover both identification and remediation of supply chain weaknesses.
2. Define the scope of “supply chain elements and processes” for your environment (systems, product lines, cloud, software suppliers, MSPs, OEMs, data providers, contractors, distributors, and internal SDLC/build chain steps).
3. Coordinate the process with the relevant roles (typically: procurement/vendor management, security, privacy, legal, engineering, IT operations, and business owners). Coordination must be visible in artifacts, not just implied.

Plain-English interpretation

SR-3 expects a living mechanism that catches supply chain issues early and pushes them to closure. “Weaknesses or deficiencies” can be security gaps (missing MFA, weak logging), contractual gaps (no breach notice, no audit rights), operational gaps (no exit plan, concentration risk), or product risks (untracked components, insecure update process). The control does not require perfection; it requires a managed process that can find problems and make progress with traceability.

Who it applies to (entity and operational context)

SR-3 commonly applies where NIST SP 800-53 is required or adopted, including:

• Federal information systems implementing NIST SP 800-53 controls. ³
• Contractor systems handling federal data where 800-53 is flowed down contractually or used as the control baseline. ³

Operationally, SR-3 applies to teams that influence supply chain risk outcomes:

• Security/GRC (control design, monitoring, exceptions, reporting)
• Procurement / vendor management (sourcing, onboarding/offboarding, renewals)
• Legal (contract clauses, negotiation playbooks)
• Engineering / IT (architecture decisions, integrations, patching, SBOM where applicable)
• Product / business owners (risk acceptance, criticality, continuity planning)

What you actually need to do (step-by-step)

Step 1: Define SR-3 scope in one page

Create an “SR-3 Scope & Boundaries” document with:

• Supply chain elements you will manage (at minimum: third-party services that store/process transmit your sensitive data; critical software suppliers; infrastructure providers).
• Supply chain processes you will manage (sourcing, onboarding, access provisioning, change/renewal, incident response coordination, offboarding).
• System coverage: which systems, environments, and data types are in scope.

Keep it short. Auditors want clarity more than prose.

Step 2: Assign owners and a RACI with real handoffs

SR-3’s “in coordination with” language is where programs fail. Build a RACI that names:

• Process owner (often Third-Party Risk or Supply Chain Risk lead in GRC)
• Approvers (CISO or security leadership; business owner for risk acceptance)
• Contributors (procurement, legal, IT, engineering)
• Escalation path (what happens when remediation stalls)

Make the coordination operational by defining handoffs:

• Procurement opens intake → Security performs inherent risk rating → Legal applies clause set → Security validates evidence → Business owner signs residual risk.

Step 3: Build an identification pipeline (how weaknesses are found)

Document the “weakness intake channels” and ensure they funnel into one register:

• Due diligence findings (questionnaires, SOC reports, pen tests, SIG/CAIQ responses)
• Contract gaps (missing security addendum terms, subprocessor transparency gaps)
• Operational signals (security incidents, service outages, SLA breaches)
• Technical signals (vendor access reviews, integration security reviews, CASB findings, vuln notifications)
• Change events (new subprocessor, product acquisition, major architectural change)

Implementation note: decide what becomes an SR-3 item versus what stays in normal issue management. The simplest rule is: if it’s supply-chain-sourced and affects confidentiality/integrity/availability, log it under SR-3.

Step 4: Normalize and triage weaknesses

Create a standard “Supply Chain Weakness Ticket” template:

• Affected third party/product/process
• Linked system(s) and data types
• Description of deficiency and evidence source
• Risk rating method (yours; keep it consistent)
• Recommended remediation options
• Owner, due date, dependency notes
• Status and closure criteria

Use a small set of remediation paths:

• Remediate (vendor fixes; you change configuration; you add monitoring)
• Mitigate (compensating controls, segmentation, reduced access scope)
• Transfer (contractual commitments, insurance where applicable)
• Accept (documented exception with approver and review cadence)
• Exit (replacement plan and timeline)

Step 5: Drive remediation with tracking and governance

Run a recurring cadence (monthly works well in practice) where stakeholders review:

• New weaknesses logged since last meeting
• Aging/stalled remediation items
• Exceptions awaiting approval or renewal
• Supplier concentration or systemic themes (same gap appearing across suppliers)

Your governance output should be a short set of meeting notes plus an updated register. This is the easiest evidence to produce during an assessment.

Step 6: Prove coordination

Coordination is proven through artifacts that show cross-functional action, such as:

• Ticket assignments across procurement/security/legal
• Approval workflows (risk acceptance sign-off)
• Contract redlines or clause trackers tied to specific findings
• Meeting minutes showing decisions and next actions

Step 7: Operationalize “recurring evidence”

Map SR-3 to:

• A named control owner
• A written procedure (SOP)
• A defined evidence set produced on a schedule

If you use Daydream, set SR-3 up as a requirement with an evidence checklist (register export, minutes, sample tickets, exceptions log) and assign owners so audit readiness becomes a monthly routine instead of a scramble.

Required evidence and artifacts to retain

Retain artifacts that prove design and operation:

Design evidence (static)

• SR-3 SOP / process narrative (scope, triggers, roles, workflow)
• RACI and escalation path
• Templates: weakness ticket, exception request, remediation plan format

Operating evidence (recurring)

• Supply chain weakness register (with status history)
• Sample set of weakness tickets showing: intake → triage → remediation/mitigation → closure
• Evidence of coordination: meeting notes, approvals, email threads or workflow logs
• Exception log with approvals and periodic review outcomes
• Contract clause tracker mapped to findings (where deficiencies are contractual)

Common exam/audit questions and hangups

Typical questions

• “Show me your SR-3 process. Where is it documented?” (expectation: one SOP)
• “How do you detect supply chain weaknesses outside of annual reviews?”
• “Who decides remediation versus acceptance, and where is that recorded?”
• “Show examples of deficiencies identified and fixed.”
• “How do procurement and legal coordinate with security on remediation?”

Common hangups

• No clear boundary: “Supply chain” is undefined, so the process is selectively applied.
• One-time diligence: evidence shows onboarding questionnaires, but no ongoing identification/remediation.
• No closure criteria: tickets exist, but nothing demonstrates risk reduction or formal acceptance.
• Coordination is verbal: nothing shows procurement/legal participation.

Frequent implementation mistakes and how to avoid them

1. Mistake: Treat SR-3 as a policy statement.
   Fix: publish an SOP with triggers, roles, and artifacts. Make it executable.

2. Mistake: Separate registers across teams.
   Fix: one source of truth (even if intake happens in multiple tools). Link out to supporting records.

3. Mistake: Exceptions become permanent.
   Fix: require expiry/review events for accepted risks and re-approval when material changes occur.

4. Mistake: Over-focus on vendors, ignore internal supply chain processes.
   Fix: include at least one internal process category (build pipeline, software sourcing, distribution/update mechanism, or privileged access provisioning for third parties).

5. Mistake: Coordination without accountability.
   Fix: name a single SR-3 process owner with authority to escalate stalled remediation.

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for SR-3, so you should treat this as an assessment-driven requirement rather than one tied to a specific published penalty in the provided materials. ¹

Practically, SR-3 failures tend to surface as:

• Repeat findings across multiple suppliers with no systemic fix
• Unmanaged vendor access paths and integrations
• Weak contractual posture that prevents timely notification, audit, or remediation
• Evidence gaps: inability to show how weaknesses were identified, tracked, and resolved

Practical 30/60/90-day execution plan

First 30 days (stand up the control)

• Write the SR-3 SOP (2–4 pages): scope, triggers, workflow, severity/risk rating approach, remediation paths, exception process.
• Create the SR-3 RACI and escalation route.
• Stand up the weakness register and ticket template.
• Pilot with a small set of critical third parties and one internal supply chain process.

Days 31–60 (run it for real)

• Expand intake channels: procurement renewals, security incidents, architecture reviews, and vendor access reviews feed the same register.
• Hold the first governance review meeting; record minutes and decisions.
• Close at least a few weaknesses end-to-end (or document formal acceptance with compensating controls).

Days 61–90 (make it repeatable and auditable)

• Define “definition of done” for common deficiencies (contract gap fixed, control implemented, monitoring in place, exit plan approved).
• Add reporting: open items, aging, exceptions, and systemic themes for leadership visibility.
• Run an internal mini-audit: sample weakness tickets and verify artifacts are complete.
• In Daydream, map SR-3 to the control owner, SOP, and recurring evidence tasks so evidence collection happens continuously.

Frequently Asked Questions

Does SR-3 require a specific tool for supply chain risk management?

No. SR-3 requires a process (or processes) that can identify and address supply chain weaknesses with coordination across roles. A tool helps with tracking and evidence, but the control is satisfied by documented, operating workflows. ²

What counts as a “weakness or deficiency” under SR-3?

Any condition in a supply chain element or process that increases risk and requires action, such as missing contract terms, unresolved security gaps, or fragile dependencies. Define categories and closure criteria in your SR-3 SOP to keep it consistent. ²

How do I prove “coordination” during an audit?

Show artifacts with cross-functional participation: ticket assignments, approvals, meeting minutes, and contract clause trackers tied to remediation items. Auditors want evidence that procurement/legal/security/system owners all played their role. ²

Is onboarding due diligence enough to meet SR-3?

Usually not. Onboarding questionnaires identify initial gaps, but SR-3 also expects you to identify and address weaknesses over time, including changes, incidents, renewals, and new dependencies. ²

How should we handle a vendor that refuses to remediate a deficiency?

Document the deficiency, evaluate compensating controls, and route a formal risk acceptance or exit decision to the accountable business owner with security input. Keep the decision record and set a review trigger for material changes or renewal. ²

Can we scope SR-3 only to “critical vendors”?

You can apply tiering, but you still need a documented scope and rationale for what is included and excluded, plus a way to detect when a lower-tier third party becomes higher risk due to data access or integration changes. Put the tiering logic in the SR-3 scope document. ²

Footnotes

1. NIST SP 800-53 Rev. 5; NIST SP 800-53 Rev. 5 OSCAL JSON

2. NIST SP 800-53 Rev. 5 OSCAL JSON

3. NIST SP 800-53 Rev. 5