Over the past decade, manufacturing finance and security teams have done what they were supposed to do: secure internal systems, reduce employee risk, and tighten financial controls.
But today’s most damaging fraud doesn’t challenge those investments. It bypasses them by operating through trusted suppliers that sit on the perimeter.
The latest 2025 AFP report shows a sharp rise in vendor impersonation fraud and third-party compromise. All it takes is one compromised vendor inbox to send a bank-change request that looks legitimate to both security and finance. Recent manufacturing incidents, such as the ZipLine Phishing, show just how effectively attackers exploit these gaps.
In short, no matter how much you invest internally, your security and financial protection are only as strong as your most vulnerable vendor.
This article explains why manufacturing vendor fraud is rising, why traditional security and finance controls miss it, and how leading manufacturers are stopping it.
Why Manufacturing is a Prime Target
Imagine this: A Tier-1 manufacturer gets an urgent email from a long-time metal fabrication supplier about a bank change. Production is slipping, the plant manager is calling every hour for updates, and everyone feels the pressure to keep things moving. The supplier is a 12-person family business they’ve trusted for 14 years—so AP processes the request.
Three days later, the real supplier calls: Where’s our payment?
The email wasn’t from them. Their inbox had been quietly compromised.
Incidents like this reveal why manufacturing organizations are increasingly attractive targets for vendor fraud. Attackers don’t need to breach the manufacturer itself—they exploit trusted suppliers that sit directly inside high-value payment workflows.
Manufacturing environments offer attackers:
- High payment volumes, where fraudulent changes blend into the routine transaction flow
- Large transaction sizes make even a single diverted payment highly profitable
- Deeply trusted, specialized vendors, often small, lightly defended, and easier to compromise than the manufacturers they serve
For attackers, this combination delivers maximum payout with minimal resistance.
The Modern Playbook: How Attackers Exploit Manufacturing Vendor Fraud
The story of that family-run supplier mirrors trends highlighted in the 2025 Association for Financial Professionals report and what security and finance teams see across manufacturing today. Here’s how these attacks typically unfold:
Compromised Vendor Inbox: Fraud From a “Trusted” Source
Attackers don’t start with your inbox—they breach a vendor’s. Once inside, they quietly observe real conversations, learn workflows, and wait for the right moment to intervene.
Fraudulent Bank-Change Requests That Blend Into Vendor Noise
These days, attackers don’t just send sloppy scams. They match the vendor’s tone, reference real purchase orders, and drop the request into the natural rhythm of ongoing threads. These bank updates feel routine—especially when dropped into ongoing operational activity.
Operational Disruption as Leverage
Attackers reinforce legitimacy by injecting believable operational context—shipment delays, customs issues, missed production windows, or part shortages—designed to keep workflows moving without second-guessing.
The Stakes: One Fraud Incident Can Stop Production
Manufacturing vendor fraud has far-reaching consequences. Because in manufacturing, fraudulent payment isn’t just a financial loss—it behaves like a production outage. It can stall lines, jeopardize customer commitments, and ripple through the entire supply chain.
1. When a Vendor Isn’t Paid, Production Doesn’t Move
You know this dynamic well. In the example of that family-run metal fabrication shop, one fraudulent bank update meant their payment never arrived. And like many small specialized vendors, they don’t ship until they’re paid.
Parts stay in their dock. An entire line waits on a component that should have been delivered days ago. One missing part can stall multiple builds, disrupt sequencing, and cascade through downstream schedules.
2. Downtime Cascades—and Costs Climb Fast
Manufacturers don’t need a reminder about downtime:
- Labor is still on the clock
- Machines sit idle and require rescheduling
- Other runs get bumped
- Overtime and expedited freight become the default “fix”
A $50K rerouted payment can quickly escalate into millions in recovery. And industrial operations face an average of $1.9 million per day in downtime after a cyber-related disruption. This is exactly how a quiet vendor compromise turns into a full-blown operational problem.
3. Customer Commitments Slip—and Trust Takes the Hit
When a single vendor delay backs up your line, your customers feel it immediately. OEMs, distributors, and major buyers don’t care that a mom-and-pop supplier was impersonated—they see missed delivery windows, SLA penalties, and broken commitments.
In manufacturing, reliability isn’t just a KPI. It’s a competitive differentiator. And a single fraudulent request can quietly chip away at that trust.
Why Traditional Controls Fail Vendor Fraud
But how do manufacturers even get to this point? After all, finance, procurement, and security all have traditional controls and solid tools in place to stop this very thing from happening. So why aren’t these traditional controls and tools catching the rising manufacturing vendor fraud?
Security tools only see “clean” messages
An email coming from a vendor’s genuine account with no malware or spoofing passes most security filters. In the story from the beginning, even though the message was malicious, it looked like a normal vendor interaction because it was sent from their real email. Security tools designed to catch suspicious senders or malicious attachments can miss this.
Finance systems validate documents, but not behavior
ERP systems and AP workflows often check for PO match, invoice format, vendor ID- but they don’t verify the reason behind a bank change. If the routing number is valid, it passes bank checks, and if the invoice aligns with expected formats, finance teams approve it. But fraud lives in the behavioral change, not the static data.
No one team sees the full vendor journey
Procurement, AP, operations, and security each manage a different piece of the vendor relationship. Separately, these groups see only their slice of activity: the email, the purchase order, the urgency. Where they don’t communicate, attackers live. The fragmented ownership becomes the attack surface.
What High-Performing Manufacturers Do Instead
Best-in-class manufacturers know that a compromised vendor can halt production just as quickly as an OT outage. So they build resilience directly into their vendor ecosystem:
- Treat vendor behavior as an operational risk signal.
Instead of validating only what changed (bank details, invoices, domains), teams monitor how vendors behave over time. Sudden shifts in timing, communication patterns, or payment activity surface as risk signals—before money moves.
What this changes: Finance catches fraud that looks “perfect” on paper. Security gains visibility into threats that never trigger malware or phishing alerts.
- Share vendor context across finance, procurement, and security.
Rather than working from isolated systems, teams operate from a shared view of vendor activity. Bank changes, unusual email behavior, and domain anomalies are visible across roles—not trapped in a single inbox, ERP screen, or ticket queue.
What this changes: Finance no longer approves changes without a security context, and security can detect risk without slowing down legitimate transactions.
- Deploy automated controls at high-risk moments.
Advanced checks are applied exactly where attackers insert themselves—vendor bank changes, invoice updates, domain modifications, and last-minute payment requests—so scrutiny increases when risk is highest, not across every transaction.
What this changes: Finance avoids manual callbacks under pressure. Security extends protection into business workflows instead of stopping at the inbox.
- Invest in defenses built for vendor-originated fraud.
Email security protects inboxes. ERPs validate fields. Banks verify routing numbers. None of them understands vendor behavior across the full relationship. High-performing manufacturers close that gap with behavioral monitoring designed specifically for vendor interactions.
What this changes: Finance reduces exposure to high-impact losses, and security closes one of the most exploited blind spots in modern fraud.
The Bottom Line for Manufacturers
The reality is simple: in manufacturing, one compromised vendor can cause as much damage as any internal system outage. That’s why leading manufacturers now treat vendor behavior as a core operational risk—just as critical as machine uptime or production throughput.
But doing this manually, across hundreds or thousands of suppliers, just isn’t possible. Attackers are using AI to mimic your vendors with precision. High-performing manufacturers are meeting that moment with behavioral AI of their own—technology that understands how each vendor normally communicates, transacts, and behaves, and flags deviations instantly.
This is why manufacturers are turning to behavioral monitoring platforms like Trustmi. Tools designed specifically to understand how vendors normally behave and detect deviations before payments move.
Request a demo today to see how Trustmi protects manufacturers before fraud impacts production and your bottom line.
