Supply chains are headed into a volatile new year. This means manufacturers will face a slew of new—and familiar—challenges keeping production and distribution flowing.
However, one survey found that industrial companies are optimistic about the year ahead, reporting that 93% of manufacturing leaders are confident they’ll see business growth this year. Despite the optimism, survey respondents also anticipate struggles with labor, productivity, and cybersecurity, which we’ll touch on later in this article.
These and other findings highlight the need for manufacturers to prepare their businesses for the year ahead. This not only involves navigating supply chain challenges but also taking advantage of emerging trends in supply chain management.
In this article, we’ll dive into seven supply chain trends manufacturers should prepare for in 2025, plus practical tips for navigating disruptions.
Manufacturers around the world are bracing for an influx of challenges in the coming year. From skilled labor shortages and other ongoing issues to the potential of new tariffs, major supply chain issues top their list of concerns.
Here are some of the biggest supply chain challenges expected to impact manufacturing in 2025:
Geopolitical issues: Factors like political tensions, post-election policy changes, and events like cargo ship attacks continue to disrupt the flow of goods across the globe.
Increased costs: Most experts agree that the cost of goods and raw materials continues to climb—an issue multiplied by impending tariffs. This makes it harder for manufacturers to profitably meet demand.
Material shortages: Supply chain disruptions and ongoing trade wars often result in material shortages, slowing production and forcing manufacturers to find new suppliers.
Demand volatility: In light of the rising demand for personalized and sustainable products, manufacturers often struggle to consistently meet customer expectations.
Cybersecurity risks: As supply chain technology has advanced, so has the sophistication of cyber attacks. Now more than ever, manufacturers must grapple with the challenge of keeping their networks secure and customer data private.
Labor shortages: The scarcity of skilled workers will continue to challenge industrial companies in 2025, creating negative ripple effects across the supply chain.
To navigate these issues, manufacturing leaders must re-evaluate their supply chain management strategies, focusing on agility, resilience, and innovation. And that’s exactly what’s driving supply chain trends in 2025, which we’ll cover in the next section.
Staying ahead of 2025’s supply chain challenges requires a focus on resilience and flexibility—and an eye for growth opportunities. Let’s take a look at the major trends shaping the supply chain landscape in the near future.
In the wake of recent global elections, many companies are bringing their manufacturing operations closer to home. Reshoring and nearshoring not only keep transportation and logistics costs low, but these practices also help companies avoid steep tariffs and risks associated with complex international supply chains.
For example, many U.S. manufacturers are accelerating their reshoring and onshoring efforts following the 2024 presidential election. This shift is due to proposed tariffs on overseas goods, with early reports suggesting tariffs as high as 100% for some imports. Potential tax cuts for domestic production also play a big role.
Despite its benefits, close-to-home production can pose challenges for some companies, especially those relying on foreign trade partners for hard-to-find materials. When deciding on the best suppliers and routes for your business, make sure you have full transparency into each leg of your supply chain and can share data seamlessly with partners.
This way, you can ensure you’re making data-driven decisions about relocating operations.
Using artificial intelligence (AI) in supply chain management offers many advantages for manufacturers. But this year, the spotlight is on generative AI—which is proving to be a powerful tool in planning, sourcing, production, and even logistics. In fact, one report by EY indicates that at least 40% of supply chain organizations are heavily investing in generative AI.
In 2025, you can expect an uptick in generative AI adoption in the following supply chain areas:
Demand forecasting: Generative AI can analyze sales data, market trends, and external factors such as seasonality or economic conditions to create highly accurate demand predictions. This helps you align inventory levels and production schedules with real-time market needs.
Risk management: AI models can simulate and assess potential supply chain disruptions, such as raw material shortages, geopolitical tensions, or natural disasters. With these insights, you can quickly develop contingency plans and avoid unnecessary risk.
Cost negotiation: Generative AI evaluates historical purchasing data, supplier performance, and market benchmarks to recommend pricing strategies. This allows you to negotiate favorable terms and spot cost-saving opportunities efficiently.
Production planning: In production scheduling, you can use generative AI to simulate different scenarios and balance variables like machine availability, labor, and material shortages. This improves resource utilization, minimizes downtime, and speeds time-to-market.
Predictive maintenance: Generative AI also improves maintenance processes by analyzing sensor data and equipment usage patterns. Predictive maintenance helps you identify potential machine failures proactively, extending asset lifespan and reducing unplanned downtime.
The bottom line is that generative AI is taking much of the legwork out of supply chain management tasks. If you’re curious about implementing generative AI in your supply chain operations, focus on high-value use cases first while considering this emerging technology’s limitations.
Sustainability will be a major focus for manufacturers in 2025. Environment, Health, and Safety (EHS) regulations, customer demands for sustainable products and packaging, and the need for environmental risk management strategies are all key drivers of sustainability initiatives.
In fact, Blue Yonder’s 2024 Supply Chain Executive Survey revealed that 44% of organizations have already increased sustainability initiatives in the past year. In 2025, we expect this percentage to increase even more. Not only will we see stricter compliance requirements, but we can also expect companies to make supply chain sustainability a core part of their business strategy.
For example, reducing Scope 3 emissions, or the carbon footprint generated from supply chain activities, will be a key focus for many manufacturers in the coming year. This may involve:
Ensuring responsible raw materials sourcing—which could include changing suppliers
Choosing shorter or more fuel-efficient transportation routes
Opting for more renewable energy sources
Using more recycled materials in packaging and production
To create a greener supply chain, it’s crucial to start with data. Make sure you conduct a thorough supply chain audit—focusing on areas of high environmental impact—and partner with suppliers to ensure you’re using sustainable (yet cost-effective) materials.
Agility will be a major differentiating factor for manufacturers in 2025—not only in production but as an overall supply chain strategy. Much like agile manufacturing, an agile supply chain focuses on responsiveness and adaptability in the face of disruptions and changing customer expectations. This approach is becoming increasingly important amid the rise of e-commerce and the demand for fast delivery of personalized goods.
In an agile supply chain, the ability to respond to change in a rapid yet cost-effective manner is paramount. Agile systems switch production plans and vendors on short notice and rely on real-time data from every part of the supply chain. Industries that produce customizable products (e.g., textiles, consumer electronics, and fashion) or have complex supply chains (e.g., technology and automotive) benefit the most from an agile supply chain.
Moving into 2025, we expect to see more companies adopt agile strategies or combine them with a lean approach. It’s important to note that this shift will require investments in advanced digital technologies, such as big data analytics and AI, to ensure successful execution.
As supply chain management systems advance, 2025 will bring us much closer to realizing the concept of the autonomous supply chain. In short, an autonomous supply chain uses advanced technologies like robotic process automation (RPA), AI, and the Internet of Things (IoT) to conduct supply chain operations with very little human intervention. While no supply chain today is fully autonomous, we can expect to see more and larger investments in supply chain automation.
The reasons behind these projected investments are twofold. First, automating supply chain processes, including procurement, logistics, demand planning, and production, improves responsiveness and resilience. Additionally, this level of automation allows manufacturers to maximize operational efficiency despite challenges like ongoing labor shortages and market volatility.
In light of supply chain automation’s benefits, it’s crucial to note that self-driving supply chains don’t yet exist. Yet investing in high-value automation use cases is a must for ensuring future resilience and competitiveness.
Cybersecurity will be a major differentiating factor for manufacturers in 2025—especially as supply chains become more interconnected and data-driven. With increased digitization comes greater exposure to cyber threats that can disrupt operations and damage customer trust.
Ransomware attacks, data breaches, and supplier vulnerabilities are some of the top risks manufacturers face. A single breach can bring entire operations to a standstill, leading to costly downtime and reputational damage. To stay ahead, you need to:
Implement end-to-end cybersecurity protocols
Continuously monitor for vulnerabilities across their networks
Train employees to recognize and respond to cyber threats
Much like agile supply chains, a proactive cybersecurity strategy focuses on resilience and adaptability. As threats evolve, manufacturers that prioritize security will gain a significant edge to ensure uninterrupted operations and safeguard their future.
Supply chain resilience—the ability to recover from disruptions quickly (think: the “3 Rs”)—will continue to be a top concern for industrial leaders in 2025. As advanced digital technologies are helping supply chains do just that, it becomes clear that innovation is a key element of a successful supply chain strategy.
A common misconception among industrial and supply chain professionals is that resilience and innovations are separate areas of investment. However, strengthening supply chains requires access to vast amounts of real-time data and the ability to glean reliable, actionable insights. This is why digital transformation is critical for reducing supply chain complexity and the impact of unforeseen disruptions.
As companies embrace the value of supply chain digitization, we expect innovations directly tied to transparency, proactivity, and flexibility to become central to resilience strategies.
As manufacturers navigate the challenges and opportunities of 2025, connected technology will be a critical enabler of supply chain resilience, agility, and innovation. By using digital tools to improve visibility, collaboration, and data-driven decision-making, manufacturers can stay ahead of disruptions and remain competitive in an unpredictable global marketplace.
Connected workforce platforms help industrial companies prepare for supply chain volatility by:
Improving real-time visibility into production processes and supply chain bottlenecks
Reducing unplanned downtime with preventive maintenance and issue resolution
Strengthening team collaboration for faster response to disruptions or shortages
Streamlining communication across operations, IT, and supply chain teams
When disruptions hit, manufacturers using connected technologies can act faster, reduce costly delays, and maintain operational momentum.
Ready to build a more resilient and agile supply chain?
Book a demo with L2L today and see how connected workforce technology can future-proof your operations.