Midterm outlook for the Roaring ’20s: Decade of digitalization and disruption, year 6

From the January-February 2025 edition of Supply Chain Management Review.

January-February 2025

As much discussion and deployment of artificial intelligence took place in 2024, 2025 is shaping up to be an even bigger year. This year will likely see the acceleration of AI, and specifically Generative AI, into…

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By Dr. Jack Crumbly and Richard J. Sherman

We’ve hit the midway point in the Decade of Disruption and what have we learned?

• A connected supply ecosystem vision is still unclear across industries resulting in an increasing gap between leaders and laggards. Leaders have transformed from “supply chain” to “ecosystem supply network” thinking. Connected and collaborative network platforms enable digital enterprise process frameworks, innovating digital twins, pervasive robotic process automation (RPA), cognitive data analytics and AI/ML, on-demand simulations, and real-time resilient decision-making support.
• Innovation and change management are interoperable and take more time and resources than anyone realizes. Companies that strategically approach innovation and change as synonymous have a distinct advantage in terms of competitiveness and performance. A clear vision with management commitment provides companies with a practical roadmap to incremental, planned innovation that starts with pragmatic process improvement change priorities with clear goals and performance management milestones. The goals of the longer-term vision enable and energize associates with creative tension to accelerate and adopt current process changes to realize the vision.
• Technology has limitations and capacity constraints. An ecosystem supply network generates new data algorithmically. Artificial intelligence (AI) is computing intensive. Machine learning (ML) requires significant quantities of “new” historical data. Collaborative ecosystem connectivity drives increased bandwidth. A review of market research over the past 30 years reveals a clear vision of the “Industry 4.0” digital supply network ecosystem. It is evolving as cloud-deployed computing power, applications, and bandwidth become pervasive.
• The leaders established long-term visions and evangelized system thinking and supply network management to drive C-level strategic thinking and engagement. Armed with a shared enterprise vision and senior management commitment, the leaders (for example, Gartner’s Annual Top 25 Supply Chains) have evolved and adopted incremental technology innovations to advance their strategic plans to achieve market and best practices leadership. The innovation adoption curve is shifting and late majority time compression is causing a dropping off of “Sherman’s Existential Mountain,” as the slow adopters tread water in the pool of laggards awaiting eventual failure.
• There is no shortage of innovative concepts and ideas. Unfortunately, there is also no shortage of skepticism impeding adoption.

2025 key market drivers of digital transformation and disruption trends/challenges

Let’s break down the key trends and challenges that will define the supply chain landscape in 2025.

Key industry trends in 2025

1. Digital transformation and Industry 4.0 integration accelerates

The continued integration of digital technologies into supply chain operations will be one of the most transformative trends in the near future. Industry 4.0 technologies such as the Internet of Things (IoT), artificial intelligence (AI), machine learning (ML), and robotics will play increasingly critical roles in driving efficiencies, improving decision-making, and enabling more agile, resilient supply networks.

2. Supply chain resilience and agility

Following the predictable and unpredictable disruptions caused by the COVID-19 pandemic, multiple climate/weather changes/disasters, and geopolitical changes, supply chain resilience has become a top priority for executives. The focus is on creating supply networks that can not only withstand shocks (from natural disasters to geopolitical tensions); but can also adapt and recover quickly.

Strategic responses to adopting frameworks to achieve resilience:

Diversification of suppliers and ecosystem commerce partners. Moving away from reliance on a single supplier or region, especially in industry ecosystems such as semiconductors, energy, raw materials, and their dependent strategic segments. Companies must define and simulate “virtual and physical” ecosystem components and interdependencies.

Reshoring and nearshoring. Companies are increasingly considering the tariff, tax, and ESG/DEI implications for reshoring (bringing manufacturing back to their home country) or nearshoring (moving operations closer to home) to reduce lead times and mitigate risks.

Redundant logistics strategies. Building redundancy and digital twin simulations into logistics and transportation networks to ensure alternative routes are available in case of disruption. Companies must strategically include connectivity analysis for the execution of event management that considers critical ecosystem actions and resulting intended and unintended consequences.

3. Sustainability and circular supply chains

Sustainability is no longer a “nice to have” but a critical business imperative, driven by consumer demand, regulatory pressure, and corporate responsibility goals. Companies are being held accountable for their environmental and social impacts across the entire supply chain:

Carbon footprint reduction. Companies will be held to stricter carbon reduction targets, necessitating investments in greener logistics, energy-efficient manufacturing processes, and alternative materials.

Circular supply chains. A move toward circularity, where products are designed for reuse, recycling, and remanufacturing, will gain traction. This trend will require collaboration across market ecosystems including suppliers, manufacturers, logistics providers, and supporting partners.

ESG reporting. Supply chain transparency and the ability to report on environmental, social, and governance (ESG) metrics will be crucial for winning customer trust and maintaining compliance with often conflicting and competing geopolitical regulatory requirements and “time to adopt” realities.

4. AI-powered supply chain analytics

Data has always been a cornerstone of supply chain management; but, the explosion of available new network data sources combined with AI-powered analytics will revolutionize how supply network ecosystems are managed. By the end of 2025, predictive and prescriptive analytics will be mainstream, supporting and advising smarter network-sensitive decisions faster.

5. Hyper-personalization and customer-centric supply networks

Consumers expect faster deliveries, personalized experiences, and greater product variety. In response, supply chains are becoming more flexible and customer-centric. While this trend is particularly prominent in e-commerce and retail, all industries are experiencing pressure to meet diverse customer demands with speed as a competitive differentiator. The result will be increased usage of “last mile” delivery and flexible storage strategies.

Industry challenges facing supply chain executives in 2025

1. Supply network talent shortages

Despite technological advancements, supply chain operations will continue to rely on human expertise, especially in strategic decision-making, risk management, and complex problem-solving
driving global shortages of supply chain talent and required skills. Meeting the challenges of attracting, developing, and retaining talent will require new thinking in organizational and human resource management:

Attracting and retaining talent. The supply chain industry is struggling to attract younger talent, who may view the sector as less attractive compared to industries like technology, marketing, and finance. Implementing diverse talent within the supply chain industry is critical as organizations update diversity, equity, and inclusion (DEI) efforts. Business students in colleges and universities, including Historically Black Colleges and Universities (HBCUs) and Hispanic Serving Institutions (HSIs), learn about career opportunities in supply chain management too late when considering career paths. Students have visions of residing in popular states (i.e. southeast U.S.) post-graduation. Organizations must consider adapting to these locations or provide incentives (work-life balance, remote employment) to attract talent.     

Upskilling the workforce. As supply chains become more digital and automated, the demand for professionals skilled in supply network data analytics, AI/ML, and digital tools will increase. Companies will need to invest heavily in training and upskilling their existing workforce. Companies would do well to work with academia (especially local institutions) to ensure curricula content and required skills will meet future work requirements. Solutions for upskilling the workforce include incentivizing early career talent to cross-train analytics skills with supply network management functions. This includes collaboration with application software providers to offer certificates/badges in supply chain management functions supported by the software. Once talent is assigned to supply chain management roles, management must consider how organizations make supply chain management rewarding, challenging, and fun to build a pipeline of senior supply chain talent that can be routinely developed.

Emerging mid-level managers with great potential in several industries are considering leaving the supply chain profession due to stress, difficulty in making an impact within the organization, and lack of a clear path to leadership. Current emerging future leadership must 1) be provided a clear path with development support and 2) be leveraged to recruit new college talent amid growing demand for skilled supply network professionals.  

2. Global geopolitical and economic uncertainty

Responding and adapting to geopolitical tensions, trade wars, labor, and economic uncertainties will continue to be major challenges for supply chain executives. Factors such as changing trade policies, tariffs, and sanctions are having a profound impact on supply chain operations and costs. Transportation network mode and lane disruptions from geopolitical events have to be baked into the strategic and operating plans.

3. Cybersecurity threats

As supply networks become more connected and data-driven, they also become more vulnerable to cyber-attacks. The increasing digitization of supply chains has made cybersecurity a critical concern for executives.

4. Cost management and inflationary pressures

Rising costs across the board—from raw materials to labor to energy and transportation—will put pressure on supply chain budgets and pricing. Supply network executives will need to find ways to mitigate these costs while maintaining service levels and profitability.

5. Geopolitical regulatory compliance

Governments and regulatory bodies are increasingly scrutinizing supply chains for compliance with environmental, labor, and safety standards. Meeting these regulations can be costly and time-consuming, especially as different regions and governments implement their own rules. Compounding the regulatory challenges is the lack of consistent digital ecosystem processes and technological platforms to manage compliance within a reasonable time frame for implementation considering unintended consequences to the network infrastructure and natural resources.

Navigating the future

The evolving transformation from a supply “chain” to an ecosystem supply “network” landscape in 2025 will be defined by its complexity, resilience, and rapid evolution. Executives are challenged to balance adopting new technologies with the requirement/mandate to build resilience, sustainability, compliance, and agility into their operations. While the challenges—such as geopolitical and economic uncertainty, skill shortages, cybersecurity risks, and rising costs—are significant, they also present opportunities for companies that can define a clear vision and leverage the energy from organizational creative tension to innovate and adapt quickly to achieve the vision. Supply network leaders who embrace digital transformation, sustainability,
and customer-centricity will be well-positioned to thrive in this dynamic collaborative ecosystem network environment.

About the author

Dr. Jack Crumbly, Ph.D., is the management department chair and associate professor at Tuskegee University and can be reached at mailto:[email protected]. Richard J. Sherman, Global Links column editor, is a retired “Guru of SCM” at Gold & Domas Research and can be reached at [email protected].

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