Overcoming obstacles and embracing new supply chain priorities

From the March-April 2025 edition of Supply Chain Management Review.

March-April 2025

Inside this month's issue of Supply Chain Management Review, we look at the complicated process of managing parts for military aircraft and what private sector supply chain managers can learn. Plus, understanding…

Browse this issue archive.

Access your online digital edition.

Download a PDF file of the March-April 2025 issue.

So far, this year has been a continuation of 2024 with supply chains facing disruptions and challenges resulting from multiple factors beyond anyone’s control. At the beginning of 2025, APQC wrapped up its 11th annual Supply Chain Management Priorities and Challenges research with 379 supply chain professionals from around the world and across multiple industries.

The research looked at organizations’ supply chain management performance, priorities, and anticipated trends. The survey revealed that supplier relationships and supply chain visibility are top priorities for the year, although these are hampered by a lack of collaboration and challenges with the adoption of new technologies.

Current performance and obstacles

After years of instability, we can no longer be surprised when there is a supply chain disruption. Risks related to geopolitical issues, labor concerns, severe weather, natural disasters, and more have led to a downward trend with regard to organizations achieving their business goals (Figure 1).

 

In 2024, there was a 7% uptick in the number of organizations that reported performing equal to or better than their competitors. This is still far short of the levels from before the pandemic, but perhaps indicates the start of a slow and hopefully steady improvement.

It is clearly a challenge for supply chain organizations to achieve their goals and match or surpass the performance of their competitors. Improving supply chain processes could help with these measures, but there are several obstacles preventing supply chains from making the necessary changes.

As shown in Figure 2, the top obstacle named by organizations is a lack of collaboration across functions and externally, followed closely by the implementation of new technologies.

 

Supply chains encompass many different functions within an enterprise that must work together to ensure things run smoothly. In addition, supply chain functions must work with external partners such as suppliers and 3PLs/4PLs so that the entire chain performs optimally. More than half of organizations say that the working relationships among these functions and partners could be more collaborative, and that the lack of collaboration affects the company’s ability to improve.

Nearly the same percentage of organizations named the implementation of new technologies as an obstacle to improvement. New technologies such as AI, internet of things (IoT) devices, and drones add value and bring complexity to running supply chains. Many organizations use different legacy systems and continue to struggle with master data management. New tools may offer the promise of enhanced capabilities, but implementation requires training, investment dollars, and updated processes. An inadequate rollout can delay or prevent the organization from obtaining maximum benefit and return on investment.

Related infographic: Take Aim at 2025 Supply Chain Goals with Greater Collaboration and Visibility

Work on collaboration. Collaboration can take different forms, depending on whether both parties are within the same organization and the degree to which their work affects others. On the more time-intensive side, collaboration can involve real-time meetings to identify points of collaboration, determine how they will work together, and how their collaboration will affect on-the-job actions.

Part of collaboration is sharing knowledge that benefits all parties involved, and knowledge management provides a framework for how that knowledge is captured and shared. This can be as simple as capturing ideas in a document that is shared with others. The organization must also determine how formal the efforts will be: whether knowledge will be captured in a centralized repository or passed directly from person to person. Some of these will be dictated by factors such as available resources, the existing infrastructure, and the level of buy-in for collaborative activities.

Changes in priorities

As part of its research, APQC asked survey respondents to identify their organization’s priority focus areas for investing resources, innovation, and hiring for 2025. As shown in Figure 3, the top two areas of focus are sourcing and procurement, and logistics and inventory management. This is the first time since 2019 that supply chain planning is not the top focus area.

Caption

The shift toward increased investments in procurement and logistics reflects organizations’ desire to change their strategies and tactics to mitigate the effects of ongoing supply chain disruptions.

Sourcing and procurement. This year, half of the organizations have made supplier and vendor relationship management a top priority for procurement (Figure 4). Next is risk mitigation, named as a priority by 34% of survey respondents. This may take the form of finding alternate suppliers to avoid relying on one region, factory, or supplier. Organizations may also choose to focus on their most strategic suppliers to create stronger relationships.

 

Looking at last year’s research results, the percentage of organizations making supplier relationship management a top priority has increased (from 32% in 2024 to 50% this year). Many recognize the direct connection between strong supplier relationships and risk mitigation: these relationships allow for greater visibility into supply chain disruptions (and potential disruptions) and improved quality control.

One way organizations are creating closer relationships is through the Vested approach. In the Vested model, organizations develop highly collaborative, win-win relationships with their suppliers. These relationships start from a place where both parties are equally committed to each other’s success. As a result, they can innovate in ways that improve service and reduce costs.

When considering the strategies they will take to reach their business goals, more than half of the respondents to APQC’s survey say they plan to improve key supplier relationships. Over the last year, the percentage of respondents indicating this strategy has also increased from 40% in 2024 to 52% this year. These results align with organizations prioritizing supplier relationship management this year. Further, it supports the need for organizations to consider an approach like the Vested model to strengthen these key supplier relationships.

Logistics. Compared with research results from 2024, supply chain visibility is a top priority for more logistics functions. The percentage of organizations identifying it as a top priority in APQC’s most recent survey is 61% (Figure 5), whereas in 2024 it was 47%.

 

As the last few years have taught us, supply chain visibility is critical in logistics and inventory management. Tracking goods and materials in real time enables organizations to pinpoint any unexpected bottlenecks and react swiftly to potential disruptions. Visibility also provides crucial support to the management of extended and outsourced supply chains because it ensures that organizations can follow raw materials from sourcing to the delivery of finished products.

After supply chain visibility, the next top priority for logistics is inventory management. Optimizing inventory can reduce both overstocking and stockouts, leading to cost savings. In fact, when it comes to the strategies organizations are adopting to meet their logistics goals, 62% are targeting inventory optimization.

Other strategies organizations are adopting include standardizing processes (48%) and implementing methods to reduce transportation costs (46%). Standardized processes can support greater supply chain visibility. Organizations should consider standardized processes and strong data governance as necessary foundations and prerequisites for automation since automating a bad process just yields a faster bad process. Once key processes have been improved and standardized, then technology can help pinpoint opportunities for cost reduction and cycle time improvements.

Keys to success in 2025

With adaptability in mind, organizations should aim to innovate when thinking about 2025. There are opportunities to change which areas of the supply chain they focus on, as well as how they work with both internal and external stakeholders. Suppliers can be a source of innovation, and close relationships with key suppliers can result in new tactics that benefit both parties. Shifting from higher-level approaches to a closer look at processes, activities, and tasks within procurement and logistics can yield more actionable, tactical changes and improvements.

With all the attention being paid to technology, it is too easy to lose sight of the importance of people and relationships to successful supply chain operations. Organizations should continue to invest in employee development to ensure that strategic decisions are well-informed and that operations continue in an efficient manner. People are also vital to effective collaboration. This key strategy requires staff who capture and share critical knowledge to improve efficiency, yield benefits, and develop innovative approaches.

If the last few years have taught us anything, it’s that supply chains will face unpredictable changes and disruptions from multiple sources. Armed with that knowledge, supply chain professionals should plan accordingly. This means focusing on executing standardized processes while embracing change, developing novel solutions, and moving beyond ingrained ways of thinking to try something new. Thriving requires nothing less.

* Data in this content was accurate at the time of publication. For the most current data, visit apqc.org.

About APQC

APQC (American Productivity & Quality Center) is the world’s foremost authority in benchmarking, best practices, process and performance improvement, and knowledge management (KM). With more than 1,000 member organizations worldwide, APQC provides the information, data, and insights organizations need to support decision-making and develop internal skills. Learn more.

This content includes median values sourced from APQC’s Open Standards Benchmarking database. If you’re interested in having access to the 25th and 75th percentiles or additional metrics, including various peer group cuts, they are either available through a benchmark license or the Benchmarks on Demand tool depending on your organization’s membership type.

APQC’s Resource Library content leverages data from multiple sources. The Open Standards Benchmark repository is updated on a nightly cadence, whereas other data sources have differing schedules. To provide as much transparency as possible, APQC will always attempt to provide context for the data included in our content and leverage the most up-to-date data available at the time of publication.

SC
MR