Resilient supply chains are critical for business continuity. However, with global challenges intensifying in 2024, businesses head into the new year facing an ever-increasing list of potential risks to their sourcing and inventory strategies.
The COVID-19 pandemic highlighted critical vulnerabilities in supply chain operations, pushing companies to prioritise risk management as a strategic advantage. However, several years later, FTI Consulting research shows that nearly 40% of companies need greater contingency plans for supply chain disruptions.
So, what now? In this article, we explore the key global and local supply chain management issues and challenges projected for 2025 and provide strategies to enhance supply chain resilience now and into the future.
Key events creating supply chain issues in 2025 and beyond
So, what are the major local and global issues likely to impact supply chains and business operations in 2025? Let’s explore them.
Elections and summits
November brought significant global events with far-reaching implications for supply chains. The G20 summit prioritised social inclusion, global reform and sustainability, while COP29 reinforced international efforts to combat climate change. In addition, it’s still unclear how the re-election of Donald Trump in the US, and his “America First” policies, will affect trade around the world.
These events will undoubtedly create global supply chain challenges and opportunities. As we approach 2025, uncertainty looms over the impact of anticipated new tariffs, trade barriers, regulations, labour laws and environmental standards, posing both challenges and opportunities for supply chain managers worldwide.
Conflict and tension
2024 was marked by ongoing conflicts in the Middle East and Ukraine, trade disputes, geopolitical tensions and sanctions. Supply chain managers are bracing for more of the same in 2025.
Several key geopolitical flashpoints are located near critical shipping chokepoints, including the Suez Canal, the Straits of Taiwan, and Malacca. The absence of a unified US foreign policy has left no framework for mitigating or resolving these tensions. Combined with the growing nationalism of China, Russia and India (which has a trade agreement with Australia), conflict and tension are set to increase.
Economic uncertainty
Inflation, currency rate fluctuations, and changing interest rates are critical global issues affecting supply chains. These economic issues make it challenging to predict pricing and maintain profitability, and they are expected to persist well into 2025 amid global uncertainty.
2024 was the year of elections, with voters in more than 70 countries going to the polls. How these elections affect supply chains is still to play out, but election-driven policies can increase or decrease demand in certain industries. 2025 will undoubtedly be a year of economic uncertainty for many.
Climate change and weather events
Weather is forecast to be a key challenge of supply chain management in 2025. Economist Impact reports that a billion-dollar weather event (an event that causes US$1 billion in damages) occurs every three weeks. Forty years ago, a billion-dollar weather event happened every four months.
Extreme weather, climate change and environmental challenges increasingly disrupt supply chains, affecting the availability of raw materials, production and warehousing. Weather and climate events can disrupt transport routes, force factories to close, destroy crops and hamper manufacturing. Consumers concerned about climate action are also putting pressure on businesses to adopt more sustainable practices.
Labour concerns
This issue of sustainability goes beyond weather and climate.
Supply chain managers must also increasingly heed the concerns of investors, regulators, employees and customers to measure and mitigate the social cost of doing business. For example, if abusive or unsafe labour practices are discovered along the supply chain, there is mounting legal and consumer pressure to find alternatives or change those practices. The increasing cost of labour in some markets is also an ongoing concern for businesses across a range of industries.
Technology and cyber threats
Increasing cyber threats can significantly undermine supply chain resilience and cause disruptions. The Medibank and Optus breaches of 2022, and the recent MediSecure hack, in which the personal data of 12.9 million Australians was compromised, show how vulnerable even the largest organisations are to these threats. This not only leads to financial loss but also erodes trust among partners and customers.
But it’s not just direct attacks and threats that are a concern Outdated technology lacks the speed, integration capabilities, security features and advanced analytics required to manage supply chain complexities, resulting in delays, errors and inefficiencies. As legacy systems get left behind, we’ve seen organisations such as ANZ, Telstra and BOQ investing heavily in updates to their technology and systems.
Strategies to mitigate supply chain issues
Investing in supply chain resilience requires businesses to navigate geopolitical tension, adopt new technologies and diversify suppliers, which can be challenging and costly. But it is worth it. According to the Wall Street Journal, businesses that invest in supply chain resilience enjoyed a 23% growth in revenue from 2018 to 2023. This compares to the 15% growth their peers enjoyed.
So, how do you, as a business owner or supply chain manager, practically mitigate supply chain risks in 2025? Here are some thought-starters:
- Develop a better understanding of your suppliers and the businesses that supply them. Conduct regular audits to identify potential vulnerabilities.
- Adopt technology to increase visibility and simplify processes. Artificial intelligence and IoT monitoring can help make real-time data-driven decisions for efficiency. This information can be shared with stakeholders to improve coordination and reduce disruptions.
- Build stronger partnerships with stakeholders, suppliers and logistics providers to ensure alignment on risk management.
- Collaborate with internal finance and marketing teams to enhance logistics decision-making, helping to manage costs and customer expectations.
- Source from multiple suppliers across different geographies to reduce dependency on a single region or supplier. Establish backup suppliers for critical materials and components.
- Focus on renewable energy for operations and partner with eco-conscious energy and raw materials suppliers.
- Create detailed risk assessments and emergency response plans for disruptions such as cyberattacks, natural disasters or geopolitical conflicts.
- Protect supply chain data with multi-factor authentication, encryption and regular security audits.
Octet’s suite of financial solutions also enhances supply chain resilience by addressing key cash flow challenges and promoting operational stability. With our intelligent supply chain finance solutions, you can extend payment terms to suppliers while ensuring your creditors are paid promptly.
Trade Finance ensures smooth import transactions by funding inventory and service purchases upfront, reducing cash flow strain during critical trade activities. While Debtor Finance (also known as Invoice Finance) unlocks funds tied up in unpaid invoices, providing immediate cash flow to manage expenses and invest in growth.
Your global supply chain partner
The challenges in global supply chains are only likely to intensify in 2025 due to an increasingly unpredictable global landscape. However, businesses that proactively invest in robust supply chain strategies can safeguard their operations and position themselves for sustainable growth.
Octet’s innovative supply chain financial solutions provide the flexibility and support to navigate supply chain management issues and challenges, strengthen supplier relationships and optimise cash flow. Get in touch to discover how we can help power your business.
Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.
