2025 promises to continue many of the evolving trends that have defined global supply chain activities since the pandemic. Increased frequency and severity of disruption takes many forms. From geopolitical conflict, the climate crisis, skills shortage, to economic pressure, and the impact of new technologies, multiple factors have driven a surge in nearshoring and other efforts to increase supply chain resilience. 

While the recent past offers clues as to the shape of the future, it’s difficult to predict with certainty. We spoke to supply chain expert Andrew Black, Director at specialist procurement and supply chain consultancy Efficio, about his predictions for 2025 and beyond. 

Ongoing geopolitical instability

“The Russian invasion of Ukraine continues to create significant uncertainty which impacts energy markets, security, and international trade. Potential cyberattacks, including on critical infrastructure like undersea internet cables, and regional destabilization (e.g., Houthi rebels targeting Red Sea shipping) are also likely to further strain supply chains and raise costs.

“Last year, the closure of specific trade routes, such as the Suez Canal, resulted in rerouted shipping, longer transit times, and higher freight rates. This has made global trade less predictable and more expensive, highlighting Europe’s reliance on secure and efficient supply chains.

“In response to these disruptions, Europe is expected to increasingly focus on onshoring and nearshoring efforts, particularly in strategic industries like electric vehicle battery production. This shift aims to reduce dependency on distant markets, notably China, and mitigate supply chain risks.” 

Trade with China and a decline in international travel:

“Europe will continue to balance trade with China while protecting strategic industries, yet geopolitical tensions and travel disruptions (e.g., airlines avoiding flights over Russia) will make this increasingly challenging.

“The decline in business travel post-COVID, as seen in major European airlines cutting flights to China, is also signalling broader changes in global supply chains. This shift away from business travel could see reduced demand for long-distance logistics and a further pivot toward regional trade.”

Supply chain resilience through visibility and strategic contracts

“Building supply chain resilience in the face of these challenges will require enhanced visibility and transparency. Companies will increasingly invest to support these goals. Example include strategic supplier relationship management (SRM) and better communication with suppliers. Also, the use of technology like web scrapers to gain insights into global supply chains and potential bottlenecks.

“Companies will also look to incorporate clauses into contracts that allow for better monitoring of their suppliers and even their suppliers’ suppliers. These measures will improve transparency and ensure that companies can react quickly to challenges in the supply chain, such as product allocation and delivery delays.”

A shift away from one-size-fits-all supply chains

“European businesses are moving away from the traditional supply chain model. This often focused on outsourcing manufacturing to low-cost countries, particularly in Asia. Instead, businesses are recognising the need for more tailored supply chain strategies. These new models are designed based on the specific characteristics of different products in their portfolios.” 

A focus on product-specific supply chain design

“Companies are increasingly designing supply chains that vary according to the nature of the product. Low-margin, high-value products may continue to be sourced from low-cost countries, while high-value, strategic products could be onshored or nearshored. This shift aims to enhance supply chain resilience and reduce geopolitical risks.

“There is also a growing emphasis on product design teams working closely with supply chain professionals to design products that are not just cost-effective but also resilient. The goal is to source components from stable, reliable regions, reducing reliance on complex, global supply chains.”

The global supply chain playbook will need a major update after Donald Trump takes office for the second time on January 20. Trump’s promises (or threats) to impose a wide array of new tariffs on imported goods might mean major changes for the ways that US businesses source supplies.

In the month since Trump’s November presidential victory, businesses have already stepped up their imports of goods from China. Many are hoping that they can build up the necessary stock surpluses to get ahead of the tariffs Trump has promised to implement come January. 

Warehouses are bulging with tariff-beating goods as businesses look to stock up before the Lunar New Year holidays when much of the country’s manufacturing will grind to a halt for up to a month. Businesses globally are holding their breath to see what comes next. 

But what else can and should businesses be doing now?

During his presidential campaign, Trump vowed to impose tariffs of between 10-20% on all imports – a massive expansion of the 10-25% levies imposed solely on Chinese goods during his previous term. 

He’s also threatened to impose an extra 60%-100% tariff on Chinese imports in addition to punitive 25% taxes on imports from Canada and Mexico. But his scattergun statements have businesses second guessing how the new regime will apply these restrictions. Understandably, it’s created a lot of uncertainty. 

What is clear is that US businesses must prepare for a range of possible scenarios and be ready to act depending on how they unfold, which means closely monitoring developments, getting contingency plans ready and having funding and logistics to react at lightning speed. 

During the last Trump presidency, suppliers developed Country of Origin Diversification strategies to avoid US tariffs on goods from China. They sourced production from alternative markets such as Vietnam, Malaysia and Indonesia. 

However, they may need to think again if universal tariffs are applied. And many are looking at onshoring and sourcing from US-based suppliers. 

“All you have to do is build your plant in the United States and you don’t have tariffs,” Trump has told US businesses. 

So, how could this work? 

From our experience, built over years supplying Fortune 500 clients – including providing drinkware, merchandise and related promotional accessories for several QSR clients, we have noted a number of things.

Some businesses are already prepared for the new regime. Beauty company Bath & Body Works, for example, is ahead of the curve using largely onshore manufacturing, with 85% of its products made in the US, mostly at a production site in Ohio. 

For many others, however, significant challenges remain. Many US businesses suddenly looking to source from suppliers within the US at the same time, for example, will strain the capacity to fulfil those orders and could drive up prices. 

Depending on the products, US-based suppliers will have to source purpose-built machinery to manufacture their goods. Yet in many cases, the specialised engineers qualified and experienced to build those machines are only found in Southeast Asia and China, meaning a further challenge: getting them to come to the US. 

US suppliers are throwing themselves into the breach

Many US-based suppliers are bullish about fulfilling the new contracts and have a refreshing “Yes, can do” approach. Yet many suppliers tend to be based in locations where they will find it hard to attract the workforce to fulfil large orders at short notice. 

It’s hard enough finding staff for retail chains these days, let alone the hundreds of manufacturing workers needed to work the challenging schedule in the same way as Chinese and SE Asia workers. 

US-based suppliers will also need access to a pool of resources to turn around large orders quickly. They’ll have to import the raw materials and tooling expertise to set up the production facilities. Establishing this infrastructure is time-consuming and requires sustained commitment. 

Sourcing from the US will also be expensive as labor and material costs are considerably higher than in China and other Asian countries. Ultimately, it may not work out any cheaper to source from the US. Paying the tariff could turn out to be more cost-effective. 

Businesses will need to make these calculations about costs and to develop a strong radar for available capacity. It could take time to establish the new supplier relationships, creating a period of instability for businesses. 

Challenging suppliers to prove they can deliver 

In the light of all this, we believe it will be important for businesses to challenge suppliers to demonstrate just how they plan to deliver their goods and services. 

Many – smaller suppliers, especially – will struggle to balance the right quality of product at a price point their buyers will still want to purchase and it is unlikely there will be a practical solution for everyone.

While business leaders crave stability, fortunes are also made during periods of disruption. When doing their calculations, businesses should remember that there are also advantages to sourcing goods from within the US. 

If production capacity becomes available, businesses will be able to fulfil their orders more rapidly – in weeks rather than the two and a half months transit time it can take ordering from a Chinese producer.

The size of orders could be smaller, too – allowing businesses to reduce their inventory, eliminating the need to sit on large amounts of stock for weeks or months, which is another overhead – which could lead to faster, more agile supply chains. 

Businesses would also save on transportation costs and lower mileage travelled would bring environmental savings. 

With no universal panacea, each individual business will need to do what it can within the parameters of its business model, product requirements and trading relationships. 

Here are some lessons based on preparations we are seeing businesses make now:

Don’t reinvent the wheel.

You may need to change a supplier, but this need not necessarily mean starting again from scratch. Explore ways to encourage existing suppliers to work with new suppliers to share expertise. 

Some organisations are assessing the potential for leveraging existing facilities in order to encourage them to partner in the US and also Europe to take their manufacturing there, rather than building a completely new supply chain.

Consider off-the-shelf solutions. 

Can elements of your product be off-the-shelf rather than bespoke? 

Many organisations are exploring the potential for using off-the-shelf bodies to keep down costs while still maintaining product quality.  

Prioritise careful management of stakeholder expectations. 

Being open and transparent with all customers and suppliers is critical and builds good faith.

This means strengthening and consolidating the partnerships we have with customers and suppliers. It is vital to ensure that all players align with one another on the different options and solutions they may need to implement. 

So far, our openness with our clients about the efforts we are taking to develop options for them have gone down well. 

It’s never too soon to plan ahead. 

No one knows quite how Trump’s tariffs promise will play out. It’s also unclear who will feel the impact most severely and to what extent these tariffs could hurt the US economy. Nevertheless, it is essential to act and be proactive by putting in place what you can now – not least due to the timescales involved in re-tooling, and so on.

The year ahead holds some significant challenges for US businesses, make no mistake. And while the tariff regime will likely create headaches for the supply chain, as expected, everybody will be in the same boat. 

But remember, for those who have preparations in place and can strike a good deal there will be opportunities to get ahead of the pack, too, and the canniest players will find first mover advantages. 

tms is a marketing, sourcing and technology company.

In the wake of US President-Elect Donald Trump’s latest vocal assertions regarding upcoming international tariffs, barriers to international trade have swiftly risen to the top of supply chain leaders’ lists of concerns headed into 2025. A new report released by logistics SaaS company Descartes Systems Group found that close to half (48%) of supply chain leaders surveyed identified rising tariffs and trade barriers as their top concern. This was closely followed by supply chain disruptions at 45% and geopolitical instability at 41%.

Jackson Wood, Director, Industry Strategy at Descartes, noted that “With the potential for the incoming US administration to impose new and additional tariffs on a wide variety of goods and countries of origin, US importers may need to significantly re-engineer their sourcing strategies to mitigate potentially higher costs.”

Trump promises tariffs will define the outset of his second presidency 

At the end of November, Donald Trump made repeated posts on his social media platform Truth Social promising that, on day one of his administration — in addition to deporting large numbers of allegedly illegal immigrants — he would impose significant and broad new tariffs on goods entering US ports. 

Trump has claimed he will impose a 25% levy on all goods entering the US from Mexico, and Canada on his first day in office. The move will, Trump claims, somehow help crack down on immigration and illegal drug smuggling. In addition to the blanket 25% tariff on all products, Trump also said that China would be subject to an additional 10% “above any additional tariffs.” While campaigning earlier this year, Trump floated the possibility of tariffs as high as 60% on all Chinese-manufactured goods. 

Tariffs provoke uncertainty as supply chains race to diversify

The potential for tariffs to eat into profit margins for western companies, which in turn will pass that cost on to consumers, is creating a scramble among companies of all sizes to place orders quickly and for supply chain leaders to rapidly reshore what elements of their supply chains they can. Descartes’ research found that tariffs and trade barriers ranked as the priority issue regardless of company size, as respondents at companies with less than 250 employees, 251-500, 501-1,000, 1,001-50,000 and 50,000+ employees all cited it as the most significant issue they are currently facing.

A recent report found that various manufacturers in the tech and consumer goods sectors are seeing huge upticks in overseas orders as businesses attempt to secure critical goods ahead of Trump’s inauguration, which also falls around the regional shutdown caused by the Lunar New Year. Affected industries will likely include display panels, IC design, memory, and optical communications. 

But beyond short-term overstocking, Descartes notes that a tariff-happy Trump presidency could highlight a newfound necessity for organisations involved in international trade to sharpen their supply chain analytics practices to help build more resilient supply chain networks. 

“Evolving tariffs and trade policies are one of a number of complex issues requiring organisations to build more resilience into their supply chains through compliance, technology and strategic planning,” argued Wood.

The last five years have seen a near-complete reimagining of the globalised, cost-driven approach to procurement that defined sourcing between the end of the 20th century and the worldwide disruption caused by the COVID-19 pandemic. 

Prior to 2020, purchasing was defined by sprawling supply chains which prioritised speed and cost over other virtues. These just-in-time supply networks performed poorly when the pandemic caused unexpected spikes in demand, disruption throughout the value chain, and prices to skyrocket. While the effects of the pandemic have gradually faded over the last four years, subsequent geopolitical events and economic pressures point to it as the dawn of an era in which McKinsey analyst Karl-Hendrik Magnus notes “volatility [looks] more and more like the rule rather than the exception.” The current climate of ongoing supply chain disruptions shows few signs of growing more hospitable. As a result, rising costs, extreme weather, and geopolitical tensions have placed nearshoring at the top of the agenda for many supply chain leaders in search of a way to reinject resilience into their supply chains. 

From “Just in Time” to “Just in Case”

It doesn’t matter how cheaply you can buy something if it spends months in transit, costs too much money to ship, or never arrives at all. Yogen Shah, a procurement director working in the oil and gas sector, observes that many of the economic and technological systems upon which the modern world depends are overly concentrated in the hands of a small number of large corporations. 

“It’s not just about supply chains—it’s the whole world depending on one or two companies based in the United States for their operations,” Shah said, in reference to the outage in late July that left 8.5 million Microsoft computers offline, grounding flights, and disrupting critical systems around the world. “This is similar to what was happening in supply chains before COVID-19, where most large companies depended solely on China for sourcing.” 

Shah notes that, by depending on a single country to supply the vast majority of a certain commodity — whether that’s manufactured goods or digital infrastructure — not only does the system become more susceptible to shocks and disruption, but the ability to cultivate those capabilities elsewhere will also be limited, making it progressively harder to pivot away from the single, monolithic supplier market. 

“Nobody was thinking about diversification before the pandemic because it was cheap and so everyone was building capacities in China, completely ignoring the risk of depending on one country for their materials,” he says. “If you’re dependent on just one country, over time you’re also losing the skill sets needed to manufacture whatever that country produces elsewhere. With China, we’re losing the ability to manufacture low-tech items. Today, if someone needs to produce something simple like a needle, nobody in Europe or America knows how to do it. It’s not just about losing jobs or economic benefits; we’re losing vital skills.” 

In the wake of the COVID-19 pandemic, Shah acknowledges that “there’s at least a realisation that we need a ‘China plus one’ strategy.” In the US, a 2023 report found that companies are aiming to reduce exposure to the Chinese economy by 40%. Chinese exports to the US dropped by 20% last year, compared with 2022. 

He adds that a rise in right wing political movements over the past five years has also eroded much of the neoliberal, globalist status quo that preceded the pandemic. “Many are now shifting from globalisation to localization, with governments becoming more right-leaning, like Trump, Modi, or what’s happening in France. Everyone wants to protect local jobs and local economies,” he notes. “We’ll likely see ‘China plus one,’ or even ‘plus three,’ strategies being developed because companies don’t want to depend on one or two countries, or even just Asia. What happens if there’s a civil war or disruption in shipping routes? Where will you turn for your critical operations? That’s why many companies are ensuring that their critical supplies have options available within their own country or region. It might be slightly more expensive, but it’s better to produce something at a higher cost than nothing at all.”

Nearshoring for a more resilient supply chain 

From nationalist protectionism to fears of another pandemic-scale disruption, many organisations are increasingly finding reason to disentangle their supply chains from markets on the other side of the world.

Gemma Thompson, a Senior Consultant for Strategy and Growth at supply chain and procurement consultancy Proxima, notes that, “when done effectively,” nearshoring “can reduce dependence on more distant suppliers, which, when done well, can provide resilience in procurement and sourcing strategies.” Hoping to mitigate the risks posed by more complex, geographically distributed supply chains, companies are starting the process of shifting resource extraction, production, manufacturing, and other critical elements of their value chain closer to home. 

Thompson adds that there are other attractive qualities to nearshoring than simple risk reduction. “Shorter, more efficient logistics networks will present an opportunity to reduce carbon footprint, and in theory, a shorter supply chain should offer greater visibility and, thus, greater transparency. Operating closer to home also presents an opportunity to simplify regulatory compliance,” she says. 

At the same time, however, companies exploring the benefits of a more local supply chain still want to preserve the financial benefits that pulled their business overseas in the first place. This creates some challenges, however.

“Often, the initial costs of nearshoring may be higher due to infrastructure investment and, in particular, higher labour costs,” admits Thompson. However, she notes there may be upsides for some industries that can help balance the scales, and that organisations should view the trade-offs of nearshoring more holistically.

“Reduced transportation costs and lower tariffs could prove to present initial savings, whilst the business case to nearshore may also involve investing in tech to mitigate costs and future-proof supply solutions,” she adds. “Unpicking complex global supply chains is not easy, nor economically feasible for some organisations, in some sectors, or some locations… We are talking about the implications of changing supply models here, and that needs serious consideration in strategy, execution and ongoing management.” 

Read the full issue of SCS here!

This year at LogiPharma 2024 we caught up with some of the pharmaceutical supply chain sector’s leading executives. We asked them for their analysis of trends shaping the industry, and how their organisations are responding to new challenges. 

We spoke with David Frouin, Senior Vice President of Vertical Market Healthcare at Geodis. Here he is discussing his takeaways from this year’s event, mitigating supply chain disruptions, and the need to improve sourcing. 

1. Given the global disruption over the past few years, where does the pharmaceutical supply chain space find itself today?

Today, the pharmaceutical supply chain is in a state of transformation. This is largely driven by the need for increased resilience in response to recent global disruptions such as the COVID-19 pandemic, geopolitical conflicts and economic pressures. 

The fragmentation of pharma manufacturing across various regions has highlighted the importance of building a robust supply chain capable of withstanding crises. For instance, the industry is seeking to mitigate risk of supply shortages during unforeseen events by moving away from single source models and embracing dual sourcing strategies. 

Companies have also focused on developing sourcing continuity plans to ensure a more agile response to future disruptions. These measures are crucial for maintaining the flow of essential medications and healthcare supplies.  

2. What do you feel are the biggest lessons supply chains have learned over the past few years?

One of the biggest lessons supply chains have learned in recent years is the critical need to improve sourcing processes. Recent global disruptions have highlighted the vulnerabilities in relying too heavily on single sources. As a result, they’re driven a shift toward diversifying suppliers to increase resilience. These events have also raised public awareness of the essential role supply chains play in ensuring the availability of goods. This has emphasised the need for greater flexibility and agility in operations.

Modern-day supply chains are now better equipped to handle “black swan” events, with many businesses implementing strategies like dual sourcing, enhancing digitalisation and strengthening risk management frameworks. While challenges certainly remain, the industry has made significant strides in becoming more adaptable and responsive to crises and is positioned to manage future disruptions more effectively.

3. Amid government legislation and changing customer demands, is a sustainable supply chain a non-negotiable in today’s world?

The topic of sustainability is certainly more prevalent than it’s ever been in the mind of consumers. However, the way that is reflected at the organisational level still varies quite drastically. What is a non-negotiable today is ensuring product integrity throughout the supply chain, which is perhaps most critical with pharmaceuticals. For medicines, maintaining temperature control is essential, making the supply chain highly energy intensive. Traditionally, pharma companies have relied primarily on air transport. 

However, with corporate social responsibility coming to the forefront, we’re seeing a shift toward a balance of air and ocean freight in the overall transportation strategy. The key to more sustainable operations also lies in efficiency and optimisation. 

For instance, reducing excess packaging and maximising cargo loads can significantly reduce the industry’s environmental footprint. By leveraging forecasting and identification tools, more informed decisions can be made to minimise the impact on the planet.

4. What are the biggest challenges or hesitations you’re seeing companies have around AI and how do we overcome them? 

One of the biggest hesitations companies have with AI is the risk of inadvertently disclosing sensitive information, both from within the company and from customers. Protecting customer data, which can be highly confidential, is a major concern and something that all organisations, not just those in the supply chain industry, are grappling with as they explore the role they want AI to have in their business.

To address these concerns, companies should implement clear guidelines and provide proper training to their teams, ensuring AI is used securely and responsibly. Organisations should look for technology solutions that emphasise strong data protection measures and offer transparency in how AI processes and stores information. This way, businesses can confidently leverage AI while safeguarding all sensitive data.

5. What is the value in events like LogiPharma 2024? How important is this conference in the supply chain pharma calendar?

LogiPharma is a critical event in the supply chain pharma calendar, offering a unique opportunity to meet with customers and strengthen brand presence in the U.S. market. With the event held in Boston, a pharmaceutical industry hub, it’s ideal for engaging with key U.S. stakeholders on behalf of our global clients. 

It allows us to connect directly with decision makers in the industry. It helps ensure we remain aligned on the latest developments in the US market and our customers’ needs. Given its significance, LogiPharma has become a non-negotiable event for Geodis to attend. This is particularly true as we continue to expand our presence in the US market.

6. What are your biggest lessons you’re taking away from this year’s LogiPharma?

My biggest takeaways from this year’s LogiPharma centre around how to prepare for future supply chain disruptions and ways to better manage unforeseen events, which seems to be more and more prevalent in our industry. 

The content explored strategies for building more resilient and adaptable supply chains, which is critical in today’s volatile landscape. There was also a strong focus on addressing sustainability challenges. That resonated with me. It’s becoming an increasingly pressing issue as we work toward becoming better stewards of the environment industry wide.

The European Union’s Digital Operational Resilience Act (DORA) takes third-party risk management very seriously. Upcoming regulatory compliance requirements under DORA will require financial institutions to have a thorough understanding of the end-to-end supply chain and enhance the way they conduct Third Party Risk Management (TPRM) by January 2025.

Many financial services firms risk having insufficient operational resilience intelligence on their core ICT suppliers and will need to ramp up their efforts to become compliant or face significant penalties for non-compliance. 

Here are some key pointers to help you and your partners meet regulatory requirements painlessly.

Visually map out key functions within your business

Begin by identifying each vital part of the organisation and then break it down into: the PEOPLE who are responsible for managing the function; the PROCESSES that underpin its daily operation; the TECHNOLOGY (systems, data, information) which enables the processes and management; and THIRD PARTIES, who supply you with the necessary systems and solutions.

As a first step, this will provide a clear overview of how the business operates and how functions overlap and interconnect. It lays the stage for the next critical step, and to build operational resilience across the supply chain.

Mapping third party risks  

Every moving part within the organisation will have some level of operational risk attached. For example, could be ‘key-person’ risks. These occur when just one or two people in a function have access to critical system knowledge. This leaves them and the function highly exposed. Or perhaps there are functions that rely on third-party systems to the extent that there are no viable manual or internal workarounds in the event of outage. Such third-party risks are particularly important, because exercising control over them is less straightforward than risks arising from in-house activities.

Successfully mapping such risks will depend on collaboration between vendor owners and subject matter experts across the organisation: professionals who are close to the coal face and have a detailed understanding of potential risks and associated impacts and can prioritise accordingly.

Identify well-governed risk treatment plans  

Having identified risks in each functional area, and the potential impact they might have on the business’s resilience posture, it’s time to develop well-governed risk treatment plans. Begin by securing sign off on remedial actions from the board; senior buy-in is essential to underline the importance of implementing the plans.

Each plan should summarise the impact of the risk to resilience, specify mitigation methods, identify who is responsible for implementation, and set deadlines for action. Ongoing monitoring and reporting will assess the effectiveness of implemented measures so they can be adjusted as necessary.

Ensure that staff are trained on DORA  

With the January 2025 deadline looming, now is the time to begin training employees on DORA and how it will affect their roles and responsibilities. The sooner people are made aware of the implications, what is required of them and how it will impact their day to day activities, the more time there will be to strengthen these practices and really bed them in before DORA is live.

There are a range of DORA training courses that provide the know-how and confidence to navigate the route to DORA compliance, as well as e-learning courses that cover essential compliance knowledge.

Develop an Operational Resilience testing framework

It is vital to regularly test threat-led testing on specific components and systems across all essential functions to calibrate assumptions made about their resilience. By integrating the outcomes of test exercises into a continuous risk assessment, organisations can enhance their resilience posture, even as external and internal threats continue to evolve.

Remember that operational resilience is an ongoing process. Regularly review and update your framework to adapt to changing circumstances and emerging risks.

Implement Governance Risk and Compliance (GRC) Tools

Third Party Risk Management is of the utmost importance to operational resilience. These tools act as a single source of truth for all vendor relationships, as well as highlighting the associated risks and mitigating controls in place. Nominate vendor ‘owners’ within the business who can use GRC tools to oversee the relationship and mitigate risk for each supplier.

At the same time, create and maintain a vendor directory, which provides complete visibility of your vendor ecosystem and the associated risks so you can make informed decisions. With all the relevant information in one central repository, you can streamline the risk management process and reduce the potential for human error.

Finally, instead of random manual checks, implement an automated Third Party Risk Management (TPRM) platform to manage the ongoing assessment of risk. This will take on the hassle of repetitive tasks and continuous verification, ensuring a consistent approach to vendor-related risk. 

For example, in the case of a vendor questionnaire, it begins with automation, but then enables individuals to thoroughly review and evaluate the provided responses, as well as the findings from any compliance audit report. Leveraging pre-mapped controls can save organisations significant time compared to carrying out manual assessments of third parties. Features like flagging and risk scores measure supplier performance, and reports provide real-time visibility into how third parties are impacting the risk and security posture of an organisation.   

By deploying such GRC tools, organisations can minimise vendor risks and the residual operational impact of any outages.

As the clock continues to tick down to January 2025, the sooner you begin addressing DORA, the better. By following these simple steps, you can ensure that you’ll be well placed to meet compliance standards and build operational resilience measures across the entire supply chain. 

The world’s largest aircraft manufacturers are continuing to experience a run of bad luck in their supply chains. 

Airbus faces delays 

This week, French manufacturer Airbus announced an adjustment to its year-end aircraft delivery. The adjustment also affected company’s earnings before interest and taxes (EBIT), and free cash flow (FCF). Currently major supply chain issues are affecting the manufacturer’s operations and ability to deliver aircraft on multiple fronts. 

In the statement issued on June 24, Airbus blamed persistent supply chain issues for a shortage of engines, aerostructures, and cabin equipment. The shortages are forcing the company to reduce the number of aircraft it plans to deliver in 2024 to around 770 aircraft, compared to the 800 aircraft that it had previously expected to send to customers. 

Additionally, Airbus was planning to ramp up production of its A320neo aircraft to 75 per month. Airbus’ supply chain disruption have also delayed this initiative, with completion expected in 2027 rather than 2026. 

Strikes with no end in sight 

Both Airbus and its main competitor Boein faced additional delays this week due to disruptions in their supply chains. Reuters reported on June 25 that, after a five week-long strike by workers at Montreal-area Safran SA, management and the Confederation des syndicats nationaux union are no closer to reaching an agreement. 

Workers picketed on Tuesday outside the factory in Mirabel, Quebec, where Safran has been running operations using personnel non-striking, non-union workers, a company spokesperson told Reuters.

Safran has told the union that it has made its final offer a 14.5% raise over three years, while workers represented by the union have said since the start of the strike that they need an estimated 22% salary hike. Safran manufactures landing-gear components used in both Boeing and Airbus jets.  The company reported €2.7 billion in profit last year. 

EU deadlines extended 

Due to the pervasive nature of the supply chain issues, the European Union this week also rolled back the deadline for the inclusion of new safety features on all newly-built aircraft. Commercial aircraft manufacturers will be granted a further 18 months to meet the new requirement, shifting the deadline back from 1 January 2025 to 1 July 2026.   

The safety features are designed to use energy calculations during approach and landing to predict the point at which an aircraft will come to a halt, and compare this with the runway length, in order to identify any risk of overrun. 

The European Union Aviation Safety Agency announced after its investigation that several type-certificate holders have faced “significant difficulties” due to supply chain disruption.

New post-Brexit rules governing the biosecurity of fresh produce entering the UK will not only see disagreements over increased costs and operational viability kicking off. The consequential delays could see fruit and veg literally going off while waiting for an ‘all-clear’ certificate.

Challenges posed by the BTOM

The new Border Target Operating Model (BTOM) classifies all plant and animal products coming from the EU and puts them into three risk groups: high, medium and low.

In its wisdom, the UK government has placed many fruit and vegetable imports into the medium risk category, meaning multi-page documentation must be provided confirming its provenance and safety at the new border points, which opened at the end of April.

With most fresh produce arriving in the UK in mixed loads, questions have been raised about potential delays and how to unpick the consignments in a timely fashion, particularly as there are question marks over the numbers of inspectors mandated to issue phytosanitary certificates at the border.

Import costs could pass down the supply chain to consumers

The Fresh Produce Consortium (FPC) argues that the process will add £200 million in additional import costs across the fresh produce supply chain, calling it “a crippling blow to a sector already grappling with unprecedented challenges.” It’s likely fees that will negatively impact small fruit and veg enterprises. Ultimately, organisations will end up passing on those costs to consumers.

Supporters of the legislation argue that the restrictions empower businesses to manage the integrity of the product through the supply chain. Regular checks from UK border controls would potentially cut down on the paperwork and maintain the steady flow of fresh produce from the EU. However, every time a product is stopped or touched, it adds cost and delay. Neither are affordable when it comes to perishable produce.

When we talk about ‘farm to fork,’ fresh produce ceases to be so when it does not arrive in a just grown or picked fashion.

BTOM may prove to be good news for British growers, but what about non-native fruit and veg? And what about choice for British consumers who will have to go without or pay more for the privilege of having not-so-fresh produce on their plates?

Either way, these post-Brexit fruit and veg rules need fresh consideration rather than unnecessary composting. 

Shelley Pierre is commercial director at leading European pallet pooler IPP. The IPP pool is a leading rental provider of pallets and boxes in fast moving consumer goods and industrial supply chains.

Food supply chains around the world are facing an array of challenges, even as the legacy of COVID-19 fades. Geopolitical disruptions are creating delays and increased shipping costs. At the same time, inflation and the rising cost of living have put pressures on supply chains to combat cost. 

Above all, of course, the worsening effects of the climate crisis continue to create supply chain instability. Nowehre is this happening more so than in the food and agriculture sector. According to the EPA, “climate change is very likely to affect food security at the global, regional, and local level. Climate change can disrupt food availability, reduce access to food, and affect food quality.” Changes in rainfall, humidity, temperature, and other cyclical weather patterns (as well as the increasing regularity of extreme weather events) have the potential to “result in reduced agricultural productivity.” 

Global food supply chains are under threat 

This increasing instability in global crop yields is already threatening the availability of crops around the world. 

Last year, in India, tomato prices surged by over 300%. This is thanks to climate change-related flooding in major tomato-producing Indian states like Andhra Pradesh, Maharashtra, and Karnataka.

2023 was also the worst year for grapes in over 30 years. Droughts and wildfires in South America and an overabundance of rain in Europe slashed yields in some of the world’s largest grape-producing mountries, according to estimates by the International Organization of Vine and Wine (OIV). 

Potatoes are also severely threatened by climate change if we continue at our current trajectory. Data suggests that global potato yields could fall by between 18% and 32% within the next 45 years.

Food insecurity in Europe could be closer than we think

In their current configurations, European and UK food supply chains are vulnerable to the worsening effects of the climate crisis. A little less than half of the food on plates in the UK is produced domestically, according to the British Government’s 2021 food security report. Despite relatively strong domestic production, the report stresses that the UK is reliant upon “diverse and longstanding trade links” in order to “meet consumer demand for a range of products at all times of the year.” 

Other countries in Europe also rely on imported goods to guarantee year-round supplies of fruit and vegetable produce. These supply chain links are especially vulnerable to climate change disruption. For example, just under 40% of Germany’s fresh fruit and vegetable imports come from developing countries. These are areas of the world being disproportionately affected by climate change and experiencing much more severe food insecurity. Climate change-related food insecurity could cause civil unrest in countries like the UK within the next few decades. Other nations in Europe are likely to be similarly affected, unless the region reevaluates its approach to agricultural procurement. 

Interestingly, not only is the process already underway somewhat organically, but a widespread shift in the way that Europe sources its produce could remove some strain on other regions whose food insecurity is at least partially linked to exports, like India. 

Pressures on global supply chains were expected to abate along with the effects of the pandemic. However, it seems as though the year (and decade) ahead will be defined by a near-constant state of disruption. The climate crisis is only expected to exacerbate this increasingly unstable state of affairs. 

As a result, many governments and companies (across multiple industries) began the process in late 2023 of nearshoring (or friend-shoring, in more political cases) their supply chains. 

Shorter supply chains and a return to seasonal food 

By moving closer to home, organisations reduce the risk of disruption to their procurement process. This is the case whether the goods moving through the value chain are silicon semiconductor chips or corn tortilla chips. 

This phenomenon was already present in Europe pre-pandemic. A report released in 2016 by the European Parliament found that shorter food supply chains where “farmers sell their produce directly to consumers or with a minimum of intermediaries,” were flourishing across the EU, both in rural and urban areas. These shorter, localised food supply chains, the report’s authors hoped, could “represent an alternative to conventional longer food chains.” 

Now, this trend is expected to accelerate further under pressure of mounting supply chain disruptions. This shift away from extended, complex supply chains “where any one of a multitude of moving parts could give retailers a pricing headache” has a price, however. According to Carlos Cordon, a professor of strategy and supply chain management at the IMD, this shift “militates against all-year-round availability.” 

Cordon believes that 2024 could be the first year when European consumers “find themselves transported back to a time when out-of-season goods were not available from their local stores.” Retailers throughout Europe may not be able (or willing) to source goods from the other side of the world. 

As a result, Europe’s food supply chains could get significantly shorter. This would increase their stability, but at the expense of the availability of out-of-season produce.

There could also be major benefits from a sustainability perspecive. Food transport has been estimated to account for one-third of the sector’s greenhouse gas emissions. As an added bonus, this reemphasis on seasonality could be the key to reducing carbon emissions and food waste while addressing food insecurity. 

The months-long drought affecting the Panama Canal may be coming to a close. The return of annual rains are predicted to raise water levels throughout the 51 mile-long stretch. With the end of the drought, optimistic predictions could see shipping volumes return to their normal levels. If that happens, it would ease one of the most severe pain points faced by supply chains in recent years. 

Since Summer 2023, a brutal drought caused water levels in one of the world’s busiest waterways to drop to historic lows. 

The reduced water levels have cut the rate at which ships can traverse the Canal in half. By December, long queues developed. According to reports, some captains paid as much as $4 million to jump to the front of the line. Those unwilling or unable to pay inflated rates have been forced to make a difficult choice between weeks spent waiting in line and long, inefficient journeys around the southern tips of either Africa or South America. The drought has also coincided with Houthi attacks in the Red Sea, further disrupting global shipping. As a result the cost of container shipping nearly double year-on-year in Q4 2023.

The end of the drought in the panama canal

Now, however, the start of Panama’s rainy season could see the trade chokepoint resolve itself. The news has been welcomed as global supply chains brace for the busiest months of the year. 

According to IMF PortWatch, the number of vessels traversing the Canal averaged 25 per day in April. That’s a significant jump from the record low of 21 in January. However, it’s still a long way below the pre-drought average of 35 ships. 

The upward trend is expected to continue, however. The canal’s governing authority recently announced plans to lift the number of daily transits through the canal to 31 in the second half of May. Then, in June, the figure will rise again to 32.  

A report by S&P Global Market Intelligence noted that this rise in water levels “should steadily lift the restrictions to global trade resulting from canal disruptions since last year, which is particularly important ahead of the peak shipping season.

“By the end of April, rain is going to begin and we’re going to have a lot,” Argelis Moreno Lopez said earlier this month at a conference at the University of Houston, Bloomberg reports. “That will reverse the situation and go back to normal at the end of the year or next year.”

Around the world, supply chains are under mounting pressure, both internally and externally. Geopolitical conflict, economic pressures, and the climate-crisis are creating an environment where the risk of disruption is almost constant. 

At the same time, staffing shortages are exacerbating the fact that the demands placed on supply chain and procurement teams are significantly increasing. A report by McKinsey found that, in 2023 alone, the workload of a typical procurement function increased by 10%. As procurement leaders and supply chain managers fight to drive efficiency and strategic wins for the business amid turbulent times, here are the top 5 pain points we see creating headwinds for the sector. 

1. Geopolitical disruption 

Shipping in the Panama and Suez canals is at a historic low, as a climate change driven drought and Houthi military action, respectively harm the flow of shipping. Transits along major shipping lanes have increased by an average of 1-2 weeks, with more than 600 vessels chose instead to travel around the Cape of Good Hope to avoid the Red Sea in March alone, according to project44 research. 

The war in Ukraine, US and Chinese posturing over Taiwan, and the ongoing genocide in Gaza can all be expected to ratchet up political tensions around the world this year, further raising prices of raw materials, oil, and other freight. 

Friend-shoring is becoming increasingly common, as supply chains are relocated to parts of the world that are less diplomatically contentious. However, this process takes time. For example, the US is in the process of divesting its semiconductor supply chain from China by investing in building up the Filipino and Malaysian manufacturing sectors. Nevertheless, this is not an overnight process. 

2. Extreme weather 

The effects of the climate crisis are only going to get worse. Droughts (like the one in Panama), wildfires, flash flooding, hurricanes, and other extreme weather events are going to not only disrupt global trade routes but interfere with the procurement of raw materials and crops. 

Predicting and avoiding extreme weather disruption is a major priority for sourcing teams in 2024. Widespread nearshoring efforts in Europe and North America are seeking to increase procurement resilience by shifting supplier ecosystems closer to home. However, much like the process of friend-shoring to avoid geopolitical tensions, this is not an overnight process. Experts believe it could take between two and three years before moving supply chains closer to home starts to positively shore up procurement resilience. By then, who knows what kind of climate we will be dealing with. 

3. Poor quality data 

Procurement is an increasingly data-driven field. Increasingly complex supply chains, growing risk of disruption, and greater expectations on procurement teams to be strategic value creators are all intensifying the demand for data. 

“Capturing, protecting and then leveraging an organisation’s data through the use of AI and Machine Learning is an example of how organisations are increasingly turning towards intangible assets to extract new sources of value,” noted Ken Chadwick, VP Analyst at Gartner’s Supply Chain Practice, in a report from October.

However, many procurement teams struggle to organise and utilise the massive amounts of data they collect. The massive deluge of data gathered by thousands of IoT sensors, smart platforms, and analytics tools is giving rise to data silos within organisations and poor quality data as a result. Procurement teams must abandon the “more is more” approach to data analytics. Instead, they must prioritise quality over quantity, and successfully tackle their data complexity issues in order to successfully make smarter, more informed decisions. 

4. Skill shortages 

Labour and skill shortages are hitting every industry. While much of the conversation is focused on the crisis-level disruption caused by a deficit in warehouse and trucking workers for the logistics sector, procurement is feeling the pinch as well. According to a recent Gartner survey, fewer than a fifth of procurement directors and executives believe that their teams contain “adequate talent” to meet the future needs of their organisations’ procurement functions. 

Shifting talent requirements driven by the increasingly digitalised and strategic nature of procurement are adding to the problem. Just 4% of procurement leaders told Gartner that no gap existed between their current capabilities and their need for technology and data skills.

5. Maverick spending 

If unauthorised spending is unregulated throughout the procurement function, it can throw off budget forecasts. These disruptions are difficult to manage for procurement as they typically originate outside the function itself, typically originating from employees or departments operating beyond procurement’s jurisdiction. This maverick spending, or “dark procurement” is difficult to track and even more complex to reign in. 

Creating standardised procurement processes across the organisation is a vital first step. Procurement leaders should enforce  strict purchasing guidelines and approval systems. It’s also important to prioritise working with trusted people and companies, both within the organisation and in the supplier ecosystem to avoid corruption.

However, eliminating maverick spend is less an issue of regulation and more deeply rooted in an organisation’s broader culture. Using training, effective communication, and collaboration with other elements of the business, procurement can cultivate good purchasing behaviours within other departments that eliminate maverick spend without turning the whole procurement department into a watchdog. 

The worldwide shipping sector suffered a cataclysmic shock in 2020 with the advent of the COVID-19 pandemic. Container prices surged, delays spiralled from days to weeks to months, and the highly distributed global model of just-in-time delivery came grinding to a halt. 

Now, almost four years later, the freight industry is starting to show signs of clawing its way back. Surging oil prices from the war in Ukraine, a looming recession, and the after effects of a US-China trade war all slowed recovery. Slowly but surely, however, global supply chains have recovered, pivoted, and restructured to thrive again. 

Back to square one: supply chain disruptions are the new normal

We’re only a few months into the new year, and new pain points already threaten to push global supply chains backwards into situations that feel an awful lot like mid-2020. 

On top of economic uncertainty, disruptions to global shipping lanes sent shockwaves through supply chains at the start of 2024. 

Two of the world’s busiest waterways are both experiencing serious disruptions, with both the Panama and Suez Canals handling less traffic. 

$4 million for a fast pass through the Panama Canal 

In Panama, a once-in-a-generation drought brought water levels at critical points along the waterway to half its usual level. As a result, cargo traffic dropped from an average of 36 to 38 ships per day in the past to approximately 18 in February. Lower water levels also mean ships cannot pass through the canal as heavily loaded as before. 

Paul Snell, chief executive officer of British American Shipping, told Fortune in December that “We face less capacity, more trips, higher costs and a less efficient supply chain.” Reports indicate that, at the end of 2023, some tanker captains were paying up to $4 million to jump the queue to pass through the canal. Others risked the weeks-long, dangerous voyage round either the Horn of Africa, or the southernmost tip of South America to reach their destinations. 

Troubled waters in the Red Sea 

Over 22,000 ships passed through the Suez canal in 2022. This year, that number is expected to be much lower. 

The Houthis, acting in response to Israel’s genocidal assault on Gaza, hijacked a series of Israeli-owned cargo ships in the Red Sea. While the attacks were carried out without loss of life, they provoked a sizable response from the US and UK armed forces, and disrupted trade through the world’s busiest waterway.  

Global slowdown triggers price increase 

The effect of water shortages in Panama and conflict in the Suez have been profound. A United Nations report found that traffic is down by more than 40% in both the Suez and Panama canals compared to their peak operating rates.

The result of less traffic, ships travelling longer distances, and increased risk of disruption is a severe rise in the price of container freight. 

In Q4, the worldwide cost to ship a 40-foot container nearly doubled compared with November of 2023. The US’ nine largest ports experienced a 13% decline in the total number of twenty-foot equivalent units handled compared to the previous year, and C.H. Robinson, the country’s largest freight broker, reported that fourth-quarter revenue and earnings fell 17% and 68%, respectively year-on-year. 

The report advises that organisations “importing from or exporting to South America, the Far East or the Middle East via either [the Suez or Panama canal] should plan for the incremental cost and time requirements to use alternative shipping routes and modes.” 

Even if the disruptions in the Suez and Panama are resolved, the first half of 2024 will be defined by higher shipping prices and increased disruption. The UNCTAD’s report confirms that “Container freight rates on Asia–Pacific to Europe routes have risen sharply since November 2023,” with weekly rate spikes for single containers of $500 observed in the last week of December 2023. “Average container shipping spot rates from Shanghai in early February 2024 more than doubled – up by 122% compared to early December 2023. The rates from Shanghai to Europe more than tripled, jumping by 256%.”