Supply Chain Faces Multiple Challenges Heading Into 2025

Over the next year, the supply chain faces a ‘polycrisis’ of challenges that includes economic unpredictability, declining customer demand and climate change pressure, according to Prologis’ 2025 supply chain outlook report. Companies may respond by reevaluating business strategies to both weather potential storms and capitalize on disruptive opportunities.

Two-thirds of executives surveyed by Prologis said they are literally losing sleep over the strain on the supply chain. The disruption was particularly notable among executives in finance and healthcare. Cybersecurity and escalating costs are among their top concerns, with 61% of tech executives pointing to the impact these two factors have on the supply chain.

“The development of resilient and secure supply chain networks will be paramount to manage risks and safeguard assets against the backdrop of these growing pressures.” said Prologis

Eighty-five percent of executives said rapid regulatory change and geopolitical instability are causing them to shift to sustainable supply chain solutions, and 86% said these factors influence their decisions about manufacturing and storage locations, according to the report.

Seventy percent of executives said it is difficult to identify profitable supply chain investment opportunities, particularly as emerging technology such as automation and artificial intelligence have yet to meet strategic objectives. Prologis offered a positive outlook, however, saying 2025 could be a turning point when supply chain initiatives begin to yield anticipated returns.

Executives feel compelled to accelerate the transition to sustainable energy sources to strengthen brand reputation, achieve ESG targets and meet consumer expectations. However a large number are hesitant to proceed because of unclear returns on investment, complex implementation processes and disruption risks. Nearly 90% of executives say they will dedicate more capital to sustainable supply chain solutions when fiscal constraints ease.

More than three-quarters of executives reported labor shortages are a concern going into 2025 and 87% think automation may be able to minimize labor-related issues. Executives also see adoption of AI as a competitive advantage, particularly in the manufacturing sector.

Over the next decade, Supply Chain 3.0 will be a priority for executives, the survey found. The majority of executives said AI integration in supply chain management, automation integration in supply chain integration, intelligent data for supply chain integration, and integration of sustainable supply chain practices will be top priorities.

Eighty-seven percent of executives said securing the supply chain against unexpected black swan events is a top priority going forward, however only 40% of executives indicated they are currently adequately prepared for cybersecurity attacks and regulatory changes.