Decoding Supply Chain Headwinds: Inflation, Labor and the Quest for Resilience

The world’s supply chains continue to face their fair share of challenges as everything from tariffs to rising business costs to ongoing disruptions impact these critical networks. There are also pockets of opportunity out there for enterprising organizations that focus on building resilient, customer-centric supply chains in the face of uncertainty. 

Technology is proving to be a great facilitator in the race to improve supply chain resilience and competitive advantage in this environment. The 2025 MHI Annual Industry Report highlights the top challenges that organizations are facing on the supply chain front right now and discusses how artificial intelligence (AI), machine learning, digital twins and the Internet of Things (IoT)— among other technologies—are being used to orchestrate end-to-end global supply chains. 

What’s Keeping Supply Chain Leaders up at Night?

But first, the challenges. According to MHI, supply chain organizations are facing a collective basket of headwinds this year. According to the survey, companies’ biggest concerns are inflation (38% of them cite this as a primary challenge); economic uncertainty (36%); workforce and talent shortages (35%); supply chain agility and resiliency (28%); and inventory challenges (25%).

“These trends are affecting supply chains today, and their impact could persist well into the future,” MHI says. For example, ongoing geopolitical tensions and recent political shocks, both domestically and globally, have increased uncertainty for global trade. “Trade restrictions will require policy revisions that contribute to economic uncertainty and will have an impact on supply chains,” it says.

Companies are increasingly turning to automation for help addressing the persistent workforce and talent shortage. “A major impetus for companies to automate and implement AI is the ongoing decline in supply chain labor force participation—a trend that seems likely to continue for the foreseeable future,” MHI reports. “Also, automated facilities with end-to-end orchestration require worker reskilling for work in digital supply chain environments.”

More Potential Points of Failure

Companies are also logically worried that their supply chains are agile and resilient enough. This isn’t a “new” problem (it surfaced prominently during the pandemic and has yet to wane), but MHI says continued expansion of product portfolios and supplier networks across manufacturers is making supply chains more complex and more vulnerable than ever. 

“This creates more potential points of failure and ripple effects across the supply network,” it explains. “This has made supply chain resiliency and agility a top priority that will likely remain for years to come. Technology is driving this resiliency by providing real-time visibility and actionable data for operations.”

Five Tech Trends

Here are five more tech-specific trends that MHI says is shaping supply chains in 2025:  

1. Cybersecurity and data security. Citing IMF estimates, MHI says the size of losses due to cyberthreats has more than quadrupled since 2017 to $2.5 billion. 
2. Demand for real-time data. Lack of access to accurate, real-time data is an ongoing barrier to achieving the vision and benefits of supply chain digitization and end-to-end orchestration.   
3. Digitization and the pace of technology adoption. “The dizzying pace of technological change in supply chains can be daunting for supply chain leaders and professionals alike,” MHI says. 
4. E-commerce growth. This is driving companies to find new and better ways to anticipate changes in demand and fulfill orders more quickly and accurately.  
5. Supply chain sustainability. It remains a high priority and strategic differentiator for many firms—with technology being both a critical enabler and potential source of new problems. “Technology advances are helping operations around the world become more sustainable,” MHI says, “however, many firms are still wrestling with data issues that make it hard for them to accurately report Scope 3 emissions.”

Taking Action Steps

As emerging technologies continue to reshape supply chain operations, MHI says organizations must adapt to stay competitive. Many of them are taking technology- or innovation-focused steps right now like digital transformation (49%); piloting new technologies (39%); and building a culture of collaboration and innovation (33%). “These results highlight the importance of prioritizing and investing in technology as a key pillar of supply chain success,” MHI concludes.