By Leslie Doyle | 06/16/2025
Natural disasters, labor shortages, raw material shortages, and tariffs are disrupting global supply chains. Amid this turmoil and other supply chain challenges, decision-makers are taking a hard look at how to build a more resilient supply chain.
Supply chain managers must now contend with a complex array of external factors that directly impact their ability to meet customer expectations.
What Is Causing Supply Chain Issues?
Today’s supply chains face an increasingly complex and volatile landscape. From climate-related events to geopolitical tensions, the risks to a modern supply chain are mounting on multiple fronts.
These challenges demand smarter strategies, faster responses, and stronger communication. Among the most pressing concerns supply chain leaders must navigate are:
- Extreme weather
- The rising costs of transportation
- Cyber threats
- Tariffs and economic uncertainty
- Global political unrest
- Sustainability demands
Extreme Weather
From out-of-control wildfires in California to unprecedented flooding in Europe, climate change has wrought havoc on global supply chains. Weather-related disruptions have become more frequent and severe. For instance:
- Hurricane Helene damaged the largest manufacturer of IV fluids and peritoneal dialysis supplies, causing serious shortfalls at hospitals around the U.S.
- Flooding in China was so bad that it forced a Nissan® plant to temporarily halt production.
- Heat waves in Greece caused the breakdown of machinery as well as labor shortages at ports, delaying shipments through Mediterranean trade routes.
Everstream Analytics, a supply chain insights firm, ranks weather events as the number one risk to global supply chains.
According to the World Meteorological Organization, the sheer volume of natural disasters has increased fivefold over the past 50 years due to the climate crisis. If recent years are any indication, extreme weather events will continue to be one of the top supply chain risks – a trend for which a supply chain manager must prepare.
The Rising Costs of Transportation
Freight costs are vulnerable and may fluctuate due to many factors, ranging from political upheavals to weather events to oil prices. As globalized supply chains stretch farther, these costs are affecting organizations even more and impacting their ability to satisfy customer demand.
However, there is some good news. Some studies show that international trade can still be beneficial despite high transportation costs, assuming a company has a competitive edge in some manner. Businesses with strong operational efficiency may be able to offset some of these increased costs.
The high cost of transportation has had a major impact on decisions about whether to import goods or not. Businesses may still choose to import materials if a supply chain can be relied upon for consistent production delivery.
Cybersecurity
Both inadvertent failures and deliberate cyberattacks now pose serious risks for supply chain managers. The recent CrowdStrike outage was a prime example. A seemingly innocuous software update took down various enterprises and halted the production and transfer of goods. Delays at ports and airports also caused tremendous supply chain disruption.
This outage was not an isolated incident. The researcher and publisher Cybersecurity Ventures anticipates that software supply chain attacks will cost businesses $138 billion by 2031.
Cyber attacks on supply chains grew 431% between 2021 and 2023, according to a report by cyber insurance company Cowbell Cyber, Inc. Supply chains make an attractive target for attackers looking to cause maximize upheaval, since disruptions to a supply chain can affect multiple organizations at once.
Tariffs and Economic Uncertainty
The introduction of new tariffs in 2025 has already affected entire supply chains, including raw material sources from abroad and final product availability in U.S. retail stores. Some of the supply chain impacts include a higher cost of goods, ranging from essentials like eggs to specialty products like Bibles. According to the Pew Research Center, 91% of operations and supply chain leaders report they will need to adjust their supply chain strategy in response to changes in U.S. trade policy.
“Tariffs, introduced by various governments, particularly the United States, aim to protect domestic industries, regulate trade, and generate revenue,” says Dr. William Oliver Hedgepeth, Professor of Reverse Logistics at the Dr. Wallace E. Boston School of Business at American Military University (AMU). “However, their broader implications extend beyond immediate economic concerns, influencing sustainability efforts and long-term supply chain resilience.
“The price of goods will most likely remain volatile for the next few years. We have lived through such a ripple effect during the COVID-19 pandemic and the fuel crisis of 2008.
“This ripple effect will and is disrupting supply chains not just for the flow of goods from one point to another but may shut down retail stores and warehouse operations. The supply chain of today seems to be restructuring itself.”
Global Political Unrest
Political tensions in Eastern Europe and the Red Sea are just two examples of the serious, ongoing disruptions that have afflicted today’s supply chains. Wars and geopolitical conflict are estimated to cost up to a trillion dollars in economic damages annually, notes Material Handling and Logistics News.
The Russian-Ukraine war, for example, drove up the price of commodities and caused supply chain disruptions due to interruptions in energy supplies. According to the World Economic Forum, tensions between the U.S. and China could cause further supply chain disruptions, most notably for companies in the high-tech sector.
Sustainability Demands
Tackling climate change isn’t just an environmental goal. It’s a business necessity for protecting all sorts of operations, including supply chain processes. A recent Deloitte survey found that 97% of company executives say the climate crisis has already affected their business operations, including supply chains.
Consumer demand for greater sustainability is also putting pressure on supply chains when it comes to sourcing raw materials, producing goods, and transporting finished products. More than 80% of consumers say they are willing to pay more for goods that are sustainably sourced.
Additionally, regulations such as the European Union’s Directive on Corporate Sustainability Due Diligence will compel more businesses to audit and improve the environmental impact of their sourcing, production, and distribution.
Unfortunately, there is much work to be done to reduce the environmental impact of producing and shipping goods. Global container emissions increased 14% in 2024. Meanwhile, the Congressional Budget Office estimates that the U.S. manufacturing industry will likely increase its gas emissions by 17% between 2024 and 2050.
Increasing Supply Chain Resilience
Today’s supply chain managers must act swiftly to adapt to both expected and unexpected risks. A resilient operational strategy must be able to anticipate and respond to multifaceted supply chain issues on numerous fronts.
Implementing Cutting-Edge Technology
There are numerous software tools that can give businesses a competitive edge in navigating supply chain challenges. These tools include:
- Enterprise resource planning (ERP) systems
- Predictive analytics
- Digital twin technology
- Artificial intelligence (AI)
Enterprise Resource Planning
ERP systems make supply chains operate more efficiently by providing greater visibility into the production and distribution of goods. This visibility allows for faster decision-making, optimized inventory levels, and more opportunities for automation.
Predictive Analytics
Predictive analytics software combines historical supply chain data, statistical models, and machine learning algorithms to assess supply chain performance. Advanced analytics software can also forecast demand and identify potential supply chain problems in either domestic or overseas operations.
Digital Twin Technology
A digital twin is a virtual replica of a physical system or process – a real-time simulation. Companies use digital twins for scenario planning. Using this technology, they can experiment with different scenarios to gain insights into how best to proceed with their operations.
A digital twin, for example, could be used to model wind turbines in real time to optimize energy output. It could simulate various environmental conditions – such as wind speed, direction, and turbulence – and predict how each factor affects turbine efficiency.
This virtual model allows engineers to test blade angles, rotation speeds, and maintenance schedules without interrupting actual operations, enabling proactive adjustments that boost energy production and extend equipment lifespan.
Digital twin technology is being employed by supply chain leaders to optimize supply chain operations, from manufacturing to warehouses and distribution centers. By simulating these systems, companies can optimize operations and test their resilience strategies in advance before a disruption occurs.
Artificial Intelligence
Management consulting firm McKinsey and Company noted in a recent article that artificial intelligence can be used to automate the analysis of data from disparate sources across supply chains. Artificial intelligence can also be used to develop early warning systems and alert companies of supply chain risks.
Making Inventory Management More Agile
Inventory management is especially complex for businesses with long lead times, diverse product lines, or unpredictable demand, such as the fashion industry. Business consultants say there are a number of strategies that can be employed to make for a more agile supply chain, including:
- Using intelligent forecasting to improve material sourcing and reduce the impact of supply chain disruption
- Applying voice-of-the-customer methods to gain insight into customer demand, emerging trends, and drivers of consumer spending
- Building a cross-channel database to assess future demand and make more informed decisions on order replenishment
- Encouraging cross-functional collaboration to enhance organizational understanding and responsiveness
Preventing Labor Shortages
Supply chain management not only includes technology but also human talent. A recent supply chain and logistics workforce study found that more than a third of supply chain organizations are facing high labor shortages. These shortages have led to impacts on customer service and transportation operations.
Many experienced supply chain and logistics staff are aging out of the workforce. Also, younger generations have different priorities, such as physical and emotional well-being and flexibility (such as remote work).
Business leaders can address labor shortages in several ways:
- Address knowledge gaps through upskilling (training existing staff new skills in exchange for advancement)
- Develop a digital-ready workforce through targeted training and peer learning programs
- Promote from within an organization to retain talent and foster loyalty
- Improve internal communications so employees feel heard and valued
- Enhance wages and benefits, including flexible scheduling and time off
- Using strategic workforce planning – reviewing skills and needs to adapt the recruiting process
Using Multiple Suppliers
As part of risk mitigation, supply chain leaders should diversify their relationships with global suppliers and logistics partners. Depending on a company’s unique vulnerabilities, leaders may also revisit supplier relationships, choosing onshore vs. offshore in some cases.
According to the research and advisory firm Gartner, diversifying supply chains involves analyzing numerous factors. Supply chain leaders should ask themselves:
- What are we looking to protect – product lines, key clients, or brand reputation?
- Who are our most critical partners and why?
- How much risk can our organization absorb?
- Are the legislative incentives for shifting supply chain investments to new locations? (In some cases, governments make it worth your while to move manufacturing to the U.S. or closer to end consumers.)
- When should we diversify? (It may be less disruptive to do so when you’re setting up a new network or bringing a new product to market instead of retrofitting an existing system.)
Building Close Connections with Supply Chain Partners
“To minimize the chance of product shortages, companies need to work closely with all supply partners,” says American Military University Analytics, Economics, and Finance Department Chair Dr. Robert Gordon. “An organization should ensure that contracts are up to date or initiate a contract to better solidify a relationship with a supplier. Consider a fixed-price agreement with volume guarantees to ensure products will be available when needed.
“Since tariffs are currently in flux, make use of this uncertainty to ensure product supply. Consider an 80/20 situation where the primary vendor has 80% of the business and a secondary vendor has 20% of the business. Having good contracts that increase or decrease volume can help keep different options open to reduce supply chain risk.”
Supply chain risks such as tariffs will be a temporary problem, but organizations still need to be ready. It is also helpful to consider advising consumers about possible price increases due to tariffs and future supply chain issues.
Diversifying Shipping Processes
Rising shipping costs and disrupted or unstable shipping routes strain supply chains. “To help improve supply chain planning, it might be a good time to set up contracts with multiple freight forwarders to ensure that you have many different options,” says Dr. Gordon.
“Having agreements in advance will put you in a better position to get material when it is needed. Structure your freight agreements so that as the company increases or decreases volume you can keep different options open.”
Incorporating Sustainability into the Supply Chain
The consulting firm Ernst and Young advises several ways businesses can begin to reduce the environmental impact of their supply chain operations, including:
- Sourcing raw materials that comply with UN Global Compact principles
- Integrating sustainability metrics into procurement policies
- Leveraging technology for greater supply chain visibility
McKinsey & Company also published a report on organizations leading the way in sustainability strategies. The firm noted these efforts had two factors in common:
- First, the companies captured the maximum potential through changes across their operations.
- Second, they were among the first to secure sources of low-carbon raw materials and other sustainable products.
Embracing Organizational Change
Today’s supply chain leaders need to focus on agility in the face of swift and ever-changing business risks. “There is always risk, but organizations should make sure they have agreements with suppliers and freight companies. They should also make sure that there are contingency plans to address any disruptions, especially in global supply chain operations,” says Dr. Gordon.
“Organizations need to have a plan and be ready to implement that plan as issues arise to mitigate supply chain issues," he adds. “Supply chain managers need to be flexible and be ready to change direction when circumstances require.
“To facilitate being able to change, be sure to have open communication with suppliers, buyers, sales, and operations so that everyone is aware that things might need to change quickly to address the needs of customers and the market.”
Building a Highly Adaptive, Highly Trained Workforce
Ideally, organizations should hire people who have experience adapting to emerging situations that thrive in uncertain conditions. “Recruit talent who can demonstrate that they’re able to change with these challenging times,” says Dr. Gordon.
“There are so many different ERP systems available that it is often hard to find a supply chain professional with that experience, so finding someone who is interested in learning and flexible is what is most important. No role is static anymore. The more that your team can be inspired to improve their education, training, and knowledge, the better it is for your organization.”
An important way to build resiliency in a supply chain is to train your staff. “An ERP is only as effective as the people who know how to use it,” advises Dr. Gordon. “Make sure that people understand the limitations and weaknesses of the ERP system but also understand the strengths.
“Training can help make your team more effective and better cope with issues in the market that may result in supply chain disruption. Make sure you have at least one – or better, two – trained super users to support the system and keep other users updated and trained.
“Furthermore, if your organization is not already using AI systems, learn more about AI and see how it can be implemented at your organization. Using AI and machine learning is going to differentiate organizations, helping them to be more efficient and more proactive. AI use is only going to increase, so the more that your team can use these systems, the better your organization will be in the marketplace.”
Examples of Supply Chain Resilience
There are many companies that have made meaningful strides in minimizing supply chain issues. Some notable successes with supply chain planning include:
- Health and beauty brand Winky Lux® upgraded its ERP to integrate with its suppliers’ systems. The company eliminated manual supply chain processes and reduced costs, which resulted in an anticipated 40% growth in sales. Having a resilient supply chain allows this business to adapt more swiftly to emerging issues.
- Cisco Systems® built its supply chain strategy around dual sourcing and strong, long-term supplier relationships. The company also invested in real-time technology that enables greater supply chain visibility and mitigates risks. Sustainability is at the core of this company’s supply chain, with a pledge to reduce greenhouse gas emissions by 30%.
- Procter & Gamble® partnered with Ernst and Young to transform its supply chain through an integrated, human-centric approach. Its systematic model of addressing people, processes, and technology reduces supply chain risk and improves business continuity. The moves earned the company recognition on Gartner's Supply Chain Top 25, which recognizes sustained supply chain excellence.
AMU’s Supply Chain Management Degrees
For adult learners who seek a more in-depth understanding of supply chain challenges and supply chain management systems, AMU offers several degrees:
- An online Associate of Arts in Supply Chain Management
- An online Bachelor of Arts in Supply Chain Management
- An online Master of Arts in Supply Chain Management
The core courses in these academic programs include topics such as macroeconomics, the principles of supply chain management, and global demand management. Other courses include the principles of e-commerce, global issues in supply chain management, sustainable supply chain strategy, and technology in supply chain management.
All three of these degree programs were awarded specialty accreditation from the Accreditation Council for Business Schools and Programs (ACBSP®). This specialty accreditation ensures that these academic programs have met high academic standards.
For more information about AMU’s supply chain management degrees, visit our business administration and management degree program page.
Nissan is a registered trademark of Nissan Jidosha Kabushiki Kaisha.
Winky Lux is a registered trademark of Glow Concept, Inc.
Cisco Systems is a registered trademark of Cisco Technology, Inc.
Proctor & Gamble is a registered trademark of the Proctor & Gamble Company.
ACBSP is a registered trademark of the Accreditation Council for Business Schools and Programs.