Change management: An existential supply chain capability?
As technology advances and disruptions multiply, third-party logistics providers and shippers must continue to work together to respond and adapt to change.
C. John Langley Jr., Ph.D. (jlangley@psu.edu) is Professor of Supply Chain Management at Penn State University’s Smeal College of Business and the Department of Supply Chain and Information Systems, and Founder of the “Annual Third-Party Logistics Study.”
Supply chains are subjected to constant change, and the most recent five years have forced supply chain professionals to navigate unprecedented issues, adapt to shifting demand patterns, and deal with unanticipated volatility and, to some extent, “black swan” events.
As a result, change management has become an essential capability to help improve supply chain operations, support collaboration both internally and with external partners, deploy new technology, and adapt to sometimes continually changing market pressures. Recognizing this importance, the 2025 Annual Third-Party Logistics Study (www.3PLStudy.com) took an in-depth look at change management. The majority of respondents to the study’s global survey—61% of shippers and 73% of 3PLs—reported that the need for supply chain change management is either critical or significant.
Shippers says that the biggest drivers of change in their supply chain organizations are customer demands, economic factors, and technological advancements.
2025 Annual Third-Party Logistics Study
Figure 1 above focuses on several factors that were identified as likely drivers of change in supply chains. Among shippers, the biggest drivers of change in their supply chain organizations included customer demands, economic factors, and technological advancements. Other factors included supplier considerations, societal shifts, and labor restraints. 3PL responses were similar to shippers’ except 3PLs ranked labor restraints as the fourth most important driver of change.
The study also asked respondents to identify areas in need of change. The most-identified area was supply chain visibility, cited by 69% of shippers and 68% of 3PLs. Technology, planning, and relationships also ranked highly.
Respondents also reported varying degrees of receptivity to change. About one-fourth of shippers and 3PLs said they are extremely receptive to change, while 45% of shippers and 53% of 3PLs said their organizations are moderately receptive to change.
AI underscores need for change management
Most supply chain professionals agree that the need to embrace change is likely to continue to increase. Technology is advancing rapidly, and artificial intelligence (AI) and machine learning are creating new opportunities to increase efficiency, improve decision-making, and optimize operations within the supply chain.
Among the many pertinent messages that received attention at the 2024 CSCMP EDGE Supply Chain Conference and Exhibition was that nearly every aspect of the supply chain will be involved with or impacted by AI. Example areas where significant improvements and results may be achieved include demand forecasting, inventory management, warehouse operations, predictive equipment maintenance, supplier relationship management, and more. As a result, AI may bring change to nearly every aspect of supply chain management and every level of employee.
This year’s 3PL study also focused on the growing role of AI in supply chains. Shippers and 3PLs are aligned on the top use cases for AI, with supply and demand forecasting and transportation and route optimization ranking at the top. Order management also ranked highly for both groups, while 3PLs see a slightly higher use case for warehouse automation than do shippers.
Both groups are also aligned on their view of AI as a tool that can automate data analysis, identify patterns, solve problems, and automate repetitive and mundane tasks. The hope is that AI will help companies better use their data to make improved and informed decisions. AI can process data and identify patterns and repetitive operational issues faster than a human can, which can improve forecasting, uncover inefficiencies, optimize processes, make predictions, and increase resiliency. Machine learning, a subset of AI, is expected to be especially useful for solving complex logistics problems by refining its predictions and recommendations over time to create more efficient operations.
Shippers and 3PLs agree that the greatest return on investment from AI will come from service-level improvements—cited by 40% of shippers and 37% of 3PLs—as well as data accuracy, cited by 34% of shippers and 39% of 3PLs.
Given the potential benefits of AI, shippers will increasingly be looking for 3PLs that offer AI solutions that they can use to achieve reliable results and gain a competitive advantage. Nearly three-quarters of shippers said 3PLs’ use of AI would influence their choice of a 3PL partner. On a more granular basis, 13% of shippers reported that they are very likely to switch 3PL providers based on their AI capabilities, 29% said they are likely, and 32% said they are somewhat likely to switch 3PL providers based on their AI capabilities. As demand for AI-based solutions increases, 3PL offerings will evolve, further exacerbating the change that supply chain organizations are experiencing.
Realizing benefits from change management
While the ability to manage change is critical to survival, so too is the ability to determine when change may be needed. To determine whether they need to change, companies should start by assessing their current state and opportunities for improvement. Next, they need to identify the desired state and benefits of change. To help drive success, the change management strategy should create a vision, identify solutions, and develop a plan for change.
For successful change to occur, stakeholders must work together to operate as a systematic supply chain rather than working as individuals with departmental goals that may not align. It is also critical to gain support for the change initiative among those who may be involved. Educating stakeholders about the need for change, creating a clear vision of what the change will accomplish, and outlining the benefits can help build support.
Many companies have found that using a structured change management process can reduce resistance to change, improve communication, and increase the likelihood of success. In the study, 58% of shippers and 76% of 3PLs reported using a change management framework. The two most frequently cited frameworks used by both shippers and 3PLs were the McKinsey 7-S (which identifies seven factors that influence an organization’s ability to change) and the ADKAR change management model (awareness, desire, knowledge, ability, and reinforcement). Use of an in-house proprietary system was cited by 36% of shippers and 29% of 3PLs.
The good news for those in supply chain is that key stakeholders are dedicated to minimizing disruptions, enhancing agility, and ensuring long-term success. In this year’s study, 89% of shippers reported that they are committed to the success of the broader, end-to-end (E2E) supply chain. It is clear that shippers sense a deep commitment to the broader concept of supply chain management and recognize the need to align themselves with multiple supply chain participants to create value for their end-user customers and consumers. What’s more, 64% of shippers reported that their 3PLs share this commitment to the E2E concept, and 69% indicated that some of their 3PLs are involved with their change management processes. Also encouraging is that 77% of shippers agree that their 3PLs are enthusiastic about joint efforts relating to change management.
In the complex and ever-evolving world of supply chains, change is inevitable. With effective change management practices in place, shippers and 3PLs can navigate these changes with greater confidence and turn them into opportunities for growth and improvement.
The practice consists of 5,000 professionals from Accenture and from Avanade—the consulting firm’s joint venture with Microsoft. They will be supported by Microsoft product specialists who will work closely with the Accenture Center for Advanced AI. Together, that group will collaborate on AI and Copilot agent templates, extensions, plugins, and connectors to help organizations leverage their data and gen AI to reduce costs, improve efficiencies and drive growth, they said on Thursday.
Accenture and Avanade say they have already developed some AI tools for these applications. For example, a supplier discovery and risk agent can deliver real-time market insights, agile supply chain responses, and better vendor selection, which could result in up to 15% cost savings. And a procure-to-pay agent could improve efficiency by up to 40% and enhance vendor relations and satisfaction by addressing urgent payment requirements and avoiding disruptions of key services
Likewise, they have also built solutions for clients using Microsoft 365 Copilot technology. For example, they have created Copilots for a variety of industries and functions including finance, manufacturing, supply chain, retail, and consumer goods and healthcare.
Another part of the new practice will be educating clients how to use the technology, using an “Azure Generative AI Engineer Nanodegree program” to teach users how to design, build, and operationalize AI-driven applications on Azure, Microsoft’s cloud computing platform. The online classes will teach learners how to use AI models to solve real-world problems through automation, data insights, and generative AI solutions, the firms said.
“We are pleased to deepen our collaboration with Accenture to help our mutual customers develop AI-first business processes responsibly and securely, while helping them drive market differentiation,” Judson Althoff, executive vice president and chief commercial officer at Microsoft, said in a release. “By bringing together Copilots and human ambition, paired with the autonomous capabilities of an agent, we can accelerate AI transformation for organizations across industries and help them realize successful business outcomes through pragmatic innovation.”
Census data showed that overall retail sales in October were up 0.4% seasonally adjusted month over month and up 2.8% unadjusted year over year. That compared with increases of 0.8% month over month and 2% year over year in September.
October’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were unchanged seasonally adjusted month over month but up 5.4% unadjusted year over year.
Core sales were up 3.5% year over year for the first 10 months of the year, in line with NRF’s forecast for 2024 retail sales to grow between 2.5% and 3.5% over 2023. NRF is forecasting that 2024 holiday sales during November and December will also increase between 2.5% and 3.5% over the same time last year.
“October’s pickup in retail sales shows a healthy pace of spending as many consumers got an early start on holiday shopping,” NRF Chief Economist Jack Kleinhenz said in a release. “October sales were a good early step forward into the holiday shopping season, which is now fully underway. Falling energy prices have likely provided extra dollars for household spending on retail merchandise.”
Despite that positive trend, market watchers cautioned that retailers still need to offer competitive value propositions and customer experience in order to succeed in the holiday season. “The American consumer has been more resilient than anyone could have expected. But that isn’t a free pass for retailers to under invest in their stores,” Nikki Baird, VP of strategy & product at Aptos, a solutions provider of unified retail technology based out of Alpharetta, Georgia, said in a statement. “They need to make investments in labor, customer experience tech, and digital transformation. It has been too easy to kick the can down the road until you suddenly realize there’s no road left.”
A similar message came from Chip West, a retail and consumer behavior expert at the marketing, packaging, print and supply chain solutions provider RRD. “October’s increase proved to be slightly better than projections and was likely boosted by lower fuel prices. As inflation slowed for a number of months, prices in several categories have stabilized, with some even showing declines, offering further relief to consumers,” West said. “The data also looks to be a positive sign as we kick off the holiday shopping season. Promotions and discounts will play a prominent role in holiday shopping behavior as they are key influencers in consumer’s purchasing decisions.”
That result came from the company’s “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses. The October index number was -0.39, which was up only slightly from its level of -0.43 in September.
Researchers found a steep rise in slack across North American supply chains due to declining factory activity in the U.S. In fact, purchasing managers at U.S. manufacturers made their strongest cutbacks to buying volumes in nearly a year and a half, indicating that factories in the world's largest economy are preparing for lower production volumes, GEP said.
Elsewhere, suppliers feeding Asia also reported spare capacity in October, albeit to a lesser degree than seen in Western markets. Europe's industrial plight remained a key feature of the data in October, as vendor capacity was significantly underutilized, reflecting a continuation of subdued demand in key manufacturing hubs across the continent.
"We're in a buyers' market. October is the fourth straight month that suppliers worldwide reported spare capacity, with notable contractions in factory demand across North America and Europe, underscoring the challenging outlook for Western manufacturers," Todd Bremer, vice president, GEP, said in a release. "President-elect Trump inherits U.S. manufacturers with plenty of spare capacity while in contrast, China's modest rebound and strong expansion in India demonstrate greater resilience in Asia."
Even as the e-commerce sector overall continues expanding toward a forecasted 41% of all retail sales by 2027, many small to medium e-commerce companies are struggling to find the investment funding they need to increase sales, according to a sector survey from online capital platform Stenn.
Global geopolitical instability and increasing inflation are causing e-commerce firms to face a liquidity crisis, which means companies may not be able to access the funds they need to grow, Stenn’s survey of 500 senior e-commerce leaders found. The research was conducted by Opinion Matters between August 29 and September 5.
Survey findings include:
61.8% of leaders who sought growth capital did so to invest in advanced technologies, such as AI and machine learning, to improve their businesses.
When asked which resources they wished they had more access to, 63.8% of respondents pointed to growth capital.
Women indicated a stronger need for business operations training (51.2%) and financial planning resources (48.8%) compared to men (30.8% and 15.4%).
40% of business owners are seeking external financial advice and mentorship at least once a week to help with business decisions.
Almost half (49.6%) of respondents are proactively forecasting their business activity 6-18 months ahead.
“As e-commerce continues to grow rapidly, driven by increasing online consumer demand and technological innovation, it’s important to remember that capital constraints and access to growth financing remain persistent hurdles for many e-commerce business leaders especially at small and medium-sized businesses,” Noel Hillman, Chief Commercial Officer at Stenn, said in a release. “In this competitive landscape, ensuring liquidity and optimizing supply chain processes are critical to sustaining growth and scaling operations.”
With six keynote and more than 100 educational sessions, CSCMP EDGE 2024 offered a wealth of content. Here are highlights from just some of the presentations.
A great American story
Author and entrepreneur Fawn Weaver closed out the first day of the conference by telling the little-known story of Nathan “Nearest” Green, who was born into slavery, freed after the Civil War, and went on to become the first master distiller for the Jack Daniel’s Whiskey brand. Through extensive research and interviews with descendants of the Daniel and Green families, Weaver discovered what she describes as a positive American story.
She told the story in her best-selling book, Love & Whiskey: The Remarkable True Story of Jack Daniel, His Master Distiller Nearest Green, and the Improbable Rise of Uncle Nearest. That story also inspired her to create Uncle Nearest Premium Whiskey.
Weaver discussed the barriers she encountered in bringing the brand to life, her vision for where it’s headed, and her take on the supply chain—which she views as both a necessary cost of doing business and an opportunity.
“[It’s] an opportunity if you can move quickly,” she said, pointing to a recent project in which the company was able to fast-track a new Uncle Nearest product thanks to close collaboration with its supply chain partners.
A two-pronged business transformation
We may be living in a world full of technology, but strategy and focus remain the top priorities when it comes to managing a business and its supply chains. So says Roberto Isaias, executive vice president and chief supply chain officer for toy manufacturing and entertainment company Mattel.
Isaias emphasized the point during his keynote on day two of EDGE 2024. He described how Mattel transformed itself amid surging demand for Barbie-branded items following the success of the Barbie movie.
That transformation, according to Isaias, came on two fronts: commercially and logistically. Today, Mattel is steadily moving beyond the toy aisle with two films and 13 TV series in production as well as 14 films and 35 shows in development. And as for those supply chain gains? The company has saved millions, increased productivity, and improved profit margins—even amid cost increases and inflation.
A framework for chasing excellence
Most of the time when CEOs present at an industry conference, they like to talk about their companies’ success stories. Not J.B. Hunt’s Shelley Simpson. Speaking at EDGE, the trucking company’s president and CEO led with a story about a time that the company lost a major customer.
According to Simpson, the company had a customer of their dedicated contract business in 2001 that was consistently making late shipments with no lead time. “We were working like crazy to try to satisfy them, and lost their business,” Simpson said.
When the team at J.B. Hunt later met with the customer’s chief supply chain officer and related all they had been doing, the customer responded, “You never shared everything you were doing for us.”
Out of that experience, came J.B. Hunt’s Customer Value Delivery framework. The framework consists of five steps: 1) understand customer needs, 2) deliver expectations, 3) measure results, 4) communicate performance, and 5) anticipate new value.
Next year’s CSCMP EDGE conference on October 5–8 in National Harbor, Md., promises to have a similarly deep lineup of keynote presentations. Register early at www.cscmpedge.org.