Supply chain reinvention: Three vital principles for building a risk-resilient, sustainable future
The global upheaval of the past few years has highlighted how vulnerable our supply chains are to disruption. To holistically manage and mitigate business risk, companies need to re-examine their traditional supply chain processes and adopt a comprehensive digital supply chain strategy. Here’s how to lay a proper foundation for this effort.
For decades, the focus for supply chain executives has been relatively straightforward: reduce costs and increase efficiency.
However, the global upheaval of the past few years—from COVID-19, geopolitical conflicts, and other disruptions—has brought into stark relief a newer, more complicated reality: The supply chain is vulnerable and business risk is high. Whether due to port closures, materials and labor shortages, or economic impacts like rising inflation and fluctuating demand, we are in a moment of unprecedented pressures.
These pressures are, frankly, not going away anytime soon. In fact, a CNBC survey found that 61% of logistics managers say the supply chain is still not operating normally—and most of them say they don’t expect it to do so until 2024 or even later.1 Similarly 82% of supply chain leaders surveyed by Coupa Software say challenges will stay the same or worsen over the next six to 12 months.2
So, what are decision-makers to do? U.S.-based supply chains are undeniably out of sync, and in order to survive, these executives must find real, lasting solutions to today’s pressing challenges. This isn’t just about business continuity; it’s about future growth, revenue, and overall success.
To navigate contemporary challenges and build more resilient supply chains, leaders must embrace a thoughtful and comprehensive digital supply chain strategy. At a foundational level, this digital strategy should be built on three key principles:
connect every process,
contextualize every decision, and
enable collaboration across a company’s ecosystem.
This is about more than simply implementing new digital technologies—it’s a full, end-to-end reimagining of the supply chain, all contained in one interoperable, process-driven solution strategy. Supply chain leaders must reinvent their traditional processes and transform their approach. This will not only assist in extracting risk out of the process but in embedding sustainability into it. This will show that a better, more agile, and more resilient future is very much possible.
How we got here
Before I dive into the three vital principles for digital supply chain strategy success, let’s talk about how we got here.
Supply chains have historically been viewed as a cost center. As a result, managing them called for a steady focus on optimizing cost efficiency and maximizing profit. This meant that many companies excelled in their core competencies but outsourced the rest. Suppliers were selected based primarily on cost, and manufacturing was often moved to areas of the globe that had lower material and labor costs.
Recent supply chain disruptions—whether due to the pandemic, Russia’s invasion of Ukraine, the Suez Canal blockage, or some other event—exposed the inherent risks of this traditional way of thinking. Rocketing prices, inventory shortages, and empty shelves have become not only more common but downright frequent. Why did this happen? Because traditional supply chain and planning approaches have proven to be ineffective when variability arises, due to a lack of real-time visibility into evolving trends across the enterprise (such as market demand, resource availability, and raw material prices).
The other vital factor in this discussion is our growing climate crisis. Every year, we are using more resources than the planet can sustainably provide. The harmful effects—on climate, biodiversity, and even social inequality—are only increasing. This is one of the reasons why, as we rethink our approach to the supply chain, we must transition from a low-cost, streamlined approach to one that is risk-resilient and sustainable.
Where we are going
What will this risk-resilient and sustainable future look like? It’s not something we can approach in a piecemeal way. If you try to take several small bites at the apple, you’ll be exposing wide swaths of your organization to unnecessary risk for years to come. Functional business areas will remain disconnected and operate as distinct entities, rather than key cogs in a whole machine of interoperable business processes.
To properly address these foundational issues, supply chains need to evolve beyond cost considerations and embrace wider business issues of speed, customer service, risk, and sustainability. This means focusing on alleviating risk and building resiliency to shock and disruption, while still addressing critical sustainability mandates. Otherwise, decisions will be made in functional isolation, based on history and static operation rather than in-the-moment, information-driven action.
Investing in foundational digital tools and technology is a key enabler of this supply chain reinvention. But to be successful, we must rethink how we’re fabricating our digital supply chain strategy. To do so, start with these three principles.
Principle #1: Connect every process
To build a resilient and sustainable supply chain, you must start with an enterprise-wide lens. You can accomplish this by digitally integrating the supply chain from end to end—design to planning to manufacturing to logistics to maintenance to service. This end-to-end visibility is absolutely vital.
For instance, look to integrate design and production engineering. Build an approach where engineering bills of materials or recipes are managed through a consistent digital thread and handed over to the manufacturing team. A well-connected supply chain is one where custom orders are managed through variant configuration in an integrated manufacturing environment. It’s one where production engineering can easily communicate last-minute changes to the shop floor. It’s one that enables raw materials and parts supplied to the production lines to be orchestrated between manufacturing execution and warehouse management systems, eliminating waste hiding in functional siloes and driving profitability.
Going a step further, all of these business functions can provide even greater visibility and foresight by implementing cutting-edge artificial intelligence (AI) tools that can detect and analyze activities across the extended supply chain. This level of visibility will improve supply chain resilience by allowing companies to take preventative actions to mitigate bottlenecks.
The widespread elimination of data disconnects and process siloes enables some key benefits for the enterprise, including:
Accelerating the pace of innovation, individualization of products, and manufacturing, which will help get products out the door—and revenue in the door—faster;
Effective evaluation and prediction of supply, inventory, and performance issues, which helps reduce downtime and disruption;
Continuous feedback loops across business functions, which enables continuous improvement and innovation; and
Sustainability being engrained into every step of the process, helping to consistently reduce emissions, waste, and environmental impact.
How to set all of this into motion? An integrated business planning (IBP) process that embraces product development tools and IBP supply chain solutions can go a long way toward connecting every process. An effective IBP process that brings together both financial and operational stakeholders can break down the siloes that currently exist throughout the planning and decision-making process. It moves the decision-making process into a single place and ensures that data is easily available for all. Furthermore, it creates transparent plans with clear priorities, synchronized functional siloes, investment in organizational and cultural change, and the involvement of your broader partner ecosystem.
Principle #2: Contextualize every decision
In order to create risk-resilient and sustainable supply chains, leaders need to base their decisions on data and information that is not only accurate and up-to-date but also contextualized. A good digital strategy will bring together accurate, in-the-moment operational data with always-up-to-date business information. The accuracy of what you put into your system—your data acquisition—is paramount, but so too is your data analysis. Let’s consider three examples from very different parts of your supply chain.
To properly execute demand planning, you need to have a complete picture of daily demand; only then can you make decisions that will optimize profitability, deliver high customer service levels, and enable accurate supply planning. Creating a complete picture, however, requires going beyond merely reporting sales data to providing a context for that data. A good AI tool, for example, can help automatically identify meaningful demand thresholds and raise alerts when anomalies are detected.
Contextualizing decisions can also help you better maintain and manage your assets. A proper digital strategy for the lifecycle management of assets would not only gather and report sensor data, inspection results, and historical maintenance records but also analyze that data and form correlations. It would leverage AI, the internet of things, and rule-based frameworks to enable not only prescriptive maintenance (fixing the asset after it breaks) but also predictive maintenance (fixing it before it breaks).
Finally, digital technologies can help refine product design decisions by providing data around the usage of critical materials, energy consumption, and emissions. This type of context will help companies eliminate waste and ensure their products meet both regulatory requirements and their own sustainability goals.
Turning toward the future, intelligent technologies can help you contextualize your operational and business data, which will enable you to:
Operate as one business and avoid gaps, inaccuracies, and mistakes that would otherwise slow you down and increase costs, and
Embed sustainability into your day-to-day operations and processes, offering compliance transparency and decision guidance while proactively managing your goals.
Principle #3: Enable collaboration
A truly successful supply chain strategy is one that also creates dynamic, digital connections across all suppliers, contract manufacturers, logistics partners, and service providers. It’s all about collaboration.
What would this look like? Working closely with shippers and carriers, for instance, to help optimize logistics processes, increase on-time deliveries, and mitigate supply risk. Or empowering operators, manufacturers, and service providers, for example, with a single digital network for resiliency and transparency.
This kind of close collaboration has many other benefits, including:
Full visibility into every partner’s capabilities, capacity, and performance, making it easy to plan with precision and confidence;
Coordination with partners to ensure that available supply meets market demand to provide on-time, in-full delivery;
Strategic discovery and approval of partners to quickly and efficiently pivot when necessary; and
Coordination amongst partners in sustainability priorities and requirements.
An eye towards tomorrow
These three principles are vital steps to building a risk-resilient and sustainable supply chain. Once your design, manufacturing, logistics, maintenance, and service processes are connected and providing you the context you need to make effective decisions, you will finally be able to respond to disruptions in real time and connect your organization to an entire ecosystem of partners and collaborators.
The magnitude of the shift from after-the-fact reactions to in-the-moment actions—and even in-advance prediction—cannot be understated. It’s a move from ordinary to extraordinary, from automation to business-changing transformation. It’s about turning agility, resiliency, and sustainability from pie-in-the-sky, C-suite dreams into grounded, operational realities.
As a result, your supply chain will become more nimble, and you’ll see costs, profits, and customer service capabilities all trending in the right direction. You’ll see risk fading into your rearview mirror, and you’ll see sustainability and success rising just above the horizon.
ReposiTrak, a global food traceability network operator, will partner with Upshop, a provider of store operations technology for food retailers, to create an end-to-end grocery traceability solution that reaches from the supply chain to the retail store, the firms said today.
The partnership creates a data connection between suppliers and the retail store. It works by integrating Salt Lake City-based ReposiTrak’s network of thousands of suppliers and their traceability shipment data with Austin, Texas-based Upshop’s network of more than 450 retailers and their retail stores.
That accomplishment is important because it will allow food sector trading partners to meet the U.S. FDA’s Food Safety Modernization Act Section 204d (FSMA 204) requirements that they must create and store complete traceability records for certain foods.
And according to ReposiTrak and Upshop, the traceability solution may also unlock potential business benefits. It could do that by creating margin and growth opportunities in stores by connecting supply chain data with store data, thus allowing users to optimize inventory, labor, and customer experience management automation.
"Traceability requires data from the supply chain and – importantly – confirmation at the retail store that the proper and accurate lot code data from each shipment has been captured when the product is received. The missing piece for us has been the supply chain data. ReposiTrak is the leader in capturing and managing supply chain data, starting at the suppliers. Together, we can deliver a single, comprehensive traceability solution," Mark Hawthorne, chief innovation and strategy officer at Upshop, said in a release.
"Once the data is flowing the benefits are compounding. Traceability data can be used to improve food safety, reduce invoice discrepancies, and identify ways to reduce waste and improve efficiencies throughout the store,” Hawthorne said.
Under FSMA 204, retailers are required by law to track Key Data Elements (KDEs) to the store-level for every shipment containing high-risk food items from the Food Traceability List (FTL). ReposiTrak and Upshop say that major industry retailers have made public commitments to traceability, announcing programs that require more traceability data for all food product on a faster timeline. The efforts of those retailers have activated the industry, motivating others to institute traceability programs now, ahead of the FDA’s enforcement deadline of January 20, 2026.
Inclusive procurement practices can fuel economic growth and create jobs worldwide through increased partnerships with small and diverse suppliers, according to a study from the Illinois firm Supplier.io.
The firm’s “2024 Supplier Diversity Economic Impact Report” found that $168 billion spent directly with those suppliers generated a total economic impact of $303 billion. That analysis can help supplier diversity managers and chief procurement officers implement programs that grow diversity spend, improve supply chain competitiveness, and increase brand value, the firm said.
The companies featured in Supplier.io’s report collectively supported more than 710,000 direct jobs and contributed $60 billion in direct wages through their investments in small and diverse suppliers. According to the analysis, those purchases created a ripple effect, supporting over 1.4 million jobs and driving $105 billion in total income when factoring in direct, indirect, and induced economic impacts.
“At Supplier.io, we believe that empowering businesses with advanced supplier intelligence not only enhances their operational resilience but also significantly mitigates risks,” Aylin Basom, CEO of Supplier.io, said in a release. “Our platform provides critical insights that drive efficiency and innovation, enabling companies to find and invest in small and diverse suppliers. This approach helps build stronger, more reliable supply chains.”
Logistics industry growth slowed in December due to a seasonal wind-down of inventory and following one of the busiest holiday shopping seasons on record, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The monthly LMI was 57.3 in December, down more than a percentage point from November’s reading of 58.4. Despite the slowdown, economic activity across the industry continued to expand, as an LMI reading above 50 indicates growth and a reading below 50 indicates contraction.
The LMI researchers said the monthly conditions were largely due to seasonal drawdowns in inventory levels—and the associated costs of holding them—at the retail level. The LMI’s Inventory Levels index registered 50, falling from 56.1 in November. That reduction also affected warehousing capacity, which slowed but remained in expansion mode: The LMI’s warehousing capacity index fell 7 points to a reading of 61.6.
December’s results reflect a continued trend toward more typical industry growth patterns following recent years of volatility—and they point to a successful peak holiday season as well.
“Retailers were clearly correct in their bet to stock [up] on goods ahead of the holiday season,” the LMI researchers wrote in their monthly report. “Holiday sales from November until Christmas Eve were up 3.8% year-over-year according to Mastercard. This was largely driven by a 6.7% increase in e-commerce sales, although in-person spending was up 2.9% as well.”
And those results came during a compressed peak shopping cycle.
“The increase in spending came despite the shorter holiday season due to the late Thanksgiving,” the researchers also wrote, citing National Retail Federation (NRF) estimates that U.S. shoppers spent just short of a trillion dollars in November and December, making it the busiest holiday season of all time.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
As U.S. small and medium-sized enterprises (SMEs) face an uncertain business landscape in 2025, a substantial majority (67%) expect positive growth in the new year compared to 2024, according to a survey from DHL.
However, the survey also showed that businesses could face a rocky road to reach that goal, as they navigate a complex environment of regulatory/policy shifts and global market volatility. Both those issues were cited as top challenges by 36% of respondents, followed by staffing/talent retention (11%) and digital threats and cyber attacks (2%).
Against that backdrop, SMEs said that the biggest opportunity for growth in 2025 lies in expanding into new markets (40%), followed by economic improvements (31%) and implementing new technologies (14%).
As the U.S. prepares for a broad shift in political leadership in Washington after a contentious election, the SMEs in DHL’s survey were likely split evenly on their opinion about the impact of regulatory and policy changes. A plurality of 40% were on the fence (uncertain, still evaluating), followed by 24% who believe regulatory changes could negatively impact growth, 20% who see these changes as having a positive impact, and 16% predicting no impact on growth at all.
That uncertainty also triggered a split when respondents were asked how they planned to adjust their strategy in 2025 in response to changes in the policy or regulatory landscape. The largest portion (38%) of SMEs said they remained uncertain or still evaluating, followed by 30% who will make minor adjustments, 19% will maintain their current approach, and 13% who were willing to significantly adjust their approach.
That percentage is even greater than the 13.21% of total retail sales that were returned. Measured in dollars, returns (including both legitimate and fraudulent) last year reached $685 billion out of the $5.19 trillion in total retail sales.
“It’s clear why retailers want to limit bad actors that exhibit fraudulent and abusive returns behavior, but the reality is that they are finding stricter returns policies are not reducing the returns fraud they face,” Michael Osborne, CEO of Appriss Retail, said in a release.
Specifically, the report lists the leading types of returns fraud and abuse reported by retailers in 2024, including findings that:
60% of retailers surveyed reported incidents of “wardrobing,” or the act of consumers buying an item, using the merchandise, and then returning it.
55% cited cases of returning an item obtained through fraudulent or stolen tender, such as stolen credit cards, counterfeit bills, gift cards obtained through fraudulent means or fraudulent checks.
48% of retailers faced occurrences of returning stolen merchandise.
Together, those statistics show that the problem remains prevalent despite growing efforts by retailers to curb retail returns fraud through stricter returns policies, while still offering a sufficiently open returns policy to keep customers loyal, they said.
“Returns are a significant cost for retailers, and the rise of online shopping could increase this trend,” Kevin Mahoney, managing director, retail, Deloitte Consulting LLP, said. “As retailers implement policies to address this issue, they should avoid negatively affecting customer loyalty and retention. Effective policies should reduce losses for the retailer while minimally impacting the customer experience. This approach can be crucial for long-term success.”