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.
As I assume the role of Chair of the Board of Directors for the Council of Supply Chain Management Professionals (CSCMP), I fondly reflect on the more than 10 years that I’ve had the privilege of being part of this extraordinary organization. I’ve seen firsthand the impact we have had on individuals, companies, and the entire supply chain profession.
CSCMP’s journey as an organization began back in 1963. It has since grown from a small, passionate community to the world’s premier association for supply chain professionals. Our mission—to connect, educate, and develop supply chain professionals throughout their careers—remains not only relevant, but vital in today’s world.
As we look ahead, the opportunities are vast. What stands out the most to me is simply this:We are stronger together. Every individual brings a unique perspective, and it’s through our collective wisdom and efforts that we will continue to advance the work we do. The road ahead is not one we travel alone. It’s a path we navigate as a community—one united in purpose and direction.
My vision for the year ahead centers around growth—growth in our global reach and, perhaps even more importantly, growth in how we engage and support each other. We have tremendous opportunities for international expansion, especially in Europe, the U.K., Mexico, Central and South America, and Canada. I’m happy to share that we're already seeing progress in our reach to these regions.
I'm incredibly excited about the potential for even more growth ahead. One of the initiatives I am most passionate about is our Centers of Excellence. These centers will provide members the space to engage deeply in key supply chain disciplines. I invite each of you to dive into these areas, share your experiences, and contribute to the innovative solutions we develop together. There will be plenty of opportunity to do so. These centers are not only academic spaces—they are hubs for innovation, where we can share best practices and work together to solve our industry’s biggest challenges.
Education and thought leadership will continue to be at the heart of what we do. By expanding our research capacity, we will offer cutting-edge insights that keep our members at the forefront of industry trends and innovation. Through our platforms, we will create even more opportunities for connection and collaboration—ensuring that every voice is heard. Your insights, curiosity, questions, and engagement will drive the transformation we seek. We all play a part in the advancement of our industry and our profession.
Our impact begins with membership. Expanding collaborations with public, private, and nonprofit sectors will give us new ways to drive progress. In a world where our ecosystem is even more interconnected than ever before, the ability to engage with diverse stakeholders will help us unlock new solutions and truly make a difference on a global scale. None of this would be possible without the strong foundation that has been built over the years by serving our supply chain community. Each of you holds the ability to shape the future of the supply chain, and I can’t wait to see what we will achieve together.
The concept of using a neutral third party to resolve conflicts between suppliers and customers is not new. Mediation and arbitration have long been considered as more efficient and less costly ways to resolve contractual disputes than litigation. In fact, 2025 marks the 100th anniversary of the Federal Arbitration Act, which allows for contract disputes to be resolved through a private resolution process instead of going to court.
Over the years, the concept of using a neutral has expanded to include more preventive techniques for keeping business relationships healthy and addressing potential contractual misalignments earlier. For example, the construction industry has been utilizing the concept of a dispute review board (DRB) since 1975 to solve issues that arise during major projects, such as cost overruns, schedule delays, and disputes over payment or the quality of workmanship. The DRB is typically a panel of three independent expert advisors who are immediately available to help resolve disputes that arise during the contractual relationship.1 The panel is formed at the beginning of the construction project with the goal of resolving any issues or differences before they become formal claims.
Recently the concept has evolved further into what is now known as a “standing neutral” and has been adopted by companies in many industries outside of construction. A standing neutral is a highly qualified and respected expert, selected by both parties in a business relationship to help them resolve issues and maintain a healthy relationship. This can best be described as a proactive approach where the neutral provides quick, informal, flexible, adaptable, and nonadversarial ways for preventing disputes.
The role of the standing neutral
Unlike a neutral third party used on an ad-hoc basis for dispute resolution in mediation or arbitration, a standing neutral is a readily available “fast response” technique. It is designed to prevent any issues from escalating into adversarial disputes that might otherwise go to mediation, arbitration, or litigation. A key feature is that the neutral is “standing,” meaning it is integrated into the parties' continuing governance structure. Another key concept is that the standing neutral supports the relationship itself and both parties equally; the goal is to ensure the success of the relationship.
Embedding a standing neutral into a contracting party's governance structure can have a powerful impact on the success of the business relationship. The standing neutral provides a helpful "dose of reality" to the parties and encourages them to be more objective in their dealings with each other. When differences of opinion arise, the parties can quickly use the standing neutral as an objective sounding board, obtaining a recommended course of action that is minimally disruptive to the business relationship.
While the classic role of a standing neutral is to serve as a “real-time” issue-resolver throughout a relationship, companies have begun to expand how they have used a standing neutral. The University of Tennessee’s research—which is detailed in the white paper “Unpacking the Standing Neutral”—reveals the creative ways that companies are using a standing neutral.2 For example, some companies are increasing the role of their standing neutral to support annual relationship health checks and even using neutrals as “deal facilitators” to help craft highly complex or strategic outsourcing agreements.
Today, there are many different variations of a standing neutral. Figure 1 shows some of the most common options companies can consider when designing the role and scope of their standing neutral. In the figure, these options are organized across nine design principles or considerations. For an example of how a standing neutral can operate in a real-world setting see the sidebar “Idea in action: EY case study."
Getting ramped up
If you think using a standing neutral would benefit one of your relationships, we suggest going through the following simple stages. It’s important to note that the cost and expenses of the standing neutral are absorbed equally by both parties.
1. Selection: At the outset of their relationship, parties select one person (or three) with whom they trust and have confidence to serve as standing neutral throughout their relationship. A single standing neutral should always be entirely independent. In most cases where there is a panel of neutrals, each party nominates one member, and the two nominated neutrals will select a third member; in such cases, it is typically required that every panel member be acceptable to both parties and that all panel members be independent and impartial, with no special allegiance to the nominating party.
As part of the selection process, the parties formalize an agreement with the standing neutral, which includes determining the standing neutral's responsibilities and authority. The nine design principles in Figure 1 can be used to accomplish this.
2. Briefing: The parties brief the standing neutral regarding the nature, scope, and purpose of the relationship or venture. As part of the briefing, the standing neutral is usually equipped with a basic set of contract materials and supporting documents.
3. Continuing involvement: A key part of designing a standing neutral program is embedding your standing neutral as part of your ongoing governance. For example, we recommend at a minimum that the parties have their standing neutral attend the parties’ quarterly business reviews and lead an annual relationship health check. This enables the standing neutral to meet regularly with the parties to review the progress of the relationship, even if there are no issues.
Alternatively, it is possible to have a
standby neutral (versus a standing neutral). In the case of a standby neutral, the neutral is merely available on an ad-hoc basis to be called on whenever necessary to give an advisory opinion.
Why standing neutrals work so well
Standing neutrals have had a remarkable record—especially for resolving issues before they become disputes. A study of the use of standing neutrals in the construction industry found that, in the vast majority of cases, the parties never look to the standing neutral to make any dispute resolution recommendations or decisions. (And in the small minority of cases where the standing neutral actually makes a recommendation, 95% of the recommendations are accepted by the parties without resorting to mediation, arbitration or litigation.
3)
It may seem counterintuitive that having a standing neutral reduces the likelihood of needing a third party to resolve disputes. But research has found that the presence of others causes people to behave more honestly and reign in unethical behavior such as cheating. These effects are amplified when the third-party observer is knowledgeable in the subject matter of the agreement and in the nature of the agreement.
The establishment of a standing neutral—which appears at first to be merely an efficient technique for quickly resolving disputes—creates a dynamic situation in which the participants change their relationship and their attitudes toward each other. The changes usually are an evolution, rather than a conscious effort. For example, at first it is common for contracting parties to feel they are simply choosing a neutral expert for resolving conflicts between them promptly. However, as the standing neutral interacts with the parties during ongoing governance forums, the parties develop a greater sense of confidence in the standing neutral's ability to quickly alleviate friction in the relationship. When this happens, the parties shift their view of the standing neutral from “dispute-resolver” to one of “sensible sounding board.”
The presence of a standing neutral also encourages teamwork and improved performance by all parties. The contracting parties become incentivized to concentrate on “fixing the problem” rather than “fixing the blame,” and use their mutual knowledge to solve the problem rather than relinquishing control to the neutral. A side benefit is when the parties construct their own solutions to problems, they often increase their trust and confidence in each other's abilities, which ultimately strengthens the relationship. For these reasons, the standing neutral serves as not only a standby dispute resolution process, but also as a remarkably successful dispute prevention process.
Notes:
1 For more information see A. A. Mathews, Robert J. Smith, Paul E. Sperry, and Robert M. Matyas, Construction Dispute Review Board Manual, (New York: McGraw-Hill, 1996): p. 10
The global consulting firm EY was looking to outsource the food services, cleaning services, and maintenance at its facilities to the provider Integrated Service Solutions (ISS). But the company wanted to do so in a way that was completely different from how it had approached outsourcing workplace services in the past. EY and ISS wanted to create an outsourcing agreement that was highly collaborative and beneficial for both parties.
To do so, they incorporated a standing neutral in the contracting process from the outset. Together the parties selected one standing neutral—Erik Linnarsson, a lawyer from Cirio Law Firm—as a deal facilitator. Linnarsson was trained as a certified deal architect (CDA) to craft complex outsourcing agreements.
Post contract signing, the parties continued to use a standing neutral, embedding Linnarsson into the outsourcing relationship’s ongoing governance. Linnarsson supported both mid- and higher-level governance forums. He also acted as both an expert coach and evaluator for issue resolution, providing advice as problems arose. If needed, Linnarsson had the authority to make formal, nonbinding recommendations. When Linnarsson decided to retire, EY, ISS, and Linnarsson ramped up one of Linnarsson’s colleagues, who now serves the role of standing neutral.
The parties also have tapped into their standing neutral for additional post-support services that are preventive in nature. These include ongoing performance management alignment and performance relationship health monitoring. For example, one role of the standing neutral is conducting an annual relationship health check, which includes measuring the level of trust and compatibility between the two partners.
The standing neutral also supports strategic reviews, including reviewing the contract for any misalignments. For example, when the parties initially created the agreement, they had decided to use a specific sustainability metric. However, since signing the contract, regulatory requirements around sustainability have become stricter. In addition, EY wanted to be a global leader in sustainability. As part of the proactive review, and with the help of the standing neutral, the parties worked together to revamp the metric.
Magnus Kuchler, EY’s markets leader and country managing partner for EY Sweden, believes that using a standing neutral has had a positive impact on the outsourcing relationship. “Simply having a trusting and credible standing neutral post-contract signing gives team members a sounding board that helps people make better decisions,” he said. “Using a standing neutral is truly a powerful tool to help contracting parties maintain a healthy relationship—which ultimately prevents costly disputes.”
Global trade will see a moderate rebound in 2025, likely growing by 3.6% in volume terms, helped by companies restocking and households renewing purchases of durable goods while reducing spending on services, according to a forecast from trade credit insurer Allianz Trade.
The end of the year for 2024 will also likely be supported by companies rushing to ship goods in anticipation of the higher tariffs likely to be imposed by the coming Trump administration, and other potential disruptions in the coming quarters, the report said.
However, that tailwind for global trade will likely shift to a headwind once the effects of a renewed but contained trade war are felt from the second half of 2025 and in full in 2026. As a result, Allianz Trade has throttled back its predictions, saying that global trade in volume will grow by 2.8% in 2025 (reduced by 0.2 percentage points vs. its previous forecast) and 2.3% in 2026 (reduced by 0.5 percentage points).
The same logic applies to Allianz Trade’s forecast for export prices in U.S. dollars, which the firm has now revised downward to predict growth reaching 2.3% in 2025 (reduced by 1.7 percentage points) and 4.1% in 2026 (reduced by 0.8 percentage points).
In the meantime, the rush to frontload imports into the U.S. is giving freight carriers an early Christmas present. According to Allianz Trade, data released last week showed Chinese exports rising by a robust 6.7% y/y in November. And imports of some consumer goods that have been threatened with a likely 25% tariff under the new Trump administration have outperformed even more, growing by nearly 20% y/y on average between July and September.
North American manufacturers have begun stockpiling goods to buffer against the impact of potential tariffs threatened by incoming Trump Administration, building up safety stocks to guard against higher imported costs, according to a report from New Jersey business software firm GEP.
That surge in orders has sparked a jump in production, shrinking the level of spare capacity in global supply chains to its lowest level since June, the firm said in its “GEP Global Supply Chain Volatility Index.” By the numbers, that index rose to -0.20 in November, from -0.39 the month before, based on GEP’s measurement of demand conditions, shortages, transportation costs, inventories, and backlogs from its monthly survey of 27,000 businesses.
Another impact of the trend has been to trigger a surge in procurement activity by manufacturers in Asia—especially China—as new orders rebounded sharply. Only India reported a greater rise in raw material purchases than China in November. And preparations to ramp up production even further were evidenced data showing factory procurement activity across Asia rising at its fastest pace for three-and-a-half years, GEP said.
In sharp contrast, Europe's industrial recession worsened in November, in large part due to Germany's deepening manufacturing downturn. Factories in that region went deeper into retrenchment mode, as demand for inputs from manufacturers in Europe was its weakest since December 2023.
"In November, U.S. manufacturers, particularly in the consumer goods sector, increased their safety stocks to help blunt any immediate tariff increases," John Piatek, vice president, GEP, said in a release. "In contrast, Chinese manufacturers are getting busier as a result of government stimulus and growth in exports, led by automotives and technology products. Strategically, many global companies have a wait-and-hope approach, while simultaneously planning to remake their global supply chains to respond to a tariff and trade war in 2025 and beyond."