Gumming up supply chains: US enterprises need to get their act together in 2025

From geopolitical shifts and technological advancements to heightened sustainability concerns, the $19 billion supply chain sector is experiencing unprecedented challenges and opportunities. Events such as mass deportations in the US, ongoing complexities in the silicon and battery supply chains, and a surge in global electricity demand are reshaping priorities for enterprises worldwide.

The push for decarbonization and renewable energy integration

A global electricity supercycle is underway as nations transition to renewable energy. The surge in demand for clean energy infrastructure has led to increased reliance on materials like lithium, nickel, and cobalt, which are key components of batteries. However, geopolitical challenges, such as efforts to decouple from Chinese dominance in the battery supply chain, are intensifying the resource constraints.

A significant number of enterprises are prioritizing sustainable practices, with more than three-quarters of businesses aiming to enhance customer experience through digital strategies that often include sustainability elements. Enterprises must prioritize investments in circular supply chains, focusing on battery recycling and secondary sourcing strategies. It is essential to collaborate with policymakers to secure stable, diversified sources of critical materials. Additionally, adopting digital twin technologies can enhance visibility and optimize energy consumption across the supply chain.

Geopolitical disruptions and workforce dynamics

Once Donald Trump gets the throne, the expected exodus of skilled and semi-skilled workers will likely create bottlenecks in production, transportation, and logistics. In a recent HFS-EY supply chain study, less than 15% of the enterprises claimed to have achieved complete visibility of their supply chains. This makes enterprises vulnerable to ongoing and forecast labor disruptions.

Enterprises should accelerate automation efforts and deploy AI-driven workforce management solutions to mitigate labor shortages. Establishing partnerships with local governments and NGOs to tap into underutilized labor pools, such as refugees or displaced individuals, can also help alleviate workforce gaps. Building redundancy into supply chain networks will ensure operational continuity amid geopolitical disruptions.

The reshoring and nearshoring surge

Geopolitical and economic pressures are driving a wave of reshoring and nearshoring, particularly in critical industries such as semiconductors and pharmaceuticals. However, the transition faces hurdles, including infrastructure limitations and cost challenges. According to a recent industry survey, 85% of large company executives plan to make significant changes to their supply chains, including reshoring and nearshoring, due to concerns about trade wars and geopolitical tensions. Moreover, the US Department of Defense is investing $6 billion in reshoring initiatives and modernizing production plants to enhance the production of munitions and other critical materials for national security.

Enterprises must adopt a phased approach to reshoring, starting with high-value and strategically critical components. Leveraging government incentives for domestic production and investing in smart manufacturing technologies will enable cost-efficient local operations. Strengthening supplier relationships in nearshore locations can further enhance resilience.

The rise of supply chain militarization

With increasing geopolitical rivalries, national defense strategies are prioritizing secure and self-sufficient supply chains. For example, the US Army’s focus on developing affordable, efficient drones underscores a broader shift toward military-driven innovation and procurement.

Companies involved in dual-use technologies should align with national priorities to tap into defense funding and partnerships. Strengthening cybersecurity and ensuring compliance with national security standards will be critical for participating in defense-driven supply chains. Building agile manufacturing capabilities will enable quicker responses to evolving military needs.

Technology as the great equalizer

The rise of generative AI, blockchain, and IoT is transforming how supply chains are designed and managed. For instance, based on a recent HFS-EY supply chain study, GenAI adoption in the supply chain market will outgrow the current AI adoption in the next 18 months. A significant majority—more than two-thirds of supply chain professionals—consider AI advancements critical for achieving ‘autonomous and resilient’ supply chains. Enterprises must accelerate the adoption of advanced technologies such as AI-powered predictive analytics and blockchain-based traceability solutions. Building a robust ecosystem of technology partners will ensure faster and smoother integration of innovations. Continuous upskilling of the workforce in digital technologies will be critical for staying competitive in the tech-driven supply chain arena.

The Bottomline: The supply chain industry in 2025 is characterized by complexity, innovation, and uncertainty. Enterprises that proactively adapt to these trends will not only navigate the challenges but also seize the opportunities to drive growth and resilience.

From embracing sustainable practices to leveraging cutting-edge technologies, the time to act is now. A balanced approach—combining agility, collaboration, and innovation—will help supply chain leaders successfully sail through these uncertain times while banking on opportunities.