The supply chain landscape continues to evolve at an unprecedented pace. A new report in Material Handling & Logistics (Jan. 15, 2025), identifies the top five most likely supply chain events that could impact companies in 2025.
Climate Change — 90% Risk Score Driven by shifting climate patterns and record-high temperatures, extreme weather events are a dominant risk to the supply chain. Volatile flooding has the potential for deep disruption. Indications point to the state of ocean temperatures being elevated in 2025 and beyond, with the potential for record-breaking highs.
Geopolitical Instability with Increased Tariff Risk – 80% Risk Score
The following major geopolitical events are likely to impact global trade in 2025:
• Ongoing Houthi attacks on cargo and container ships in the Red Sea continue to lead to longer transit times and equipment imbalance.
• Continued conflict in Ukraine could destabilize manufacturing and trade activities, putting European economies at further risk.
• Increased Chinese military drills near Taiwan could hinder trade through major sea routes, affecting global container shipping flows.
*The automotive, semiconductor, and manufacturing industries are possibly at risk due to proposed tariffs by the U.S.
Cybercrime – 75% Risk Score. Escalating cybersecurity risks in 2025, driven by the growing reliance on AI, IoT devices and interconnected systems include:
• Growing reliance on AI and cloud computing within supply chains is creating new “back door” opportunities for bad actors.
•Cyberattacks via sub-tier supply chains where criminals can more easily exploit common programming errors and vulnerabilities, allowing them into organizations via phishing and software connection links.
Rare Metals and Minerals– 65% Risk Score
• Within a politically charged atmosphere between the West and the major commodity producers – China and Russia – companies will face new tariffs and sanctions on critical metals.
• China could impose broader export restrictions, highlighting the need to diversify sourcing strategies. Lack of supplier diversity complicates procurement, leads to supply shortages and makes the price of affected commodities particularly vulnerable to trade tensions and eventual tariffs or sanctions.
Forced Labor – 60% Risk Score A growing crackdown on forced labor across industries will increase pressure on companies who are facing scrutiny to manage and eliminate suppliers violating human rights. Anticipated risks in 2025 include: Labor conditions in China, a cascade of legislation to address lax forced labor issues, the global concentration of commodities (like palm oil and vanilla) that originate in countries cited for modern slavery.
Classroom discussion questions:
- What can an OM team at a manufacturer do to mitigate these risks?
- Do you agree with these rankings? Would you add other risk factors?