AI will protect global supply chains from the next major shock

For years, a stream of disruptions has created a persistent state of uncertainty and instability in global supply chains. Some still question whether the pandemic is the root cause, as logistical pressure points far predated COVID-19 – which may have simply exposed the fact that global supply chains had become so lean over time that they were more vulnerable to global shocks affecting multiple sectors at once.

Disruption is far from over. Longshoremen strikes in the US on the East Coast and Gulf ports, and ongoing farmers’ strikes in multiple regions of the world, have created disruptions and added to capacity issues. Geopolitical conflict is an ongoing supply chain risk, particularly in critical corridors, or pinch points, of supply. Disruptions and damage from weather-related disasters are unrelenting, and will continue as a result of droughts, fires, flooding, and La Niña. Trade tensions are choking the movement of semiconductor products, manufacturing equipment, and other critical materials.

The ingenuity, resilience, and flexibility of supply chain leaders worldwide will continue to be tested – but we can learn from the past. In addition to increasing the viability of current supply chain networks, logistics leaders must create more resilient and sustainable versions for the future. The year 2025 will see significant changes to global supply chain infrastructure – a necessity for the resilience of the nations and alliances that depend on it. AI may hold the key.

The widespread adoption of advanced technologies will catalyze the digitalization of supply chain management, change how products and services are made and delivered, and enable the sharing of supply chain information in new ways. Companies that pilot and apply emerging technology platforms to traditional management will realize the kind of optimization the industry has sorely needed.

At the procurement level, increased automation and advanced manufacturing will continue to reshape the labour force. Total sourcing costs, especially in industries suited for automation and in countries that have traditionally been the engines of global supply chains, will also be impacted. These shifts are likely to have several implications for procurement leaders:

Climate change will also continue to affect supply chains and logistics. A 2024 study published in Nature Sustainability predicts that supply chains will face an increase in weather-induced disruptions over the next 15 years. While the exact effects cannot be precisely predicted, more frequent heat extremes and rainfall patterns are creating a continually shifting environment that impacts the production of raw materials in many countries.

Geopolitical shifts also have the potential to transform the global business landscape, by creating an environment that is more complex and politically fraught. Tariffs and trade agreements, political relationships, subsidies, and export restrictions that affect trade routes and resource availability may have a significant impact on supply chains. There may be near-term damage if massive disruptions create chaos for businesses that rely on imports.

Looking beyond 2025, direct challenges to global logistics and warehousing, as well as uncertainties about the durability of global trade agreements and norms, are destined to weaken the business models that gave rise to legacy global supply chain infrastructure. Fundamental changes are already taking place in the supply chain sector. Due to mixed signals in the global trade system and planned shifts in economic models, some companies are already reshoring, engaging in vertical integration, and increasingly drawing resources from new geographies.

Many are hanging their hats on visibility into the future viability of global supply chain infrastructure. In 2023, as the world found itself at a pivotal juncture, the World Economic Forum in collaboration with Accenture and other key partners examined the Global Supply Resilience Initiative (GSRI) – a collective endeavour that was aimed at promoting resilience through increased visibility in supply chain operations. The resulting report outlines a pilot project undertaken by UNICEF in which it used real-time data to reinforce system performance and help save lives in West Africa.

Using advanced technologies, UNICEF was able to predict, respond and maintain resilient supply networks by harnessing shared data intelligence. The GSRI case study exemplified the role of open, non-competitive data exchange in bolstering supply chain resilience. It pointed to issues with organizational hesitation over data-sharing, and outlined how technological innovation and robust governance can encourage collective action for the greater good.

In 2024, KPMG reported that it was the year for “the supply chain digital shake-up”. Advanced technologies have created a new paradigm where organizations can respond more quickly, proactively address problems, and reduce errors and inefficiencies with greater visibility, transparency, and traceability – all of which makes global supply chain infrastructure more resilient to future shocks and potential disruptions.

Further hammering home the importance of technological evolution, Gartner recently published its Top 10 Strategic Technology Trends for 2025; it is a “star map” for companies that wish to progress securely into the next five years and beyond, “especially as artificial intelligence upends the way technology is acquired, implemented and used in today’s organizations”.

Most supply chain infrastructure actors now have a heightened awareness that they must up their game in our “new normal”. Part of that means the adoption of AI solutions that will contribute to the assessment and reorganization of globalized supply chains. This should remove unnecessary complexities and mitigate vulnerabilities to the shocks and disruptions that have mercilessly plagued the industry. AI in the supply chain can revitalize individual companies' activity, while elevating the industry as whole. Let’s champion supply chain innovation for the good of the global economy.