The Five Most Urgent Challenges for Supply Chain Risk Management Leaders in 2025

Article Highlights:

• ESG regulations are a growing threat to manufacturers, in large part due to the raft of expanding directives in the European Union.
• One of the most awe-inspiring aspects of artificial intelligence is also arguably its greatest source of risk: the breakneck speed of advancement. 
• With the ascent of aggressive protectionist trade policies among some of the world’s most powerful nations, geopolitics is an increasingly consequential risk within the greater supply chain risk management landscape.

Although 2024 was considerably more stable than the succession of years roiled by the COVID-19 pandemic, it didn’t bring the continuity many in the supply chain industry were hoping for. The blockade in the Red Sea impacted vessels traveling through the Suez Canal and the billions of dollars in cargo that are ferried through it every day. Longshoremen and rail workers from Germany and Canada to the Gulf Coast of the U.S. engaged in lengthy labor disputes with their employers, jeopardizing key nodes in worldwide logistics networks. And major geopolitical developments continued to introduce new variables that complicated the way businesses sourced parts and collaborated with suppliers. 

As we transition into 2025, the question on the minds of many supply chain risk management (SCRM) leaders is whether we’ll return to anything resembling the relative calm and stability experienced in the years immediately prior to the pandemic. Will supply chain disruptions and the range of difficulties that emerged in recent years start to tick modestly downward, or has the upheaval and volatility of the past half-decade now entrenched itself as the new status quo? 

Below, we take a look at five major challenges that SCRM leaders should be on the lookout for as we officially begin the second half of the 2020s—a decade that has sowed havoc and turmoil on supply chains all over the world. 

Complexity of the ESG Landscape 

ESG regulations are not exactly a new threat to manufacturers and their suppliers. They are, however, growing into an increasingly large and consequential one, in large part because of the raft of expanding directives in the European Union. Regulations like the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the German Supply Chain Due Diligence Act (SCDDA) are all set to expand their scope in the near future, legally compelling more companies to adhere to their reporting obligations. 

While it’s difficult to know with any certainty how quickly U.S. regulators are going to catch up with their EU counterparts, the concretizing regulatory landscape among the 27 EU member nations means that American companies with global customer bases won’t have the luxury to wait. This year is a particularly significant one for these regulations, too, with the CSRD rolling out the second phase of its implementation process. As of January 1, 2025, all businesses that meet the directive’s threshold for a “non-listed large company” will need to start fulfilling the regulation’s reporting requirements. 

While it’s difficult to know with any certainty how quickly U.S. regulators are going to catch up with their EU counterparts, the concretizing regulatory landscape among the 27 EU member nations means that American companies with global customer bases won’t have the luxury to wait.

The High-Risk, High-Reward AI Adoption Game 

The degree to which businesses are rushing to adopt AI into their internal operations is staggering. Corporate spend on generative AI came in around $5 billion in 2022. A year later, that figure jumped sevenfold, to $36 billion, and there’s little question that 2024 saw even greater capital investment on the tantalizing potential of artificial intelligence and its many applications. But while technologies like generative AI, conversational AI, and machine learning—to name just a few current incarnations—are offering glimpses of transformative capabilities in functionalities ranging from predictive analytics to risk assessment, deploying these platforms brings its own slew of unique hazards. 

That’s because one of the most awe-inspiring aspects of artificial intelligence is also arguably its greatest source of risk: the breakneck speed of advancement. AI is evolving very quickly, and an artificial intelligence tool that’s implemented today could be existing in a much different—and more sophisticated—context in 12 or 18 months. If a company spends heavily on a specific AI platform today, and that platform’s underlying technology is rendered obsolete by sweeping strides in the field over the next year, then what once looked like a savvy investment is suddenly squandered capital. As much as the corporate sector valorizes the “first mover advantage” and the ability to see trends before they crystallize into fundamental aspects of our culture, early adoption in the AI space comes with real pitfalls. 

As much as the corporate sector valorizes the “first mover advantage” and the ability to see trends before they crystallize into fundamental aspects of our culture, early adoption in the AI space comes with real pitfalls. 

There are three potential paths SCRM leaders can take as they start to think more strategically about bringing on AI. First, businesses can invest heavily in AI right now, going “all in,” so to speak, on the technology as it exists today. Second, they can continue on their current path while experimenting with potential AI applications for their operations. Finally, they can simply ignore artificial intelligence completely, sticking to their current path and maintaining confidence that the technology will never become an essential aspect of their specific industry. 

It goes without saying, probably, that the latter route should be discouraged, as it could leave a company far behind if artificial intelligence is even close to as useful as many experts think. But recklessly embracing the technology is risky, too. A more patient, thoughtful approach that neither dismisses AI nor puts a disproportionate amount of faith into it is most likely to be the most prudent strategy for many SCRM leaders. 

Supply Chain Transparency Is a Skeleton Key

Over the past year or two, the concept of transparency has risen in the supply chain zeitgeist. Beyond just having the visibility to extract data from supply chains and the manufacturers that populate them, transparency requires businesses to communicate and disclose that data to relevant stakeholders—including investors, consumers, and government agencies. In a global environment characterized by rising regulations mandating that companies carry out supply chain due diligence and report on various ESG impacts, achieving transparency is critical to environmental compliance efforts. 

But as the scope of regulatory obligations and related expectations continues to expand, businesses need to start cultivating strategies for practicing supply chain transparency in ways that are built to last. As organizations work to develop systems and repeatable processes for achieving transparency within their vendor networks, they need to come to terms with the reality that these data-gathering undertakings are not finite projects. Rather, they’re ongoing journeys that get organizations incrementally closer to achieving ideal transparency over time. 

Geopolitics and Trade Are More Intertwined Than Ever

Following the last two U.S. presidential administrations, weaponizing trade against geopolitical rivals has started to look a lot like the genie that can’t be shoved back into the magic lamp. President Trump used a sweeping succession of tariffs to wage a trade war against China, and the Biden administration largely continued in its predecessor’s footsteps, embracing a methodical and at times severe strategy to restrict international trade relations with China. For its part, China didn’t absorb all the economic warfare waged against it lying down. The PRC has implemented various restrictions on mineral exports over the past two years, including an outright ban on the shipment of gallium, germanium, and antimony to the U.S. this past December.

With the ascent of aggressive protectionist trade policies among some of the world’s most powerful nations—and the restrictive barriers that serve as their chief instruments—geopolitics is now a major dimension in the greater supply chain risk management landscape. Given the history of the incoming administration and President-Elect Trump’s past strategies regarding trade, there’s a high probability that the next four years are going to see even more trade conflict and related geopolitical maneuvering. And with the prospect of even more tariffs from the Trump administration, a lot more companies are going to start transitioning out of China and establishing sourcing in other countries. 

Implementing a SCRM Framework That Lasts

A plethora of data over the past few years has indicated that businesses in a wide range of sectors are making progress in learning to manage risk more comprehensively. According to Fictiv, a custom manufacturing firm, nearly 60% of companies are ramping up their risk management processes. Additional research by McKinsey & Company bolsters the case for more robust SCRM efforts across industries. A 2024 survey conducted by the consultancy found that nearly three-quarters of businesses surveyed had dual sourcing strategies in place, and 60% reported extensive visibility into their tier one suppliers.

But figures like these only tell part of the story. Many organizations—including firms that have developed internal risk management measures—are still relying on ad-hoc solutions for mitigating risks, and may still be scrambling to address disruptions transpiring in real time. These businesses continue to lack a consistent, comprehensive SCRM framework that’s capable of handling a myriad of different supply chain threats. One of the critical emerging challenges leaders are facing is how to set up a system and accompanying process that allow them to adapt to risks, disruptions, and other changes in a quick, highly formalized fashion. 

One way to install this kind of system is through a supply chain risk management platform like Z2Data. A leading SCRM firm that provides companies with a comprehensive out-of-the-box solution, Z2Data helps businesses mitigate supply chain risk and build resilience throughout their sourcing networks. By utilizing several large internal databases that include over one billion components, tens of thousands of suppliers, and manufacturing sites all over the world, the platform gives companies a powerful, intuitive command station for addressing an ever-evolving threat landscape. 

The SCRM software allows manufacturers to visualize their supply chains, see deep into their vendors, and rapidly assess the fallout from active disruptions. Z2Data is the kind of risk management framework that lifts businesses out of the chaotic morass of devising makeshift, impromptu solutions for every interruption that impacts their supply chain.

To learn more about the Z2Data platform and how its tools can help you effectively combat the major supply chain challenges of 2025, schedule a free demo with one of our product experts.