Lilian Bories, Author at Global Trade Magazine

One effect of the global pandemic was the elevation of supply chain management from a back-office business function to a C-level strategic priority. As we approach 2025, all indicators suggest that for most industries, including retail, optimizing the supply chain to meet the needs of a post-pandemic world is more than ever a priority.

To stay competitive, businesses can no longer rely solely on past supply chain measures such as cost reduction, inventory minimization, and service improvements. A recent Bain & Company survey of CEO priorities highlights the need for leaders to balance traditional supply chain priorities with newer ones, such as increasing resilience, improving sustainability and responsiveness to customer expectations.

Based on extensive industry research and discussions with our customers and the broader retail community, TradeBeyond’s new “Retail Sourcing Report: 2025 Supply Chain Trends” highlights the concerns and priorities that are most top of mind for supply chain leaders going into 2025. These include diversifying and derisking global sourcing and manufacturing, preparing for the long-awaited broad adoption of AI in supply chain operations, and advancing sustainability initiatives beyond compliance.

Diversification and Derisking

Ongoing disruption to supply chains is now the norm rather than the exception. In the coming year, we can expect to see similar hiccups in supply chains due to trade wars between regional economic blocs, ongoing conflict in the Middle East and Eastern Europe, and extreme weather – to name a few. Close to half (47%) of global supply chain executives recently surveyed by KPMG, see their business as vulnerable to disruption.

Leading companies in this new-normal are focused on resilience, supported by flexibility in their operations, enabling them to quickly respond to potential disruptions. To ensure business continuity, companies will need to make a real-time cost/risk assessment – sometimes accepting higher costs.

Many companies will continue to focus on diversifying their supply chains in the coming year. This might take the form of avoiding reliance on a single supplier, factory, or region. Depending on the product and market, this could also mean shifting manufacturing domestically (onshoring) or closer to the market (nearshoring). Despite the obvious upstream/downstream benefits of manufacturing in China, Vietnam or Mexico, companies will need to keep adapting to the evolving geopolitical environment.

No question, the recent U.S. election will have further implications on global supply chains, with escalation in trade wars and significant tariffs likely. This is just one more implication of the post-globalization era.

AI: Beyond the Fundamentals

AI is laying the foundation for dramatic transformation across global supply chains. As industries increasingly turn to digital solutions, AI technologies are now poised to drive significant economic value for retail sourcing and supply chain operations. From improving traceability and risk management to automating time-consuming processes, 2025 is set to be a pivotal year for AI adoption.

Core AI technologies, such as machine learning and advanced analytics, are ready for widespread implementation. Many companies are already leveraging these tools for “level 1” applications, including AI-powered quality risk management and chain-of-custody tools. These technologies have enhanced supply chain visibility, ensured regulatory compliance, and reduced manual effort, marking significant progress in operational efficiency and sustainability. Jeff Alpert, founder and CEO of Pillar AI, notes, “The ability to monitor and analyze supply chains in real time has already unlocked considerable value for forward-thinking organizations.”

While these foundational applications are already adding measurable impact, that’s only the surface of AI’s potential in supply chains. Within the next year or two, AI is on track to make deeper inroads into complex supply chain functions, such as probabilistic demand planning, advanced risk assessment, and predictive ESG performance analysis. These “level 2” applications will help businesses not only respond to challenges but anticipate and mitigate them with unparalleled accuracy.

To unlock the full value of AI, organizations must focus on building robust data ecosystems. By centralizing proprietary and external supply chain data in accessible platforms, businesses can empower AI to deliver transformative insights. A well-prepared data foundation enables AI tools to generate breakthroughs in speed, precision, and agility—transforming supply chains into engines of innovation and competitive advantage.

Sustainability is Growing up

Over the last few years, most businesses have been heavily focused on sustainability, both from a marketing perspective and to meet an ever-growing body of compliance requirements. In the initial stages of the sustainability movement in the apparel sector, retailers and brands could make unsupported ESG related claims about material content and origin, emissions and other ESG related criteria, but those days are ending.

Today, across the globe, rigorous standards are in play, to enforce green claims and limit greenwashing. This includes top-down standards governing transparency, traceability, and other areas of ESG compliance. TradeBeyond has produced several reports this year which cover retail supply chain sustainability trends and traceability in greater detail.

In 2025, we expect to see a greater focus on a more mature approach to sustainability, such as building in circularity into the business ethos. Increasingly we are seeing leading retailers and brands taking a step back and re-evaluating their business models, building sustainability and circularity into their core, much like brands such as Patagonia and others have done since inception.

Circularity in the retail supply chain refers to a shift away from the traditional linear retail model. Rather than selling new products at increasing speeds, only for them to end up in landfills within a year or two, circularity aims to create a value chain that slows and closes the material loop. While fast-fashion is unlikely to go away anytime soon, there is a nascent trend toward what some call “slow-fashion,” which considers the impact of a product in the broader context of people and planet.

Other indicative trends which point to evolution in the sustainability movement include the growth in the resale of secondhand clothing. The global secondhand clothing market is forecast to reach $350 billion by 2027, up from $43 billion in 2023, ThredUp reported. A wide range of brands, including REI, H&M, Carhartt and others now have resale models in place.

Much like AI, the will and the need for circularity exist, as does the supporting technology and systems, but retailers and brands must play catch-up. For example, FibreTrace, a technology which provides digital transparency into the life cycle of apparel and other products can track a piece of apparel from the material origin to the product’s end-of-life, either in a landfill or through recycling.

The above is only a brief overview of the many exciting trends we are observing across both the front-end and back-end of retail. We cover more of these in greater detail in TradeBeyond’s “Retail Sourcing Report: 2025 Supply Chain Trends Report.”

Lilian Bories is Chief Marketing Officer for TradeBeyond, retail’s leading provider of SaaS supply chain solutions.

In recent years, geopolitical events have exposed the fragility of global supply chains. The pandemic, the Russia/Ukraine war, and the Israel/Gaza conflict have starkly demonstrated the vulnerabilities of supply lines. Designed primarily to minimize costs by leveraging low-cost labor and materials, these networks are easily disrupted by geopolitical events.

To better understand the dynamics reshaping global trade, TradeBeyond’s newly published “Retail Sourcing Report: Q3/Q4 2024 Insights & Indicators” offers strategic insights into how supply chains are adapting. For instance, the Middle East conflict has made the Red Sea shipping route unviable, forcing container ships to take the longer and more expensive route around South Africa’s Cape. Along with Asian Port congestion limiting container capacity, container shipping costs are pushing up toward pandemic levels.

Meanwhile, the Russia/Ukraine conflict has resulted in a reconfiguring of trade, with Russia discounting its plentiful energy exports to bypass sanctions and the decline of its important Europe markets. China and Russia have emerged as a powerful trading alliance, and a major challenge to U.S. economic and political hegemony. For Europe, high energy prices have accelerated the push towards cleaner energy.

Most interesting to watch are the large emerging economies such as India, Mexico, Brazil and the recently expanded BRICS alliance, a significant trading bloc, together accounting for over 37% of global GDP. To the consternation of the U.S.-Europe alliance, these countries are trying to stay neutral on political issues, but at the same are growing their bilateral trade with the Russia-China alliance. India is now the second biggest buyer of Russian energy exports and China is now India’s largest trading partner.

The report also extensively unpacks the impact of de-globalization and de-dollarization, two growing trends. Both U.S. competitors and allies recognize the risk of depending on the dollar and are increasingly using alternative trade settlement currencies. For Russia and China, this means the Chinese yuan. While the dollar is still a long way from being dethroned as the world’s trading currency, the long-term trend is clear that alternate currencies, especially the yuan, will become more important.

Strategic Responses to Geopolitical Shifts

While nearshoring and onshoring are still growing in the U.S., Mexico is now one of themost important U.S. trading partners. Also noteworthy is that Chinese manufacturing is staying ahead of geopolitics, with a substantial number of Chinese factories setting up shop in India, Vietnam, and Mexico to bypass tariffs.

This geopolitical reality has forced global supply chain executives to find alternatives, which in some cases means backpedaling from globalization. The degree of shift depends on the industry and region, but the overall trend is a steady shift away from the cost-driven dispersed global networks that evolved since the 1980s, to supply networks rooted in political alliances, which favor risk-mitigation over cost-savings.

The high value and strategically important global semiconductor industry is a case in point. With new U.S. and European protective tariffs on Chinese semiconductor exports (among other high-tech exports such as lithium-ion batteries and electric vehicles), the semiconductor market has become a strategic operational pawn in global supply chains. The U.S. Chips and Science Act provides over $50 billion in funding and subsidies for development of the U.S. semiconductor industry. As part of a larger $280 billion in science and tech funding, this measure is aimed at protecting and nurturing U.S. innovation and avoiding the chip shortages and supply bottlenecks which crippled the automotive and other industries during the pandemic.

At the same time, China is heavily focused on expanding higher value production in areas such electronics, chemicals, pharmaceuticals, and high-tech manufacturing. China has more than made up for declining exports of high value products such as semiconductors and electric vehicles to the U.S. and Europe with the expansion of exports to Russia and emerging economies in Asia and Africa.

The supply of raw materials used in the production of high value technology products, such as lithium, cobalt and rare earth materials are now also a strategic asset, much of which are controlled by China. With China restricting the flow of these raw materials, global supply chains of semiconductors and other products are less viable.

This all means that complex global supply chains that evolved to produce ever-cheaper made-in-China products make less sense. It also means that the inflated prices we are still experiencing for consumables, despite softening inflation, may be here to stay. At least in the near term, more secure U.S. and European supply chains come at a higher cost.

All these issues are discussed in greater detail in “Retail Sourcing Report: Q3/Q4 2024 Insights & Indicators.” This report covers a range of issues relevant to retail supply chain professionals, with detailed insights into the trends and challenges facing retail supply chains. Along with analysis of variables such as currency, commodity, and shipping trends, the report provides a detailed look at evolving regional markets, with forecasts based on expert research. As global supply chains adapt to new geopolitical realities, these kinds of actionable insights are more important than ever for supply chain leaders.

Supplier Diversification, AI Readiness, and Circularity Top Supply Chain Priorities for 2025

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