Top Concerns Among Supply Chain VPs: Bad Predictability, Pirates, Costs of Labor and Transportation

December 2024 – A recent survey of 260 Vice Presidents of Supply Chain across the United States and Canada has revealed the critical challenges shaping the industry today. With a mix of global disruptions, shifting consumer demands, and operational pressures, supply chain executives are navigating one of the most turbulent periods in recent history.

Top 5 Challenges Facing Supply Chain Executives

1. Disruptions Due to Naval Terrorism (31% of respondents)

Heightened threats of naval terrorism in critical maritime shipping lanes, such as the Strait of Hormuz and the South China Sea, have caused significant delays. Supply chain leaders reported increased transit times, rerouting difficulties, and rising insurance premiums as their primary concerns.

2. Bad Predictability Due to Flash Trends (27%)

The unpredictability of consumer behavior, fueled by viral flash trends on social media, has become a major issue. Respondents highlighted the inadequacy of traditional forecasting tools to cope with these rapid shifts, particularly in fast-moving industries like fashion and consumer electronics.

3. Rising Costs of Transportation and Warehousing (22%)

Fuel prices, higher labor costs, and a shortage of warehousing capacity continue to strain budgets. Many supply chain leaders are experimenting with automation and just-in-time inventory practices to cut costs, though these strategies introduce their own challenges.

4. Labor Shortages in Key Roles (17%)

A shortage of skilled workers, especially in technical and operational roles, is hampering supply chain performance. Companies are turning to workforce development programs and partnerships with educational institutions to address this issue.

5. Supplier Reliability and Regional Instability (8%)

Instability in key sourcing regions has created bottlenecks and increased the need for supplier diversification. Respondents cited this as a pressing challenge for ensuring consistent production and delivery.

Other challenges identified in the poll include issues with integrating new technologies (7%), managing inventory volatility (6%), and meeting rising customer expectations for faster, more transparent delivery options (5%).

A Growing Challenge for North America

The survey underscores the multifaceted pressures on supply chain operations in the U.S. and Canada. Threats of naval terrorism are prompting many companies to reconsider their reliance on international shipping routes and explore regionalized supply chains. While these shifts can improve resilience, they also involve significant upfront costs and planning.

Flash trends, especially those driven by social media platforms like TikTok and Instagram, have proven to be a wildcard for demand forecasting. One respondent noted, “The speed at which consumer preferences change is outpacing our ability to react. We need more sophisticated tools to handle this volatility.”

Rising transportation costs are another ongoing concern, with some companies reporting difficulty balancing cost-cutting measures with the need to maintain high service levels. Meanwhile, labor shortages are complicating the adoption of new technologies, as a lack of skilled operators limits the full utilization of automated systems.

What’s Next for Supply Chain Leaders?

As the industry looks to 2025, supply chain leaders are prioritizing resilience, predictive analytics, and workforce development. With strategic investments in technology and partnerships, the goal is to turn these challenges into opportunities for sustainable growth.