As volatility becomes increasingly constant in today’s supply chain, manufacturers and retailers are prioritizing the development of more agile and resilient supply chains. For manufacturers and retailers, their ability to meet customer demand, maintain competitive pricing and protect their brand’s reputation depends on an effective supply chain and the ability to respond quickly to shifting needs.

The Growing Need for Supply Chain Diversification

Economic pressures, tariffs and escalating geopolitical tensions have highlighted the risks of over-reliance on single-source supply bases, especially for businesses that rely on just-in-time inventory and rapid replenishment cycles. If products don’t arrive on time, retailers risk stockouts, which cost them nearly $1 trillion worldwide annually and create a negative customer experience that can destroy loyalty and lead to higher operational costs. For manufacturers, shipment delays can result in downed production lines and costly delays.

As a result, many companies are working to diversify their procurement networks, building on a broader trend that began several years ago. Vietnam, Mexico and India are among the countries that have experienced a surge in exports to the United States, while Chinese exports to the U.S. have dropped.

Diversification is expected to intensify as companies rethink their long-term sourcing strategies. Strategies like moving production closer to end markets, adopting regional supply hubs and investing in supplier redundancy are becoming standard best practices rather than contingency plans.

The Use of AI and Automation Is Increasing

Big data analytics, artificial intelligence and automation are becoming essential tools for optimizing supply chains. Manufacturers and retailers are increasingly adopting AI to improve demand forecasting, optimize inventory and streamline the supply chain.

AI can also optimize delivery routes by considering demand trends, real-time traffic, weather, fuel efficiency and more.

Within the warehouse, AI and machine learning can detect anomalies and enhance forecasting in near real time, enabling operators to make data-driven decisions quickly. For instance, AI could alert a supervisor if one area is running 20 minutes behind while another is ahead, then suggest how to reallocate labor accordingly.

Automation within the warehouse is also increasing to manage high-movement facilities effectively. Automated sorting and human-assist robotics are among warehouse technologies that are changing how goods move, boosting productivity and allowing human workers to focus on higher-value tasks, such as operational decision-making and safety enhancements.

The Customer Experience Hinges on Effective Supply Chains

The National Retail Federation forecasted that 2025’s U.S. retail sales will grow between 2.7% and 3.7% over 2024 to between $5.42 trillion and $5.48 trillion. At the same time, e-commerce continues to increase, with global online retail sales nearing $6.3 trillion. In 2024, the U.S. e-commerce market reached $1.19 trillion, accounting for approximately 16% of all retail sales.

Supply chains have become increasingly customer-facing, especially in omnichannel retail environments, where expectations for consistency and accuracy across both digital and physical touchpoints are higher than ever. The customer experience depends on supply chains, which directly impact store replenishment, delivery speeds and e-commerce fulfillment.

As expectations increase, retailers are under growing pressure to manage inventory in real time. Visibility is critical for retailers to manage inventory across stores, distribution centers and online channels effectively. Having both high-level and granular visibility allows shippers to make data-driven decisions about inventory and get ahead of potential disruptions. 3PLs help shippers adjust delivery schedules in response to real-time inventory levels, demand fluctuations and store needs.

Transportation and Labor Costs May Increase

Freight rates within the trucking industry have remained low, but they started to experience a modest market correction throughout 2024.

Costs are expected to increase in 2025. Higher costs can squeeze retail profit margins or lead to higher prices for finished goods, but there are several ways to control costs.

Network optimization and evaluating the network as a whole can help shippers and their logistics providers improve the overall engineering of the supply chain. The goal is to increase efficiency and reduce transit times, which can lead to significant cost savings. As a third-party logistics provider, Penske can help retailers evaluate sourcing locations, delivery points and routes to optimize their networks. Engineers run ‘what if’ scenarios to identify the ideal solutions.

Increased visibility also helps control costs by not only streamlining inventory management but also reducing the risk of a disruption. Minimizing disruptions lets retailers and manufacturers alike avoid the need for expedited freight, which adds to the overall transportation spend. Other tools to control transportation costs can include taking control of inbound freight and using dedicated contract carriage.

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