Supply chain reinvention amidst global changes: PwC

The upheaval to global supply chains in recent years has stress-tested even the most resilient operations — challenging conventional wisdom and elevating supply chain strategy to corporate boardrooms. Not just viewed as cost centers, supply chains are being recognized as critical enablers of growth and value creation, with many investments aimed at scaling operations and mitigating labor issues.

Despite this shift, many transformative initiatives don’t produce the anticipated outcomes. PwC’s annual Digital Trends in Operations Survey consistently finds that most tech investments in operations and supply chains don’t fully deliver the expected results. At the same time, senior executives aren’t showing much concern with supply chains. In PwC’s 27th Annual Global CEO Survey, only 27% of executives said supply chain instability will change the way their company creates, delivers and captures value in the next three years. That’s well behind other factors like technological change, changes in customer preferences and government regulation, and it indicates that attention to supply chains may be slipping in the C-suite.

The once-imagined golden age of supply chains now seems elusive, especially in an era of potential tariff wars, ongoing geopolitical changes and other disruptions. The tariffs issue especially seems likely to continue to be a moving target, so companies should be prepared for ongoing uncertainty. Many realize that simply cutting costs isn’t the answer but still struggle to balance that with increasing strategic flexibility and resilience. Still, without a fundamental paradigm shift from near-term thinking — or outright reinvention — today’s supply chains will be ill-prepared for the challenges ahead.

Why you need to reinvent — now

To navigate uncertainty and position your operations for success, you’ll need to keep up with the broader trends that are reshaping the global business environment. We believe six overarching forces will redefine the future of supply chain management. These changes are both gradual and rapid, and the combination will challenge operations leaders to juggle reacting to the here and now while making structural changes for the future.

1. Resource scarcity

Essential resources — materials, energy, labor and even demand in certain markets — are becoming scarcer and more volatile. While shortages aren’t new, recent years have brought more frequent and severe constraints. Climate change, environmental pressures and shifting economic conditions exacerbate scarcity, making it harder to secure reliable inputs at predictable costs.

Scarcity challenges

- Climate change limiting resource availability, including energy and water
- Labor shortages (both skills and availability)
- Material and energy supply shortages exacerbated by energy hungry AI data centers
- Environmental disruptions affecting sourcing and production
- Demand contractions due to inflationary and recessionary cycles

2. Energy transition

Whether driven by policy shifts toward cleaner energy or the growing demands of AI data centers, energy issues are likely to remain central. The International Energy Agency projects that renewables will account for 80% of global electricity by 2030, highlighting the need for supply chains to reduce reliance on fossil fuels while adopting cleaner technologies. PwC’s Sustainable Supply Chain Survey suggests that companies proactively aligning with ESG objectives and renewable energy targets can unlock long-term efficiency and reduce exposure to volatile energy costs.

Key drivers of energy transition

- Vehicle electrification
- Decoupling global supply chains from fossil fuels
- Innovation in clean energy infrastructure
- Rising energy demand from AI data centers
- A renewed interest in nuclear energy

3. Technology acceleration

Advances in physical automation, artificial intelligence (including generative AI), data ecosystems and emerging fields like quantum computing will redefine operational models in the coming years. We’ve also seen industry leaders use data and automation to help streamline daily tasks and inform strategic decisions, enhancing scenario planning and autonomously navigating disruptions. Success will require new skill sets and a culture of continuous learning.

Technology acceleration examples

- Explosive data growth (projected at 181 zettabytes by 2025)
- AI and generative AI at scale
- Increased computing power, including quantum computing
- Autonomous operations (e.g., robotics, self-driving fleets)
- Secure, integrated data ecosystems

4. Capital markets disruption

Volatile interest rates, currency values and commodity prices make capital allocation more challenging. PwC analysis shows that companies with agile, flexible supply chain models can better withstand these cycles and seize emerging opportunities. Meanwhile, limited access to capital and higher borrowing costs could require more resilient and cost-effective operations.

Driving forces of capital markets disruption

- Frequent boom/bust economic cycles
- Regional economic variability, impacting local strategies
- Elevated interest rates and inventory carrying costs
- Stricter capital allocation and limited funding availability

5. Changing world order

As trade environments evolve, many companies are rethinking sourcing strategies. The plateauing of US imports from China, combined with a partial shift toward nearshoring and onshoring, signals a broader “right-shoring” trend. While these shifts can be beneficial, they also bring issues with labor availability, cost structures and regulatory complexities. We anticipate increased public-private partnerships, further government intervention and evolving regulations that can influence where and how goods are produced and moved.

Evolving global trade patterns

- Right-shoring and diversified supply sources
- Trade disputes and shifting bilateral relationships
- Public/private co-investments (e.g., CHIPS and Science Act)
- Growing regulatory oversight and government interventions
- Geopolitical tensions shaping supply network decisions

6. Business model reinvention

These converging forces will transform traditional profit formulas and ecosystems in most industries. While digital commerce and omnichannel models once disrupted only select sectors, the next era of transformation will be far more pervasive. Some business leaders sense these shifts but often underestimate their implications for supply chains. Future success will hinge on managing ecosystems of partners, suppliers and innovators rather than relying solely on internal capabilities.

Business model reinvention factors

- The sunset of traditional business models
- New profit formulas and monetization strategies
- Disruptive growth and operating model overhauls
- Recalibration of historical value chains
- Greater regulatory uncertainty and mounting ESG pressures

The costs of business as usual

If left unaddressed, these six forces will likely outpace current supply chain capabilities. What were once aspirational goals — greater resilience, autonomy and agility — should become baseline expectations. Without evolving, organizations may risk:

Slower reaction times and missed opportunities — Inadequate capabilities will prolong disruption recovery, costing growth and profit.
Inflexible operating models — Organizational silos and outdated structures will hinder adaptation to shifting markets, reducing competitiveness.
Rising costs and risks — Limited data visibility, low automation and outdated technology will inflate costs and heighten operational risks.
Workforce challenges — Labor shortages and skill gaps will limit organizations’ ability to execute strategic initiatives and deliver transformative results.
Impeded growth and reinvention — Existing infrastructure may not support the rapid reconfiguration and scaling required for market expansion, new offerings and segmentation strategies.

Look to tomorrow

Supply chains will continue to shift, and they’ll look significantly different in the coming years, so operations leaders should plan for that future state now. Required capabilities include ecosystem orchestration, functionless value chains, closed loop planning and execution, and “lights out” operations. Solutions such as digital twin, control tower, intelligent automation, GenAI and integrated business planning will be critical.

For business leaders who are willing to be bold, these investments can put their operations in a stronger position to unlock value from their supply chains and drive overall growth. We’ll explore the “what” and “how” of reinvention in future insights, including our 2025 Digital Trends in Operations Survey report that will be released in April.