Supply Chain Management 101: Principles, Examples, and Templates

Current issues in supply chain management include geopolitical tensions, labor shortages, resource scarcity, and increasing cybersecurity threats. Companies also face challenges related to sustainability, regulatory complexity, and logistics delays. Adopting new technologies like AI and blockchain adds pressure to modernize and secure global supply networks.

Here’s a closer look at today’s challenges in supply chain management:

• Diversified Sourcing: A diversification strategy, however, comes with increased costs, regulatory hurdles, and the challenge of establishing reliable new supplier networks.
  
  “Covid exposed our supply chains to unseen vulnerabilities and brought to light our international exposure to key items,” says Celli. “This caused many companies to reexamine their supply chains to reduce dependency on a single source of supply.”
• AI and Technology: The fast adoption of artificial intelligence (AI), automation, and blockchain is transforming supply chains, but these technologies can also introduce complexities, requiring significant investment in talent and data management to integrate into existing systems. 
• Supply Chain Security: Cyber threats and data breaches have become major concerns as supply chains become more digitized. Hackers increasingly target logistics systems, inventory management platforms, and supplier databases to disrupt operations or steal sensitive information. Companies must invest in cybersecurity measures such as multi-factor authentication, encrypted communications, and AI-driven threat detection to safeguard their supply chain networks.
  
  “Supply chain security has become a growing challenge to many companies,” says Celli, who works a lot with government and defense organizations. “Knockoff brands have been around for decades, but the level of counterfeit items has grown to include product components. For example, the high cost and high demand for microchips has led to the introduction of counterfeit chips. These chips have often been taken off retired products or are from an older generation, leading to a high degree of failures. For the defense industry, these counterfeit chips may also contain malicious code, resulting in a national threat.”
  
  Celli adds that in-transit security is also becoming a challenge. “Many ports lack the security to ensure that products are not stolen or altered,” he says. “Often, counterfeit products are altered while in transit. This is why we are reading more and more about port management and piracy. While we think of piracy as an 18th-century issue, it is alive and well today in many parts of the world. This has resulted not only in stolen products, but also in higher insurance and shipping costs.” 
• Defense Supply Chains: The defense industry faces heightened risks due to its reliance on highly specialized suppliers and classified components. Disruptions in the supply chain can delay critical defense projects. Additionally, strict regulatory requirements, such as the U.S. Department of Defense’s Cybersecurity Maturity Model Certification (CMMC) framework — demand rigorous security measures to prevent espionage and unauthorized access to sensitive military technology.
  
  “Defense supply chains face an even higher level of scrutiny due to the nature of their products, but also the impact of supply disruption due to a conflict,” Celli notes. “As military equipment has become more technical in nature, the sourcing of the components becomes more critical. Just as in commercial supply chains, defense products are subject to the introduction of counterfeit or malicious products. In-transit visibility becomes a classified issue.”
  
  Celli also notes the high stakes involved. “There have been attempts by adversaries to try to alter the shipping destination, or at least gain insight into the final destination as a source of intelligence of future plans,” he says. “For these reasons, the systems that are used to manage a defense supply chain are highly classified systems.” 
• Regulatory Complexity: New standards and certifications keep coming out to help regulate data security, quality management, and other supply chain concerns. Supply chain managers are dealing with new standards such as the CMMC for defense contractors and the Trusted Information Security Assessment Exchange (TISAX) for the automotive supply chain. 
• Location of New Facilities: Companies looking to expand must carefully consider where to build new warehouses, distribution centers, and manufacturing plants. Factors like proximity to customers, labor availability, tax incentives, and infrastructure all play a role. Companies navigate a mix of regulatory approvals, community negotiations, and alternative site strategies.
  
  Many businesses regularly encounter the NIMBY (“not in my back yard”) movement, says John H. Boyd (Jack), Founder and Principal of the Boyd Company, which helps clients with warehouse site selection.
  
  

  

  
  
  “The continued boom in e-commerce since the pandemic has helped to fuel these conflicts, pitting the benefits of new tax revenues for local schools and new jobs that warehouse facilities provide against local concerns over lifestyle changes, truck traffic, stormwater runoff, and other issues,” Boyd says. “We have seen the impact of these conflicts on site selection decisions range from our clients walking away from a community to some kind of middle-ground compromise.” 
• Accurate Inventory Tracking: Keeping track of inventory is more than just counting stock — it’s about ensuring real-time accuracy across complex supply networks.
  
  “Discrepancies between system records and actual stock levels cause major disruptions, especially when incorrect inventory data leads to missed shipments or unfulfilled customer commitments,” says Wenting Zhang, Sales Operations Specialist for Hankook Tire China Co., a global tire manufacturer. Zhang’s role involves inventory management, purchase orders, supply chain reports, and maritime shipping.
  
  

  

  
  
  “Even with internal process optimizations,” Zhang adds, “challenges persist when suppliers or factories have inconsistent inventory management practices, leading to stock mismatches and last-minute changes.”
• Logistics Delays: Despite advances in shipping and fulfillment technology, logistics delays remain a persistent challenge. Port congestion, trucking shortages, customs slowdowns, and geopolitical disruptions can all lead to longer delivery times and higher costs.
  
  “Limited shipping slots, lengthy documentation processes, and unexpected delays create inefficiencies,” Zhang says. “Customers expect faster deliveries, but external factors, such as freight availability and customs procedures, often limit flexibility.”
  
  Also, logistics plays a more strategic role than simply moving goods from point A to point B, according to a 2023 study for Open Journal of Business and Management titled “Supply Chain Management and Logistics: How Important Interconnection Is for Business Success.” Logistics also acts as the connective tissue that keeps supply chains running efficiently, from sourcing raw materials to final delivery.
  
  As the authors of this study put it: “Supply chain management emphasizes the connection between parts of a business coordinating activities across the supply chain and the importance of efficient logistics. Therefore by tackling the intricacies of integration and fostering collaboration among supply chain partners, companies can enhance their performance in supply chain management.”
• Resource Scarcity: Global supply chains are under pressure due to limited access to key raw materials such as semiconductors, lithium, rare earth metals, and agricultural products. Climate change and increased demand for critical minerals can exacerbate shortages. Companies are responding by diversifying their sourcing and exploring alternative strategies. 
• Sustainability: Consumers, investors, and regulators are starting to demand greener supply chains with smaller carbon footprints and more responsible sourcing. Companies must comply with sustainability regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD). Retail giants like Walmart and IKEA are also investing more in renewable energy-powered supply chains. 
• Ethical Issues: Governments, consumer advocacy groups, and watchdog organizations are scrutinizing supply chains for human rights violations, labor exploitation, and environmental harm. Common concerns include child labor, unsafe working conditions, and misleading sustainability claims. Forced labor remains a significant issue in industries like textiles, mining, and agriculture. Companies are responding by improving transparency, conducting third-party audits, and using blockchain for supply chain traceability. 
• Labor Shortages: The United States is experiencing significant labor shortages in manufacturing and warehousing. A 2024 Deloitte study estimates that nearly 1.9 million manufacturing jobs could remain unfilled by 2033, prompting companies like Boeing to launch aggressive programs to attract skilled workers. A 2024 Descartes survey of 1,000 supply chain and logistics leaders in North America and Europe found that 37 percent were experiencing high workforce shortages, leading some to invest more in robotics and automation.
   

Find more solutions to today’s issues in this collection of supply chain risk assessment and risk management plan templates.