11 Supply Chain Trends That Will Shape Ecommerce (2024) - Shopify

Nearly three years after the first lockdowns, we’re still seeing supply chain disruptions on the rise. The need to build more resilient and adaptable supply chains hasn’t gone away. 

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As an ecommerce brand, you probably want to know how to best approach your supply chain strategy. Here are the top supply chain trends to implement to get ahead of the curve. 

11 supply chain trends to watch

1. Preventing cybercrime

2. Focusing on greater shipper visibility

3. Integrating AI

4. Optimizing last mile delivery

5. Putting supply chain executives in the C-suite

6. Preparing for risk events

7. Securing flexible contracts

8. Creating supply chain agility

9. Investing in analytics

10. Focusing on sustainable procurement

11. Evolving inventory management

1. Preventing cybercrime 

Cyberattacks are on the rise. Online attacks have become increasingly common in the United States, where many companies, individuals, and governments have been victimized.

According to KPMG’s supply chain report, almost half of global organizations consider cybersecurity a significant operational challenge for their supply chains in the coming three years.

As brands increasingly digitally automate internal processes and access cloud services, it leaves them more vulnerable to cyber intrusions. A cyberattack on Clorox earlier in led S&P Global Ratings to lower its outlook for the company to negative. During the attack, Clorox’s IT systems were disrupted, forcing the company to switch to manual ordering and processing, which slowed operations and affected product availability.

And that’s just one major example. Cyberattacks can affect supply chains in various ways:

• Ransomware can disrupt logistics and delay the flow of goods. 

• Data breaches can reveal sensitive customer details and trade secrets. 

• Responses to cyberattack can be costly to repair, plus there are regulatory fines and compensation to customers to consider.

• Cybercriminals can manipulate supply chain data or systems to divert shipments.

It’s no wonder cyber investments are on pace to reach $215 billion in , with security services expected to account for $90 billion alone. Companies looking to build and optimize cybersecurity programs are set to succeed in the upcoming year.

2. Focusing on greater shipper visibility 

Blue Yonder found that some 87% of businesses experienced supply chain disruptions in the last year, with customer delays being a common outcome. Despite these challenges, 62% of respondents believe their supply chains are resilient.

To combat rising costs and supply chain disruptions, companies are investing heavily in technology. Fifty-six percent of investments are directed toward supply chain technologies like warehouse and order management systems, supply chain visibility tools, and transportation management. 

Early adopters are seeing these investments pay off, with 54% reporting improved efficiencies, 42% experiencing fewer disruptions, and 39% seeing revenue growth.

3. Integrating AI

AI has become ubiquitous in ecommerce. AI’s abilities are becoming increasingly diverse and sophisticated, with the ability to do such tasks as sourcing suppliers and automating negotiations. 

AI technology has the potential to process through many data sets, like enterprise systems, POS systems, and inventory levels. It can take in the data and return predictions based on what you’re looking for. The recent Blue Yonder survey found that 78% of respondents are using AI and machine learning in their supply chains for various functions, like inventory optimization and risk management.

Some examples of ways to implement AI in include:

• Demand forecasting: Algorithms can analyze past sales data, market trends, and public sentiment to predict future demand.

• Supplier selection: Harvard Business Review found that brands are using AI to find alternative suppliers last minute. AI systems can find the best suppliers by evaluating factors like reliability, cost, and quality.

• Predictive maintenance: AI can also predict when equipment needs maintenance in your warehouse, reducing downtime and extending the life of your machinery.

• Sustainability tracking and reporting: Generative-AI tools like ChatGPT can analyze sustainability data and insights, then create the base for a report. 

In a McKinsey survey conducted early in , 73% of supply chain leaders said spreadsheets are their primary planning tool. But, 43% said they planned to use artificial intelligence for some planning activities. The integration of AI into the supply chain is rapidly evolving, offering new opportunities for brands to innovate and improve on their processes. 

4. Optimizing last mile delivery

The “last mile” is to supply chains what the fourth quarter is to a sporting event: the critical final stage. Last-mile costs represent between 40% and 55% of the total supply chain costs in shipping.

Grocery and retail brands are responding to these increasing last-mile costs by taking the last mile into their own hands.

According to Maggie M. Barnett, COO of Ship Hero, omnichannel retailers are curtailing the impact of global supply chain disruptions via “micro-fulfillment,” handling fulfillment directly with supplies from a local warehouse. Then, retailers offer an option like buy online, deliver from store, or buy online, pickup in-store.

Micro-fulfillment is a newer trend, but it’s picking up more steam as we move closer to peak season.

5. Putting supply chain executives in the C-suite

In , Modern Retail called the role of supply chain specialist “the hottest job in retail.” Moving into , this sentiment still holds true. 

In a recent episode of McKinsey Talks Operations, Knut Alicke and Radu Palamariu, authors of From Source to Sold: Stories of Leadership in Supply Chain, found that only 11% of Fortune 200 CEOs have a background in supply chain, despite its strategic importance. 

But they are looking toward the future. The narrative shift in supply chain management is in the works. Supply chains are being perceived less as problem-focused entities and more as a source of competitive advantage. 

Hiring C-level assets with a diverse background in supply chain management is both a current and a forward-looking move. The authors believe it is this diversity in perspectives that will lead to innovation in the field and help brands adapt to rapidly changing global dynamics. 

6. Preparing for risk events

An old axiom says that the best time to plant a tree was 20 years ago—and the next best time is now. That’s the approach companies are taking with unexpected supply chain disruptions. It’s already too late to deal with —but it’s not too late to put a new plan on paper.

For instance, more than 60% of organizations expect geopolitical instability to detrimentally impact their supply chains in the next three years​. In short, companies are prepping for the next big event, even if it never comes. 

7. Securing flexible contracts

In recent years, companies with huge, static orders on the books are seeing the value of flexibility.

Flexible contracts split supply orders up into smaller blocks, giving the buyer the option to change orders as demand shifts. Making fewer static commitments in the form of fixed, long-term contracts with suppliers means more adaptability.

“Flexible contract manufacturing enables companies to replace more of their traditional fixed cost base with variable costs to adapt to changing demand,” says Jeff Langely of KPMG Australia.

8. Creating supply chain agility 

Not all supply chain remedies are quite so surgical. A healthy supply chain sometimes requires organizational-level improvements to business agility: your company’s ability to adapt and respond to rapid change.

According to KPMG, 67% of organizations view meeting customer expectations for speed of delivery as a critical factor affecting their supply chains over the next 12 to 18 months.

Business agility and a responsive supply chain are inextricably linked ideas. Investing in supply chain agility means adopting strategies like safety stock, buffer inventory, and inventory optimization to manage fluctuations supply and demand. 

It also means building a network of suppliers, both local and international, to reduce dependency on one single source. 

9. Investing in analytics

While data usability usually translates to improving sales and marketing processes, it can also provide more flexibility with supply chains. Predictive analytics, along with advances in big data and robotics, will have a significant impact on retailers. 

“Another trend this year is focused on the need for better quality data, not necessarily more data,” says ShipHero’s Maggie M. Barnett. “It’s becoming increasingly important to have quality data at your disposal, especially on the warehouse floor. With the widespread application of automation, AI, and other technologies, it’s critical to have data that can help those technologies become even more efficient and intelligent.

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“Are you leveraging data to help predict where inventory demand will be highest? Are you using your data to identify ways to optimize your warehouse space? Take a closer look at the data you have access to and then analyze how to best put it to work.”

10. Focusing on sustainable procurement

B2B buyers have set their eyes on sustainable procurement, and organizations are meeting them there. A recent survey found that over half of them intend to increase their focus on sustainable sourcing in the coming year. 

Buyers are investing in new technology like automated approval workflows, expense management controls, and guided buying capabilities to meet goals and improve operations. 

While improving efficiency is a core focus, social responsibility was also reported as a top priority for procurement teams. 

For retailers, digital procurement investments will continue to evolve during , allowing companies to easily search and buy from you and providing visibility into your products. Procurement officers are looking to buy from companies that align with their budget and core values.

11. Evolving inventory management

Volatile shipping delays, increasing raw material costs, and dealing with overstock are causing retailers to look at inventory management differently. 

In response, retailers are leveraging techniques like: 

• Cutting SKUs

• Promotions

• Price hikes

Women’s intimates brand Lively has been “laser-focused” on making sure top sellers are in stock, prioritizing its top 10 items, Modern Retail reports. Via customer feedback, it’s also reduced inventory by cutting down on launches and designing products that will be in demand. 

Other brands, like Weezie Towels, don’t plan to cut SKUs, but will focus on bundling top-selling products. The core theme? Being in touch with what customers expect from your brand and producing those items, be it top sellers or new lines. 

Strategies for future-proofing your supply chain

Localize your supplies

When Louis Vuitton built a 100,000-square-foot factory in Texas, it wasn’t necessarily because it liked barbecue. 

The leather-goods manufacturing shop trains and hires its own leather employees, creating leather goods with the Made in USA label attached. Given many of the brand’s properties are in France, Louis Vuitton’s stateside investment means there’s one less ocean to travel every time a new product ships to the American market.

If you want to invest in the efficiency of the supply lines between you and your customers, set up local delivery with your Shopify presence.

Diversify your supply chain

In investing, experts say spreading your money around reduces risk. It’s the same with supply chains: the more options you can turn to, the steadier your inventory will be.

Check on the health of your current suppliers. Who’s supplying the suppliers, and what are their vulnerabilities? 

Finally, look for viable alternative suppliers to add diversity to your supply chain, stabilizing your options when a crisis hits. And browse third-party fulfillment providers to select one that will make your agile supply chain more resilient. 

Invest in the customer experience

Ultimately, customers have finite patience. They want their items to their door as quickly as possible, and when there’s a delay, they’re likely to cancel the order. That makes your supply chains a vital part of the customer experience. 

Don’t hide your supply chain issues from your customers. Instead, be proactive and reach out to customers in a way that lets them know when supply chain disruptions are out of your hands.

Invest in analytics

Sometimes you don’t know your supply chain vulnerabilities until you can see your data right there in black and white. That requires an investment in the analytics that drive all of your numbers.

Take the Shopify data analytics course from the Shopify Academy to learn how to uncover insights into every aspect of your business—not just the supply chain.

Hire a supply chain specialist

The past few years have exposed the downfalls of the modern supply chain, forcing retailers and brands to hire experienced leaders for their logistics operations. 

As your brand expands into multiple retailers that need managing, logistics become more difficult. Hiring supply-chain-focused roles can help better manage supply and manufacturer connections, problem-solve supply chain issues, and create excellent vendor relationships. 

Invest in automation

One way you can take proactive action during an era of disruption is through automation. Supply chain leaders are increasingly investing in new technologies to fill the gaps humans can’t manage. 

Supply Chain Brain reports on three ways supply chain leaders use artificial intelligence and automation: 

1. Building a digital twin. Retailers are creating a digital supply chain replica, including all assets, warehouses, and materials, and acting out “what if” scenarios to improve planning. For example, if there is political unrest or a factory closure overseas, the digital twin can predict how it will impact the supply chain. 

2. Utilizing the Internet of Things (IoT). Retailers also use self-reliant, internet-connected devices to gather data, monitor supply chains, and reduce risk. With IoT, you can get real-time data on product locations, improve inventory tracking, build fully automated warehouses, and speed up the process of loading and unloading goods. 

3. Harnessing machine learning. You can use machine learning for endless reasons. These systems quickly analyze swaths of data, recognizing patterns and trends so you can make adjustments as needed. For example, you could determine the most cost-effective transportation routes in a region, factoring in fuel costs, vehicle usage, and risk of theft or damage. It helps you keep products in stock during high demand. 

Automation doesn’t mean reducing your workforce, however. The goal is to help your supply chain flow more smoothly and enhance supply chain resilience. 

Future-proofing your supply chains for the challenges ahead

There is no way to totally future-proof your entire supply chain. But given the industry’s resilience and digital transformation over the past few years, you might not need one. 

Building reliable relationships with a diverse list of supply chain partners and logistics providers—especially if they’re local—can serve as an “emergency valve” that gets you through the next supply crisis.

And you don’t need a crisis to justify the investments you make. Today’s supply chain managers find that enhancing resilience can help hedge against other challenges, like higher transportation costs.

was a year of reckoning for the fashion and luxury goods supply chain.

As luxury brands continued to hike their prices, consumers and critics scrutinised the quality and value of goods and found many lacking. Incoming legislation — especially initial preparations for the introduction of digital product passports in Europe — shone a light on the lack of transparency in the industry as it stands. Various reports highlighted the ongoing use of forced labour in the global fashion supply chain, while Bangladeshi garment workers’ fight for fairer pay exposed the power dynamics at play between brands and their suppliers. Meanwhile, the need for flexibility was underlined as the industry grappled with disruptions in key trade routes, a US port strike and damp demand in several key markets.

So what now?

is poised to be another year of uncertainty, largely due to unresolved tariff issues in several countries, particularly the US, says Joëlle Grunberg, partner and leader of McKinsey’s apparel, fashion and luxury group in North America. President-elect Donald Trump, who will be sworn in on 20 January, has proposed additional tariffs on imports into the US of between 10 and 20 per cent for all goods, and between 60 and 100 per cent on goods from China. Other expected challenges include the threat of fresh strikes by US dockworkers, global airfreight capacity restraints, rising shipping costs and — for luxury in particular — a shortage of talent. At the same time, fashion brands are looking to reduce their costs, improve delivery times and comply with evolving sustainability regulations.

Consider it the new normal. “Nowadays, we are faced with a global poli-crisis setting, mainly in terms of geopolitical tensions and severe weather situations due to climate change,” says Marijn Visser, global vertical head of lifestyle at shipping and logistics company Maersk. “On top, many businesses have to cope with multiple challenges like digitisation, decarbonisation of the business, high inflation rates and others. Volatility will increase rather than ease.”

“Building end-to-end resilience, particularly through strategies like nearshoring, multi-sourcing and strategic partnerships will be essential to mitigate the risks associated with geopolitical instability, shipping costs and global supply chain fragility,” says Claudia D’Arpizio, senior partner and leader of management consultancy Bain & Co’s luxury goods practice.

Impact of the slowdown

The global personal luxury goods market is expected to grow in the low single digits in — a marked slowdown from the post-pandemic boom, per Bain. This decline is prompting a reassessment of inventory strategies, with a focus on reducing stock levels to free up cash and improve working capital efficiency, says D’Arpizio. “The market slowdown is having a significant impact on supply chains, triggering an estimated double-digit drop in supply chain volumes compared to two years ago,” she adds. “Brands are facing heightened pressure to adapt their operations to the realities of reduced demand.”

McKinsey’s Grunberg warns that a reduction in order volumes could place renewed strain on the relationships between brands and their suppliers. “As in , significant shifts in demand will have long-term repercussions on the landscape and will carry effects into .”

By aligning inventory more closely with real-time demand, brands can mitigate the risks of overproduction and excess stock. “The luxury slowdown is emphasising the importance of advanced demand forecasting and planning optimisation,” says D’Arpizio. “With reduced room for error, brands can leverage predictive analytics and data-driven tools to better align production schedules with consumer demand, maintaining good profitability while also minimising waste.”

Global logistics company GXO says one of its luxury clients has combined several smaller warehouses into one large, automated facility, which has helped to reduce operating costs, reduce inventory holdings via an omnichannel focus and, at the same time, speed up deliveries. “With demand uncertain in , we expect a renewed focus from luxury and fashion companies to drive efficiency,” says Max Alexander, SVP of global sector development at GXO.

Meanwhile, the use of artificial intelligence will drive efficiency and personalisation, speed up decision-making and reduce waste by enabling advanced demand forecasting. AI will also help to automate repetitive tasks and improve supply chain visibility. It doesn’t come without challenges, however; among them, potential job losses and the need to reskill the workforce.

Recovering trust

Focus in will be on building back trust in the luxury supply chain, which was rocked last summer when the Italian Competition Authority launched a probe into allegations that workers in some factories used by Dior and Armani were being underpaid and experiencing sweatshop conditions (both brands said they were collaborating with the authorities to look into the claims).

Experts agree that the best way to do this is to create visibility. “For luxury brands, it is important to manage and control their end-to-end supply chain internally, as well as to be able to create transparency for their consumers,” says Maersk’s Visser.

Spencer Shute, vice president at procurement and supply chain consulting firm Proxima, agrees: “Increased transparency on sourcing practices, cost structures and being open and honest about failures (with a plan to repair) go a long way with consumers. Not only stating policies for improvement, but actively reporting out on how they measure against their goals and targets to show continued improvement is critical to consumer trust.”

D’Arpizio advises luxury brands to focus on rebuilding strong emotional connections by expanding their narrative into areas that resonate with customers, making sure to highlight their commitments to ethical practices. “Regaining trust requires a careful balance of creativity with traditional luxury pillars — craftsmanship, heritage and exclusivity — ensuring authenticity while staying attuned to customer expectations.” Greater personalisation will also make customers feel valued and “uniquely catered to”, she adds, which is particularly important when trust has been eroded.

Changing up the sourcing map

Experts predict that brands will continue to evaluate their sourcing strategies globally, moving away from a heavy reliance on any one market. “Many brand owners have or are looking at having at least two sourcing markets for each of their products,” says Visser. Shute adds that he expects companies to look for ways to reduce, delay or avoid increased tariffs through making changes in their supply chain.

The extent and speed of this shift will depend on how geopolitical and economic conditions evolve, says Bain’s D'Arpizio. “Current geopolitical tensions, particularly regarding critical technologies and economic competition, encouraged brands to explore alternative sourcing regions, such as Southeast Asia, building resilience against trade restrictions and rising tariffs. However, moving production is not without challenges, potentially leading to higher short-term costs as brands invest in new facilities, train workers and adjust their logistics.” On the positive side, changes to the sourcing map open up opportunities to become more agile by adopting strategies like nearshoring, which can reduce transportation times and costs while addressing sustainability goals.

Alongside Southeast Asia, India is an emerging sourcing hub to watch in . “India offers significant potential as a sourcing hub due to its large labour force, improving manufacturing infrastructure and government incentives to attract foreign investment,” says D'Arpizio. “Similarly, Vietnam has emerged as a strategic hub due to its proximity to China, competitive labour costs and growing expertise in electronics and textiles manufacturing.”

Exchange rates, current trade agreements and proximity to final markets are key reasons for these areas to be up and coming in the luxury market, says Shute. But he warns that they still face many of the same challenges primary sourcing hubs do today, particularly around labour practices. “Implementing a robust sourcing and supplier review process to mitigate potential concerns with vetting new suppliers is a critical step in the process of moving any supply chain.”

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