Social impact of supply chains

24 Mar 2025
Technology creates new opportunities for supply chain optimization

IN-DEPTH ANALYSIS
By Alicia Martínez de Yuso

The past few years have been marked by a series of abrupt changes that profoundly impacted the global economy and society as a whole. These shifts are expected to have significant consequences in the years to come. Globalisation, technological advancements and evolving consumer demands have greatly influenced supply chains, compelling organisations to continuously adapt to the increasing volatility, uncertainty, complexity and ambiguity (VUCA) of the business environment.

To face these changes, many operators relied on strategies that only partially addressed their challenges and, therefore, have not provided an effective solution to the associated disruptions in the supply chain. Given these circumstances, future supply chains will need to be resilient, sustainable and socially responsible to effectively address potential disruptions and leverage the opportunities of the global market.

Exploring future challenges

Resilience refers to the capacity of organisations to effectively anticipate and adjust to evolving circumstances, enabling them to endure or promptly recover from external disturbances. In terms of supply chain resilience (SCR), it is essential to analyse and assess certain key metrics related to supply chain performance, including time to awareness, time to action, time to recover and time to survive.

Actions taken within various areas of a company’s value chain — including procurement, transport, logistics and manufacturing — can impact its overall resilience. A well-thought-out combination of measures implemented across the entire value chain is paramount for achieving optimal resilience.

Adopting a sustainable "by design" approach empowers supply chains to integrate risk management into a transformative journey

SCR consists of three dimensions: proactive capabilities, reactive capabilities and supply chain design quality, which correspond to the dynamic capabilities of sensing, seizing and reconfiguring. A high-quality supply chain design can maintain peak performance while reorganising assets, strategies and operations and adapting to changes. Recent works hypothesise that supply chain design quality positively influences sustainable competitive advantage while negatively impacting operational vulnerability.

Risk management is a transformative process for the supply chain

Overcoming obstacles to SCR

Effective risk management is vital for resilient supply chains. SCR capability mediates the relationship between risks (sourcing, manufacturing, delivery) and overall resilience. High risks positively correlate with resilience capability, and improved strategy performance considerably boosts SCR. This synergy between risk management and resilience is crucial for maintaining robust supply chains.

Organisations are facing two main problems when it comes to achieving RSC:

  • The first issue revolves around the conceptualisation of resilience, with a lack of clarity in defining it and differentiating it from related concepts. Businesses must understand the factors that strengthen or weaken resilience — along with their causes and effects — to assess, develop and enhance this capability effectively. Clear comprehension of resilience and its determining factors is fundamental for successfully navigating supply chain disruptions and uncertainties.
  • The second challenge companies face is measuring resilience accurately. Despite progress in this area, there are still concerns regarding the validity and reliability of measurement approaches. Ongoing research is necessary to develop more robust and comprehensive methodologies that can capture the multidimensional nature of organisational resilience effectively. By enhancing measurement techniques, businesses can evaluate their resilience capabilities more effectively and pinpoint areas for improvement in building resilient supply chains.

Furthermore, supply chains should strive to create a positive impact on the planet, people and profit. Achieving this will require a collaborative and comprehensive approach involving all stakeholders, including governments, businesses, civil society and consumers.

The development of zero-emissions vehicles and new renewable energy sources is essential for the sector’s evolution

By adopting innovative practices, leveraging technology and engaging with stakeholders, supply chain actors can enhance their performance in terms of resilience, sustainability and social responsibility. This will not only improve their competitiveness and reputation but also align with the European Union’s long-term policy priorities of social resilience and competitive sustainability. In this context, the EU-funded project ReSChape sheds light on the matter by identifying the main issues facing supply chains and the initiatives to promote sustainability and resilience.

The team behind the ReSChape project showcased their progress at the 2024 International Association for Management of Technology (IAMOT) conference

Challenges for future supply chains

To understand the specific hurdles involved in achieving resilient value chains, the ReSChape project has analysed various use cases from different ecosystems. The main challenges identified in these use cases — particularly in terms of logistics — include technology implementation, effective collaboration, learning mechanism adoption and transformation achieved.

Digitalisation is a key challenge and enabler of transformation in this sector. Implementing digital technologies like the Internet of Things (IoT), artificial intelligence (AI) and blockchain to improve processes and manage risks ensures real-time visibility, transparency and efficiency in logistics. However, this also poses challenges related to cybersecurity, data privacy and workforce reskilling. Adopting digital technologies, including digital twins and cloud-based platforms, is critical for decision-making and operational optimisation.

The development of zero-emissions vehicles and new renewable energy sources is essential for the sector’s evolution. Integrating services with infrastructure and optimising operations are vital to remain competitive. Autonomous driving and warehouse operations are expected to enhance logistics processes, facilitating personalised delivery in urban and rural areas.

Collaboration must be strengthened across the supply chain, including with suppliers, customers, competitors and other organisations such as municipalities, NGOs, policymakers and technology providers. Transforming the sector through these actions and technologies leads to more efficient transport operations, improved traceability and better information exchange along the supply chain.

Implementing digital technologies, including digital twins and cloud-based platforms, opens up new opportunities for operational optimisation

Companies must also develop knowledge management activities through learning from experience. This involves creating, transferring and sharing knowledge beyond supply chain boundaries.

Finally, organisations should focus on actions that create long-term impact to overcome immediate stabilisation needs and move towards sustainable resilience. This includes adapting and transforming supply chain processes to be more innovative and society-driven, facilitating the move towards a new normal after disruptions.

These challenges are derived from the transformative approach to resilience, aiming to not just recover from disruptions but innovate and develop new opportunities for the supply chain. Therefore, these hurdles are also opportunities and key enablers to ensure SCR.

In conclusion, the logistics sector must embrace innovation, foster collaboration and invest in sustainable solutions to remain competitive while complying with increasing regulations and policies.

Companies must develop knowledge management activities through learning from experience

Key actions for resilient and sustainable supply chains

Addressing the risks and challenges businesses face in achieving effective, resilient supply chains requires a holistic approach that integrates environmental, economic and social considerations.

After analysing case studies across various ecosystems and the emphasised initiatives undertaken to promote resilient and sustainable supply chains, actions in five key processes were identified: design, sourcing, manufacturing, delivery and returns.

  • In the design process, ecodesign, partnerships with material suppliers and technologies like virtual reality are highlighted to enhance environmental sustainability and customer interaction.
  • In sourcing, collaboration strategies for supplier development and practices ensuring sustainability compliance are outlined, including audits and certifications.
  • Manufacturing processes involve actions such as worker training initiatives, code of ethics implementation and investments in local communities to increase social sustainability. Environmental sustainability is addressed through preventive measures, technology-driven solutions and energy-saving initiatives.
  • Delivery transformation actions include transitioning to alternative energy, optimising transport and adopting real-time tracking technologies to enhance environmental and social sustainability.
  • For the returns process, actions focus on regenerative practices, waste recycling and promoting product life extension to improve supply chain sustainability.

Throughout, collaboration, learning and technology play key roles in driving these actions toward more resilient and sustainable supply chains.

Towards a collaborative future

Adopting a sustainable “by design” approach empowers supply chains to integrate risk management into a transformative journey, crafting tailored strategies for each process based on specific goals and contexts. Sustainability, viewed as a medium-to-long-term endeavour, thrives on collaboration facilitated by advanced technologies. These enable learning mechanisms at various levels, from suppliers to customers and society at large.

Learning mechanisms are intricately connected with knowledge creation, management and sharing. The openness of the supply chain emerges as a major factor when implementing transformative sustainability actions. Expanding the number of actors involved and transcending traditional boundaries is critical. This inclusive approach brings in stakeholders from the broader ecosystem, such as municipalities, NGOs, consumer associations and citizens.

By fostering a culture of collaboration and continuous learning, supply chains can become more resilient and sustainable, ultimately benefiting all participants and the wider community.

 

 

AUTHOR OF THE ANALYSIS:

Alicia Martínez de Yuso, Project Manager, Zaragoza Logistics Center ALICIA MARTÍNEZ DE YUSO
Project Manager at the Zaragoza Logistics Center (ZLC). With extensive experience in environmental topics, she contributes to innovative projects in the circular economy, industrial symbiosis, supply chains, urban mobility and AI, providing strategic, sustainable and resilient solutions.

 

 

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