Challenges of Supply Chain Management | Velosio

What are the Challenges Facing Supply Chain Management in 2026?

It’s never exactly been easy to manage a supply chain.

There’s always a possibility that something might go sideways. A war suddenly breaks out. A massive earthquake wipes out a supplier’s entire inventory. Trade relations between global powers break down over some behind-the-scenes disagreement.

But, in the past, there were some things that you could count on. For starters, lessons from the past were often a helpful guide for navigating present challenges.

Now, we find ourselves in an environment defined by disruption and uncertainty.

Supply chain leaders face a growing list of complex problems — none of which have a clear solution. There’s also no roadmap, because, at the risk of being cliché, these are “unprecedented times.”

It’s tempting to give up and let your business sink in the overwhelming chaos. Yes, the challenges are real — and yes, they’re also crazy complex. But, here’s the thing: there are solutions.

Below, we examine seven critical supply chain challenges and some of the ways that software can address them.

1. Data Management and Visibility Gaps

Almost every challenge on this list stems from the same root cause: inaccurate or incomplete data.

According to EY, limited visibility into supply chain functions remains a top challenge for businesses.

Research from Tive found that even as technology improves, visibility challenges persist. The report found that overall, first- and last-mile visibility has improved. Yet 37% of companies still struggle to track activity during the mid-mile stage of transportation.

This is a problem because visibility is the first step toward building resilient and agile supply chains.

Leaders struggle to answer basic questions in real-time: Where is the inventory right now? Which orders are at risk? How are key suppliers performing this week, not last quarter?

You also can’t respond to time-sensitive issues, such as incoming cyber threats or safety recalls. And, you’ll most likely miss the red flags and anomalies that warn of the next big “black swan” disruption.

The core data-management challenges include:

No single source of truth for managing suppliers, inventory, and risk.
Inconsistent master data across business units and regions. Limited ability to incorporate external signals (market data, weather, macro indicators) into planning.
Slow, manual reporting cycles that delay decisions.

With the right software, organizations can overcome this challenge.

Migrating to a cloud ERP like Microsoft Dynamics 365 enables you to combine your entire business and supply chain — finance, procurement, inventory, warehousing, logistics, etc.— in one location.

Modern data platforms – i.e., data lakes, lakehouses, and data management solutions – are designed to tackle challenges related to controlling and operationalizing supply chain data. Microsoft Fabric unifies data from ERP, CRM, WMS, TMS, and partner systems into a single analytics-ready layer.

You can then use tools like Power BI, embedded dashboards, Copilot, and digital supply chain control towers to provide planners and executives with a shared, real-time view of operations.

For supply chain teams, this foundation sets the stage for everything else. Better risk management. Fewer security risks. More accurate planning. The ability to leverage intelligent automation and AI agents.

2. Tariffs & Geopolitical Tensions

Geopolitical and trade risk have moved from background noise to a daily operating constraint.

A recent DP World study found that 82% of supply chain leaders view geopolitical disruption as a serious risk. Yet, only about a quarter feel adequately prepared.

Conflicts, sanctions, export controls, and shifting alliances are forcing companies to redraw trade maps and rethink dependencies on specific countries, corridors, or ports.

For supply chain teams, that means more frequent changes to tariffs and duties, unexpected route closures, and pressure from boards and regulators to reduce exposure to high-risk regions. Long, lean, single-sourced networks built purely for cost are now a liability.

This creates three key problems:

You can’t visualize your end-to-end network in a spreadsheet. You need a global map.
You can’t model “what if” scenarios when, say, a trade lane closes or tariffs spike.
You don’t have a structured way to evaluate sourcing options without blowing up your margins. I.e., reshoring, nearshoring, multi-sourcing, etc.

Cloud-based ERP and supply chain planning platforms help by consolidating supplier, demand, logistics, and cost data in a single location.

Layering analytics and AI on top enables planners to run scenarios, compare options, and receive alerts when conditions exceed a threshold. So you’re not finding out about trade shocks in the news after the damage is done.

You can see the impact of this capability in industries hit directly by tariff volatility.

In 2025, growers faced rapid swings in fertilizer tariffs and availability.

For our clients using SilverLeaf, a solution that integrates core processes for cannabis and greenhouse growers with Dynamics 365 Business Central, real-time data enables rapid response.

Instead of scrambling when prices surged or materials got stuck at the border, unified data enabled those clients to take action.

They were able to model cost impacts in real-time, adjust purchasing strategies, and protect planting timelines when shipments were delayed at customs. They quickly reworked budgets, rerouted orders, and were able to maintain production schedules.

The lesson applies across industries. When tariffs change faster than your spreadsheets, you need systems that provide immediate, actionable guidance.

3. Inflation & Economic Pressure

Inflation and economic uncertainty remain near the top of the list of impactful supply chain trends.

Among those surveyed in the 2025 MHI Annual Industry Report, 38% ranked inflation as the most significant force shaping supply chains. And, another 37% chose economic uncertainty.

For most organizations, that pressure shows up as:

Volatile input and freight costs.
Rising labor and energy expenses.
Customers pushing back on price increases.

The challenge is that many companies still lack a clear link between operational decisions and financial impact. Procurement negotiates contracts. Logistics reroutes shipments. Planners adjust inventory buffers.

But without connected data, it’s hard to understand how those decisions affect margin, cash flow, and customer commitments.

Modern ERP platforms that integrate all supply chain functions with finance systems change that equation.

They allow you to:

Tie landed cost, service levels, and margin together in a single view
Use AI-driven forecasting to right-size inventory and safety stock
Run simulations to test pricing, sourcing, or network decisions before you commit

Instead of reacting to cost spikes months later, you can see trends in near real time and course-correct before they show up in your P&L.

4. Cybersecurity

Supply chains have become one of the most attractive targets for cybercriminals.

As supply chains become more digitalized, exposure to cyber threats increases.

Attackers often go after suppliers, logistics providers, and software vendors, because they see them as “weak links” that can provide backdoor entry into more valuable targets.

WTW’s 2025 Global Supply Chain Risk analysis found that cybersecurity has jumped sharply as a core concern among supply chain leaders. The report also noted that a growing share of reported attacks now originates from third parties.

In October 2025, The Guardian reported that about a third of business leaders had seen an increase in cyberattacks on their supply chains in the last six months alone. These incidents triggered a range of issues, including logistics disruptions, factory shutdowns, and losses exceeding tens of millions of dollars.

Much of the problem stems from poor visibility. Though, naturally, legacy systems make matters worse.

For example, older ERPs and custom logistics solutions tend to lack modern identity and access controls, universal monitoring and threat detection, and robust event logging. Systems often can’t be patched quickly, requiring IT to perform manual updates.

When vulnerable systems connect to partner networks via VPNs or flat network connections, the results can be devastating. One compromised account or exposed endpoint can grant access to attackers, who can then achieve broad lateral movement.

Addressing this risk requires both governance and technology:

Adopting a zero-trust approach to identity, access, and network segmentation.
Extending security requirements and monitoring to key suppliers. Moving core supply chain workloads to platforms that deliver regular security updates, built-in threat detection, and granular access control.

Cloud ERP and supply chain platforms backed by enterprise-grade security tooling can help you get ahead of this challenge.

Integrated SIEM, XDR, and identity & access protection solutions make it easier to harden your environment, automate patching, and gain real-time insight into suspicious activity.

Meanwhile, automatic updates and AI-enhanced workflows proactively safeguard against threats, without relying on overstretched IT teams.

5. Sustainability & ESG Compliance

Sustainability has shifted from a marketing talking point to hard requirement.

Regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) and various supply chain due diligence laws require granular data on emissions, human rights, and traceability across complex, multi-tiered networks.

Non-compliance, of course, carries reputational, legal, and financial consequences.

Sustainability has become a greater concern for customers and investors, who now expect more than “green-washed” climate pledges and a few stats about emissions. They’re looking for more transparency into aspects such as water use, labor practices, and climate adaptation plans.

The operational challenges:

Collecting accurate emissions and ESG data from suppliers and logistics partners
Linking sustainability metrics to SKUs, routes, and facilities
Embedding ESG criteria into sourcing, network design, and planning decisions
Producing auditable reports without adding months of manual work

Modern supply chains and sustainability platforms are converging to address this. By integrating ESG data into your operational systems, you can:

Track emissions by route, mode, product, or facility in near real time
Model lower-carbon scenarios alongside cost and service trade-offs
Flag suppliers that fall short of ESG benchmarks
Automate portions of regulatory and customer reporting

The upside is that many sustainability initiatives also support traditional supply chain and business objectives. For example, waste reduction, energy efficiency, and optimized route planning reduce costs and minimize risks.

The point is, in a unified system, compliance is no longer a burden, but an opportunity to create a competitive advantage.

6. Realizing ROI on AI

Many organizations have experimented with AI for forecasting, routing, or quality. But they still struggle to scale those efforts or tie them to clear business outcomes.

Part of the problem is that supply chain orgs are approaching AI as a collection of one-off side projects. Another issue is data connectivity. Research from SAP and MIT has emphasized that AI can only deliver value when it has fast, consistent access to high-quality data across the enterprise.

The main challenges:

Fragmented data, as discussed earlier
Use cases defined in isolation from business strategy
Limited change-management and training for planners, buyers, and operators
Difficulty measuring impact beyond anecdotal wins

Unlocking its true potential means leaders must embrace more holistic AI strategies. This also means that AI must be embedded across all core platforms and processes.

That looks like:

AI-assisted demand and supply planning inside your planning system
AI assistants like Copilot that leverage data from your ERP to surface anomalies, suggest actions, and generate reports.
AI agents that can track changes in trade rules, lead times, or capacity signals, then trigger workflows when thresholds are breached. (For example, Microsoft Copilot has an agent that can help you navigate tariffs.)

When those tools sit on top of a unified data foundation, it’s easier to connect AI initiatives to supply chain outcomes and KPIs like forecast accuracy, inventory turns, on-time in-full (OTIF), and cost-to-serve.

7. Labor Shortages and Skills Gaps

Labor and skills shortages remain one of the biggest challenges facing supply chains.

The MHI report we mentioned found that workforce and talent shortages were cited by 35% of respondents as a top concern, second only to inflation and economic uncertainty.

The gap is twofold:

It’s getting harder to hire and retain qualified frontline employees for transportation, warehousing, and manufacturing roles.
Digital and analytical skills needed to run modern, AI-enabled supply chains are in short supply.

These issues make it difficult to scale operations, adopt new tools, or manage complex supply chain operations.

There’s also the added challenge of trying to “transform” when staff are already stretched thin trying to keep up with existing responsibilities. That, in turn, means tech initiatives are more likely to stall out – further wasting resources and making the business even more vulnerable to risk.

Software can’t solve the talent shortage by itself (and, no, replacing people with AI is not the answer, either). But the right technology can help your existing workforce become more effective.

And, it can help you create an environment that makes it easier to attract and retain the right people moving forward. A few examples:

User-friendly, cloud-based applications reduce training time and frustration compared to clunky legacy interfaces.
Automation offloads repetitive tasks, allowing planners and supervisors to focus on handling exceptions and driving improvement.
Embedded guidance, co-pilots, and in-app learning help users adopt best practices as they work, not in a separate training environment.

Combined with thoughtful workforce and change management strategies, as well as internal upskilling programs, these technologies can help you build a team capable of running a digitally enabled, data-driven supply chain.

Final Thoughts

In 2026, the biggest supply chain challenges — geopolitics, inflation, cyber risk, AI adoption, etc. — aren’t really separate problems. They’re different expressions of the same reality.

Supply chains are now dynamic, digital ecosystems that span continents, partners, and platforms.

To navigate that reality, organizations need:

A connected data foundation that breaks down silos.
Real-time visibility across inventory, logistics, and suppliers.
Embedded AI and automation that support planners and operators, not replace them.
Cloud-based, modular tools that can evolve as conditions change.

Get those building blocks in place, and the challenges that feel overwhelming today become the strategic levers you can use to control costs, reduce risk, and win big tomorrow.

Struggling with visibility gaps, volatile costs, or fragile supplier networks? Velosio helps supply chain organizations replace outdated systems with modern, AI-powered ecosystems that deliver real-time insight and predictable ROI.

7 Challenges Facing Global Supply Chains