Beyond Supply Chain 2025 Predictions

Welcome to 2025! As we roll into the new year, it’s time to place bets on what’s in store — for the world (more generally) and supply chain (more specifically).

Some of this is based on extrapolation of trends or anticipation of key events, but there are always wildcards. In our profession, we need to persistently tune into the risks that will disrupt today’s operations and the strategic threats that might cause us to preemptively change our network or operating models.

A good starting point is comparing last year’s predictions to actual events.

Here’s a rundown of the predictions in my Beyond Supply Chain 2024 Predictions blog: 

On the macroeconomic front, I correctly called the U.S. avoiding recession, Europe’s flattish growth and a challenged Chinese economy. Ultimately, the U.S. economy and labor market fared better than most expected in 2024. China’s President Xi recently alluded to hitting his government’s 5% GDP growth target, but continued investment in industrial capacity and output were the main drivers. When coupled with tepid consumer demand, the result has been deflation in producer prices for the past two years.

Geopolitically, I highlighted the risk of rogue actors disrupting the largest election year in history – one representing more than 70 countries and nearly half the global population. While there were some instances of disinformation coming through social media channels, democracy generally worked in 2024. The result was that voters successfully registered their collective displeasure with incumbents. Of the G20 countries either holding elections or experiencing a more sudden change in leadership, two-thirds went to challenger parties. Cyber-disruption was more prevalent in the business world, with one measure of weekly attacks increasing more than 30% year-over-year.

In the technology domain, a Gartner report (subscription required) showed 80% of large enterprises were beginning to (or planning to) implement GenAI at the beginning of 2024. My best guesses for winning use cases at that time were in performance management and improved explainability of traditional AI applications. In addition to those areas, information summarization and knowledge management tools, alongside conversational agents for customer service and support, emerged as the most commonly used.

In last year’s predictions, I mentioned the enormous amount of power required to run all of these new applications. A Gartner Maverick report on this topic noted that, if forecasts hold, electricity demand for information and communications technologies will reach nearly two-thirds of total global supply by 2040!

When it came to sustainability, and ESG more generally, 2024 was a transition year. Regulations previously loaded in the pipeline, such as the EU’s Corporate Sustainability Reporting Directive, increased the cost of reporting for larger enterprises. At the same time, many companies quietly pulled back on ambitious emissions reduction or resource stewardship goals set in the early 2020s.

I also predicted the labor market moving back into equilibrium in 2024. Thankfully, the pendulum did not swing too far in the direction of weak labor markets, though some sectors, like high tech, saw significant layoffs. Finally, I saw corporate M&A as a potential disruptor for supply chains in 2024. Analysis by one investment firm showed corporate deal volume increasing 12% year-over-year, though 2025 may see a larger jump in activity.

• The crystal ball on overall global growth is hazier with the threat of a Trump 2.0-driven trade war. Most leaders know from Trump 1.0 to track the intent versus the letter of directions coming from the White House. Even so, tariffs of 25% or so on China and nearly 10 percent on the rest of the world would create price inflation and disrupt trade flows. This is where proactive supply chain organizations can earn their stripes as P&L guardians – scenario planning and shifting flows in a new era of “economic statecraft.”
• Specific to China, 2025 may be the year that its government steps in with consumer stimulus. This would be a last resort move after all other upstream financial supports and mechanisms are exhausted.
• Finally, we may also see a reemergence of bond vigilantes who discipline excessive government spending by demanding higher sovereign debt yields.

• The starting gun on the next U.S.-China trade war starts January 20, but we’ve already seen the pregame posturing. U.S. tariffs, tech policy and export controls, and efforts to delegitimize the Chinese government will be met with counter-tariffs and restrictions on critical materials. Saber rattling around Taiwan will be a welcome external distraction for the Chinese public, but 2025 is likely not the time for end-game moves.
• In the Middle East, Israel and Saudi Arabia might finally expand the Abraham Accords. This alignment, paired with a weakened Iranian sponsor, could lead Houthi rebels in Yemen to cease attacks on Red Sea shipping lanes, causing transport spot rates prices to decrease.
• In Europe, waning U.S. support for Ukraine would force the EU to play a larger role in any negotiated peace treaty with Russia

• In the context of Gartner’s Hype Cycle, winning GenAI use cases will hit the plateau of productivity. A next step beyond sophisticated information summarization will be Agentic AI, creating a virtual workforce of agents to assist, offload and augment the work of humans and traditional applications.
• The market-level question to answer will be whether the amount of savings generated by AI justifies the scale of data center expansion planned for 2025.

• 2025 will see continued climate disruption. With no central organizing force driving greater global sustainability, we are locked in a race between market forces enabling clean energy transition and increasingly volatile climate conditions derived from legacy energy infrastructure.
• A big x-factor will be the electricity required to support forecasted AI growth. I predict that, at least in the U.S., the combination of a Trump 2.0 maximalist energy policy and deep-pocketed investors will drive reduction in the timeline to qualify new nuclear power facilities and mobile reactors.

• A recent Wall Street Journal article noted that 2025 is the peak year for Baby Boomers turning 65. This means more retirements and corresponding career opportunities for up-and-coming younger leaders. It also ups the ante for maintaining institutional knowledge before it walks out the door.
• Pre-retirement cross-mentoring and AI knowledge capture, along with more flexible post-retirement consulting gigs could soften this blow.

It might feel strange to hear, but last year’s operating environment is likely the calmest and most predictable we’ll see for a while. Supply chain leaders that thoughtfully plan for a wide range of disruptive forces and events will fare best.

We should also remember the power of our community when it pools resources and advocates for our collective good. Powerful governments may set the opening frame for trade terms, but enough strong voices from the business community can shape the final outcome.

Wishing you and yours a happy and healthy year ahead!

Stan Aronow
VP Distinguished Advisor
Gartner Supply Chain
Stan.Aronow@gartner.com

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