Supply chain resilience: strategies for dealing with supply chain challenges in retail

Explore key strategies for overcoming supply chain challenges in the retail industry in 2025. Tips and insights to help you adapt and thrive.

The retail industry is going through a turbulent time, with supply chain disruptions just one of many challenges currently facing the sector. Contact our experts to discuss how they can help support your businesses future development.

Geopolitical instability, climate change and increasingly high consumer expectations are adding pressure onto global supply chain networks, making them more vulnerable than ever to disruption.

Such challenges were particularly evident in 2024, when disturbance in the Red Sea resulted in shipping route disruptions in the Middle East, causing delays and increased shipping costs.^[1]

With sourcing, logistics, and operations all affected by supply chain issues, retailers operate in an increasingly complex environment. The challenge is to juggle profitability and reputation management against a backdrop of volatile and uncertain market conditions.

Transport and Logistics Diversity

One effective strategy for enhancing supply chain resilience is to diversify transport and logistics options. By using multiple transportation modes—such as air, sea, rail, and road—you can mitigate the risks associated with relying on a single supplier method of transport. This allows for greater flexibility in responding to potential disruptions, as you can quickly shift to alternative options or modes when faced with delays or rising costs.

As well as identifying alternative options, establishing relationships with various logistics providers can enhance reliability and ensure business continuity by making sure that retailers have backup options in place. This reduces the impact of unforeseen events on supply chains and helps ensure supply chain resilience.

Diversifying Suppliers and Supply Locations

As well as diversifying your transport options, it would also give you a comparative advantage to put some focus on diversifying your supplier network and supply locations. Relying on a narrow supplier network, or just a single supplier, within a limited bubble of geographical regions can expose your business to significant risks. This is particularly unwise in times of geopolitical instability or in regions prone to natural disasters.

By sourcing products from a broader range of suppliers across different regions, retailers can create a more resilient supply chain that is better equipped to mitigate disruptions.

This approach not only mitigates risk by maintaining a steady flow of goods, but it also fosters competition among suppliers. This could potentially help you enhance supplier contracts in terms of pricing and quality. Having multiple suppliers also helps you to maintain safety stock to improve your surge capacity - preventing sales from being hindered by a supply shortage, enabling you to still meet consumer demand.

Visibility and reputation

While supply chain visibility is an issue in most sectors, some challenges relate specifically to retail.

Modern slavery, which can be both hard to identify and actively hidden, can affect huge swathes of the industry. For example, Bangladeshi employees of a Malaysian plastic parts supplier to large Japanese companies recently reported forced labour, unpaid overtime, withholding wages, and confiscating passports.^[² ^]

Meanwhile, a major fashion house is set to pay €2m to fund programmes identifying victims of labour exploitation after an investigation by Italy’s competition watchdog into labour practices in its entire supply chain.^[³ ^]

Consumers expect companies to understand the end-to-end process of where and how products are manufactured and to engage with suppliers who understand the importance of maintaining ethical and operational standards.

Those who fail to do so can expect customers to vote with their feet, with boycotts, negative press coverage and brand damage wreaking havoc on reputation and profitability. A dip in customer satisfaction alone can have a huge impact very quickly.

The importance of taking a proactive approach to risk

Visibility is vital if companies are to manage these risks successfully. However, the structure of the modern supply chain management system has created complex and opaque networks that limit the ability to identify potential risks in their upstream supply chain operations in the first place.^[⁴ ^]

Although most companies understand the operations of their first-tier suppliers, visibility often diminishes further up the chain. For lower-tier suppliers, it starts with simply knowing who they are. Many companies lack basic awareness of these entities, let alone insight into their practices and the risks they face. This lack of transparency creates significant vulnerabilities in supply chain visibility.^[⁵ ^]

A survey about building supply chain resilience and risk by Oliver Wyman found widespread evidence, particularly of poor visibility and a lack of understanding of the risks hidden within supply chains.^[⁶ ^]

The lack of visibility of upstream suppliers makes it much harder for organisations to understand the hidden risks, which means disruption can seemingly come out of the blue.

Failing to understand every level of the supply chain, including its strengths and vulnerabilities, can lead to serious issues that potentially affect all aspects of your business.

Leveraging digital supply chain technologies for visibility

Traditionally, the solution has been to build supply chain maps manually. It’s an arduous process which can lead to too much time attempting to understand the risks and less time spent designing supply chain solutions.

However, one answer is emerging in technology, where AI-powered approaches are creating innovative solutions.

One example of such resilient supply chain technologies is Marsh McLennan’s Sentrisk™, which uses artificial intelligence to enable clients to map their supply chain and assess the potential for bottlenecks and network disruption.^[⁷ ^] In addition, it can identify supplier risks, such as potential biodiversity issues or natural hazards, at site level.

This is particularly crucial when assessing ethical sourcing risks, carbon footprints, and the resilience of suppliers in unstable regions.

Identifying the risks

While the scale of the problem can seem overwhelming, the key is to move quickly towards a solution.

Actions to take:

Map the upstream supply chain—Marsh McLennan’s Sentrisk™ revealed that 65% of companies have at least one bottleneck in their supply chain that would cause catastrophic disruption to the business if it failed. This means mapping is a crucial part of the process.^[⁸ ^]
Identify key suppliers and components in the chain—assess whether you should spread the risk by using several suppliers and logistics options.
Understand risks— spotting potential flash points as quickly as possible means you can put more time and energy into building resilient supply chains by creating strategic plans.
Create mitigation strategies—draw up plans for managing these risks, considering the part the supplier/supply plays in your process and the affordability of the resilience solution.
Monitor risks over time and tweak your approach accordingly—while we can’t always know what’s around the corner, some risks can be identified and planned for early enough to allow adaptations to be made.
Plan for the worst—most businesses will face some disruption at some point. By building a business continuity plan which identifies where those supply chain risks lie and how they might look, organisations are better placed to deal with whatever may come their way.

Simplifying complexity and regaining control

While it’s impossible to eradicate risk, identifying common challenges in the industry makes it easy to see the areas where you could gain a competitive advantage and establish greater resilience. By implementing the appropriate risk management strategies, you could manage supply chains in a way that ensures that you can survive market disruption and continue to thrive in the face of it.

If you would like to discuss any topics raised in this article, please contact us.

¹ https://www.trade.gov/market-intelligence/israel-raw-materials-supply-chain-affected-israel-hamas-conflict

² https://apnews.com/article/labor-migrants-malaysia-bangladesh-japan-749864c6c2dfc19aff8969e3882d0527

³ https://www.reuters.com/sustainability/italy-antitrust-closes-dior-probe-with-pledges-fund-fight-against-labour-2025-05-21/

⁴ https://www.marsh.com/en-gb/industries/retail-wholesale/insights/supply-chain-risk-uncover-truth-about-tiers-matters.html

⁵ https://supplychain360.io/cracking-the-visibility-code-to-future-proof-supply-chains/

⁶ https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2024/sep/Keys%20to%20improving%20supply%20chain%20risk%20and%20resilience.pdf

⁷ https://www.marshmclennan.com/sentrisk.html

⁸ https://www.marsh.com/en-gb/industries/retail-wholesale/insights/supply-chain-risk-uncover-truth-about-tiers-matters.html

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