5 Strategies for Managing Supply Chain Disruptions

Businesses have prioritized supply chain resilience amid ongoing global disruptions, with many companies upgrading operations to lower their risks. Supply chain stress is triggered by everything from uncertain trade policies and tariffs to labor shortages, transportation bottlenecks, cyberattacks, extreme weather events, and inflation. All these pressures and more are compounded by unpredictable market demand. So, the question is: What fresh disruption will tomorrow bring, and how does a company handle the unrelenting challenges to its supply chain?

What Is a Supply Chain Disruption?

A supply chain includes the network of people and companies that create a product and deliver it to a customer. A supply chain disruption is any circumstance that interferes with a company’s flow of production, sales, and distribution. Disruptions are the bane of supply chain management and can cause significant harm to a business by slowing shipments, degrading product quality, increasing costs, and damaging brand reputation.

At the height of the pandemic, supply chains captured the media spotlight when they broke down, leaving grocery shelves empty as many products, from toilet paper to meat, were hard for consumers to come by. Delivery schedules were fraught with delays, stretching far beyond customers’ level of tolerance. As some of the shipping problems, ransomware attacks, and other supply chain issues that plagued businesses between 2020 and 2022 have abated—although they have not completely disappeared—other challenges have arisen, such as oil price spikes and tariff uncertainty. Understanding, monitoring, and managing supply chain risks remained one of companies’ biggest supply chain challenges in 2025, according to a survey by the Business Continuity Institute (BCI).

Supply chain problems can have a severe impact on businesses, often damaging their overall performance. To reduce risks and mitigate the impact of disruptions, companies may employ a variety of supply chain strategies, including preparing backup-supplier arrangements, geographically restructuring supply lines, and increasing inventory levels. Digital technologies support these strategies by enhancing supplier networking, visibility, and analytical capabilities, allowing businesses to closely monitor their supply chains, detect potential problems, and make contingency plans to avoid costly headaches.

Key Takeaways

• Disruptions have become the norm in recent years, creating ongoing challenges for supply chain managers.
• The causes of disruption vary widely, from labor shortages and extreme weather events to geopolitical tension and tariff uncertainty.
• Supply chain disruptions can hurt businesses in a variety of ways, impacting both the top line and bottom line by slowing shipments, degrading product quality, increasing costs, and damaging brand reputation.
• Supply chain resilience strategies remain a work in progress, as companies continue to implement the digital controls needed to handle disruptive events.

The Rise in Supply Chain Disruptions

Over 60% of businesses surveyed perceived global supply chain risk as high or very high in 2025, according to the RapidRatings analytics firm, with about a third of disruptions carrying a price tag over $5 million each. Disruptions can occur at any link in the supply chain, including the internal as well as external breakdowns described below.

Internal vs. External Risks

Some supply chain risks are initiated within a company, and others come from outside influences that disrupt operations either directly (via a company’s tier 1 suppliers) or indirectly (due to a supplier’s suppliers at tier 2 or beyond). Spot semiconductor shortages present a prime example of a breakdown in a multitiered supply chain: An automaker can’t make enough cars when its (tier 1) supplier of engine management systems is delayed because a (tier 2) maker of fuel injection modules can’t get enough chips from its (tier 3) semiconductor supplier. A midsize company may have anywhere from a handful of suppliers to dozens of them at different levels of its supply chain and, therefore, may be susceptible to both internal and external risks.

• Internal risks: Internal issues may arise in the C-suite when a new business strategy or reorganization fails to consider supply chain implications. More often, the roots of disruption can be traced to a procurement office or other supply chain management function, which may suffer from poor inventory management, neglected supplier relationship management, lack of contingency planning, or insufficient visibility across the supply chain.
• External risks: The list of external risks is long: hurricanes, ransomware attacks, blockages at ocean ports, geopolitical conflicts, demand fluctuations, and more. Events like these can be more challenging than internal disruptions, since they often fall outside a company’s control, such as a political crisis in a different country that supplies products to a business. The tiered nature of supply chains also increases a company’s exposure, particularly when the supply chain crosses international borders. It takes a concerted effort to keep on top of suppliers feeding into a business’s operations at tier 1, tier 2, tier 3, and beyond. But there’s only a 50-50 chance that any of these suppliers have measures in place to mitigate their own disruptions, according to the BCI.

Types of Supply Chain Disruptions

While stress on global supply chains has receded post pandemic, according to the New York Fed, the market continues to experience disturbances due to causes such as natural disasters and extreme weather, labor shortages, transportation delays, cyberattacks, and price and tariff volatility. In 2025, nearly seven in 10 supply chain professionals surveyed said they expected their risks to escalate.

Price and Tariff Volatility

Global economic uncertainty poses a risk to companies’ operations and long-term stability, according to a BCI report. Trade tensions among nations and the on-again, off-again threat of high tariffs create strategic uncertainty as future costs remain unclear. Persistent inflation hovers over everything from customer demand and wages to purchasing power and inventory financing.

To keep close tabs on costs, experts suggest leaning more heavily on digital technologies that will increase visibility, accelerate planning exercises, and provide predictive analytics to prepare for impending price hikes.

Natural Disasters and Extreme Weather

Over 40% of companies have experienced a moderate or significant impact due to climate-related events in recent years—mostly in their supply chains, according to BCI. Extreme weather events, such as heat waves and large storms, are likely to grow more frequent and intense, according to the U.S. Environmental Protection Agency. And too many supply chain managers have already experienced factory floors flooded by hurricanes, ocean ports closed by freak winter storms, highways blocked by wildfires or food supplies decimated by drought.

Companies that take precautions stand in better stead. A Harvard Business Review case study, for example, describes how a major coffee producer used satellite imagery to locate its New Orleans production facilities well above sea level, enabling it to restore operations more quickly than other businesses after Hurricane Katrina in 2005. Advance planning and preventive measures like these need to be supplemented by early-detection systems. Some companies use artificial intelligence (AI) to scan climate news and predict events, while others purchase feeds from risk analytics services. For many supply chain managers, weather data provides the impetus for creating detailed contingency plans.

Labor Shortages

Labor shortages continue to plague supply chains. Truckers are in short supply, leading to shipping delays. Unfilled jobs on factory floors have contributed to rising accident rates. Within the supply chain function itself, positions in high demand include logistics managers, supply chain analysts, procurement specialists, warehouse operations managers, and plant managers.

Automating supply chain processes can help by freeing the current workforce from preoccupation with many tedious manual tasks related to monitoring the supply chain and giving them time to take on more complex and satisfying work that allows businesses to retain employees.

Transportation Delays

Global transportation networks are struggling under the weight of persistent disruptions, including changing tariff paperwork, port congestion, war-related bottlenecks in key trade routes, storms, and labor shortages. Delays like these can increase shipping costs, disrupt inventory management, and disappoint customers awaiting their purchases.

In these circumstances, inventory management plays a critical role. Achieving uninterrupted deliveries requires effective inventory management that is integrated across sales, operations, procurement, and other relevant departments.

Cyberattacks

Supply chains have increasingly become exposed to more and more sophisticated cyberattacks. Cyberattackers often break into smaller companies in a supply chain in an effort to ultimately reach a big buyer as their main target.

In the past year, more than 70% of companies experienced a significant cyber incident that originated from a vulnerable supply chain partner, according to a cybersecurity ratings firm. Companies need to collaborate more with supply chain partners and implement third-party risk management procedures to ward off attacks, while also protecting their own employees, customers, platforms, and data from cyberattacks by boosting cybersecurity tactics.

Global Pandemics

Global pandemics, such as COVID-19, can disrupt the entire supply chain due to everything from shortages of raw materials to changes in consumer behavior.

The memories of severe COVID-related shortages remain fresh as businesses work to prevent supply chain disruptions: “Companies saw what was happening and tried to front-load their orders to get ahead of delays,” said Matt Mendez, supply chain manager, Physicians Choice, a dietary supplements brand. “Increased demand, paired with a decrease in supply from the virus, resulted in massive lead times and stockouts for certain raw materials.” Many companies that survived this complex turn of events have shifted from prioritizing lean, “just-in-time” operations to adopting more agile approaches to attain greater supply chain resilience.

Some companies have “reshored” offshore sourcing arrangements, bringing suppliers closer to their home bases. To increase agility, many companies are leaning more heavily on digital controls, for example, and have restrategized inventory management to better withstand shortfalls. Experts warn against complacency, saying that company officials need to remember lessons learned during the pandemic in case of future events of its magnitude.

The Impact of Supply Chain Disruptions

Many C-suites and boards of directors consider supply chain disruptions a major risk to business. One consequence is an inability to manufacture at full capacity.

Another way to understand the impact of supply chain disruptions is to look at what happens in a worst-case scenario. When a giant cargo ship blocked the Suez Canal in March 2021, it shut down a trade route that typically carried $9.6 billion worth of shipments every day. Delayed and rerouted cargo included everything from wine to car parts, affecting a wide array of industries from the restaurant business to auto repair shops. Once unblocked, the ship and its thousands of tons of merchandise were then impounded for three months due to legal issues, which experts say caused global supply chain repercussions for companies more than a year later.

Supply chain disruptions have wide-ranging impacts, from increased costs and canceled orders to reduced business profitability and diminished company valuation. For example, the share price of a major auto manufacturer plunged after it warned that chip shortages would force the business to miss production targets.

Supply Chain Efficiency vs. Supply Chain Resilience: What’s the Difference?

Supply chain efficiency and supply chain resilience may both be laudable goals, but they can conflict. Supply chain efficiency strategies aim to reduce costs and optimize operations in a stable environment, using tactics such as “just-in-time” manufacturing, lean inventories, and low-cost sourcing. Its hallmarks are smaller budgets, faster inventory turnover, and shorter lead times.

In contrast, resilience strategies strive to improve a supply chain’s ability to withstand and recover from disruptions. Unlike efficiency strategies, which seek to eliminate excess, resilience strategies embrace redundancy and controls to insure against volatility, by holding inventory buffers, diversifying suppliers, and investing in advanced visibility and monitoring technologies. The success of a resilient supply chain is measured by its capacity to continue service when disruptions occur.

Businesses are advised not to choose one over the other, but to find the best balance of the two. A supply chain that is strictly efficient can be brittle and vulnerable, while one that is purely resilient may be too costly to be competitive.

How to Handle Supply Chain Disruptions

Having a plan to handle disruptions is essential. KPMG management consultancy advises that “when disruption is constant, an organization’s preparation for key supply chain trends can be a significant competitive advantage.” So, what are best practices for establishing and running resilient supply chains that can overcome disruptions?

1. Identify Potential Risk Factors

   Supply chain managers need to create a structure for tackling supply chain disruptions, and they can start getting organized by cataloging and addressing known risks. Classic supply chain risks, such as supplier bankruptcies, can be more easily measured and managed than less familiar sources of disruption. To assess exposure, a supplier’s financial history can be combined with knowledge of the product lines in a company that rely on that supplier’s solvency. Certain unknown risks, on the other hand, can be moving targets. Today, for example, unpredictable tariff rates can have an insidious impact on a company’s business planning and inventory management. At the same time, companies can help lift the curtain on the unknowns by taking advantage of a variety of tactics, such as employing predictive analytics, what-if scenarios, and estimations of value-at-risk.

   Identifying risks in advance is one thing, but supply chain managers also need to put digital systems in place to detect disruptions that are unfolding in real time.

2. Develop a Contingency Plan

   A world of risks requires agile supply chain operations that are based on alternative supplier relationships and other short- and long-term strategies to avert problems and remediate any that do occur. A basic contingency plan would map out a series of steps, from identifying the cause of a disruption to prioritizing critical operations, rebalancing inventory, shifting orders to alternative vendors, and communicating plans to stakeholders. A key proviso is that contingency plans need to be routinely reviewed and updated, or they may not be useful enough when they’re needed most.

3. Monitor and Analyze Supply Chain Data

   Visibility clears the path to uninterrupted supply chain operations. To gain visibility, companies use digital tools, such as scanners, to derive tracking and maintenance data from myriad IoT devices on trucks, in warehouses, and on the factory floor — then analyze that data via cloud-based networks. Layering on software, such as demand planning and inventory management applications, helps to complete this picture for Beekman 1802, a skin care company. “We know when we’re going to be out of stock, and we have mechanisms to reach out to suppliers and expedite things,” according to an operations executive.

   In a 2025 survey by the Material Handling Industry, a trade association, supply chain professionals cited AI as a top priority, followed by predictive and prescriptive analytics. About eight in 10 said they had already adopted these innovations or were likely to in the coming five years.

4. Implement Automation Solutions to Help Manage Disruptions

   With the ability to monitor every stage of the supply chain process, companies can increase efficiency and avoid unnecessary costs. In a warehouse, for example, sensors can track inventory levels and automatically reorder supplies when they reach a set threshold to avoid stockouts. While in transit, sensors can report the location and condition of goods, allowing companies to reroute orders, if problems arise, to avoid delays.

   In the back office, robotic process automation can help prevent ordering mistakes by reducing the errors associated with manual data entry. Many companies have begun to deploy AI to enhance the predictive capabilities of automated functions, like reordering and rerouting products. Amid labor shortages, some companies are using robots that can pick products off shelves and pack shipments in the warehouse. Delivery drones are also being tested in some cities.

5. Strengthen Supplier Relationships

   Suppliers shouldn’t be viewed only as potential sources of risk but should also be treated as allies in avoiding disruptions. “Make sure you’re developing those relationships constantly,” said Tiffany Krumins, founder of Ava the Elephant, a maker of interactive medication dispensers for children that is now part of Better Family.

   Chief supply chain officers are working to improve collaborative relationships with key customers and suppliers. For example, some companies are developing shared inventory-hedging strategies to secure supplies, decrease lead time, and reduce risk. Others have found strength in building relationships with a diverse group of suppliers, such as minority- and women-owned businesses, that are introducing new approaches to agility and resiliency against disruptions.

   While many companies are making strides toward managing supply chain disruptions, more work remains to be done. Areas for improvement include routine validations of suppliers’ business continuity plans and the deepening of digital collaboration with suppliers.

Examples and Case Studies

Recent events have produced two major supply chain disruptions:

• Tariffs: In 2025, global trade tensions including new and pending tariff increases have clouded demand forecasting, increased the cost of some goods, restructured global sourcing, and upended inventory management. Uncertainty surrounding the tariffs, which have been repeatedly delayed and revised, has stymied some businesses, such as the automaker that simply suspended production of some of its models in Canada. One wellness company reported “significant operational turbulence,” with repeated revisions to financial planning, pricing strategy, cash management, and customer communications.
• Armed conflict: Meanwhile, sustained, violent attacks on shipping in the Red Sea in the mid-2020s have created a large-scale diversion of shipping traffic. Container ships and tankers traveling between Asia and Europe began navigating around the tip of Africa, instead of going through the Suez Canal, adding up to two weeks to a journey that otherwise takes around 30 days. Impacts on manufacturers, retailers, and other businesses have included a sharp increase in shipping rates, in addition to delays in inventory replenishment and other issues. Some companies have opted for air freight instead, paying significantly higher costs.

Manage Your Supply Chain Regardless of Disruptions With NetSuite

NetSuite’s supply chain management software aims to keep operations running smoothly, so that all workers and materials are available at the right time and place. NetSuite procurement capabilities drive accuracy throughout the purchasing process while supporting collaboration with suppliers. In addition, integrated demand planning, inventory management, and predictive analytics optimize supply chain strategies and streamline tasks to see to it that supply plans are executed with fewer disruptions and products are delivered as promised.

The bottom line? As Michael Card, executive vice president of finance for Crumbl Cookies, put it: “We’ve been able to increase profitability by improving visibility into inventory value, days on hand and other critical information with NetSuite.”

Supply chain disruptions have become a permanent fixture of supply chain management. Disruptions can be caused by a range of factors, from labor shortages to extreme weather to uncertain tariff policies, and these challenges are only increasing in frequency and intensity. Their impact can be far-reaching and damaging, affecting everything from shipping time to product quality, cost, and brand reputation. The global pandemic provided businesses with important lessons about the need for agile operations, catalyzing improvements in strategies, tactics, and digital controls. As companies have applied these mechanisms to mitigate the impact of new and different disruptive events, businesses have been building the resilience they need to remain competitive in today’s volatile marketplace.

Supply Chain Disruption FAQs

What are some of the consequences of supply chain disruption?

Supply chain disruptions can do plenty of harm in a lot of ways. For example, disruptions can lead to increased costs, canceled orders, damage to a company’s reputation, reduced profits, and a lower share price on the stock market.

What are some tips for reducing supply chain disruptions?

Best practices in supply chain management call for a five-step approach to avoiding disruptions and their worst impacts:

1. Know your potential risks.
2. Have an up-to-date contingency plan in place.
3. Deploy monitoring tools and run analytics on your supply chain data.
4. Automate to mitigate disruptions.
5. Strengthen your supplier relationship management system.

What are some predictions for the future of the supply chain?

Experts predict that the risk of supply chain disruptions will remain high, since pressures due to extreme weather, price volatility, labor shortages, tariff uncertainty, and cyberattacks may continue to grow in frequency and severity in the years ahead. Experts say companies working to optimize their supply chains now will handle future risks more effectively.

How do you handle supply chain problems?

It’s best to handle supply chain problems in close collaboration with suppliers, using shared, real-time tracking and visibility tools to identify the root causes of any disruption, find alternative transportation or warehousing options, and take other necessary steps.

How do you address a supply chain disruption?

A basic contingency plan for a disruption would outline a sequence of actions: identifying the root cause of the problem, prioritizing crucial operations, readjusting inventory, transferring orders to alternative suppliers, and informing stakeholders of the situation.

How can you reduce the risk of supply chain disruptions?

Visibility is a key factor in reducing the risk of supply chain disruptions. To gain visibility, companies can collect and analyze data from across their supply chains via cloud-based networks. For example, tracking data from Internet of Things devices on trucks, in warehouses, and on factory floors feeds into inventory management software to more accurately predict potential disturbances in the supply chain.

What are the five operational strategies for managing supply chain disruptions?

Here are five operational strategies for avoiding supply chain disruptions and mitigating their adverse effects:

1. Identify long-term, short-term and immediate risks.
2. Develop a contingency plan.
3. Leverage digital monitoring and data analytics tools.
4. Automate operations to reduce errors and speed response.
5. Collaborate closely with suppliers.