Five Trends Coming in '25

Five trends to look for in 2025

December 18, 2024
By the Blue Print Editorial Team

Supply chains are constantly changing in ways we can and can’t predict. Technology, labor, resources. They all affect an organization’s bottom line and customers.

What are the biggest risks and opportunities awaiting us in the year ahead? HERE’S WHAT YOU NEED TO KNOW.

Geopolitical uncertainty

PROBLEM
That dizzy feeling? It’s our world lurching into a new geopolitical era. The hallmarks include disruptive technologies, climate change, accelerating migration, weakening institutions, multipolar military tensions, and a global move toward nationalism, populism, and protectionism.

Time will tell where it’s all headed. Right now, we’re faced with pressing questions.

How will the conflicts in the Middle East and Ukraine play out? Will new hot spots arise (for example, in the South China Sea)? Will we see a resumption of labor strikes by East Coast port workers? And now that the U.S. Presidential race is settled, what will trade policy look like in the year ahead?

We’ve been playing out scenarios for all of the above; but as this article goes to print, nobody really knows the answers. What we do know is this: It’s more important than ever for your business to have a strong supply chain partner like Fastenal.

SOLUTION
We’re ready to help with three layers of support. First, we’ve built flexibility into our supplier network, so if there’s pressure in one part of the world, we can shift on the fly to well-vetted sources in other regions.

Second, we’ve positioned supply chain experts across the planet to establish agility and control close to various sources of supply. Their ranks include analysts, planners, buyers, factory auditors, engineers, and logistics experts – each attuned to the pulse of their local market.

The third layer is the key: the local service teams we provide to understand your operations and provide creative solutions in a pinch. This includes the ability to make sourcing and buying decisions to meet your needs. The tools in their toolbox include the global resources mentioned above plus our North American truck fleet (giving us full control of ground transportation) and our in-house manufacturing capabilities (a fail-safe plan B for critical parts).

It’s a strategic approach to help keep your business moving forward, even as the world navigates uncharted waters.

Rising operational costs

PROBLEM
Rising operation costs are never NOT a big deal. They include expenses like labor (salaries), processes (utilities), and occupancy (rent, inventory costs) needed to maintain day-to-day operations. Since the pandemic, a steady inflation has contributed to rising operation costs.

However, the cause behind rising operation costs isn’t as clear cut as inflation on raw materials or milk. It’s more like a chain reaction. For example, procurement delays cause production delays and thus increase operating costs to run the machines, keep the lights on, pay for overtime, etc. One issue leads to another, creating a ripple effect that affects overall operation costs.

And unfortunately, there is more than just one issue contributing to this ripple effect.

Disruption in the flow of goods
Increasing material and labor costs
Changes in geopolitics and global trade
Mismatched supply and demand forecasts
Disturbances from weather and natural disasters

All these factors mean it’s crucial that the supply chain be as well coordinated as possible. An air-tight supply chain reduces the chance for mistakes or delays to sneak in and cause chaos.

Coming up with a one-size-fits-all solution for these disruptions? Not so easy. A plan that works for weather issues might not cut it for production cost spikes. So, ditch the blanket solutions. Instead, go for strategies tailored to your specific needs.

CUSTOM SOLUTIONS
We’ve talked about how you can work with Fastenal to mitigate supply chain risk. You can also work with us to quantify and reduce costs related to procuring, transporting, owning, and accessing supplies.

The goal is maximum value with minimum waste, lowering the Total Cost of Ownership. A better TCO means more savings even as external costs rise.

"By partnering with Fastenal, they brought to the table a less expensive alternative to what we already had. This option not only reduced capital expenses but also will help our maintenance and operation expenses moving forward. To me, this was a really big win for the university in terms of maintaining future operations."

- Jeff Benjamin, Assistant VP of facilities services at the University of Houston

Digitalizing the supply chain (and using big data analytics)

PROBLEM
Transforming physical supply chain processes into digital data has been an industry topic for a while. But getting the digitalization done and reaping the results is still on many people’s to-do lists.

Certain obstacles can slow down the transformation. Not enough time or manpower, lack of skills or knowledge, resistance to change, high costs to change, or silos that separate one supply chain link from the next. These all can slow down or halt digitalization.

But here’s the thing.

Digitalization can also help you overcome those obstacles. It can break silos down and allow for better supply chain integration. It can cut costs, alleviate labor shortages, and improve time usage, which helps boost productivity. Analyzing the positive outcomes versus the financial investment of digitalization can start the transition from choice to change.

ONE SOLUTION
Inventory management technology – for example, vending machines, smart cabinets, or e-bins – can put supplies right where workers are. These devices also collect data, helping you and your supply chain partners spot usage trends and hidden costs you wouldn’t see without digitalization. It allows you to predict future needs for a more proactive approach.

It’s best to have (or find) a supply chain partner who isn’t just thinking about ways to digitize your supply chain but has innovative technology for you now to begin transitioning.

This climate change factor

PROBLEM
Weather disruptions have always been a headache for supply chains. And as climate change issues increase in intensity, frequency, and unpredictability, they will have a larger effect on your supply chain.

Droughts and floods halt production, wasting time and money. Heatwaves and ice storms make it impossible for outdoor workers to do their jobs. Supplies and resources get wiped out from hurricanes and fires. And don’t forget how insurance costs have increased along with the number of climate issues.

If a storm knocks out a power plant on the other side of the country, it can have ripple effects in your organization due to the complex interdependence of modern supply chains.

Say a drought in China halts hydropower. This pauses production of auto parts, which creates a material shortage all the way to assembly plants in the U.S. The result? Increased car prices. The drought happened nowhere near the plant yet still affects its producers and end users.

So, how do you (and your supply chain) prepare for the increasing likelihood of severe climate events?

SOME SOLUTIONS
Create contingency plans before disaster strikes. You can’t stop a tornado, but you can protect your supply chain from its aftermath.

Ask your supply chain partners and suppliers about their contingencies. If a storm hits their warehouse, which you depend on, do they have reserves? Do they have the logistics capabilities to keep supplies flowing in an emergency? Will they prioritize your needs in an emergency? These questions can help protect your supply chain from weather impacts.

"We used to do all [the] legwork. We’d source out all the supplies, we'd source out all the tools. If there was an issue on site where we needed something, we’d be doing the running around. We’d have to go out and get those products. There's a lot of man hours lost if we need to go out running around replacing tools and parts or sourcing new supplies, so Fastenal has come in and they've taken care of all that for us."

- Derek King, Senior Director of Hockey Operations, NHL

Labor pressures

PROBLEM
Ever since the pandemic, finding and retaining talent has been in a state of flux for many industries. Despite cooling job growth, labor scarcity seems to be the new normal. The main reasons? A long-term birthrate decline and an ever-larger share of Baby Boomers hitting retirement age.

These trends were exacerbated by the pandemic. COVID-19 shifted people’s priorities toward flexible, remote opportunities; prompted a wave of early retirement; and, tragically, caused nearly a million deaths in the U.S., affecting the worker-to-job ratio.

As a result, there have been more open jobs than available workers, so supply chains must compete for talent against other industries like retail, hospitality, and construction. The biggest concern is manufacturing labor. A shortage here means fewer and/or more expensive products, which can translate to lower customer retention.

In this case, the supply chain includes YOU, and the question is: How can your organization gain productivity to succeed in a period of labor scarcity?

A SOLUTION
Free up current workers from non-core tasks. By letting technology or external services handle repetitive tasks, such as inventory management, you redirect your employee’s time and energy to more essential work. It's a simple step to increase output without increasing labor cost.

The takeaway

As the world and supply chains keep evolving, new trends and concerns will inevitably crop
up. In order to keep pace, we all need to adapt with these changes, together. We can help you keep an eye on current and future trends, finding ways to combat them and build a resilient supply chain.