The global supply chain landscape continues to face unprecedented challenges, with new research revealing that persistent issues like freight costs and labor shortages now account for 92% of current supply chain pressures. The Supply Chain Stability Index , a joint report from the Association for Supply Chain Management (ASCM) and KPMG US, provides critical insights into these systemic challenges and offers actionable strategies for businesses.
A Comprehensive Health Check for Supply Chains
Unlike traditional economic indicators, the Supply Chain Stability Index functions as a diagnostic tool, tracking volatility across four key dimensions:
- Service levels
- Inventory fluctuations
- Material and logistics costs
- Labor market conditions
This multidimensional approach enables organizations to identify vulnerabilities, anticipate disruptions, and implement targeted improvements to enhance resilience.
The Twin Challenges: Freight Costs and Labor Shortages
While geopolitical events like the pandemic and Russia-Ukraine conflict initially disrupted global supply chains, the report reveals that sustained pressure comes from two fundamental issues:
1. Soaring Freight Costs
US trucking industry prices, which historically increased about 2% annually since 2008, have surged 45% over the past two years. This dramatic escalation stems from:
- Geopolitical tensions disrupting traditional shipping routes
- Persistent driver shortages
- Rising fuel and maintenance costs
2. Chronic Labor Shortages
The US labor market remains exceptionally tight, with December data showing:
- 3.5% unemployment rate
- 11 million job openings
- 1.9 available positions per unemployed worker
This imbalance creates significant operational challenges, particularly in logistics and manufacturing sectors where unfilled orders continue to accumulate despite stable vacancy rates.
Structural Vulnerabilities in Global Supply Networks
The report highlights how decades of supply chain optimization for cost efficiency have created new risks:
- Over-reliance on single-source suppliers
- Extended lead times from globalized production
- Limited visibility into multi-tier supplier networks
These vulnerabilities became apparent during recent disruptions, with supply pressures doubling annually over the past two years due to rising material costs and constrained availability.
Strategies for Building Resilient Supply Chains
The report outlines several approaches to mitigate current pressures and prepare for future challenges:
1. Network Optimization
Companies should reevaluate their supply chain architecture through:
- Regionalization of critical suppliers
- Multi-sourcing strategies
- Inventory positioning analytics
2. Workforce Solutions
Addressing labor challenges requires:
- Enhanced training and retention programs
- Strategic automation investments
- Improved working conditions in logistics roles
3. Digital Transformation
Technology adoption can improve visibility and responsiveness:
- Predictive analytics for demand sensing
- Blockchain for supply chain transparency
- AI-driven logistics optimization
4. Collaborative Partnerships
Building stronger relationships across the supply chain ecosystem:
- Shared risk management frameworks
- Coordinated capacity planning
- Joint sustainability initiatives
The Path Forward
The Supply Chain Stability Index provides empirical evidence that today's challenges stem from structural issues rather than temporary disruptions. Organizations that proactively address these fundamentals through strategic investments and operational improvements will be best positioned to navigate ongoing volatility and capitalize on future opportunities.
As supply chains continue to evolve, this research offers a valuable framework for assessing stability and guiding transformation efforts across industries. The insights underscore the importance of moving beyond reactive crisis management to build more agile, resilient supply networks capable of withstanding future shocks.