What We’ll Unpack in this Article (TL;DR)
In 2025, supply chain leaders face labor shortages driven by skills gaps, talent competition, and aging, pushing up costs and delaying deliveries. Businesses can counter these challenges by boosting workforce resilience through retention, upskilling, and strong talent pipelines, and by using AI, automation, and predictive analytics to maintain service levels and keep goods moving.
In 2025, supply chain leaders face a labor paradox. The supply chain has (relatively) stabilized after years of pandemic-level volatility, but the workforce necessary to keep goods moving remains in short supply. This has led to a supply chain labor shortage, which refers to a situation where there are not enough qualified workers to fill critical roles across the supply chain. From warehouse associates to skilled maintenance technicians, employers are competing for staff from a shrinking talent pool, while also navigating trends like higher wage expectations and an accelerating need for digital skills.
This skilled talent gap in the supply chain is widespread: one study on the supply chain and logistics workforce found that 37% of organizations are experiencing high labor shortages, more than 60% have transportation disruptions from understaffing, and more than half say shortages impact customer service.
In this article, we’ll explore the state of supply chain labor, break down effective strategies for building workforce resilience, and share tips for offsetting the fallout of labor gaps.
The Supply Chain Labor Landscape in 2025
The supply chain labor shortage has become a lasting structural challenge for inventory-based businesses. While some industries have seen hiring conditions improve in recent years, businesses in the supply chain continue to face labor crisis shortages in available skilled talent. Research shows that recruiting and keeping qualified workers is the leading challenge for supply chain executives.
Here are some of the key drivers of the shortage:
- Skill gaps in tech-enabled operations: As more and more warehouses and manufacturing plants adopt automation, artificial intelligence (AI), and machine learning, there’s a growing need for workers who can manage, maintain, and optimize these systems.
- Labor market tightness: This refers to a state where there are job vacancies available, but talented workers are in short supply. Labor tightness is an ongoing challenge across the entire workforce.
- Rising competition for talent: Retail, eCommerce, and other sectors can often draw workers away from the supply chain, because these fields offer competitive pay, more predictable hours, and remote work opportunities.
- Aging workforce and retirement: Many experienced workers in areas like trucking, warehousing, and skilled trades are retiring faster than can be replaced.
The labor shortage itself is one thing. But what is the fallout like? Without enough skilled workers to take roles, the supply chain experiences:
- Higher costs: Overtime pay and recruiting expenses add pressure to already thin margins.
- Extended lead times: The supply chain workforce shortage slows production, delays order fulfillment, and creates bottlenecks for transportation.
- Customer dissatisfaction: Late deliveries, stockouts, and order inaccuracies erode customer trust and brand loyalty.
With supply chain labor scarcity now the norm, organizations need to adapt their workforce strategies, embrace technology, and reconfigure operations for efficiency and resilience.
How Can We Improve the Supply Chain Workforce?
You can’t make more workers appear from thin air. However, you can find ways to attract them and cultivate workforce resilience. It starts with the people you already have, and extends to how you attract, train, and retain talent over time.
With that in mind, here are strategies for improving resilience::
1. Reduce turnover
First, set your sights on retention. Keeping your existing workforce engaged and committed is often faster, cheaper, and more effective than hiring replacements. Address satisfaction, ensure your wages and benefits are benchmarked against industry averages, and consider flexible scheduling to help employees achieve work/life balance.
2. Upskill and reskill
A labor shortage is also a skills shortage, especially as technology rapidly reshapes supply chain operations. Consider cross-training programs to enable employees to handle multiple roles – this can provide coverage for absences and peak season. Also, address digital skills by training your staff on systems, interfaces, and tools, especially when it comes to new technology (like AI or ML).
3. Offer career pathways
Your team members likely want opportunities to grow internally. Show employees how they can progress into higher-paying, higher-skilled positions within your organization. When they feel like you invest in their performance and future, they’re more likely to remain loyal and productive.
4. Develop talent pipelines
While highly skilled talent might be in short supply, it still exists. Find ways to reach top-tier employees by carefully architecting your talent pipeline. Build awareness around your brand and available roles, develop a strong brand story (which highlights your company’s culture and employee success features). Consider collaborating with local organizations and even trade schools to create a steady flow of candidates.
Leveraging Technology to Offset Labor Gaps
When the supply chain labor shortage impacts your business, technology becomes a force multiplier, allowing businesses to do more with the people they already have. In 2025 and beyond, these tools are essential for bridging the gap between labor supply and operational demand.
- Automation: Automation is an essential supply chain technology, replacing or augmenting repetitive (and often physically demanding) tasks, while freeing up human workers to focus on higher-value activities. Automated vehicles can be used in warehouses to move goods between zones, and for picking and packing to increase order efficiency. Modern chain software also offers features powered by automation. For example, your inventory management solution might be able to manually generate purchase orders based on stock levels.
- AI and predictive analytics: Intelligence systems can anticipate needs, streamline workflows, and prevent costly slow downs. For example, with AI-powered demand forecasting, you can align labor schedules with predicted order volumes to avoid both understaffing and overstaffing. You can also use predictive maintenance to minimize equipment downtime before it fails, reducing emergency labor needs.
- Digital collaboration tools: Keeping teams aligned and productive during labor shortages is easier with connected platforms. Consider supply chain management systems which centralize inventory data, remote operations tools (to monitor and adjust workflows across sites without needing to be physically present), and remote workforce apps to give team members instant access to schedules and SOPs from any device.
By strategically integrating supply chain technology, leaders can not only protect their organizations from the ripple effects of the labor shortage – they can also build technological infrastructure that allows their business to thrive in the face of it.
StockIQ: Your Labor Shortage Secret Weapon
The supply chain labor shortage in 2025 is a significant challenge that calls for long-term solutions. By focusing on workforce resilience, investing in skills development, improving hiring, and embracing advanced supply chain technology, you can do more with what you have. And if you’re ready to become fully resilient in the wake of labor shortages, StockIQ is here to help.
What’s StockIQ? We’re a supply chain planning suite built for businesses like yours that uses advanced technologies to help you streamline your supply planning process, including your software and strategies, and overcome the challenges of the labor shortage. .
Our user-friendly system enables you to control inventory, simplify ordering, and enhance forecasting with AI-powered tools and sophisticated machine-learning algorithms.
Are you interested in learning how StockIQ can help you do more with your current team, and optimize outcomes even when labor is in short supply? Contact us today or request a StockIQ demo.