Sourcing raw materials is an essential part of supply chains, and the way businesses execute this process is changing. In recent years, challenges like supply chain disruptions, fluctuating costs, and growing demands for ethical business practices have triggered changes in the sourcing process. As we move into 2025, it’s clear there’s a need for a better, more resilient approach to sourcing raw materials in supply chains.
Overall, the entire supply chain is going through an overhaul, shaped by shifting consumer expectations and new global dynamics. For example, studies show that 40% of companies report increased sourcing costs in the past year and that 57% of companies have adjusted their procurement strategies to combat uncertainty in the wake of geopolitical risks. Companies that adapt to these and other changes can gain a competitive edge, improve efficiency, and align with consumer needs. Those that don’t risk falling behind in this rapidly evolving market.
In this article, we’ll explore practices and ideas you can use to improve the way your business sources raw materials, to overcome challenges and future-proof your sourcing processes.
The Evolving Landscape of Sourcing Raw Materials
What makes sourcing raw materials different this year than in years past? The entire supply chain is undergoing rapid and profound change, driven by several significant trends. Here are some of the key elements shaping the sourcing landscape today:
1. Volatile market conditions
Market conditions are always in flux, but it’s important to understand the state of the market today to determine how to best source raw materials. For example, research shows that while 2024 began with expansion, the year might end with the need for manufacturers to cut production. And “while the rate of inflation diminished, manufacturers continue to face higher costs.”
What this all reflects is that as we begin 2025, supply chain businesses are navigating a “challenging and uncertain business climate.”
2. Technological advancements
It’s no secret that in 2024, the global supply chain was shaped by new technological advancements. From artificial intelligence to blockchain, these technologies are redefining how materials are sourced, tracked, and managed. Businesses are now adopting new tools, which are enabling new levels of optimization and transparency.
3. Demand for ethical supply chains
Consumers, investors, and regulators are now placing greater emphasis on ethical supply chains and sustainable sourcing. Even businesses themselves are prioritizing supply chain practices that further align with their ethics and goals.
4. Global uncertainty
Geopolitical tensions, trade disputes, and even natural disasters underscore the risks of a globalized supply chain. As a result, businesses are diversifying suppliers and exploring regional sourcing options to reduce vulnerability and boost resilience.
Key Innovations in Raw Materials Sourcing
As we step into 2025, the process of sourcing raw materials is defined by a wave of groundbreaking innovations that address the challenges we mentioned above. These include:
1. AI-powered supply chain management
Tools powered by artificial intelligence are becoming integral in sourcing raw materials. For example, predictive analytics and demand forecasting tools are being used to anticipate demand and identify potential disruptions, allowing companies to stay ahead. These tools are also able to evaluate supplier performance and risks, ensuring businesses work with reliable and ethical partners.
2. Ethically-driven sourcing
Ethical concerns are driving companies to rethink their sourcing practices. For example, companies are seeking materials that are sourced using fair labor and sustainable environmental practices. They might source from recycled or upcycled materials, and optimize logistics to cut emissions and align with carbon reduction goals.
3. Blockchain for transparency
Blockchain technology is just beginning to grow in popularity in supply chains for its ability to create immutable records of material origins and transactions. In sourcing, the use of blockchain allows businesses to trace raw materials back to their origins, minimize the risks of counterfeit materials, and streamline regulatory processes with transparent documentation.
4. Localized and regional sourcing
Challenges in the global supply chain have caused businesses to diversify and localize their supplier sources, to reduce reliance on volatile international markets. These shorter supply chains improve agility, by improving response times to market changes and customer demands.
By adopting these innovations, companies are not only addressing current sourcing challenges but also positioning themselves for a more sustainable and efficient future.
Tips for Better Sourcing in 2025
Whichever technologies and processes you choose to adopt in your businesses, here are some tips and best practices for better sourcing in 2025 and beyond.
1. Take steps to prepare against disruptions
Supply chain disruptions are no longer the exception: they’re the norm. Whether or not they occur, it’s wise to take steps now to be prepared in case disruptions do happen in the future.
For example, identify alternative suppliers and create backup plans you can deploy if disruptions occur. You can also work to strengthen relationships with suppliers so that in case something is amiss, you know you’ll have clear communication, and that your partners will go beyond to support you.
Other techniques you can use to prepare for disruptions include adopting real-time digital tools to help ensure your data and forecasts are 100% accurate. Tools like inventory analytics and supplier tracking allow you to know what’s happening with your business, meaning that, if necessary, you can quickly make new decisions using accurate information.
2. Source locally and diversely (when possible)
Local sourcing has a few critical advantages. For example, it makes it easier to determine whether your materials are ethically sourced since you’re able to access more information about your source. It’s also often easier to get local materials to you more quickly.
Pay attention to where your partners are getting their materials from, to help better maintain your supply chain. Keep in mind that if your providers are sourcing their materials from overseas or even across the country, you may encounter delays (despite the steps you have taken to localize your sourcing).
Similarly, diversity is a wise approach when it comes to raw materials sourcing. If there are shortages or disruptions with one supplier, you’ll be better prepared and less vulnerable to the impacts.
3. Stay up-to-date on sourcing trends
Today, sourcing and supply chain trends move at the speed of light. In just weeks, days, or even hours, things can dramatically shift. This can impact the way you’re able to get materials, the prices of your materials, and influence any delays or shortages. Instead of being blindsided, you can take steps to stay ahead of the curve, by staying up-to-date on sourcing trends and news.
To do this efficiently, you can set up news alerts (Google Alerts is helpful for this) involving sourcing and supply chain changes. Next, you can also do a quick online search one or two days a week, to see what the latest stories are. Third, you can also touch base with your suppliers and distributors regularly, and check in to see how they’re doing, and if they’re seeing any first-hand impacts, you should be aware of.
4. Take advantage of digital tools and processes
The future is increasingly digital, and the sourcing industry is no different. Today, there’s an abundance of tools and systems you can use to digitize your operations, to get things done more efficiently, and more accurately, and get better data around your work. For example, warehouse automation involves using digital tools to automate your regular warehouse management, and might include moving inventory within your warehouse, out of your warehouse, and ensuring that inventory reaches customers efficiently.
Improve Your Supply Chain Sourcing with StockIQ
Sourcing raw materials efficiently and profitably requires businesses to take a data-backed approach to their operations and suppliers. And for that, you can turn to StockIQ. StockIQ is advanced, user-friendly supply chain planning software that helps you control inventory, simplify ordering, and improve forecasting. With intelligent features for demand forecasting, supplier performance, and inventory analysis, you can easily improve the way you approach raw materials sourcing.
Find out how StockIQ can improve your raw materials sourcing by contacting us today or requesting a StockIQ demo.
