Inspectorio Explores Supply Chain Disruption in 2025

Global supply chains are under pressure as a result of climate instability, geopolitical risk and growing regulatory demands.

Procurement now sits at the centre of this disruption, with sourcing strategies, compliance and logistics all being rethought.

Inspectorio’s State of Supply Chain Report 2025 outlines how procurement must adapt to handle these shifts, with a particular focus on digital procurement, ESG integration and diversified sourcing.

The report gathers insight from 269 supply chain professionals across multiple sectors, including apparel, footwear, food and outdoor goods. It underlines how global sourcing is evolving as procurement teams respond to changing compliance requirements and supply volatility.

Chirag Patel, CEO, Inspectorio, explains: “To manage accelerating regulations on forced labour, heightened sustainability mandates and geopolitical fluctuations, brands and suppliers must move quickly to improve their supply chain agility and resilience.

“This year’s report reveals that a multifaceted approach – one that unifies compliance and risk management with strategic sourcing, digital innovations and measurable ESG commitments – is critical to success both now and in the future.”

Sourcing disruption changes procurement’s priorities

As tariffs and geopolitical shifts affect cross-border production, procurement is reassessing traditional sourcing hubs.

Inspectorio’s data shows that 95% of supply chain executives identify tariffs as a primary disruptor. As a result, production is shifting from China to other locations such as Vietnam, Cambodia and parts of Eastern Europe.

However, relocation brings its own procurement and logistics challenges. More than a third (36%) of companies have either already moved or plan to move production, which has led to higher transport costs and more complex compliance needs in unfamiliar regions. Two in five are diversifying their supplier base to reduce reliance on high-risk countries and to manage exposure to trade restrictions.

This diversification brings additional requirements for sourcing teams, which now must factor in transparency gaps, infrastructure readiness and variable ESG standards across different regions.

The report notes the emergence of an ‘hourglass effect’ where high-end and low-cost suppliers remain competitive while mid-tier suppliers struggle to meet compliance and cost expectations.

For procurement teams, the task is to source responsibly, control costs and manage supplier risk all at once, especially in industries where consumers have limited tolerance for price increases.

ESG compliance becomes central to supply chain strategy

ESG considerations are now shaping procurement at every stage. From sourcing raw materials to supplier audits, compliance with evolving rules around sustainability, labour and emissions is essential.

Inspectorio highlights how extended producer responsibility (EPR), Scope 3 carbon reporting and forced labour laws are directly affecting how procurement teams operate.

Three-quarters (75%) of businesses surveyed have increased compliance budgets to deal with these ESG demands. The consequences of failing to meet these standards range from reputational damage to shipment detentions.

Procurement teams are expected to lead on ESG strategy by working closely with suppliers and ensuring that sustainability claims are backed by traceable, verifiable data.

Cost remains a major concern. With demand for low-cost goods still strong, procurement professionals must find ESG-compliant sourcing options that also meet commercial targets. This requires strong supplier relationships and the use of reliable data tools to assess environmental and social impact.

Inspectorio argues that procurement can no longer operate independently from ESG; collaboration with sourcing and compliance teams is essential. Tools that measure carbon footprints, labour conditions and environmental risks are becoming standard.

Procurement now plays a key role in sustainability planning, particularly when selecting suppliers and negotiating terms.

Digital procurement lags behind but holds future potential

Digital tools have the potential to transform procurement, yet Inspectorio’s report finds that the industry is still lagging in adoption.

Fewer than 10% of organisations have fully automated their procurement and supply chain operations and more than 45% report that they have digitised less than a quarter of their processes.

Barriers to digital procurement include poor cross-functional collaboration, siloed legacy systems and resistance from middle management.

Many firms also struggle to prove the ROI of procurement technology. And yet, 70% of respondents agree that digital tools, including AI, will shape future supply chain operations.

Despite this, only 27% of companies have introduced AI into their procurement or supply chain functions, with data quality remaining a persistent problem.

Supplier data is often incomplete or inconsistent, making automation difficult. Inspectorio notes that companies must enforce clear data-sharing standards across all supplier tiers to unlock the benefits of digital procurement.

Without this, visibility, efficiency and agility remain limited. The report warns that 14% of companies still lack any digital roadmap at all. These organisations risk falling behind as their competitors adopt real-time tools for supplier performance, compliance tracking and risk monitoring.

Procurement’s influence is growing across supply chains. Inspectorio shows that procurement is now involved in sourcing strategy, logistics planning, ESG implementation and digital transformation.

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