Grocery supply chains are no longer operating in a recovery phase. According to a new supply chain outlook report from Tosca, volatility tied to labor availability, trade policy, and cost pressure has become a persistent condition rather than an occasional disruption. The report suggests that technology adoption, particularly in forecasting, digital traceability, and transit optimization, is increasingly being used to stabilize operations under less predictable conditions.
Rather than pointing to a single dominant force, the report describes a set of reinforcing pressures that are reshaping the flow of food from farm to store. Labor shortages, tariff exposure, and waste reduction emerge as recurring constraints, with technology positioned as a practical response rather than a cure-all.
Labor shortages are shaping how supply chains are designed
One of the clearest signals in the report is the persistence of workforce gaps. Tosca’s analysis indicates that 76% of supply chain leaders report shortages across warehousing, transportation, and manufacturing roles. For grocery supply chains, where throughput and freshness are closely linked, these shortages pose an immediate operational risk.
The report does not frame automation as a replacement for labor. Instead, it emphasizes efficiency gains that allow limited labor resources to be deployed more effectively. Improvements in planning accuracy, visibility, and execution reduce rework, manual intervention, and firefighting in environments where staffing flexibility is already limited.
For food and grocery operators, this framing is important. Labor remains central to operations, but the ability to reduce unnecessary handling, mispicks, and last-minute adjustments is becoming a competitive differentiator.
AI is moving from experimentation to operational use
Artificial intelligence is presented less as an emerging technology and more as a tool that has crossed into routine use. Tosca reports that AI is now used by roughly 78% of organizations in at least one business function. In supply chain applications, companies using AI-driven tools report forecasting error reductions ranging from 20% to 50%.
For grocery retailers and suppliers, forecast accuracy has direct implications for inventory levels, waste, and service reliability. Overestimating demand increases spoilage risk, while underestimating demand leads to empty shelves and lost sales. The report suggests that AI-supported planning enables faster adjustments and more confident decision-making, particularly in volatile demand environments.
At the same time, Tosca is careful not to oversell outcomes. Improvements depend heavily on data quality, integration, and organizational readiness. AI appears most effective when used to support decisions, not replace them.
Traceability is increasingly about efficiency, not just compliance
Traceability is another area where the report moves beyond regulatory narratives. Tosca projects the global traceability technology market to grow at more than 17% annually, driven by falling sensor costs, improved connectivity, and growing expectations around transparency.
According to the report, about 70% of food manufacturers have already adopted some form of digital traceability. Those that have done so report meaningful operational benefits, including cost reductions of around 30% and food loss reductions of 5% to 7% when sensor-enabled tracking is used.
The operational value lies in earlier detection of problems. Continuous visibility into location, temperature, and handling conditions allows companies to intervene before quality issues escalate. In grocery supply chains, where recalls and spoilage carry immediate financial and reputational consequences, traceability is increasingly treated as an efficiency tool rather than a stand-alone sustainability initiative.
Tariffs introduce volatility beyond direct cost increases
Trade policy and tariffs represent one of the most disruptive external pressures identified in the report. Tosca finds that 82% of supply chain leaders say new tariffs are affecting their operations, with an estimated 20% to 40% of supply chain activity impacted.
The grocery sector faces layered exposure. Roughly 17% of the U.S. food supply is imported, and tariffs on packaging materials introduce additional uncertainty. The report highlights tariffs affecting plastic packaging, as well as steel and aluminum food cans, complicating cost forecasting and supplier planning.
Rather than focusing solely on higher prices, Tosca emphasizes volatility. Tariffs make landed costs harder to predict, disrupt sourcing strategies, and encourage inventory buffering. Companies are responding by diversifying supplier regions and shifting some production closer to end markets, though the report notes that these strategies carry their own trade-offs.
Product protection and waste reduction intersect under pressure
Supply disruptions also expose weaknesses in product handling and transit. Using eggs as a case example, the report notes that transport-related breakage rates can reach several percentage points, amplifying shortages during periods of constrained supply.
While disease prevention and production capacity remain critical, Tosca highlights product protection during handling and transport as an often-overlooked lever. Stronger transit packaging and reusable container systems are cited as ways to preserve usable product volume and reduce avoidable losses. Even modest reductions in damage rates can translate into meaningful gains at scale.
Sustainability and regulation increasingly align with cost control
Sustainability runs through the report, but largely through an operational lens. Tosca highlights the growing impact of Extended Producer Responsibility legislation, now enacted in multiple U.S. states, which shifts waste management costs toward producers.
Single-use packaging is increasingly associated with higher long-term costs under these frameworks. Reusable packaging systems are positioned as a way to reduce material waste, improve traceability, and limit regulatory exposure. Consumer expectations reinforce this direction, with a growing share of shoppers indicating a willingness to pay more for sustainable products.
At the same time, the report acknowledges that investment appetite has cooled. Planned spending on supply chain digitization has declined compared to prior years, suggesting companies are becoming more selective about where technology delivers the most value.
Resilience, not optimization, defines the path forward
A consistent theme throughout the report is pragmatism. Tosca does not argue that technology eliminates disruption, but that it helps organizations respond more effectively when disruption occurs. The supply chains most likely to perform well over the next decade, the report suggests, will be those designed for adaptability rather than peak efficiency under ideal conditions.
For grocery supply chains, that means targeted investments in forecasting, visibility, and product protection that address real operational constraints. As volatility becomes routine, resilience is increasingly defined by the ability to absorb shocks and keep products moving, not by the absence of disruption itself.
To find out more, visit www.toscaltd.comand our reusable packaging hub.
Rick LeBlanc, EMBA, is the founder and editor of Reusable Packaging News (subscribe to the free newsletter) and editor of Western Pallet Magazine. A supply chain journalist with more than 30 years of experience, he specializes in pallets, reusable packaging, material handling and related operations. Rick is co-author of Pallets: A North American Perspective and Pallets & Progress: A Collected History of Pallets and Palletized Handling 1922–1945. He is also an advisory board member of the Virginia Tech Center for Packaging and Unit Load Design. Read Rick’s full bio.
