Companies are aggressively investing in AI across supply chains to counter inflation and trade volatility, but a growing execution gap threatens to derail these efforts, according to the second annual State of Supply Chain 2025: Balancing Inflation, Investment & Innovation report from RELEX Solutions.
While 60 per cent of surveyed companies are prioritising AI and automation investments, nearly half (44 per cent) can’t find the specialised talent needed to implement these technologies. Companies also struggle with budget constraints that limit their ability to scale AI initiatives (43 per cent) as well as poor data quality (39 per cent).
The comprehensive study surveyed 500+ retail, CPG manufacturing, and wholesale professionals across seven countries, revealing how economic headwinds are simultaneously driving technology investment and forcing strategic pivots:
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Inflation is reshaping retail strategies – 31 per cent of retailers are optimising operations and 31 per cent are adjusting pricing to stay competitive
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Private label expansion has become mainstream – 59 per cent of retailers are growing own-brand portfolios as consumers seek value
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Food and beverage manufacturers face margin pressure – 70 per cent have increased discounting aggressively, while 40 per cent have introduced value-tier products
These findings expand on the early released findings of the report showing 60 per cent of companies fundamentally restructuring their supply chains, with 52 per cent citing demand volatility as their primary challenge and 47 per cent concerned about tariff uncertainty and trade disruptions.
“Today’s supply chain leaders face a dual challenge – they must innovate through technology while adapting to economic pressures,” said Dr. Madhav Durbha, Group Vice President of Manufacturing Industry Strategy at RELEX Solutions. “The gap between AI’s potential and its practical implementation represents both the greatest risk and opportunity in supply chain transformation today.”
The report also identifies Generative AI (59 per cent), Predictive AI (43 per cent), and Cloud-native solutions (34 per cent) as the top technology investment priorities, with most companies allocating between 5-20 per cent of their technology budgets to AI-driven solutions despite market volatility.
“As businesses navigate economic volatility and evolving consumer behaviours, the report underscores the importance of flexible supply chain strategies that combine technology investment with operational agility,” said Durbha. “Organisations that can bridge the gap between AI’s potential and practical implementation will gain a competitive edge, while those that lag behind may struggle to keep pace.”
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