MHI Solutions Improving Supply Chain Performance
More than half of industry leaders plan to increase investments in supply chain technologies to facilitate end‑to‑end orchestration of equipment, workforce and goods, according to the 12th edition of the MHI Annual Industry Report.
BY CAROL MILLER, CHIEF MARKETING OFFICER, MHI
The increasing complexity and volatility of today’s highly competitive business environment is prompting companies to pursue a more integrated and agile approach to global supply chain management. The leading strategy to achieve this objective? Deploying digital technologies to seamlessly connect every stage of the supply chain and orchestrate streamlined, end‑to‑end decision‑making for greater cost savings, higher productivity and improved customer satisfaction.
This was the leading trend revealed by the survey informing the 2025 MHI Annual Industry Report, “The Digital Supply Chain Ecosystem: Orchestrating End‑to‑End Solutions.” Produced annually for the past 12 years by MHI and Deloitte, the report offers insights into developments and technologies driving supply chain transformation, as well as the objectives of supply chain leaders. The report was released on March 19 at ProMat. It joins all of MHI’s Annual Industry Reports as a free download available via mhi.org/publications/report.
“These are exciting times for the supply chain industry as we see the orchestration of technology, talent and data coming to the forefront,” stated John Paxton, CEO of MHI. “The future of supply chains will center around putting human talent and technology together to generate higher levels of efficiency, transparency and sustainability.”
The 2025 report is based on survey responses received at the end of 2024 from more than 700 supply chain leaders across a diverse range of industries, noted Paxton. “Participants represent companies from small to large, with 53% reporting annual sales in excess of $50 million and 21% of $1 billion or more,” he said, adding that 83% hold high‑level executive titles of CEO, vice president, general manager, department head or engineering manager.
Leaders Identify Internal Challenges and Ten Trends Impacting Supply Chains
The top internal challenge facing supply chain operations is again workforce, Paxton noted, with hiring and retaining workers and a general talent shortage vexing 52% and 45% of leaders respectively. That was followed by forecasting (44%) and shifting customer demands (43%).
“When asked which current trends have the greatest impact on their supply chains, leaders put inflation concerns at the top of the list for the second year in a row, albeit by a lower margin,” reported Paxton. “In the 2025 report, 38% of leaders cited inflation‑driven costs as the top trend impacting operations and investments. In the 2024 report, the trend was noted by 53% of respondents.”
While Paxton found the continued focus on inflation unsurprising given the uncertainty surrounding shifting tariff policies, he also observed that the U.S. economy has continued to thrive. “The bottom line is that while inflation is a headwind against investment in new supply chain technologies, those headwinds will likely be more than offset by resulting efficiency gains and reduced reliance on scarce talent,” he said.
After inflation, the next four most impactful external forces facing supply chains were:
2. Economic Uncertainty. Driven by rising geopolitical tensions and trade restrictions, both domestically and globally, unease about policy revisions has businesses on edge.
3. Workforce and Talent Shortages. Due to the ongoing decline in supply chain labor force participation, companies are increasingly looking to technology and automation to compensate—along with developing and deploying reskilling strategies.
4. Supply Chain Agility and Resiliency. Amid growing complexities and increased vulnerabilities resulting from the continued expansion of product portfolios and supplier networks across manufacturers, organizations must focus on identifying and mitigating potential points of failure. The real‑time visibility and actionable data generated by technology can help.
5. Inventory Challenges. Finding ways to maintain larger volumes of safety stock, manage higher associated costs and improve demand forecasting accuracy in uncertain economic times is contributing to supply chain complexities.
Rounding out the list of top 10 trends impacting supply chains were five technology‑specific developments identified by survey respondents, continued Paxton. They include:
6. Cybersecurity and Data Security. Supply chains are already a leading source of cybersecurity risk. Their greater reliance on technology and digitization will make data security ever more vital. Threat agents will also leverage AI to launch progressively more sophisticated phishing, deepfake and ransomware attacks.
7. Demand for Real‑Time Data. Lack of access to accurate, real‑time data is an ongoing barrier to achieving end‑to‑end supply chain orchestration. Without real‑time data visibility, supply chain leaders will struggle to make data‑driven decisions that optimize inventory, respond to shifting demands and risks and improve efficiency.
8. Digitization and the Pace of Technology Adoption. The frantic pace of technological change in supply chains will likely accelerate as more operations embrace AI for better visibility, transparency and efficiency. Keeping up with the latest developments will become even more challenging and important.
9. E‑commerce Growth. Online shopping exploded in popularity during the pandemic and continues to expand. Supply chains are seeking ways to harness the power of technology—especially AI—to more accurately anticipate customer needs, manage inventories and accelerate delivery.
10. Sustainability. Technology advances are helping operations worldwide become more sustainable, but many firms struggle with data issues. That makes accurate reporting of Scope 3 emissions difficult. Although AI can help, ironically it requires tremendous amounts of energy.
“As supply chain organizations wrestle with these trends—and work to embrace and integrate new technologies—they continue to broadly focus on strengthening their operations to withstand future challenges and capitalize on emerging opportunities,” added Paxton. “Ultimately, both strategies are crucial for maintaining a competitive advantage in a dynamic global marketplace.”
Investment and Technology Deployment Plans Revealed
In terms of investment plans, 55% of supply chain leaders have increased their supply chain technology and innovation budgets. Of those, 60% allocated more than $1 million to supply chain investments, while 19% intend to spend more than $10 million.
The report also revealed that supply chain spending declined sharply from an annual average of $26 million in 2023 to $13 million in 2024. That drop is actually a return to pre‑pandemic levels, observed Wanda Johnson, supply chain technology fellow at Deloitte Consulting. Johnson again returned to lead the research behind the report.
“When you look at those numbers in the context of COVID‑19, they track with where supply chain spending was in 2019—$14 million,” she explained. “The pandemic exploited virtually every supply chain vulnerability, paralyzing many organizations. In response, companies spent almost twice as much to address and correct those issues moving forward.”
Johnson considers this downshift in spending to be a normalization. “Companies implemented a lot of solutions that they’re still adapting their operations to,” she said. “Now, they’re focusing on leveraging and expanding the capabilities of those technologies to further refine and optimize their operations.”
Likewise, it’s common for organizations to take a more conservative approach to spending in times of economic uncertainty, Johnson added.
“In the survey, 38% of supply chain leaders told us they’re focused on workforce reskilling and retention. That’s a 13% increase over the previous year. Another 45% of respondents plan to purchase automated solutions, and 42% plan to buy forklift trucks and other handling equipment to modernize their hardware and improve daily productivity,” she continued. “That indicates they’re working to expand upon the capabilities of their technology investments from the last few years.”
Johnson reported that, when assessing supply chain leaders’ adoption predictions for 11 digital technologies over the next five years, there was considerable growth in the three leading categories over last year’s report. All three, she noted, are tools and technologies that enable comprehensive, end‑to‑end supply chain orchestration.
- Inventory and Network Optimization—92% (a 24% increase over the 2024 report)
- Cloud Computing and Storage—91% (a 28% increase over the 2024 report)
- Sensors and Automatic Identification—88% (an 18% increase over the 2024 report)
- Predictive Analytics—87%
- Robotics and Automation—83%
- Artificial Intelligence (AI)—82%
- Internet of Things (IoT)—77%
- Wearable and Mobile Technology—72%
- Autonomous Vehicles and Drones—64%
- 3D Printing—57%
- Blockchain—54%
AI Has Highest Adoption Trajectory
Of the 11 technologies tracked by the report, the forecasted adoption rates for AI vastly exceed the others. Only 28% of supply chain leaders report using AI today, but nearly three times as many—82%—expect to use AI in five years. Paxton noted that AI technology’s rapid advancement has challenged many companies as they attempt to keep up.
“Supply chain leaders told us they don’t yet understand how to apply the AI to their operations, which makes it difficult to build a business case for the investment,” he explained. “To overcome these barriers to deployment, we recommend applying small‑scale AI pilots to practical, real‑world supply chain challenges. That allows companies to gain both experience and knowledge rather than be overwhelmed by AI hype.”
Click here to read the full feature.