RELEX’s second annual State of the Supply Chain report reveals widening gap between AI ambitions and execution as inflation drives retailers to private label expansion
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% of surveyed companies are prioritizing AI and automation investments, nearly half (44%) can’t find the specialized talent needed to implement these technologies. Companies also struggle with budget constraints that limit their ability to scale AI initiatives (43%) as well as poor data quality (39%).
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:
Read More: SalesTechStar Interview with Mark Connon, CEO of Bombora
- Inflation is reshaping retail strategies – 31% of retailers are optimizing operations and 31% are adjusting pricing to stay competitive
- Private label expansion has become mainstream – 59% of retailers are growing own-brand portfolios as consumers seek value
- Food and beverage manufacturers face margin pressure – 70% have increased discounting aggressively, while 40% have introduced value-tier products
These findings expand on the early released findings of the report showing 60% of companies fundamentally restructuring their supply chains, with 52% citing demand volatility as their primary challenge and 47% concerned about tariff uncertainty and trade disruptions.
“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 .”
The report also identifies Generative AI (59%), Predictive AI (43%), and Cloud-native solutions (34%) as the top technology investment priorities, with most companies allocating between 5-20% of their technology budgets to AI-driven solutions despite market volatility.
“As businesses navigate economic volatility and evolving consumer behaviors, the report underscores the importance of flexible supply chain strategies that combine technology investment with operational agility,” said Durbha. “Organizations 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.”