Summary

Supply chain leaders find themselves dealing with multiple challenges and opportunities as they enter 2026. This insight notes encapsulates some of the most pressing areas to help supply chain leaders establish priorities going forward.

Tariff headwinds to continue, renewed focus on nearshoring

2025 started on a somber note with the US imposing tariffs on a broad range of imports. These have been subject to pause, revision, negotiation, and are being deployed as a tool of statecraft, increasing the uncertainty associated with cross border trade.

• A Maersk¹ survey among its European customers found 78% of respondents anticipating continued volatility from tariffs, trade regulation, and geopolitics for the next one to two years.
  
• A McKinsey² survey of 100 supply chain leaders of May 2025 found that 82% had their supply chain affected by new tariffs, with 39% reporting increased supplier/material costs and 30% reporting lower customer demand consequently. This has led to inventory stocking, dual sourcing of material, and working on supplier nearshoring or onshoring plans. It has also pushed nearshoring to end markets as one of the pressing items, with 43% of respondents planning to shift their supply chains to the US over the next three years. Some of those shifts are coming from China (38% respondents) and Western Europe (21% respondents).
  
• And this push towards reshoring has acquired heightened importance in Europe, which is facing and responding to renewed calls for reindustrialization. A Capgemini³ study found that 65% of executives based in Europe either had a reindustrialization strategy already in place or in progress. Volvo⁴ is reportedly shifting its EV production from China to Belgium in response to EU tariffs on Chinese EV.
  
• Once designed with cost-optimization at the core, supply chains have to contend with geopolitical fragmentation and this is pushing supply chain resilience into focus. A sourcing survey by ARC Group⁵ found significant shifts in 2025. While China’s dominant share and a rising shift to North America takes the limelight, Southeast Asia’s share rose from 30% to 54%, led by Vietnam, Thailand and Indonesia. In choice of location decision and supplier selection, tariff has been cited by 67% companies as a structural risk and an enduring condition that requires reworking supply chains for good.

Implications for supply chain leaders: Globally distributed supply chains, with a focus on cost optimization, are under stress. Geopolitics together with country concentration (re China) and operational challenges (port congestion) is driving a rethink on design of supply chain networks, increasingly viewed as structural risk. With new trade deals in place and FTAs being signed between major economies, sourcing arrangements needs to be relooked. From tariff impact across countries, government incentives, and supplier networks and capabilities to operational efficiency from nearness to end-markets, each of these add resilience to the supply chain and its ability to withstand shocks from a changing policy landscape. For most supply chain leaders, proximity and hence regional sourcing should be a strategic consideration towards resilient supply chains. Leveraging market insights and competitive intelligence can help leaders evaluate supplier capabilities across geographies and make informed nearshoring decisions.

Cost Control in Focus

In addition to uncertainty, tariffs have saddled companies with higher costs, and not all businesses have been able to fully pass the same to customers. This has brought cost control into focus.

• Fall 2025 Fortune/Deloitte⁶ CEO Survey of 69 CEOs found that 80% planned to implement cost-cutting measures to offset the increased costs.
  
• And this is having an impact on the ground. Dow has delayed a multibillion dollar plant in Canada by one to two years, citing macroeconomic volatility and uncertainties from trade policies. Boston Scientific expected a USD 100m cost increment from tariff headwinds in 2025 and implemented reductions in discretionary spending, including travel. P&G to bear USD 1bn in tariff-related costs and plans to do everything it possibly can to mitigate this impact within its cost structure.
  
• A Gartner⁷ survey of Chief Supply Chain Officers found the focus on cost reduction to be widespread, with less than 20% reporting no plans for cost cutting. Still further, about one-fourth of the companies are targeting savings of 5% or more.
  

Implications for supply chain leaders: Higher tariffs have created a cost challenge that is not easy to mitigate in the short run. On one side is the higher costs of inputs and imported products, and, on the other hand, is the inability to fully pass on impact to the end consumer. There is also negative consumer sentiment and its impact on demand, with companies reporting margin compression from a mix of these factors. In the US, manufacturing activity continued to drop in December and input costs rose as new orders continued to contract. This is pushing companies into supplier renegotiation, volume commitments, and bulk shipping. In addition to cost pass through, companies are introducing broad-based cost controls company-wide on discretionary spend that tries to save what is possible.

Cyber Attacks Are Holding Supply Chains to Ransom

Jaguar Land Rover reported a crippling cyber attack in September 2025 that shut down virtually all of its IT systems, halting the production lines at its Solihull, Wolverhampton and Halewood factories. It had a cascading impact on many suppliers that had to shut operations temporarily. JLR reported a 24% decline in revenues for quarter ended September 2025, a loss of Euro 550 million, and Euro 222 million in cyber related costs.

And this was not an isolated incident and attacks don’t always target the shop floor. A ransomware attack on Marks & Spencer in April 2025 encrypted its hypervisor software and halted its online orders and Click & Collect services. And there was United Natural Foods, grocery wholesaler and primary distributor for Whole Foods, which suffered disruption to its order processing and invoicing resulting in stockout and millions in lost sales, over June 2025.

• A SecurityScorecard⁸ survey of CISO and cybersecurity leaders globally found 88% of them concerned about supply chain cybersecurity risks. It further found that supply chain attacks were increasing but cyber visibility across the supplier landscape was lacking. Still further, responses were passive.

Implications for supply chain leaders: Interconnected, digitized networks allow attackers to exploit weak links in suppliers to breach larger, well-defended organizations – making cyber security a priority for supply chain leaders. CISOs have their priorities clear and hands full – regular cyber security assessments till the nth supplier, zero trust architectures, continuous monitoring, and employee training given the rise in phishing emails, credential phishing, and malware attacks. With public facing web applications positioned as leading sources for attack initiation, identity control, security testing, network segmentation, WAF, and patch management will continue to engage IT teams. This necessitates an insights deep-dive into sector cyber events, cyber priorities among peers, and zeroing in on MSSP that can help adopt a proactive stance to minimize the attack surface.

Sustainability Is Alive and Businesses Are Forging Ahead

With the US withdrawing from the Paris Agreement on climate change, there was widespread anticipation of a major slowdown in emission-reducing efforts. However, a report from the MIT Sustainable Supply Chain Lab⁹ paints a rather different picture of corporate action in face of policy reversals, though regional differences remain.

• Most organizations (73% of respondents) are forging ahead with their sustainability agenda and report no change. About 15% reported reducing commitments. That said, Scope 3 emissions remain the most challenging to track and curb, with lack of supplier information as the bottleneck.
  
• Regionally, European firms agreed to facing more pressure than their North American counterparts (60% vs 46%) on supply chain sustainability. This largely owes to the strong regulatory environment in Europe that compels companies to report progress.

Implications for supply chain leaders: Sustainability remains center stage for most leaders and stands elevated to the board room for many companies. This has seen sustainability evolve from a monitoring and reporting process to one that impact profitability, cost savings and operational efficiency. Technology solutions, including the use of AI for procurement as well as green IT, is seen as central to making an impact. With a focus on Scope 3, leaders are engaging suppliers in monitoring and reporting on ESG parameters. Leaders also need to take cognizance of prevailing guidelines and ensure that their suppliers are from countries that comply with emission mandates. And then there is circularity, which is challenging procurement teams to pivot from a linear model and show their strategic value in delivering ESG goals. This needs topical ESG research so that supply chain leaders know what best-in-class companies are doing, including targets set for meeting climate obligations.

There Is a Continued Focus on Supply Chain Technology but the Drivers Are Different

While cost efficiency and productivity improvements at 83% response rate continues to be the top reason for supply chain digitalization in the ARC Group survey, supply chain resilience (risk management and disruption mitigation) emerged at the next driver for tech investments at 70% response, followed by customer service at third (55% response).

This was echoed by an Oliver Wyman¹⁰ survey that cited digital solution as the top most priority for managing supply chain resilience (71% respondents), followed by risk framework at 70%. Still further, digital solutions for better demand planning (role of AI) and supply chain visibility and analytics stood out as top focus areas to enable resilience. Lower down the order was automation of logistic processes (23% respondents) such as for transportation and warehousing.

Implications for supply chain leaders: Technology has been a constant for supply chain leaders as shop floor and warehouse operations come into focus for efficiency, leading to automation, robotics and WMS often cited as top priorities. While the noise accompanying most technology may create a FOMO, a successful digital transformation requires articulating a clear problem to solve – leaders need to focus on an issue, process or area they want to address for digital transformation to start right. Further, when operations are interconnected with suppliers, data flow and its standardization become key – and this data flow across the supply chain is expected to engage leaders in the quest for resilience.

Optimistic Towards Role of AI in Restructuring Supply Chain and Improving Visibility

Businesses rely on continuity – policy, political environment, and tariffs – to plan, invest in, and run their operations. With American trade policy changing frequently, firms are turning to AI to churn large data sets and variables in real time, both for scenario planning and supply chain monitoring.

• An Economist Impact¹¹ report found that three-quarters of its respondents had partially deployed AI for predictive analytics, real-time decision-making and supplier monitoring. A majority of respondents cited this directly to the policy uncertainty that has come to define the Trump administration, with respondents from Europe (78%) and APAC (81%) most likely to drive AI deployments.
  
• However, this is not necessarily translating into interest in agentic AI. In fact, despite the enthusiasm for AI, its deployment and expectation remains limited within supply chain operations. An ORTEC¹² survey found that 54% used AI/ML only in select operations, which impacted a narrow 10-30% of workflows. And a wider integration across processes was reported only by 15.5% respondents. On agentic AI, 42% of respondents were not exploring it, citing multiple challenges including integration considerations, model explainability, lack of in-house expertise, and unclear ROI.

Implications for supply chain leaders: AI remains inescapable as a digital tool for supply chain leaders. While it has been positioned as an answer for many problems, supply chain leaders are adopting it for proven cases – ability to ingest vast quantums of data and carry out predictive analytics. As focus shifts to regionalization amid tariff uncertainty, leaders will need to turn to data to deliver scenario analysis to arrive at a considered decision.

How Can Supply Chain Leaders Use Insights

Supply chain networks are stressed in wake of multi-dimensional challenges and demands, from the macro (geopolitics) to the micro (increasing fulfillment efficiency). This requires supply chain leaders to use insights to map the trends and disruptions, prioritize relevant areas for actions, and follow up with deep dive to understand the market context, technology landscape, and competitor actions. Partnering with a market insights firm helps supply chain leaders access comprehensive market insights on emerging trends, supplier landscapes, and technology adoption patterns. Competitor insights help supply chain leaders know what is working in their domain (and what is not) to minimise so they are not caught by surprise while a technology insight can help them demystify and adopt emerging tech solutions (such as robotic cube storage) to make most of their warehousing investments. By addressing both the macro and micro, insights help supply chain leaders take a nuanced view of their challenges and implement solutions with the most impact.

Eliminate guess work. Embed insight. Indigrowth

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   ^{https://www.maersk.com/news/articles/2025/11/11/maersk-survey-4-in-5-supply-chain-leaders-expect-disruptions-to-continue}
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