IT in Manufacturing


Digital transformation in supply chain and logistics

November 2025 IT in Manufacturing

As supply chains evolve under the pressure of cost volatility, geopolitical disruptions and shifting consumer expectations, digital transformation is becoming critical. The 2025 Supply Chain Management & Logistics Survey by ABI Research captures the perspectives of 490 decision makers across manufacturing, retail and logistics service sectors in the United States of America, Germany, Malaysia and Mexico. The findings paint a clear picture of an industry accelerating toward data-driven, AI-enabled operations while contending with human, structural and interoperability challenges.

Rising costs and workforce resistance dominate external pressures

Cost escalation remains the defining challenge across the global supply chain ecosystem. Rising prices for components and raw materials, combined with geopolitical instability and tariff uncertainties, are forcing organisations to re-evaluate procurement and inventory strategies. Companies are seeking technology-based efficiencies to offset these pressures, but implementation remains uneven.

The most significant internal barrier to deploying new technologies is workforce resistance. Drivers and shop floor employees, in particular, express concern that automation could lead to job displacement. This cultural friction, compounded by the high cost of training and upskilling, slows digital adoption and undermines the return on investment for advanced systems. The survey suggests that companies must invest as much in change management and communication as they do in technology itself.

Barriers to proactive decision making

Even among organisations with access to real-time operational data, many struggle to act on insights effectively. A lack of clearly defined standard operating procedures emerged as the top inhibitor to proactive decision making, cited by 71% of respondents. Without consistent frameworks for translating data into decisions, visibility improvements fail to deliver tangible performance gains. The data-action gap underscores the need for structured digital governance that links data streams, analytics tools and workflow processes in a cohesive operational model.

Investment priorities reflect pragmatism and ROI pressure

While enthusiasm for innovation remains strong, technology investment decisions are still grounded in financial pragmatism. The most compelling justification for new systems is tangible working capital optimisation, particularly through inventory reduction. Manufacturers, in particular, prioritise initiatives that yield measurable cost savings or release tied-up capital. Workflow automation, while recognised as beneficial, is often treated as a secondary outcome rather than a primary investment driver. Nonetheless, one in three respondents view automation as a key motivator, indicating growing awareness of its long-term value in efficiency and resilience.

Vendor selection driven by interoperability and flexibility

When evaluating technology partners, interoperability and customisation dominate selection criteria. Over 70% of respondents consider open, standardised APIs and seamless data exchange critical factors in vendor choice. This preference reflects a growing shift toward modular, cloud-based architectures capable of integrating with legacy ERP and logistics management systems. The emphasis on interoperability signals a maturing digital ecosystem where scalability and cross-platform connectivity are paramount.

AI and generative AI gain strategic ground

Artificial intelligence continues to gain traction as the most transformative technology for supply chain management. The survey highlights widespread optimism about AI’s potential to improve decision support, customer service, inventory optimisation and demand forecasting. Generative AI is increasingly viewed as a differentiator in vendor offerings, and more than 60% of respondents cite AI integration as an important or very important factor in technology procurement.

Among emerging applications, AI Agents − autonomous systems designed to execute routine tasks − are attracting the most confidence in process automation and customer support functions. However, ABI Research notes that wider adoption will depend on education campaigns that clarify the value of Agentic AI in domains, such as supplier coordination, predictive maintenance and logistics planning.

Control towers are the new nerve centre of supply chains

Investment in control tower technologies − centralised platforms that consolidate visibility and analytics across supply chain nodes − is expanding rapidly. Over 70% of manufacturers plan to spend at least $50 000 on control tower systems in 2025. Manufacturers lead all sectors in both intent and scale of investment, followed closely by third-party logistics providers. Process manufacturing firms, in particular, see control towers as essential for real-time monitoring, anomaly detection and cross-site synchronisation.

By consolidating disparate data sources into a single operational view, control towers accelerate time-to-insight and enable more agile responses to disruptions. Their growing adoption reflects a wider industry push toward predictive rather than reactive supply chain management.

Building the digital thread

The next stage of transformation lies in creating a continuous ‘digital thread’ linking suppliers, manufacturers, logistics partners and customers through a unified data backbone. Larger enterprises and upper-middle-market companies show the strongest appetite for this kind of end-to-end connectivity. Within manufacturing, process industries again lead in willingness to invest, suggesting that organisations with complex, multi-site operations see the highest returns from digital thread implementation.

From fragmentation to integration

The 2025 ABI Research Supply Chain Survey confirms that digital transformation is advancing, but unevenly. Organisations are prioritising investments with immediate financial payoffs while gradually building the digital infrastructure required for long-term competitiveness. The focus is shifting from individual technologies such as automation or AI to integrated ecosystems capable of orchestrating data, people and processes across the value chain.

As supply chain volatility becomes the norm, the most successful companies will be those that overcome workforce resistance, standardise data-driven decision making and embed interoperability at every level of their operations.

For more information contact ABI Research, +44 203 326 0140, [email protected], www.abiresearch.com




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