AI is gaining ground in supply chains, as 40% of retail supply chain leaders report active use of the technology in 2026, up from 24% two years ago.
That’s according to the latest State of Supply Chain Report from AI platform Inspectorio, released Tuesday. The survey of nearly 200 brand and retail professionals details the impact of AI across the supply chain and points out gaps that hinder many brands and retailers from realizing its full potential. The research also reveals challenges and opportunities in traceability, sustainability, product integrity, and compliance.
Among the key findings:
- AI faces organizational hurdles. The primary obstacles to effective AI adoption are insufficient data quality, change management gaps, and lack of cross-functional integration. Organizations are deploying AI onto fragmented data environments and expecting transformative results. The research shows this consistently does not work.
- Managing compliance is increasingly stressful. Regulatory compliance is creating unprecedented organizational stress, with more than half of respondents ranking the strain of executing on compliance requirements as “4” on a 5-point scale. Compounding the issue, compliance budgets have plateaued, even as regulatory requirements continue to grow: Just 50% of survey respondents reported that their 2026 compliance budgets increased, compared to 75% in 2025.
- Sourcing diversification is eroding progress in sustainability. Thirty-seven percent of respondents shifted sourcing to new countries or regions in response to tariffs. The survey also revealed that 37% of respondents added secondary suppliers for critical products and 33% renegotiated supplier pricing or terms. But every time production moves to a new supplier, the sustainability infrastructure built at the prior location is left behind. Organizations are making sourcing decisions based on trade economics without accounting for the compliance cost of starting over in a new geography, with significant negative impact.
- Traceability is seen as a regulatory requirement, not a competitive advantage. Just 21% of organizations have a multi-tier strategy for traceability, and 79% are reactive to regulatory requirements. The majority of respondents allow their traceability strategy to be driven by regional directives, meaning traceability programs are scoped to what is currently required rather than taking a proactive approach with potential supplementary benefits related to supply chain visibility and resilience.
The research, available for download, also offers examples of how some companies are utilizing best-in-class strategies and technology to reap the benefits of AI in product integrity, sustainability, traceability, and compliance, according to Chirag Patel, Inspectorio’s CEO.
