US Companies Prioritize Risk Management in Supply Chain Transformations: KPMG Survey

In response to increasingly volatile and complicated business conditions, U.S. companies are upping their supply chain game. According to KPMG’s The State of Next-Gen Supply Chain: A Leadership Survey, almost half (47%) of respondents say their companies are spending 11-15% of revenue on supply chain activities, an increase from 2024 when most spent 5-10%. In addition, 73% of respondents say their organizations are planning a comprehensive transformation of their supply chain model in the next 1 to 3 years, an increase from 62% in 2024.

The survey, which gathered responses from executives and C-suite leaders across nine sectors, found that 51% of respondents say “managing and mitigating risks and geopolitical uncertainties” is a top transformation objective in the next 1 to 3 years, followed by “driving efficiency through tech implementation” (44%) and “advocating and ensuring compliance with international trade regulations” (44%).

Geopolitical Impacts

According to respondents, the top three challenges when adjusting their supply chain due to geopolitical risks include:

• “High production costs/price volatility” (44%)
• “Operational disruptions” (43%)
• “Transportation delays/trade route blockages” (38%)

In order to mitigate these risks, respondents cited investments in predictive analytics for risk assessment as the top strategy (41%), followed by enhancing visibility (37%) and supplier and distribution network flexibility (34%). “Risk management and resilience” also tops the list of where companies plan to invest in the near future.

When it comes to mitigating the costs of tariffs, the top three strategies include:

• “Diversify supplier base or shift to alternative markets” (37%)
• “Optimize cost structure through automation or process efficiencies” (34%)
• “Reconfigure supply chain networks” (33%)

Technology Implementation

With supply chain uncertainty becoming the new normal, companies are adopting AI and other digital tools to optimize their supply chain operations. “Enhancing agility and flexibility” (42%) is the top reason cited by respondents for changing their supply chain operating model in the next 1 to 3 years, followed closely by “improving sustainability performance” (40%) and “increasing resilience to disruptions” (36%).

Digitalization has come a long way in recent years. According to the survey, 84% of respondents believe their organizations have completely digitalized supply chain operations, up significantly from 20% in 2024. When it comes to automation, more than three-quarters (78%) of respondents plan to have at least a moderate level of autonomy by 2027.

Still, respondents report some barriers to successfully implementing and scaling new technology:

• Technological capability (17%)
• Data security (13%)
• Organizational resistance (13%)

For AI and GenAI deployment, the top ways in which companies plan to overcome challenges include:

• “Upgrading or replacing existing ERP system for better data integration” (30%)
• “Investing in employee training and development” (28%)
• “Enhancing data management capabilities” (28%)

Talent

Technology will also play a role in supply chain talent. 77% of respondents believe a talent gap exists in their company’s procurement/supply chain function, and respondents say the areas of the supply chain most impacted by the talent gap are supply chain visibility (38%), demand planning (36%) and customer service (36%).

The top conditions that respondents say will create talent issues include:

• “Competition in the labor market” (39%)
• “Minimal investment in upskilling” (36%)
• “Rapid technological advancement” (35%)

Although 35% of respondents say “rapid technological advancement” will create talent issues, 50% also believe automation and AI investments will help address the future talent shortage.