2025 Supply Chain Innovation Trends: How Retailers Can Capitalize

As supply chain-focused businesses look to address concerns around challenges such as inflation and sustainability costs, they’re betting big on technology. One in four have an innovation budget of at least $500,000, while 39 percent have seen an increase in budget for 2025, according to Kenco’s State of Supply Chain Innovation Transformation Report.

That’s great news for retailers as well, with every new innovation offering opportunities to streamline processes and move goods to store shelves quicker. In particular, the report offers three key findings retailers should consider to maximize their benefits from these innovations.

A Workforce Strategy That Works

While supply chain professionals identified inflation as the key challenge inhibiting their innovation strategy, staffing headaches weren’t too far behind: 50 percent said they’re looking for technology to help address shortages, and 71 percent said workforce complexities are the most likely issue to upend their strategy.

Physical automation such as robotics and autonomous material handling equipment can help fill the gaps, but can also be a capital-intensive strategy with a longer-term payback. For a shorter-term horizon, artificial intelligence advancements can help retailers optimize their existing warehouse labor. In fact, one in four supply chain professionals are already using AI for this purpose. AI-powered tech can track demand and ensure the right number of employees are active in the right areas of the warehouse, at the right time, optimizing productivity and reducing safety concerns.

Be Everywhere, Even When You Can’t Be

Visibility is a top priority for many supply chain professionals, with 40 percent planning to adopt sensors and automatic identification technology this year, and 33 percent leveraging AI for data visibility. With so many SKUs moving through facilities, many of which come with unique storage specifications, warehouse managers need an extra pair of eyes to make sure nothing is damaged or spoiled.

Retailers that have struggled with inventory shrinkage can also leverage AI in their quality control efforts — an approach 29 percent of supply chain professionals are already taking. For example, sensors installed in trucks can measure whether cold food remains at a safe temperature, and if it doesn’t, when and for how long it was in the “danger zone.” Retailers that don’t own their own warehouses or transportation should work with their carriers to ensure these measures are taken.

You Don’t Have to Go it Alone

More than half of supply chain professionals are turning to outside help to find and implement new technologies: 57 percent are partnering with a third-party logistics (3PL) provider, consultant or both for guidance. Still, 23 percent are relying entirely on internal resources to identify new innovations.

With the day-to-day demands of supply chain operations, it’s easy to miss minor inefficiencies that, if not addressed, can snowball into major productivity roadblocks. Retailers looking to invest in new warehouse technology should seek an outside partner who can objectively study their operations and identify these hiccups. For retailers already working with 3PLs, outside insight is baked in, but it might be underutilized. The report found 39 percent of 3PLs provide support and ongoing maintenance, but only 29 percent are viewed as advisors. Tapping this existing brainpower can be a great start for retailers looking to evolve operations.

A Rising Tide Lifts All Boats

As supply chain professionals deploy advanced technologies across their operations, their efficiency gains ultimately result in smoother operations for retailers as well. Retailers should keep an open dialogue with their supply chain partners, working together to identify their most pressing headaches and choose innovations best suited to address those challenges.

Kristi Montgomery is vice president, innovation, research and development at Kenco, a supply chain management solutions provider.