Inflation and labor shortages continue to drive innovation plans
Kenco, a leading third‑party logistics provider, today released the findings of its proprietary survey in their 2026 Innovation Report, offering a look at how supply chain leaders are navigating one of the most complex operating environments in recent years. As companies manage rising costs, labor pressures, and accelerating digital transformation demands, many are taking a more disciplined, results‑driven approach to innovation.
This year’s study reveals an “innovation paradox” in which organizations increasingly depend on innovation to mitigate inflation, yet inflation itself is making those projects harder to fund and execute. Nearly half of respondents cite inflation (45%) as their primary innovation driver, followed by labor shortages (28%), and sustainability priorities (27%). At the same time, cost constraints (51%), workforce challenges (45%), and technology integration issues (29%) remain the biggest barriers to progress.
Even with these challenges, companies remain committed to investing in innovation, as 83% of respondents reported having a dedicated 2026 innovation budget. While overall budget increases declined compared to the prior year (35%, down from 39%), nearly half of companies (49%) noted an innovation budget of at least $500,000, underscoring continued emphasis on modernization. Leaders are concentrating on foundational improvements, prioritizing quality (33%), inventory management (27%), and labor efficiency (23%).
“Supply chain leaders are past the stage of experimenting with innovation just to see what’s possible,” said Kristi Montgomery, Vice President of Strategic Transformation at Kenco. “They’re looking for solutions that positively impact cost, service, and resilience. This year’s research shows that AI and automation only deliver results when rooted in strong data foundations, proven processes, and partners who know how to operationalize innovation at scale.”
When undertaking innovative initiatives, respondents noted how organizational challenges – not technology – provide the biggest implementation hurdles. Respondents point to misalignment across Operations, IT, HR, Risk, and Legal as common causes of delays, reinforcing the need for stronger cross‑functional coordination. This pragmatic mindset also surfaces in technology selection: 42% favor established technologies, and 43% prefer a blend of existing and emerging solutions, signaling that reliability continues to outweigh novelty.
Given the innovation complexities, respondents expect third‑party logistics (3PL) partners to provide strategic insights in today’s supply chain environment. Companies are increasingly depending on their 3PLs for support across strategy, implementation, funding, and ongoing operations. In fact, 37% of respondents rely on their 3PL in all four areas, underscoring a broader move toward collaborative innovation models that combine expertise, technology, and hands‑on execution.
“Even in a tougher economic climate, this survey shows that supply chain leaders aren’t pulling back,” said Montgomery. “They’re getting smarter about where and how they innovate, and they’re looking to partners like Kenco to help them move faster with less risk.”
About the 2026 Innovation Survey
Kenco surveyed more than 150 North American supply chain executives to gather insight on their company’s strategy for innovations and automation for 2026. For full results, visit https://kencogroup.com/reports-and-insights/2026-innovation-survey-report/. For more information about Kenco, visit https://kencogroup.com.
About Kenco
Kenco is a leading North American 3PL delivering custom, integrated logistics solutions that maximize supply chain efficiency. For more than 75 years, they have partnered with customers to provide distribution, transportation, material handling and automation solutions. Kenco’s people set the organization apart – experienced, committed associates who bring agility and expertise to even the most complex supply chain challenges. Guided by its mission and vision, Kenco innovates relentlessly to deliver solutions on a national scale with the care of a local provider, building trusted partnerships that keep goods moving and businesses growing.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260219648049/en/
