What Is The State Of Manufacturing & Supply Chain In 2025?

This month, I’m excited to share the results of Fictiv’s 10th Annual State of Manufacturing & Supply Chain Report. Every year, we survey hundreds of supply chain and manufacturing leaders across multiple industries to understand their perspectives, challenges, and predictions for 2025. I’m especially excited to dive into the broader supply chain results, particularly in a year marked by massive tariff and trade disruptions.

Increasing Global Business Uncertainty

Our first findings concern business uncertainty. With the shift in the U.S. President’s trade policies, almost 100% say they’re concerned that trade wars are likely to escalate in the next few years (clearly demonstrated by widespread global tariffs).

Key Findings

96% of manufacturing leaders report they’re concerned about the impact of the U.S. President’s trade policies.

93% believe trade wars will likely escalate in the next few years, whereas 42% are now ‘very concerned’ —a 6-point increase over 2024.

91% note that global tensions are being considered in their company’s long-term supply chain strategy—a 5-point increase over 2024.

Looking at this chart, it’s clear senior leaders are concerned about tariffs, particularly the impacts on costs and profitability, as well as global business. As a result, many are planning to increase manufacturing in the U.S.

Accelerating Supply Chain Disruptions

The next key finding is around accelerating supply chain disruptions. Across the board, executives are saying they need to accelerate how they manage their supply chain. Two-thirds or 68% said that onshoring is a key priority this year for their teams.

Key Findings

68% of leaders prioritize onshoring as a key supply chain strategy in 2025, especially in industries needing complex parts at scale, like MedTech, clean energy, and EVs.

77% report a lack of resources (e.g., workforce, budget) severely limits their ability to manage their supply chains effectively (an increase over 2024).

52% of manufacturing leaders identify supplier quality, reliability, and compliance as significant challenges.

On the flip side, three-quarters, or 77%, say they lack the resources to effectively manage their supply chain as it is today. This is difficult given that leaders also say they want to onshore their supply chain. If supply chain resources are already limited, moving back to the U.S. will be a challenge.

50% are also saying that quality and reliability are significant challenges. Some are running well-performing supply chains, while another half are running inadequate supply chains.

Scaling Production More Difficult Than Ever

Our third major finding is around scaling production. In my opinion, this has been the most difficult it’s ever been. What you see here is 91% say they’re facing barriers to innovation. In other words, they’re struggling to find high-quality supply chain partners to do low-volume builds.

Key Findings

91% of manufacturing and supply chain leaders face barriers to product innovation and introduction, with nearly half struggling to source fast, high-quality solutions for low-volume builds.

86% report sourcing parts and materials takes time away from initiatives like new product innovation and introduction, making it increasingly difficult to move into and scale production.

90% of leaders consistently report that digital manufacturing platforms are an essential service for production (up from 86% in 2024).

Secondly, almost 90% are saying that all the work required to source parts is taking away from innovation. In other words, you’re launching a new product, and sourcing has become the bottleneck, the long pole on the tent. This makes driving innovation to build electric vehicles, rockets, and surgical equipment incredibly difficult—stalling the innovations of tomorrow.

In the 10 years we’ve been doing this report, we’ve consistently seen this trend. Executives are looking to digitize supply chains. This continues to be a key focus area and it’s even up from the 86% that we saw last year. So my takeaway is that for teams that are scaling new products, and moving into production, you have to think about this as another phase of development. You have development that happens by building prototype one. Getting it in the market is the next and most difficult step.

Sustainability Takes Hold

Key Findings

95% report weather and extreme climate events are impacting their supply chain strategy in 2025.

91% now have sustainability initiatives and governance in place to help drive sustainability goals.

52% believe nearshoring and onshoring strategies are critical to supporting sustainability efforts.

The fourth finding centers around sustainability. This continues to be a major focus for our audience. As we know at the macro level, we’ve seen massive fires in California, floods and tsunamis globally, and hurricanes. These weather and extreme climate events are impacting supply chains around the world, and no industry is protected.

It’s heartening to see that 91% now have sustainability initiatives and some type of governance in place, an increase from previous years. ESG has been a clear focus area for many executives and supply chain teams. However, this year, with 91% saying they have actual governance in place to do a triple bottom line, that’s really encouraging to me. We’re seeing sustainability as a large driver and metric for consideration in supply chains.

And lastly, nearshoring and onshoring are critical to supporting sustainability efforts. So nearshoring might not necessarily be a pure climate or sustainability play. There are other factors like economics, and geopolitical factors in play here. We thought this was an interesting takeaway. It’s not just about reducing the carbon emissions by being closer to your customer, there are multiple considerations when nearshoring but excited to see this continue to be top of mind in our 10th Annual State of Manufacturing and Supply Chain Report.

AI Advances

And you can’t have a report on the state of manufacturing in 2025 without AI. AI is the top trend shaping their long-term strategy, whether it’s the latest, greatest LLMs or looking at augmenting human tasks, AI is at the forefront of our customers’ minds.

Key Findings

87% of leaders report advanced levels of maturity with their company’s AI implementations.

94% use AI for manufacturing and supply chain operations, such as inventory management and product design.

56% of Manufacturing and supply chain leaders identify AI as the leading trend shaping their long-term strategy, with economic headwinds following at 53%.

Also, 87% report advanced levels of maturity in implementing AI. Almost 100% say their teams are getting better at using it for day-to-day tasks. I personally use it every single day, and I encourage all of our employees, partners, and customers to look at the ways that AI can help bring efficiencies to their work.

94% are saying that AI for manufacturing and supply chain operations is their main implementation, whether it’s inventory management, product design, research, or supplier development. One of the best implementations that I saw was all around SCARS, so Corrective Action Reports and using it to help automate the process of managing supply chains. There are a lot of great applications and agentic products out there, and I would really encourage you to look at this to streamline your operations. If you don’t do it, your competition will.

I think that while AI is here and will cause a lot of disruption, I think there are multiple factors to consider. So make sure you’re figuring out how to implement it, implement it well, and use it daily, but it’s not necessarily the silver bullet to solve all supply chain challenges.

Quick Summary

Here are a few useful takeaways from the report for your consideration:

• Onshoring is a growing trend, but resource constraints present challenges
• AI adoption is widespread but must be combined with strong strategic planning
• Sustainability is increasingly prioritized but requires careful balance with economic factors
• Geopolitical shifts continue to reshape global manufacturing, with India and Mexico emerging as key players
• Flexibility and resilience remain essential for navigating supply chain volatility

To download the full report, please go here. You can also watch an in-depth webinar discussion with Fictiv’s General Managers of China, India, Mexico, and the U.S.