2026 State of Manufacturing Report | Industry Trends & Outlook

AI Is Transforming
Manufacturing

AI adoption in manufacturing has reached a point of practical integration. This shift reflects a broader consensus that AI is now a required capability for maintaining competitiveness and operational reliability.

RYUSEI ONO

Representative Director & President
MISUMI Group Inc

Expert Opinion: AI

It’s clear that implementing AI is critical for manufacturing and supply chain success.

SANKARA NARAYANAN

Industry Director, Frost & Sullivan

95% of Manufacturing and Supply Chain Leaders Say AI is a Requirement

Strongly agree / Agree somewhat Disagree somewhat Strongly disagree

Implementing AI into manufacturing and supply chain operations is vital to my company's future success.

97% of leaders are saying AI is already embedded in core workflows. The question is no longer if you use AI but how and to what extent.

NATE EVANS

Co-Founder & Head of Climate/AI, Fictiv

Expert Opinion: AI & Supply Chain

AI has advanced beyond experimentation or pilot projects—it’s now embedded in the daily workflows that run modern factories and supply chains.

SANKARA NARAYANAN

Industry Director, Frost & Sullivan

97% Say AI Is Already Embedded Across Core Manufacturing & Supply Chain Workflows

AI Accelerates in DFM & Supply Chain Management (+18 pts YoY)

YoY Change in AI Adoption (2025 to 2026)

YoY change in AI adoption from 2025 to 2026 for DFM and supply chain management

Leaders Expect AI to Deliver Greater Productivity

In your opinion, how do you think the maturation of Al will affect overall productivity in manufacturing and supply chain?

9% Dramatically more productive (>5x)
23% Much more productive (2-5x)
27% Notably more productive (50-100%)
27% A bit more productive (20-50%)
12% Slightly more productive (<20%)
2% AI will not make us more productive

2026 State of Manufacturing & Supply Chain:

2026 State of Manufacturing & Supply Chain:
AI, Resilience, and the Path Forward

Digital Manufacturing Platforms Are Essential Supply Chain Infrastructure

digital-manufacturing-platforms

As sourcing gets more complex and expensive to manage, we look for partners like Fictiv who simplify the process, reduce handoffs, and move faster. Digital manufacturing platforms have become essential to keeping our cycle times competitive.

DAVE EVANS

President and CEO, MISUMI Americas

Supply Chain Optimization Targets Are Multi-Dimensional

Which of the following have the greatest potential to optimize your business's supply chain operations and improve your overall business outcomes?

Digital manufacturing platforms are becoming essential as manufacturers look to reduce complexity, improve engineering productivity, and optimize their supply chains.

RYUSEI ONO

Representative Director & President
MISUMI Group Inc

98% See Significant Opportunities to Improve Supply Chains

Digital Platforms Shift from “Helpful” to “Non-Negotiable”

External Volatility Continually
Pressures Supply Chains

As sourcing gets more complex and expensive to manage, we look for partners like Fictiv who simplify the process, reduce handoffs, and move faster. Digital manufacturing platforms have become essential to keeping our cycle times competitive.

LILLIAN ORTIZ

Sr Project Manager, ITW Global Safety Monterrey

Global Tensions Impacting Supply Chain Strategy More Than Ever

Are global tensions impacting your company's long-term supply chain strategy?

98% of Leaders Report Materials Volatility Is Rewriting Sourcing Strategy

What impact have raw material cost pressures had on your sourcing strategy?

98% of Manufacturers Are Taking Action to Offset Tariff Impacts

What actions has your company taken, or planning to take, to mitigate the impacts of recent tariff changes?

Supply Chain Management
Challenges Are Rising

Sourcing is becoming more complex across the entire supply chain lifecycle, especially for custom and standard mechanical components. Having a single source for both significantly reduces that complexity.

DAVE EVANS

President & CEO, MISUMI Americas

Sourcing Complexity Up from 73% to 81% YoY

Supplier sourcing and management is too time-consuming and costly

Takeaway

81% report that sourcing is increasingly time-consuming and costly, reinforcing why teams are turning to tools and services that reduce coordination overhead, such as finding a single source for custom and mechanical parts.

Manufacturing Planning Is Considered the Biggest Supply Chain Challenge

Which stages of the manufacturing and supply chain lifecycle present the greatest challenges in managing cost, quality, and time-to-market?

Takeaway

While 62% say manufacturing planning (and the upstream decisions that feed it) is the dominant supply chain challenge, closely related stages—sourcing and demand planning/forecasting—also rank high, reinforcing that planning failures are systemic.

Engineers Spend More Hours on Procurement Than Ever Before

How much time would you estimate the typical engineer spends each week on supplier sourcing, management, quoting, and ordering activities? Activities include sourcing, vetting, and onboarding new suppliers; requesting quotes and DFM; following up on orders; and managing quality.

Offloading Admin Tasks Could Dramatically Boost Engineering Productivity

In your opinion, how much would an engineer's productivity improve if they could offload administrative sourcing tasks to a managed digital manufacturing or supply chain service?

62% Significantly improve
31% Moderately improve
5% Minor improvement
1% No change
1% Productivity would be worse

Regional Resilience Combats
Supply Chain Volatility

The rise of on-shoring manufacturing in North America is one of the most significant trends emerging in this report, but ensuring agility, capacity, and cost-effectiveness at scale still requires a globally connected supply chain.

ANDY SHERMAN

General Manager, Fictiv USA

On-Shoring and Near-Shoring Dominate 2026 Manufacturing Strategies

Which of the following statements represents your company's strategy for 2026?

Sourcing Preferences Ranked

Supplier Quality &
Compliance Expectations
Are Rising

Expert Opinion: Quality Metrics

Supplier selection increasingly depends on supplier quality compliance, with documented systems replacing informal trust.

SANKARA NARAYANAN

Industry Director, Frost & Sullivan

99% Say Quality Is Measured in Execution, Not Assertions

Which of the following supplier quality metrics are most important to your company when selecting a manufacturing partner?

Supplier quality metrics importance chart

Sustainability in
Manufacturing Is Becoming
Fully Operationalized

Sustainability has become a real operational mandate. As expectations rise, companies are aligning their sourcing practices with the kind of rigor outlined in Breakthrough Energy’s Five Grand Challenges—treating carbon, materials, and process impact as measurable criteria, not aspirations.

Nate EVANS

Co-Founder and Head of Climate/AI, Fictiv

Across Industries, Sustainability is a Requirement

How important is implementing sustainable practices and initiatives to your company in 2026?

Sustainability Is Shifting From “Somewhat” to “Very” Important

How important is implementing sustainable practices and initiatives to your company in 2026/2025?

Year over year sustainability priority shift from 2024 to 2026

96% Say Sustainability Is Part of
Sourcing Decisions

How much of a consideration is supplier sustainability when making sourcing decisions at your company?

Conclusion

The 2026 State of Manufacturing & Supply Chain reveals an industry undergoing a fundamental shift. Volatility—from geopolitics and tariffs to material costs—is no longer a temporary disruption but a permanent operating condition. At the same time, engineering capacity constraints and growing sourcing complexity are making it harder for companies to move fast and reliably. Manufacturing is being reshaped around a new set of realities, where speed, predictability, and resilience matter as much as cost.

In response, leaders are building supply chains around regional resilience, AI-enabled execution, and higher standards for quality, sustainability, and traceability. AI has moved from a “transformational” idea to essential infrastructure, powering faster decisions and more coordinated execution. The manufacturers that pull these capabilities into a cohesive operating system—combining regionalized networks, AI-driven workflows, and data-backed supplier performance—will set the competitive baseline in 2026, operating with greater confidence and durable advantages in cost, quality, and speed.

Methodology & Participants

The 2026 State of Manufacturing findings are based on an online survey of 321 manufacturing leaders, covering topics such as AI adoption, supply chain disruption, new product innovation, operational efficiency, and sustainability. To enable year-over-year comparisons, select questions were repeated from the annual survey series (2020–2025), with an important caveat: trend comparisons from 2025 to 2026 are considered very reliable because the audience profile remained the same.

All qualified participants were director-level or above, spanning production manufacturing (53%), engineering (25%), supply chain (11%), R&D (7%), and digital innovation (3%)

Company representation leaned mid-to-large: 19% <1,000 employees, 38% 1,000–2,500, 30% 2,500–5,000, and 12%>5,000; respondents also spanned SKU complexity (7%: 2–5 SKUs; 23%: 6–20; 30%: 21–50; 17%: 51–100; 23%: >100). Industry mix was concentrated in priority verticals—MedTech (26%), Climate Tech (24%), EV (24%), Robotics (23%)—with “Other” minimal (2%, noted as including only Fictiv participants).

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2026 State of Manufacturing & Supply Chain: AI, Resilience, and the Path Forward

Dave Evans

AI Is Transforming Manufacturing

RYUSEI ONO

Implementing AI Is Mission-Critical

Expert Opinion: AI

SANKARA NARAYANAN

95% of Manufacturing and Supply Chain Leaders Say AI is a Requirement

Takeaway

NATE EVANS

How AI Is Being Implemented in Manufacturing & Supply Chain

Expert Opinion: AI & Supply Chain

SANKARA NARAYANAN

97% Say AI Is Already Embedded Across Core Manufacturing & Supply Chain Workflows

Takeaway

AI Accelerates in DFM & Supply Chain Management (+18 pts YoY)

Takeaway

Expected Productivity Gains From AI Adoption

Leaders Expect AI to Deliver Greater Productivity

Takeaway

Digital Manufacturing Platforms Are Essential Supply Chain Infrastructure

DAVE EVANS

Supply Chain Optimization Opportunities

Supply Chain Optimization Targets Are Multi-Dimensional

Takeaway

RYUSEI ONO

Major Themes for the Manufacturing Industry in 2026

98% See Significant Opportunities to Improve Supply Chains

Takeaway

Increase in Digital Manufacturing Platform Belief Year Over Year

Digital Platforms Shift from “Helpful” to “Non-Negotiable”

Takeaway

External Volatility Continually Pressures Supply Chains

LILLIAN ORTIZ

Global Tensions Are a Core Driver of Supply Chain Strategy

Global Tensions Impacting Supply Chain Strategy More Than Ever

Takeaway

Materials Volatility Is Rewriting Sourcing Strategy

98% of Leaders Report Materials Volatility Is Rewriting Sourcing Strategy

Takeaway

Tariff Complexity Is Increasing Demand for Tariff Expertise

98% of Manufacturers Are Taking Action to Offset Tariff Impacts

Takeaway

Supply Chain ManagementChallenges Are Rising

DAVE EVANS

Sourcing Complexity Is Increasing

Sourcing Complexity Up from 73% to 81% YoY

Takeaway

Manufacturing Planning Is the Greatest Challenge for Leaders

Manufacturing Planning Is Considered the Biggest Supply Chain Challenge

Takeaway

Engineering Bandwidth Is a Critical Bottleneck in Manufacturing

Engineers Spend More Hours on Procurement Than Ever Before

Takeaway

Offloading Admin Tasks Could Dramatically Boost Engineering Productivity

Takeaway

Regional Resilience Combats Supply Chain Volatility

ANDY SHERMAN

Sourcing Strategy Is Shifting Toward Regional Resilience

On-Shoring and Near-Shoring Dominate 2026 Manufacturing Strategies

Takeaway

Regional Preferences for New Suppliers

Sourcing Preferences Ranked

Takeaway

Supplier Quality & Compliance Expectations Are Rising

Supplier Certifications & Quality Expectations

Expert Opinion: Quality Metrics

SANKARA NARAYANAN

99% Say Quality Is Measured in Execution, Not Assertions

Takeaway

Sustainability in Manufacturing Is Becoming Fully Operationalized

Nate EVANS

Sustainability Is Important to Decision-Makers

Across Industries, Sustainability is a Requirement

Takeaway

Year Over Year Sustainability Priority Shift

AI Is Transforming
Manufacturing

External Volatility Continually
Pressures Supply Chains

Supply Chain Management
Challenges Are Rising

Regional Resilience Combats
Supply Chain Volatility

Supplier Quality &
Compliance Expectations
Are Rising

Sustainability in
Manufacturing Is Becoming
Fully Operationalized

96% Say Sustainability Is Part of
Sourcing Decisions