Supply chain growth ambitions clash with cost pressures
New research from Prological has highlighted a widening disconnect across Australian supply chains, with senior executives focused on positioning their organisations for future growth while middle management remains locked in day-to-day battles over rising costs and economic pressure.
The Prological Supply Chain Pulse Check Survey 2026, which surveyed more than 200 professionals across supply chain, logistics, manufacturing, retail and operations, shows that cost reduction remains the dominant concern across the sector. Overall, 55% of respondents identified cost reduction as a top priority. That emphasis, however, drops markedly at C-suite and business owner level, where attention shifts toward enabling longer-term growth.
According to Peter Jones, managing director at Prological, the divergence is already translating into uneven performance across the market. “We’re seeing a clear performance gap emerge between organisations that are building for adaptability and those still waiting for things to settle down. The businesses pulling ahead aren’t just managing costs – they’re also investing in the capabilities and infrastructure that create competitive advantage in an environment where disruption is constant,” Jones says.
Rising costs and inflation retained their position as the sector’s biggest challenge for the second consecutive year, cited by 68% of respondents. While operational teams remain focused on containing those pressures, senior decision-makers are increasingly concerned about the strategic consequences. The survey suggests that capital absorbed by inflated operating costs is constraining investment in automation, infrastructure and capability that would otherwise support future growth.
International trade and tariffs emerged as the third-largest challenge, identified by 29% of respondents, displacing inventory management from the top three. The shift reflects increasing uncertainty around global trade relationships. Staff shortages remained the second biggest challenge overall at 44%. Supply chain visibility also continues to lag, with just 9% of organisations reporting high visibility across their operations.
Despite cost pressure, automation investment continued to rise. In 2025, 43% of organisations increased automation spending, up from 38% in 2024. Looking ahead, 54% plan to further lift investment in 2026. Momentum is strongest among organisations with 51–100 employees, as modular automation solutions become more accessible and easier to deploy without large upfront capital commitments.
Industrial property conditions have also shifted. Only 6% of respondents cited lack of available industrial property as a major challenge, down from around 12% in 2024. When selecting warehouse facilities, 67% now prioritise operational efficiency over cost, indicating a longer-term mindset focused on productivity, flexibility and performance rather than immediate savings.
Sustainability activity showed modest improvement in 2025, with 64% of organisations undertaking carbon reduction projects, compared with 54% in 2024, although this remains below the 65% recorded in 2023. External pressure to act on sustainability has eased, with 40% reporting increased stakeholder pressure, down from 50% in 2024 and 67% in 2023. The findings raise questions about whether sustainability is becoming embedded as standard practice or whether some organisations are softening initiatives as scrutiny moderates.
Jones says the survey suggests many organisations are no longer waiting for economic conditions to stabilise.
“Our 2026 Pulse Check story shows that organisations are not waiting for things to return to ‘normal’ but looking to create strategies to thrive in these conditions.”