Uncertainty surrounding tariffs and economic conditions is driving manufacturing CEOs to prioritize supply chain resilience and AI investments, according to a 2025 CEO Outlook survey conducted by a major global consulting firm in September. Among 400 leaders surveyed, the findings reveal a striking pattern: manufacturers are investing heavily in technology to manage costs rather than fundamentally restructuring their supply chains.
The survey reveals that 63% of manufacturing CEOs identified supply chain challenges, including disruptions to global supply chains, as hindering their ability to innovate at scale. Despite these innovation barriers, 68% named AI as a top investment priority for their organization, with 69% planning to spend up to 20% of their budget on AI over the next year.
Source: KPMG 2025 CEO Outlook survey of 400 manufacturing leaders, conducted September 2025
Economic policy uncertainty has proven difficult to address, with tariff fluctuations weakening demand across the manufacturing sector. The industry contracted for the seventh consecutive month in September, as measured by the Institute for Supply Management's Purchasing Managers' Index, with companies reporting order declines as tariffs weigh on exports.
Yet manufacturing executives aren't waiting passively for conditions to improve. Instead, they're placing supply chain resilience "front and center" by deploying various strategies to guard against supply chain risks. These tactics include refining or renegotiating supplier agreements to incorporate tariff-related costs, using dynamic pricing or financial hedging, and in some cases, moving production or reshoring to improve resilience.
Interestingly, only 18% of manufacturing CEOs in the survey named reconfiguring the supply chain among their top priorities. This reveals a "wait-and-see approach" as manufacturers hesitate to commit to major structural changes amid policy volatility.
Restructuring supply chains takes considerable time and often comes with higher labor costs or upfront capital requirements to expand manufacturing capacity. With tariffs fluctuating frequently, long-term investments may not make sense for many businesses. Making changes without knowing where tariffs will stand a year from now presents significant strategic risk.
This explains why financial engineering—renegotiating contracts, dynamic pricing, hedging—proves more common than physical supply chain alterations. These approaches offer flexibility and faster implementation without the permanent capital commitments required for reshoring or facility expansion.
As manufacturers battle tariff-related cost increases, they're focusing on efficiency through automation and AI. The technology evolution is accelerating beyond generative AI, which includes large language models and chatbots, toward agentic AI, where automated agents complete actions or tasks based on instructions without human intervention.
The survey revealed that many CEOs expect to embed AI agents across their organizations, with leaders managing multiple AI agents as part of their roles. More than half (54%) of surveyed manufacturing CEOs anticipate agentic AI will significantly improve efficiency or drive growth within their operations.
Procurement represents particularly fertile ground for AI applications. The technology can help design and manage contracts while preventing contract value leakage—situations where a contract's potential value differs from actual value due to flawed management or execution.
Additional AI promise exists in financial planning and forecasting, as well as on production floors. Automation, AI, humanoids, and robotics address critical operational needs as manufacturers seek efficiency gains to offset cost pressures from tariff uncertainty and supply chain volatility.
Manufacturing CEOs recognize that AI investments require upfront costs, but they expect to see return on investment within one to three years, according to survey findings. This relatively short payback period makes AI investments more attractive than multi-year supply chain restructuring projects with uncertain tariff environments.
The survey data reveals a clear strategic calculus: when facing policy uncertainty, manufacturers invest in flexible technology solutions rather than fixed infrastructure changes. AI offers adaptability that physical supply chain restructuring cannot match. As tariff policies shift, AI systems can adjust procurement strategies, optimize contract terms, and reforecast financial impacts without requiring new facilities, supplier relationships, or logistics networks.
This approach minimizes risk while maintaining operational agility. Rather than betting on specific tariff scenarios through permanent supply chain reconfigurations, manufacturers are building technological capabilities that provide value regardless of how trade policies evolve.
The message from manufacturing leadership is clear: in uncertain times, invest in intelligence and automation that can adapt to any scenario rather than committing to infrastructure optimized for conditions that may not persist.