2026 Supply Chain Surge: Growth, Control Costs, and AI Truth

Chief Supply Chain Officers (CSCOs) have reached an inflection point. After spending recent years reacting to disruptive events, CSCOs have firmly placed commercial growth as their top long-term priority, aligning with their CEO. However, success in 2026 requires CSCOs to operate within a complex duality: commercial expansion must coexist with relentless cost control, a dynamic that will introduce new tensions across the enterprise. The year ahead is defined by structural shifts, physical network realignment, and a sober assessment of AI’s capability.

CSCOs tell us what they think in Gartner’s 2026 CSCO Community Outlook survey.

While overall cost inflation is relatively normal compared to the past three years, the drive for structural cost reduction in 2026 is more aggressive. This focus on cost control signals a deeper, more intentional attempt to reorganize the supply chain organization itself. Less than a fifth of CSCOs reported having no plans for cost reduction, demonstrating the widespread nature of these efforts. In fact, about a quarter of organizations are targeting cost reductions of 5% or more, aiming for ramped-up gains.

To achieve these cuts, CSCOs are targeting the most crucial components of their budgets. Logistics is the top target area for cost reduction, followed closely by direct materials and direct labor.  Cost control is no longer an incremental process; it has evolved into a structural requirement for 2026, targeting core operational areas driven by the enterprise mantra “do the same with less, or do more with the same”.

Tariffs and trade regulations remain significant factors, affecting the majority of organizations. As expected, China is the primary country of origin influencing costs due to tariffs.

CSCOs have moved on from a "China +1" strategy and are now primarily focused on overall cost optimization. Companies are relocating their networks, but the destinations of those moves now show a distinct regional shift. The U.S. has moved into the top spot for receiving relocated operations in 2026, with Southeast Asia following behind.

Fueled by tariffs and the mandate to optimize costs, network relocation continues unabated, with the U.S. emerging as a leading destination for new operations in 2026.

The pressure on CSCOs to leverage AI to deliver higher productivity is becoming intense. Yet, despite the hype, 2026 is shaping up to be an incremental year for autonomous decision-making, not a breakthrough. The vast majority of the CSCO community expects to trust AI to drive autonomous decisions affecting only a small percentage of their Cost of Goods Sold (COGS).

This low trust threshold requires a change in strategic thinking. I said this a few weeks ago, and I’ll repeat it: Leaders, stop looking for AI use cases and instead shift your focus to applying the appropriate level of the technology to solve specific, well-defined problems.

AI is a central priority, but trust at scale remains low for broad autonomous control. Problem-specific adoption is the leading path forward for maximizing productivity gains in 2026.

The 2026 CSCO Outlook demands a confident balancing act: driving commercial growth while simultaneously achieving structural cost reductions. This coming year is all about disciplined, dual-focus execution.

Wade L. McDaniel
VP Distinguished Advisor
Gartner Supply Chain
Wade.Mcdaniel@gartner.com