TL;DR: Sentinel Global's David Renne and Andy Reed reflect on their findings after months of speaking with key leaders across supply chain technology. They assess how the biggest barrier to supply chain transformation is tech adoption. Despite AI-driven solutions, poor implementation and organizational inertia are preventing companies from realizing their full potential. They explore the reasons for this and think of the paths ahead for the industry.
“The difficulty lies not so much in developing new ideas as in escaping from old ones.” - John Maynard Keynes
Over the past several months, we have traveled across the U.S., attending a variety of supply chain technology conferences. Throughout our tour, analysts, executives, and technology providers consistently reinforced one theme: adoption remains the greatest barrier to transformation. According to an analyst giving one of the opening keynotes, 41% of a company’s return on investment (ROI) in supply chain planning is lost due to poor implementation and change governance.
The reality is stark. Despite the promise of AI-driven solutions, most companies are struggling to integrate them effectively. Data quality remains a persistent challenge, with one executive stating bluntly,
“If we could leverage AI to clean, enhance, and standardize data, then we would have something. As it stands right now, models are learning from useless data, and inherently, themselves, become useless to us.”
At Sentinel Global, our role as investors compels us to distinguish hype from reality. To assess the state of supply chain innovation, we engaged in conversations spanning multiple industries, from Fortune 500 companies to emerging technology providers, and across multiple conference settings. These discussions provided a first-hand view of the challenges facing the sector and helped us evaluate the credibility of different players' perspectives. All of these conversations underscored a fundamental truth: organizational inertia is the most formidable obstacle to widespread adoption.
At one conference, ParkourSC captured the challenge of supply chain planning with a simple phrase: Legacy Limitations. While the alliteration, or perhaps the simplicity, drew us in like moths to a flame, the message resonated deeply. Frankly, existing approaches to supply chain planning and supply chain technology broadly, no longer provide competitive advantage to their customers. Our research at Sentinel, has indicated that data management, procurement, demand planning, demand shaping, and global trade management are areas ripest for disruption. Multinational Fortune 500 companies, in particular, are eager for advancements in demand planning, and we intend to monitor this space closely.
Here are our key takeaways from the conference circuit:
Adoption is the Biggest Hurdle
At Sentinel, we set ourselves apart by engaging directly with adopters—the key drivers of change and the most critical force in shaping our investable universe. On our trips, we listened to their stories, pain points, and outlook on supply chain technology. Our conversations spanned org charts, from analysts to CEOs and co-founders, across industries and roles. A common thread emerged: their eagerness to be heard. While we pride ourselves on being approachable, we sensed widespread frustration with the industry and a hunger for game-changing solutions. The next wave of supply chain technology must be built with an adopter-centric approach. In our experience, adopters are ready to talk.
Multiple speakers and attendees of one conference highlighted that only 40% of required users actually engage with purchased supply chain planning tools. This means that in a planning team of 50, only 20 people are effectively using the technology as intended. A manager of US supply chain at a pharmaceutical shipper remarked to us in an extemporaneous conversation, “I recently departed [a large, multi-national pharmaceutical company] for [a smaller pharmaceutical manufacturer of vaccines and insulin], and my whole day was spent in Oracle’s supply chain planning module at my previous company. Oracle worked great there, because people bought in. Now, at my new company, I have little use for it because the organization broadly doesn’t incentivize adoption.”
Narrowing down on AI and machine learning solutions, supply chain planning providers noted only a ~20% adoption rate of AI/ML forecasting tools. Tools and technologies that have already revolutionized other areas of our economy are being ignored by 80% of existing users of supply chain planning. Again, we are befuddled by this reality, particularly given one case study shared by Gartner: one large international consumer goods shipper, with proper planning and organizational buy-in, achieved a 35% reduction in waste and 40x faster proposal generation by implementing AI/ML forecasting tools. Opportunity obviously exists, but we are struck by its dependence on adoption and consensus building within organizations.
Dominant Tech is Stale and Vulnerable
Innovation in supply chain technology and supply chain planning, as we’ve acknowledged in our recent insights post, has been lacking. Current solutions from pioneers like Kinaxis and o9 Solutions – whose trailblazing spirit we acknowledge – were constructed ~30 years ago. Additionally, several of our conversations have further enforced one key element of our existing thesis:
Legacy supply chain planning technologies still, after decades-long head starts, haven’t embedded themselves deep enough into their adopter base to create durable barriers to entry – beyond the simple fact that better alternatives do not exist.
While recent unfruitful investments in this space might suggest otherwise, we spoke with several impressive teams who have successfully implemented new-age, AI-driven software in place of large incumbents. Indeed, we’re excited to see the traction in this space, and we believe that as adopters continue to find their voices, the best will rise to the top.
GenAI is Met with Skepticism
At these conferences, we were confounded by the conversations around AI. In many other industries, AI, ML, neural networks create buzz and excitement for the future. A simple search of just about any public company’s earnings calls with analysts’ questions reflect this reality. Public and private company CEOs are constantly peppered about how their companies are adapting to GenAI and the rise of human-like agents.
But in our experience at supply chain conferences, these conversations were met with metaphorical eye rolls, with most participants taking a “I’ll believe it when I see it” stance about the potential impact of AI throughout the supply chain landscape. We were also struck by the unsparing and arguably dour tone that our contacts had when the topic arose. As noted earlier, their collective outlook remains shaped primarily by one key factor: data quality.
Lastly, one striking takeaway from our discussions was the body language of industry veterans when AI came up. There were folded arms, skeptical expressions, and a general “prove it to me” attitude. This mirrors a classic pattern in disruption theory – that established players often dismiss transformative innovations until it’s too late. Taxi companies dismissed Uber. Retailers underestimated e-commerce. Supply chain incumbents may be falling into the same trap.
At Sentinel, we look for inflection points – those moments where new technology crosses the threshold from theoretical to indispensable. While widespread AI adoption in supply chains isn’t here yet, the companies that are solving the adoption challenge will define the next era of supply chain efficiency.
Conclusion
The key takeaway from our conference tour is that AI, next-gen supply chain planning tools, and supply chain technology innovations are not yet sweeping the industry. However, for companies that successfully drive adoption, the potential gains are significant. The US freight recession that has persisted since COVID-19 is expected to abate by 2025 or 2026, which could unlock budgets and accelerate investment in next-generation technology.
However, at one conference we attended, there was a clear bifurcation of thoughts on the state of the US freight economy. Technology providers are seeing green shoots emerge, while practitioners’ outlooks were far more muted. In a sense, the coming year could be a referendum on whether technology can, indeed, provide a backstop to cyclical forces.
At Sentinel, we continue to bridge the gap between founders and adopters, investing in companies that not only develop innovative products but also solve the adoption challenge. If you are working on the future of supply chain technology, or have views that differ from our findings, we are ready to talk. Reach out to us at david@sentinelglobal.xyz and andrew@sentinelglobal.xyz
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