Manufacturers Are Modernizing Fast. Their Supply Chains May Not Be Ready. 

Manufacturers are investing in technologies that promise to make production faster and more responsive. The benefits, however, may depend on whether materials and finished products can move at the pace those factories require. 

Two manufacturing surveys released in 2026 point to a potential mismatch between technological ambition and the physical networks supporting it. 

In Corning Data’s manufacturing sentiment report, 43% of respondents described industrial AI as a transformational growth tool capable of reshaping their business model. Another 29% considered it an important capability, putting nearly three-quarters in those two categories. 

Yet supply chain impact received the highest average score among seven potential threats Corning examined, at 3.65 out of five. It narrowly exceeded decision-making speed, at 3.61, and ranked above slow industrial AI adoption, at 3.09. The report classified all seven as moderate risks. 

Meanwhile, 73% of respondents to a WSI Manufacturing Warehouse Network survey said their warehouse model was designed for a different operating environment. 

The studies examine different groups and do not establish that AI investment causes warehouse problems. Together, however, they suggest a practical limit to modernization; that improving production cannot fully compensate for a supply chain that struggles to support it. 

Technology is delivering gains, with conditions 

The appeal of manufacturing innovation is grounded in operational pressures. Corning found in their survey that 66% of respondents cited improved efficiency as an investment motivation. Workforce productivity and scalability followed at 54%, while 49% cited the speed and quality of decision-making. 

Evidence of actual gains appears in Deloitte’s 2025 Smart Manufacturing and Operations Survey. Its respondents reported average production output improvements of 10% to 20% following implementation of smart manufacturing initiatives. The research covered 600 executives at large manufacturers with U.S. headquarters or operations. 

Those gains change what supporting operations must handle. Higher output can require additional warehouse throughput even when storage space remains unchanged. A production schedule that adjusts quickly to demand also requires dependable information about where components are and when they can reach the line. 

When a manufacturer shifts to smaller, more frequent production runs, the demands can change even without a large increase in total output. Materials may need to arrive in a different sequence, and warehouse teams may have less time to respond when production changes. A system built around predictable bulk movements might also require different staffing and replenishment processes. 

Modernization itself remains uneven. Half of Corning’s respondents said innovation initiatives progress steadily but slowly; 31% said they move quickly from pilot to scale. The challenge extends beyond buying technology to changing how work gets done across the operation. 

Warehouse networks carry yesterday’s decisions 

WSI’s findings help explain why the physical side can be difficult to change. The logistics provider surveyed 306 U.S. manufacturing supply chain, operations, and logistics leaders in April 2026. All represented companies with annual revenue of at least $50 million and a U.S. warehouse or distribution center. 

Three-quarters said their warehouse networks evolved organically rather than through strategic design. A location selected to serve one plant may remain in use long after the business changes around it. Expansions can solve immediate space shortages but leave the overall network poorly aligned with demand. 

Jesse Jones, vice president of operations at WSI, distinguishes improving performance inside existing buildings from reconsidering the network itself. “I don’t know that optimizing a particular facility or a group of facilities individually is going to address inefficiencies that are kind of baked in,” Jones said. 

A faster picking operation, for example, cannot eliminate the transit time between a distant warehouse and a production site; and better labor scheduling cannot create rail access where none exists. 

Prior spending complicates the decision. About 73.5% of WSI respondents said earlier capital investments had caused them to delay or avoid warehouse changes at least somewhat. An existing facility may still have financial value even when its location no longer serves the operation well. 

The pressure builds beyond the production line 

Manufacturers are also asking warehouses to absorb uncertainty. In WSI’s survey, 63% said they had increased safety stock or inventory buffers over the previous two years. Storage capacity and inventory accuracy and visibility were each cited as leading operational challenges by 35%.  

Buffers can protect production against late materials. They also occupy space needed to receive and handle other goods. If an automated line increases output while outbound capacity remains fixed, the improvement can shift a bottleneck downstream. 

Inventory location matters alongside inventory volume. WSI found that 59% considered proximity between warehousing and manufacturing very important, while 35% had their primary warehouse within 10 miles of production. The figures do not establish an ideal distance, but they raise questions about how well existing locations support operating priorities. 

Jones said visibility across the network is critical to understanding such problems. He said, “Otherwise, you’re making decisions one site at a time.” 

A comprehensive view changes the economics. Lower storage charges at one facility may be offset by extra transportation or handling elsewhere. Looking at total delivered cost is a central measure, including the cost of bringing in raw materials and moving finished goods through downstream distribution. 

Manufacturers begin to redraw the map 

The mismatch is prompting action. Three-quarters of WSI respondents were rethinking warehouse strategy at a regional or national network level. 

Reshoring is already influencing those decisions: per WSI, 35% of manufacturers were adding U.S. warehouse capacity to support reshored production, and 34% were repositioning facilities closer to new manufacturing locations.  

Moving production creates new requirements for the infrastructure around it, even when the manufacturing technology is ready. 

There is no uniform answer. Over the next 18 months, 39% expected to expand warehouse capacity or locations, while 31% expected to consolidate. Adding facilities can shorten delivery distances, but it also introduces additional inventory and operating costs. Consolidation can reduce duplication while increasing dependence on fewer locations. 

In the end, the decision extends past how much space to lease. A network must accommodate the production model a manufacturer intends to run, including its replenishment needs and the delivery commitments made to customers. Capacity planning must also account for whether trained labor and handling equipment can sustain the required flow. 

As manufacturers scale new technology, the warehouse network becomes part of the investment’s success. Faster production creates an advantage only when the surrounding operation can turn that speed into reliable delivery at a cost the business can sustain.