As they work through the complex business environment of 2026, some organizations are wrestling with an “innovation paradox,” in which they increasingly depend on innovation to mitigate inflation, yet inflation itself is making those projects harder to fund and execute.In response, many are taking a more disciplined, results‑driven approach to innovation in search of solutions to pressures such as rising costs, labor pressures, and accelerating digital transformation demands.Those findings were identified by third‑party logistics provider Kenco in its recent “2026 Innovation Report.” The study found that nearly half of respondents cite inflation (45%) as their primary innovation driver, followed by labor shortages (28%), and sustainability priorities (27%). But at the same time, cost constraints (51%), workforce challenges (45%), and technology integration issues (29%) remain the biggest barriers to progress.Still, 83% of respondents reported having a dedicated 2026 innovation budget. While overall budget increases declined compared to the prior year (35%, down from 39%), nearly half of companies (49%) noted an innovation budget of at least $500,000, underscoring continued emphasis on modernization.According to Kenco, the goal of that spending is focused on foundational improvements, prioritizing quality (33%), inventory management (27%), and labor efficiency (23%).“Supply chain leaders are past the stage of experimenting with innovation just to see what’s possible,” Kristi Montgomery, Vice President of Strategic Transformation at Kenco, said in a release. “They’re looking for solutions that positively impact cost, service, and resilience. This year’s research shows that AI and automation only deliver results when rooted in strong data foundations, proven…
