CHICAGO, Feb. 27, 2026 — Kearney says long term economic and operational drivers are adding to supply chain expenses at levels that exceed overall inflation, creating sustained financial challenges for manufacturers, retailers, and logistics providers. The analysis points to long term drivers that extend beyond short term volatility and require sustained attention from leadership teams responsible for operations and sourcing decisions.

The findings arrive as organizations continue to balance service expectations with financial discipline. Many companies have invested in digital tools and operational improvements, yet cost escalation tied to structural factors has limited the benefits of incremental changes. The report suggests that leaders must evaluate cost drivers with a systematic lens, rather than relying on isolated initiatives, to maintain competitiveness over time.

Structural forces described in the report include labor constraints, energy dynamics, regulatory requirements, network complexity, and capital intensity across global operations. These elements shape the cost base of supply chains and often influence decisions about facility location, inventory levels, transportation models, and supplier relationships. Because these drivers operate across regions and business units, they require coordinated oversight rather than fragmented management.

Persistent Cost Drivers

The report highlights how wage growth in logistics and manufacturing roles affects total operating expenses, particularly in markets where skilled labor remains limited. Transportation rates also contribute to cost escalation, especially when capacity tightens or fuel prices fluctuate. In addition, compliance requirements related to trade, environmental standards, and reporting obligations add administrative and operational expenses.

Energy considerations remain another structural factor. Production facilities, warehouses, and distribution centers depend on reliable power sources, and changes in energy pricing can alter cost structures. Network design decisions, including the number and placement of facilities, influence transportation distances and service levels, which in turn affect overall spending.

These drivers do not typically resolve through short term adjustments. Instead, they reflect underlying economic and policy conditions that shape supply chains across industries. Organizations therefore need durable frameworks to evaluate performance and guide resource allocation in response to sustained cost differences.

Strategic Implications for Leaders

When supply chain costs rise above inflation, operating margins face sustained pressure unless productivity improvements offset increases. Leaders must therefore examine not only individual cost categories but also the broader configuration of their networks. Decisions about sourcing strategies, supplier diversification, and inventory positioning can influence resilience and financial performance simultaneously.

The report indicates that organizations benefit from structured performance assessments that reveal capability gaps and identify areas for improvement. By evaluating planning processes, procurement effectiveness, logistics coordination, and governance structures, companies can determine whether current operations align with strategic objectives. Consistent measurement supports informed trade-offs between cost efficiency, service levels, and risk management.

Data driven reviews also enable benchmarking against peers. Such comparisons provide context for understanding whether cost performance reflects industry conditions or internal inefficiencies. Over time, repeated assessments create a baseline that supports progress tracking and accountability.

Role of Structured Frameworks

Tools such as the Supply Chain Navigator developed by Kearney illustrate how structured evaluation models can help organizations respond to structural cost drivers. The framework assesses maturity across strategy, processes, technology, and governance, allowing leaders to identify strengths and prioritize improvements with precision.

Rather than relying on isolated cost reduction programs, companies can use standardized assessment criteria to evaluate performance across regions and functions. This method encourages alignment between operational planning and financial objectives. It also helps management allocate capital toward initiatives that address root causes instead of temporary symptoms.

Structured reviews support transparency between functional leaders and senior executives. Clear performance indicators make it easier to discuss trade offs and resource decisions. By grounding conversations in consistent metrics, organizations reduce ambiguity and improve coordination across departments.

What Leaders Should Consider

The report emphasizes that understanding structural cost forces is only the first step. Organizations must translate insight into disciplined execution that reflects long term priorities. Regular performance evaluations, supported by reliable data, help leaders monitor progress and adjust strategies as conditions evolve.

Companies that embed structured assessment into their governance processes can respond more effectively to persistent cost differences. This discipline allows leadership to focus on productivity, network optimization, and cross functional coordination while maintaining alignment with financial targets.

Supply chain performance now plays a central role in enterprise strategy, given its direct connection to profitability and service reliability. As structural forces continue to shape cost levels, organizations that adopt systematic evaluation methods are better positioned to make informed decisions about operations, technology investments, and supplier relationships.