In today’s climate of global uncertainty, many businesses are prioritizing immediate cost control and risk mitigation over long-term innovation. This defensive approach is understandable, but risky. According to data from Ivalua’s survey of 100 supply chain and procurement decision makers, 65% of U.S. businesses say uncertainty around U.S. trade policy is causing them to pause or reduce investment. Tariff threats, export controls and geopolitical uncertainties have created a climate of hesitation, yet leaders must urgently prioritize the technology that could help them most.

Read also: How Artificial Intelligence Is Reshaping Global Supply Chains

This is policy paralysis in action. It may appear to be measured caution, but it is freezing the essential capabilities companies need to survive. 

Disruption is already reshaping strategy

For U.S. supply chain and procurement leaders, disruption is already influencing strategy. In Ivalua’s survey, 91% expect disruptions from new trade policies, and 85% say international instability is already affecting their decision-making. 

Around 40% of companies have experienced adverse effects from U.S. export control measures, including lost sales, and 78% expect their profits to take a hit. At the same time, 33% of U.S. companies told Ivalua that geopolitical risk has put profitability under pressure due to rising supply costs, and 28% have passed those costs onto customers.

The case for AI as a risk strategy

As a potential cost-saving measure, many companies rushed to build their inventories ahead of the tariff hikes, only to see those deadlines repeatedly delayed. Combined with pandemic-era stockpiles, this move creates a strong case for just-in-time inventory management. Operating on an as-needed basis is critical to preserving cash and reducing waste. In an environment that refuses to stabilize, though, leaders are pressed to find solutions that balance resiliency and efficiency. A core part of this solution is investing in AI. 

The implementation of AI has a dramatic effect on organizations. Ivalua found that a remarkable 98% of companies with fully deployed AI tools say they feel prepared for geopolitical risk, with nearly half describing themselves as very prepared. Those who haven’t fully embraced AI face a different reality. Preparedness drops to just 21%. For companies with no AI plans, confidence plummets to zero. The confidence of these organizations is established based on their capabilities, not predictions, in an unstable environment. 

What AI changes in practice

When AI is part of the infrastructure, it becomes a powerful tool for proactive risk management. For instance, AI can interpret data to flag potential disruptions, such as tariff changes and geopolitical events, evaluate supplier performance against contracts and renewal timelines, model alternative sourcing scenarios, and recommend how many components to buy and from whom. AI agents continuously evaluate supplier performance, contracts and market conditions to surface risks, optimize spend and shorten sourcing and procurement cycles. They can also intervene to mitigate risk based on changing conditions. For example, requiring an extra approval before an order is sent to a supplier whose risk profile has deteriorated beyond a pre-defined level.

AI agents collect extensive data points to surface action plans in a time frame that humans cannot match. The human element, though, is still a priority. While AI handles routine analysis, ordering and scheduling, humans must make the strategic decisions. This hybrid approach is slowly becoming the new baseline for modern supply chain operations. 

Investment gaps and real-world returns

Industry forecasts indicate spending on generative AI for supply chains could reach $55 billion by 2029, up from $2.7 billion today, according to Gartner. 

Yet, many leaders hesitate, fearing complex implementations. This perception often stems from negative stories from initiatives that took a disjointed approach, trying to bolt AI onto legacy systems or stitch together multiple solutions. This not only makes AI difficult to deploy and scale, but also limits the ability to automatically action based on new information.

This hesitation is clear in Ivalua’s survey: 59% of companies cite innovation as a priority, and 73% agree they must invest more in technology to identify and mitigate geopolitical risk. Yet only 36% view AI as a top supply chain priority today, and 65% are pausing or reducing investment in it due to trade policy uncertainty.

Leaders know AI is vital. Many are adopting it, but far fewer are acting decisively. This mindset reflects a defensive posture. Cost control and short-term risk mitigation are crowding out long-term capabilities and competitive advantage. 

The data, though, shows that innovation is translating into tangible business benefits. Well-prepared companies with mature AI strategies are far less likely to anticipate profit losses from rising costs — just 50% express that concern, compared to 78% of their less-prepared peers, according to Ivalua’s survey.

Alignment, execution and AI-readiness

Risk is a constant in global supply chains. There’s no way to eliminate it; however, there are strategic ways to mitigate it, including thoughtful integration of AI. But technology alone is not enough: a significant component of AI adoption is internal alignment. Ivalua’s survey reveals a growing disconnect inside organizations. The majority of owners and C-suite executives say their organizations are very prepared for disruption, yet confidence among senior- and junior-level managers drops sharply. 

A well-considered strategy at the top is useless if it’s not urgently translated into tools, workflows and real readiness. Even with AI investment, a breakdown in execution or communication will undermine potential rewards. Without a bridge between executive vision and frontline capability, AI initiatives are prone to failure. Companies must close these gaps.

Global uncertainty is not going away anytime soon. Trade policy volatility, geopolitical instability and relentless cost pressures now define the business environment. To survive what’s next, supply chain and procurement leaders must incorporate AI into their risk management strategies as a meaningful component of their practice — not just an experiment or a bet on the future. 

The functionality and rewards of AI have cemented its role in business strategy, and data shows that the most resilient organizations are leaning into transformation to strengthen operations, address preparedness gaps and gain a competitive advantage in an uncertain environment.

The critical question isn’t, “Can we afford to invest right now?” but, “Can we afford not to?”

Author Bio

Alex has spent over 15 years of his career evangelizing Spend Management, shaping its evolution, and working closely with hundreds of customers to support their Digital Transformation journeys. As CMO at Ivalua, Alex leads the overall global marketing strategy and thought leadership programs. Alex also spent 12 years at Ariba, first building and running the spend analytics business as General Manager. He then built and led Ariba’s international marketing team until successful acquisition by SAP, transitioning to lead business network marketing globally. Alex was a founding member of Zeborg (acquired by Emptoris) where he developed vertical procurement applications. He began his career in the U.S. Cavalry, leading tank and scout platoons through 2 combat deployments. Alex holds a B.S. in Economics from the U.S. Military Academy at West Point and an international M.B.A. from INSEAD.