High Cost of Equipment Main Barrier to Modernizing Supply Chains: Survey

To navigate these complexities, businesses are increasingly turning to creative financing solutions.

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Findings from a Mitsubishi HC Capital America survey underscore the complex and rapidly evolving challenges businesses face today. Although emerging technologies aren’t yet seen as major disruptors, policy changes and tariffs are starting to make a noticeable impact. 

In response, companies are taking varied approaches — some anticipate little change in their equipment needs, while others are preparing to replace aging assets or adapt their strategies to navigate growing economic uncertainty.

Key takeaways:

 

·        Rising transportation costs and volatile market conditions continue to complicate efforts, particularly when integrating new technologies with outdated infrastructure, a challenge cited by 90% of survey respondents.

·        To navigate these complexities, businesses are increasingly turning to creative financing solutions. 90% indicated they are likely to leverage financing for new equipment purchases to manage immediate financial pressures while investing in long-term growth. Among them, 68% preferred long-term, low-payment financing structures that support their strategic planning, as 48% cited high equipment costs as their most significant modernization challenge. Meanwhile, workforce challenges persist, with nearly half of respondents (46%) reporting issues related to a skills gap or talent shortage, adding another layer of challenges to adapting to today’s market.  

  • 74% of respondents reported equipment costs have increased in the past year, with 47% seeing significant increases.
  • 46% of organizations are experiencing talent shortages, with equipment purchases (53% of those addressing shortages) emerging as a key strategy to address workforce challenges.
  • 70% consider their organizations "on track" with modernization efforts despite significant challenges, with 37% assessing their technology needs annually.
  • 69% report stable or increasing business pipelines currently, with 44% expecting continued growth in the next six months.
  • The main performance issues are staffing shortages, supply chain disruptions, and technology limitations. Some respondents also mention difficulties in accessing financing.
  • 47% of organizations purchased new equipment within the last year, with an additional 41% making purchases in the last 1-3 years, demonstrating continued investment despite economic challenges.
  • 50% of respondents identified transportation and logistics as requiring the most modernization, highlighting significant pressure in this critical sector. Respondents cited specific challenges including "instability in transportation" and concerns about "transportation rates and fuel costs."
  • While 74% of organizations rely on traditional bank loans for equipment acquisition, the strong preference for flexible, long-term financing options indicates a significant opportunity for alternative financing approaches that better align with today's economic realities.
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