Rootstock Examines the State of Manufacturing

Rootstock has published the 2026 State of Manufacturing Technology Survey report. The findings are based on a ResearchScape survey of 520 professionals who lead digital transformation in mid- to large-sized manufacturers. They work in North America, Europe, and Asia.

The results indicate that Manufacturing organisations are making significant progress on both AI adoption and digital transformation. 94% of manufacturers are now using some form of AI.

However, some barriers and pressures may be hindering these changes. Challenges highlighted in the report include economic uncertainty, global trade pressures (notably tariff pressures), and persistent workforce constraints.

Rick Berger, CEO of Rootstock Software, commented, “Manufacturers aren’t slowing down on digital transformation, but they’re being more selective about the initiatives they move forward with, ensuring projects will help improve performance and results.

“With this strategy in mind, many manufacturers are actually increasing investments in enterprise software, as they see these solutions as being able to help them respond faster to market conditions, plan with greater confidence, and operate more effectively in today’s volatile market.”

What is in the report

The twenty-seven-page report is divided into four main sections:

• Digital Transformation in Manufacturing
• ERP and the Manufacturing Signal Chain
• Future Outlook: Economic And Trade Conditions
• AI Adoption and Impact

Each section provides commentary and data visualisations around the survey responses. There are some comments from survey participants in some sections. However, there are no comments from either Rootstock leaders, industry analysts, or academics that might have strengthened the research. The report also doesn’t use secondary research, which might have further validated or illuminated its findings.

This is the third State of Manufacturing Report that Rootstock has published, and comparisons are made from historical data throughout the report. The comparisons provide some interesting insights.

Digital Transformation in Manufacturing

This section looks at the progress that manufacturers have made in digital transformation and found that more respondents feel slightly or far ahead of peers than they did 2 years ago (38% vs 33%).

There are many perceived barriers; however, difficulty with traceability/compliance and an inability to get products to market fast enough have fallen. The top three challenges (all on 27%) were the lack of:

• Operational capability to react to disruptions
• Digital competencies to transition to new business models
• Digital skills amongst employees

Notably, finance was not highlighted as a barrier. It isn’t clear whether this wasn’t included in the survey or was inconsequential. Other similar surveys list systemic, financial, and cultural barriers.

There is investment in digital transformation, or at least technology. Organisations seek to improve operations and production performance (40%), though this is down a point from the last survey. 61% plan to increase spending in Enterprise Software. It should be noted that 34% see cybersecurity as a necessary IT investment, though.

ERP and the Manufacturing Signal Chain

To improve their operations and production performance, manufacturers are still turning to ERP. 49% want ERP to help simplify and standardise platforms. In other words, they expect platforms such as Salesforce to serve as the foundation for business applications.

Despite the desire, there is a lack of integration between business functions such as supply chain, demand, production and finance. Unfortunately, the report asked functions in isolation about their integration level. It would have been interesting to get a deeper insight into which functions are already integrated with others.

The advantage that Rootstock can deliver to manufacturers is that it already integrates Supply Chain, Production, and Finance, and, with Sales Cloud, provides integration between all four. Perhaps next year, a service function will be added, and organisations that use Salesforce Service Cloud should find synergies with other functions.

Once the customer quote in the report highlights this, saying, “Salesforce is supporting manufacturing digital transformation by providing a unified platform that connects various aspects of our business, including sales, operations, and customer service.”

Ohad Idan, Vice President of Product at Rootstock, commented, “Manufacturers are increasingly looking to ERP as a way to consolidate platforms and bring fragmented parts of the business together. The survey shows rising expectations around ERP to unify data across sales, operations, and supply chains.

“This type of unified view helps manufacturers modernize processes and gives them clearer insights to meet customer demand. As AI adoption continues to expand, having a unified foundation becomes essential for improving forecasting, decision-making, and employee productivity.”

Future Outlook: Economic and Trade Conditions

Manufacturing has mixed opinions about the economic outlook. The majority, though, have a negative outlook as a result of inflation, interest rates and the general academic conditions over the next 12 months. Only 19% are positive about demand, 15% about supplier reliability, and 7% about transportation and logistics. The report did not break this down by region.

Many manufacturers expect these to affect operations or investment decisions. The most common impacts are:

• Higher cost of raw materials or components, 39%
• Need to raise prices for customers, 37%
• Stockpiling inventory ahead of tariff changes, 26%

While the report found that the introduction of tariffs has impacted North America differently than Europe, there are similarities: the two highest impacts are the higher cost of materials (41% North America, 36% Europe) and the need to raise prices (35% North America, 40% Europe).

Stockpiling also has other impacts that the authors did not delve into. For example, it is likely to reduce free cash, increase storage costs, and increase the risk of higher wastage.  Also, there may be other causes for price increases.

AI Adoption and Impact

The final section, and possibly most interesting, focuses on the use of AI within Manufacturing. AI is being used more widely in manufacturing firms than two years ago. Predictive AI is up 12%, AI-powered IIoT is up 6%, Generative AI is up 9%, and Automation has increased 10%. The survey does not appear to have asked about Agentic AI, though.

These numbers are backed by the finding that Manufacturers are growing more confident in using AI. The focus varies, but there was a significant increase in those planning to invest in AI-powered supply chain management and planning (up 29% to 35%). However, cybersecurity remains the top investment priority (43%). It was followed by process optimisation (36%), which has also jumped 11% from the previous report.

Many employees feel concern about AI. Business leaders are stating more openly that AI will cause job losses, either indirectly or directly. The final part of the survey is about the impact on the workforce. It highlights the positive, the negative and the changes that are likely to happen with:

• 50% say AI will improve employee satisfaction and productivity
• 48% expect to upskill or reskill current employees
• 28% expect to reduce headcount

Enterprise Times: What does this mean

The report is well put together and includes some interesting statistics, especially regarding the trends observed. Those trends may be more obvious if Rootstock repeats the report next year. The report could have been improved by providing a takeaway for readers, either action points or a set of questions for them to contemplate.

There is also no breakdown of the results from Asia, presumably because the sample was too small. Rootstock should either drop the survey in Asia or ramp it up, so it can provide meaningful figures.

There are some clear takeaways, though. Manufacturing may be later to the party than other industries, but it is now rapidly digitally transforming and getting excited about AI. While the US is slightly ahead of Europe, European manufacturers are not that far behind.

Finally, there is value in putting enterprise applications onto a common platform, such as Salesforce. It enables better integration between historically siloed functions. For manufacturers, though, having a common platform does not solve coordination challenges; it merely enables integration at the technological level.

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