New research from Argon & Co, a global operations strategy and transformation consultancy, finds 54% of C-suite leaders in the UK say inflation and rising costs were the most significant challenge facing their organisation in 2025, limiting their ability to invest in the capabilities needed to build resilient operations.

Almost one year on from the increases to Employer National Insurance and the National Living Wage – plus a fresh rise of inflation to 3.4% – operations leaders say cost pressure is forcing difficult trade-offs between protecting short-term margins and investing in long-term resilience as UK growth stalls.

Argon & Co’s report, Operations Outlook 2026, surveyed more than 800 C-suite leaders globally. The research shows that many UK C-suite leaders are turning towards technology to drive efficiencies, with 52% using artificial intelligence (AI) and automation to combat rising operating costs.

Key findings are:

• Raw material costs are threatening supply chains: 38% of UK respondents say rising raw material costs are negatively affecting their supply chain operations, particularly in the automotive (53%), food and beverage (40%), and life sciences (40%) industries.
• Some firms are making cuts: More than half (52%) of C-suite leaders are reducing non-essential spending to offset rising costs.
• Keeping up with the pace of AI is a growing challenge: 38% of operations leaders in the UK cited rapid technological change as their biggest business challenge last year.

“C-suite leaders are caught between a rock and a hard place, expected to build organisations that can withstand disruption, while also maintaining profitability and performance,” comments John Thorpe, Partner at Argon & Co. “But it’s not all doom and gloom for the UK – growth is achievable and out there. Leaders who build adaptive operating models and develop the muscle for continuous transformation will be best placed to protect margins, create value, and navigate this uncertainty. When done well, finding these efficiencies is one of the best ways to build resilience.”

Growth is on the 2026 agenda

Despite today’s pressures, the findings show that C-suite leaders are prioritising long-term growth and resilience building. Looking at the strategies that firms are implementing, 53% of UK C-suite leaders are optimising inventory, helping to strengthen responsiveness and cash flow while reducing waste and working capital pressure.

C-suite leaders are also increasingly viewing advanced digital tools as essential to operational resilience, particularly across supply chains, manufacturing, and logistics.

Almost half (49%) of global operations leaders say digital twins, AI, and predictive analytics present the greatest opportunity to build resilience in manufacturing and logistics over the next five years. A further 39% see automation and Industry 4.0 technologies as essential for improving resilience, enhancing workforce productivity, and reducing reliance on manual intervention in industries vulnerable to labour shortages.

“Firms need to know where the vulnerable parts of their operations are, and understand how different disruptions could pan out,” Amanda Khalaf, Partner at Argon & Co notes. “Digital twins help leaders to quickly run ‘what-if’ scenarios, stress-test plans, and build contingencies before trouble hits – vital for when supply chain conditions rapidly change.”

“But technology alone won’t build resilience. The organisations making the greatest progress are those opting for a cross-functional approach: integrating technology, people, and processes, and challenging long-standing ways of working so they can respond to disruption faster than competitors.”

Further data and insights can be found in the full Operations Outlook 2026 research report, available for download here: https://www.argonandco.com/en/news-insights/whitepapers/operations-outlook-2026/