Software plays a central role in today’s busy automated fulfillment centers, where companies use connected systems to manage labor, transportation, planning, data and automation more effectively. This year, companies are upgrading core systems, evaluating new platforms and looking more closely at the tools that help keep warehouse and distribution operations running.
The annual “Software/Automation Outlook 2026” survey was conducted by Peerless Research Group for Modern to better understand how companies are using, evaluating and planning for technology applications in materials handling environments.
It explores technology adoption, economic factors affecting software purchases, key investment drivers, planned software evaluations and the reasons companies implement these systems.
This year’s survey of Modern’s readers represent a cross-section of supply chain operations, with manufacturers making up the largest share at 36%. Another 15% work for wholesalers, and 14% are employed in transportation or warehousing services.
They also hold a range of senior and operational roles, including logistics or distribution manager (24%), vice president or general manager (19%), corporate or divisional manager (14%) and operations manager (12%).
Large companies are well represented in the survey. Thirty-eight percent of respondents work for organizations that posted 2025 revenues of $250 million or more, including 19% at $2.5 billion or higher. Another 31% fall between $10 million and $249.9 million, while 24% report revenues under $10 million.
Software adoption plans are split across the board this year. Forty percent of respondents say their companies are cautiously embracing change (up from 34% last year), while 17% are taking a wait-and-see approach (down from 27% last year). Others (13%) say they’re early adopters when it comes to materials handling technology, and 17% consider themselves innovators (up from 11% last year).
The current economy has affected materials handling management software investments. Thirty-eight percent of respondents are holding off on software investments this year, up from 34% in 2025. And, about one-quarter of companies are scrutinizing software investments and moving forward cautiously due to the current economic environment.
Seventeen percent plan to upgrade existing software instead of buying new packages, the same percentage want to outsource more software implementations, and 13% say they’re moving forward with new software investments this year. More than half (55%) of companies say their use of materials handling software has stayed the same, up from 51% last year, while 42% say usage has increased, and only 4% say it has decreased, down from 7% last year.
Companies rely on several different software applications to run their fulfillment environments. Roughly half (49%) currently use warehouse management systems (WMS) or inventory management software; and 30% use supply chain management (SCM) or planning software (SCP). Other popular applications include labor management systems (LMS), transportation management systems (TMS), asset tracking software, warehouse execution systems (WES) and yard management systems (YMS).
Over the next two years, 25% of companies will evaluate, purchase or upgrade their WMS, while 21% will do the same with WES, and 18% with SCM or SCP. Other companies plan to evaluate, purchase or upgrade robotic control systems (17%), asset tracking systems (15%), LMS (13%) and TMS (12%).
Companies run into familiar challenges when adopting or implementing materials handling software systems. The top issues include total cost of ownership (32%), compatibility with existing systems (31%), user acceptance (30%), integration with existing software applications (29%) and a lack of resources to implement, manage and maintain these systems (28%).
Other obstacles include a lack of funding (24%), software performance issues (23%) and compatibility problems with existing host or legacy systems (21%).
The WMS remains a core platform for fulfillment operations, but companies are running systems of different ages. Thirty-two percent have had their WMS for five to 10 years, while 27% have had their WMS for one to five years. Another 18% have had their WMS for 10 to less than 15 years, and 14% are using a WMS installed 15+ years ago.
Upgrade timelines have shifted since last year. Twenty-seven percent of respondents upgraded less than a year ago, down from 50% last year. Others upgraded one to five years ago (41%, up from 25% last year), while 18% made the move in the last five to 10 years. Five percent of companies have never upgraded their WMS.
Respondents also report a wider range of WMS return on investment (ROI) timelines. Thirty-two percent say it took more than 18 months to realize ROI, while 22% realized ROI in six to 12 months (compared to 37% last year), another 22% say it took 12 to 18 months. Fifteen percent realized ROI in less than six months, while 9% say they haven’t realized ROI yet or aren’t sure exactly how long it took, down from 19% last year.
This year, companies are upgrading their WMS for different reasons, but most (62%) are doing it to replace existing platforms. Other drivers include improved labor management (29%) and inventory deployment (28%). The need for real-time control (24%), new picking requirements (23%) and slotting systems (15%) is also pushing companies to upgrade.
As transportation gets more complicated and costly to manage, TMS has become a more important part of the warehouse and distribution software lineup.
Thirty percent of respondents say they’ve had their TMS in place for 10 to less than 15 years, while 29% have had their TMS for five to 10 years. Another 23% have had their TMS for less than one year, suggesting more companies have recently moved forward with TMS implementations.
Companies are also upgrading existing TMS platforms. Thirty-nine percent say they upgraded their TMS less than one year ago, up from 23% last year, while 31% upgraded one to less than five years ago. Nine percent upgraded 15+ years ago, 7% upgraded five to less than 10 years ago, and 8% have never upgraded their TMS.
TMS investments are also producing faster payback for some companies. Thirty-nine percent say they realized ROI in six to 12 months, up from 28% last year, while 17% say it took more than 18 months and 14% say it took 12 to 18 months.
Companies are using supply chain management and planning tools to manage demand, manufacturing and replenishment. Thirty-seven percent have had their current solution in place for one to less than five years, while 35% have been using theirs for five to less than 10 years. Forty-six percent of respondents upgraded their solution one to less than five years ago, while 18% upgraded 10 to less than 15 years ago.
In most cases, companies use their supply chain management software for demand planning (51%); manufacturing (49%); collaborative forecasting, planning and replenishment (39%); and upgrading an existing package (36%). The payoff for these investments is generally quick: 46% say they realized ROI in six to 12 months, while 18% say it took less than six months and 17% say it took more than 18 months.
More of those solutions are running in the cloud. Forty-one percent of respondents now run cloud-based applications, while 36% are evaluating or plan to evaluate them within the next 12 to 24 months.
The top benefits include scalability (36%), access to analytical data (33%) and shared access to the same information (32%). Cloud is also getting more attention for core warehouse software, where 61% of companies are using or planning to evaluate cloud-based applications for WMS, TMS, LMS, slotting, order management or planning.
AI adoption is moving faster than it was a year ago. This year, 26% of respondents say they’re now using AI, up from 19% in 2025, while 29% are evaluating the technology. Another 11% will evaluate AI adoption in the next two years, up from 6% last year. On the flip side, only 10% have no plans to use AI at this time, compared to 25% last year.
Machine learning is also gaining attention. In 2026, 19% of respondents currently use machine learning, 26% are evaluating it and 12% plan to consider adoption in the next two years. Another 14% say they’ll evaluate machine learning in the future but aren’t sure when, while 7% need to know more before adoption and 21% have no plans at present.
With AI getting more attention this year, some familiar technologies are still part of the materials handling software conversation. In 2026, 22% of respondents say they’re using the Internet of Things (IoT), while 24% are evaluating it and 10% plan to evaluate it within the next two years.
Blockchain also saw some movement this year. Seventeen percent of respondents say they’re using the technology (up from 6% in 2025), while 15% are currently evaluating it.
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