While tariffs will likely end up as the biggest topic of 2025 discussion in wholesale distribution, AI remains a close second. AI is widely seen as the next wave of technological innovation across all industries, and depending on your source, it may be the biggest of the post-WWII era.

There is an endless stream of studies on the current and potential impact of AI in the business world, but what about distribution specifically?

MDM is happy to be a resource here.

For the past three years, we’ve benchmarked what distributors have told us regarding their amount of AI application throughout their organization. We’ve done this by asking the same quantitative survey question — “To What Extent is Your Company Utilizing AI Technology in its Operations?” at the same time of the year, and to the same pool of respondents. 

This was done via our quarterly Baird-MDM Industrial Distribution Survey, which polls hundreds of distributors, manufacturers, manufacturers representatives, master distributors, buying groups and more on current and projected revenues, business conditions, pricing and more, and collects plenty of respondent commentary.

We pulled the results of the 2Q25 survey on July 7, and like they did the previous two years, the results showed another significant jump in the industry’s — and greater industrial supply channel’s — AI adoption.

Whitepaper: In Pursuit of Practicality — 52 real use cases for AI in wholesale distribution today

Survey Demographics

Before we dive in, it’s important to know the demographics of our survey respondent pool for this question. 

• Over three years, the average number of respondents is 268. 
• Approximately 60% of respondents identify as distributors; 30% as manufacturers; and 10% as other (manufacturers reps, master distributors, buying groups, etc.)
• Approximately 50% of respondents have annual revenues below $25 million, reflecting the small, independent company that makes up the majority of MDM’s readership; 28% are between $26M-$100M; 17% are between $101M-$500M; and 15% are >$500M.

But enough preamble. Let’s explore our findings that cover three years of benchmarking AI adoption rates, segmented by company type and revenue size.

All Respondents

When looking at our entire respondent pool, we see that the portion who have yet to get involved with AI anywhere in their organization became considerably smaller again in our 2025 survey, now at 28.7% as “Nothing yet”. It was at 61.8% just two years earlier. Meanwhile, the biggest year-to-year jump was in the slice that indicated they’re using AI in several activities — moving from 12.9% in 2023 to 20.1% in 2024 and now up to 33.8% in 2025.

Distributors

When we single out distributors from the total respondent pool, we see that they are more active with AI than the above overall figures. The portion of distributors that indicated they’ve done nothing yet with AI plummeted from 47.1% in 2024 to just 25.0% in 2025. This still represents that 1-in-4 distributors aren’t using AI anywhere, but the rate of change is nonetheless remarkable — especially when given the survey demographic slant toward smaller companies. The portion that indicated they’re using AI in several activities had a similar annual increase in 2025 that it did in 2024, improving 13.2 percentage points to 36.4%.

Distributors using AI “In Many Activities” remains a small sliver, but increased from zero in 2023, to 1.3% in 2024 and 3.8% here in 2025.

Now, let’s get more granular and filter our results further by distributor revenue size. For this, we’ll examine only our 2025 results.

Of our distributor respondents, 58% of them indicated they have revenues of less than $101 million, including 36.6% with less than $25 million. We dispersed the results of our distributors by the revenue ranges above as the most even spread for this. To no surprise, the results for <$25M and $26M-$100M are very similar, with just a few percentage points separating them in a couple of slices. It’s at the other end of the spectrum that things differ considerably, with larger distributors — and their more robust capital and staffing resources — able to support higher levels of AI activity. This is led by a combined 61% our >$500M distributors using AI in several or many activities, compared to about 28% when combining our <$25M and $26M-$100M distributors.

Manufacturers

Manufacturers represented approximately 30% of our respondent pool over the past three years, making that demographic well worth splitting out as well.

Our manufacturer respondents certainly lag the adoption rate of distributors in this survey, but show sizable progress nonetheless, with the portion indicating “Nothing Yet” for activity going from 70% in 2023 to 43.7% in 2024 and down to 36.9% in 2025, vs. 25.0% for distributors. 

So, What Does This Tell Us?

Distributors > Manufacturers, at least in AI adoption

Given the nature of distributors as sales-based organizations and the low barrier to entry for AI-powered sales tools, the noticeable difference here in the yearly adoption progress between distributors and manufacturers isn’t surprising. AI-powered factory production tools tend to be far more involved and expensive than tools that make a distributor sales rep more efficient, so cost may be the biggest factor in the difference we see here in distributor vs. manufacturer AI adoption rates.

Size matters

Our chart for AI adoption rates by distributor revenue size makes it obvious that scale plays the largest role there. This has always been the assumption in the industry, but it’s interesting to actually see in the data. Of course, there are plenty of small- mid-sized distributors that are heavily involved with AI and in some cases are far more proactive with it than their larger counterparts, but the broader aggregate tends to reflect what our survey findings show.

Plenty More AI Insight from MDM

This adoption benchmarking is just one snippet of the AI research and analysis available from MDM. Below are other recent resources that you are more than welcome to make use of:

• Upcoming July 24 Webcast: Preparing B2B Product Data for Growth and AI
• Upcoming Aug. 7 Webcast: The Executive AI Playbook – Scaling Intelligent Supply Chains & Distribution Network
• Whitepaper: In Pursuit of Practicality — 52 real use cases for AI in wholesale distribution today
• Article: A Day in the Life of an Outside Sales Rep – With AI
• Whitepaper: Distribution Futures 2035
• Article: Using AI in Your Day-to-Day: A Board Director’s Guide
• Whitepaper: Practical AI Applications Across Business Functions
• Article: Why Most AI Projects Fail — and How to Ensure Yours Succeeds