Netstock 2025 Benchmark Report: The State of Supply Chain Planning

Tariffs defined the opening chapter of 2025. A staggering two-thirds of SMBs (63%) reported direct operational impacts, making it a near-universal challenge shaping inventory strategies. For many, the immediate question was whether to absorb costs, pass them along, or cut back on purchases. Almost half chose to absorb (44%), signaling a willingness to accept slimmer margins in order to keep shelves stocked and customers satisfied. In other words, service levels took precedence over short-term cost relief. Only about a quarter of SMBs weren’t impacted, reinforcing how widespread this pressure has become.

This reality is reshaping procurement tactics. Rate management practices show uneven maturity. The share of SMBs without a formal hedging or contracting strategy climbed to nearly half (49%), a sign that many are still exposed to supplier price swings. Long-term contracts, while still the most common tool, slipped from 47% to 36%. Forward cover nudged up (11% → 15%), suggesting a small but growing cohort of businesses experimenting with more sophisticated financial protections. The broader picture: a sector navigating volatility with mixed levels of preparedness.

Sourcing decisions reflect the same balancing act. When tariffs rise, SMBs must quickly weigh domestic, offshore, and split strategies. In 2025, split sourcing, the most flexible model, dropped from nearly half of businesses (47%) to just 38%. Offshore reliance eased slightly (31% → 28%), while domestic sourcing ticked up (19% → 21%). While the shifts are modest, they point to SMBs making firmer commitments that narrow their optionality. This may be the early outline of a reshoring trend, or simply the byproduct of constrained budgets and fewer supplier options. Either way, SMBs are recalibrating sourcing in response to global trade friction.

Lead times, which had been trending downward, reversed course in late 2024 as tariffs landed. Some SMBs managed to maintain stability, but others experienced significant delays stretching weeks longer. More recently, those delays have begun to ease, hinting that some of the initial tariff shock is wearing off. Whether that relief proves durable remains to be seen, but the signal suggests that supply chains are starting to regain their footing after months of volatility.

While tariffs have been the headline story, supplier performance tells us how those pressures play out on the ground. For SMBs, predictability and speed continue to outweigh pure cost considerations. Lead time variability, which is shipments arriving unpredictably early or late, remains the top challenge, cited by 68% of respondents. Long supplier lead times follow closely at 58%. Cost, while still important, ranked lower at 48%, up slightly from 43% in 2024. This flat year-over-year pattern on lead times suggests that the pain hasn’t eased. Many SMBs appear to be adapting through buffer stock, improved forecasting, or closer supplier coordination rather than seeing real improvement in supplier reliability.

Other pain points remain in play. Minimum order quantities (MOQs) still weigh on nearly half of SMBs (45%), forcing many to purchase more than they need and tie up cash. Partial deliveries, cited by 26%, have actually ticked up since 2024, showing that order fulfillment consistency continues to challenge day-to-day operations. Together, these responses paint a picture of supply chains where timing and accuracy matter more than ever, and where disruptions translate directly into excess or missed sales.

At the same time, SMBs are exploring alternative approaches to ease this strain. Vendor-managed inventory (VMI), where suppliers take responsibility for monitoring stock and replenishing when needed, jumped from 29% to 44%. Consignment, where suppliers retain ownership until goods are sold, also grew modestly, from 19% to 25%. Perhaps most encouraging is the sharp drop in SMBs without any alternative strategy: down from 60% to just 38%. This signals meaningful progress, with more businesses willing to test shared-risk models and new procurement practices that spread responsibility across the supply chain.

The modest efficiency gains of recent years have leveled off. Global stock turns plateaued in 2025, holding an average of 5.3 and a median of 3.9 — almost unchanged from last year. The gap between the mean and median highlights a familiar story: a small group of high performers keep inventory moving efficiently, while most SMBs continue to struggle to accelerate sell-through. Despite the tariff pressures of late 2024, there was no broad improvement in turnover, suggesting that momentum has stalled. For some SMBs, stability may feel like a win, but for others, sluggish stock turns remain a drag on cash flow and competitiveness.

Inventory holdings reveal how SMBs manage disruption not just through daily operations, but through broader choices about how much to carry, when to build buffers, and how aggressively to trim back. This year, a new lens came into sharper focus: strategic excess stock. For some, surplus is no longer a mistake to be avoided, but a deliberate decision to frontload and prepare for tariffs, delays, or demand swings. 30% of SMBs report that more than 30% of their excess stock is strategic, deliberately held as a buffer, up from 23% in 2024. On the other end, one in five say less than 10% of their excess is strategic, reflecting leaner, just-in-time philosophies. This wide split highlights two schools of thought: resilience through stockpiling versus efficiency through restraint.

Still, excess stock comes with consequences. Total excess and dead stock are both climbing, and dead stock in particular is worsening. Today, 55% of SMBs report holding at least 20% excess stock — up from 48% in 2024. In reality, that percentage may be higher than reported and closer to 40%. Nearly half (46%) say 5% or more of their inventory is dead stock, and 17% carry more than 10% — up from 12% in 2024. That rise is especially concerning: inventory sitting unsold for a year or more ties up cash, eats warehouse space, and drains agility.

On clearing excess, most SMBs still lean on the most obvious tool: promotions, cited by 69%. Redistribution across warehouses, a tactic that protects margins while moving stock closer to demand, remains underused at just 29%. And 11% admit they have no reduction strategy at all, leaving them exposed when excess becomes unmanageable. These responses suggest that while many businesses are learning to plan strategically on the front end, fewer have developed sophisticated playbooks for clearing the backlog.

Inventory scale, which had been flattening through 2024 at around $3.5M median value per business, began ticking upward in Q2 2025, reaching $3.6M. That inflection suggests a new round of stockpiling — whether deliberate or reactive — likely spurred by tariff announcements and demand uncertainty. By Q2 2025, however, orders tapered off, and sales spiked again, a sign of businesses discounting to clear shelves after overbuying due to tariffs.

SMBs are showing clear differences in how they approach excess this year, from stockpiling for promotions to freezing up in the face of volatility to actively burning down surplus:

The balance between too much and too little remains delicate as well, with many SMBs leaning toward stockpiling as insurance against uncertainty, even as others aim for leaner, more precise operations:

Finally, purchasing discipline is diverging, with some businesses aligning tightly to demand while many others continue to misjudge order volumes and sit on sluggish stock:

Taken together, these findings show SMBs in a moment of divergence. Some are sharpening their strategies, treating “excess” as a calculated tool. Others remain reactive, caught between carrying too much, too little, or the wrong mix. The challenge for 2026 will be closing that gap: turning excess from a liability into a lever, while ensuring that discipline doesn’t slip in the face of external shocks.

Stars represent the 75th percentile and above for key inventory KPIs, while stragglers represent the 25th percentile and below. These benchmarks offer a snapshot of how SMBs, by industry and region, perform at the top and bottom of the spectrum.

Lead Time

• Stars: Keep lead times stable, globally averaging 20 days or less.
• Stragglers: Face delays stretching beyond 80 days, with volatility tied to tariff and supplier disruptions.

The spread highlights why agility and reliable suppliers separate leaders from laggards.

Stock Turn

• Stars: Average ~6+ turns per year, showing disciplined purchasing and efficient sell-through.
• Stragglers: Struggle below ~2 turns, signaling sluggish inventory and cash flow pressure.

This contrast highlights why stock turn remains one of the clearest indicators of operational maturity.

Overstocking

• Stars: Maintain tight control, holding 26% or less excess while protecting service levels.
• Stragglers: Sit on heavy piles of surpluses of 50% or more, often buying reactively or failing to burn down inventory.

The divide shows how excess can either be a strategic buffer or a costly liability.

Understocking

• Stars: Balance lean inventory with service, avoiding missed sales with stockout levels of under 2%.
• Stragglers: Chronically under-purchase, exposing themselves to lost sales of 13%+ and possible customer churn.

The split reinforces the challenge of right-sizing: too little can be just as damaging as too much.

Behind every inventory decision lies a financial one: how will it be funded? The 2025 data shows subtle but important shifts in how SMBs approach this question. Reliance on credit fell from 53% to 47%, a decline that likely reflects higher borrowing costs and greater caution around taking on debt. Cash usage dropped even more sharply, from 54% in 2024 to 44% this year, suggesting that fewer businesses are able to self-fund inventory as freely as before. Meanwhile, the share of SMBs with no defined financing strategy climbed to 27%.

These shifts don’t necessarily point to deterioration, but they do reveal tighter financial flexibility. Data shows a global demand downturn in Q4 2024, likely driven by economic uncertainty from looming global tariffs. This left cash unexpectedly tied up in higher-than-planned inventory, compounding the challenge of managing stock efficiently. Many SMBs are balancing preserving cash reserves, avoiding costly borrowing, and finding new ways to keep stock moving. In practice, this can mean leaning more on promotions to generate cash flow, delaying purchases, or reducing growth investments. More than ever, SMBs will need reliable inventory planning tools and expert guidance to navigate this uncertain planning landscape.

The takeaway: financing isn’t just a back-office consideration. It shapes procurement discipline and helps businesses respond to tariffs and supply shocks. It also enables SMBs to handle sudden demand changes and seize new opportunities quickly. In an environment where inventory itself is increasingly used as a buffer against uncertainty, the question of “how to pay” is becoming just as strategic as “what to buy” or “when to sell”.

Financing decisions shape more than balance sheets; they determine a business’s agility. When SMBs have the resources to invest, they can do more than weather shocks; they can keep customers satisfied and expand into new markets. This is where the story of resilience turns into one of growth.

Service levels, a measure of how often businesses can fulfill customer demand without stockouts, are the clearest signal of operational health. In 2025, nearly half (46%) of SMBs reported service levels above 90%, up from 41% last year. This improvement shows that despite tariff pressures, shifting supplier dynamics, and rising costs, more SMBs are reliably getting products to customers when and where they need them.

But SMBs aren’t just holding the line, they’re expanding it. An impressive 93% of businesses launched or expanded product lines in 2025. This growth reflects not only innovation but also a determination to compete, adapt, and differentiate. From entering new categories to fine-tuning assortments, SMBs are showing that turbulent conditions don’t have to stall ambition.

Together, these findings highlight a critical point: even under financial and supply chain strain, SMBs are proving capable of both stability and forward motion. Strong service levels keep customers loyal, while new product growth positions businesses for the next opportunity.

AI is no longer just a concept for SMBs; it’s a central tool in inventory management. AI adoption has more than doubled, climbing from 23% in 2024 to 48% in 2025. Future investment plans nearly doubled as well, from 26% to 49%. Just 17% now say they’re unsure of future investment in AI, down from 47% a year ago. The shift signals a decisive move from exploration to execution.

The adoption pattern tells a clear story. AI tools have become more accessible and relevant, and SMBs are responding with action rather than hesitation. Fewer businesses are “unsure,” and more are committing resources, showing that AI is now viewed as a competitive necessity rather than a distant possibility.

The data shows SMBs are leaning into AI where it delivers measurable ROI. Forecasting remains the top application, rising from 52% in 2024 to 63% in 2025. Inventory optimization climbed from 48% to 58%, and demand planning grew from 44% to 55%. Even supplier performance monitoring expanded, from 20% to 27%. These jumps reflect a preference for pragmatic, high-impact applications that directly improve cash flow, carrying costs, and customer service.

Adoption isn’t without friction. Security concerns remain the top challenge, cited by 36% of SMBs. Inconsistent answers (24%) and transparency issues (17%) also weigh on confidence. Yet progress is evident: fewer SMBs cite “not knowing how AI works” compared to 2024, showing that education and familiarity are improving year over year.

The most striking shift is how SMBs view AI autonomy. More than 75% are willing to share or fully delegate inventory processes to AI, while outright rejection remains rare. Most SMBs lean toward shared control — 52% want oversight but are open to AI assistance — while nearly a quarter (24%) are ready to embrace automation outright. Only 14% say they would never trust AI to manage inventory.

This balance of openness and caution highlights a maturing perspective: SMBs want efficiency gains from automation but expect transparency and human input. For a segment known for lean teams and limited resources, this blended “human + machine” model is likely to drive the next wave of AI adoption.

2025’s data reveals a sector under pressure, but not standing still. SMBs are adapting and finding ways to balance cost, service, and growth. Tariffs, financing constraints, and supplier uncertainty will remain challenges, but they are also catalysts, pushing businesses toward smarter strategies and new tools.

With AI and modern planning tools, SMBs can do more than just optimize their inventory. They can simulate alternatives, evaluate service-level and capacity trade-offs, and focus attention on the scenarios that matter most. Forward-looking visibility is what builds resilience and makes their limited bandwidth more impactful. This shift, from firefighting to proactive planning, allows lean teams to punch above their weight, turning data into a set of clear, viable options that leadership can act on with confidence.

For SMBs entering 2026, the call to action is clear: treat inventory as the foundation for smarter supply chain planning, embrace AI-driven insights, and use them to unlock resilience, agility, and growth.