Netstock’s new inventory management 2024 benchmark report is a resource for small and medium-sized businesses (SMBs) striving to optimize their inventory performance. With excess stock now accounting for 38% of SMBs’ inventory and significant gaps in demand planning, this report provides businesses with data needed to measure their performance against industry peers, identify areas for improvement, and set realistic, actionable goals. 

The report highlights five emerging trends that emphasize the urgent need for SMBs to develop more robust supply and demand planning software strategies in an ever-shifting global marketplace. 

1 Addressing Inventory Excess  

SMBs have held onto fewer goods this past year but struggled to get rid of slow-moving inventory. Netstock’s benchmark report shows that smaller businesses have reduced the overall inventory levels, showing a 9% year-over-year decrease in total inventory value. However, nearly 80% of SMBs continue to struggle with inadequate forward planning and overstock issues, indicating persistent worries about not being able to get inventory.  

“If you step back two to three years, we all know where this excess comes from,” says Barry Kukkuk, CTO and co-founder of Netstock. “A lot of SMBs got burned from over-ordering their inventory during the peak of COVID-19 and have continued to try to compensate from these past experiences.” 

Viewed year-over-year, while purchase orders steadily rose by 9% in early 2023 and skyrocketed ahead of the holiday shopping season for retail businesses to 16% in the first half of 2023, businesses weren’t moving enough goods to keep up with the big stockpiles accumulated. Yet, by early 2024, average inventory spending returned to a near identical pre-crisis level (less than 1% difference from 2023). 

2 Navigating Long Lead Times and Lead Time Variability  

Netstock’s report shows that lead times began on a downward slope in 2023, dropping a full week from an average of 61.5 days to 54.1 by Q3. But when global unrest knocked supply chains off course, and turnover plateaued in the second half of the year, supplier delays predictably picked back up all the way into 2024. 

The report identified that 58% of SMBs cite long lead times as a significant challenge, where the dominant issue for suppliers is lead time variability, affecting 72% of SMBs.  

Looking regionally across key areas, the majority of SMBs from the study are struggling with lead time variability when sourcing their inventory from China (67%), more than from the U.S. (56%), Canada (21%), and Mexico (just 9%).  

“Even though things started getting better, with lead times coming down over the year, the variability of lead times has made it very hard to plan,” Kukkuk says. “If your supplier says we will deliver in 90 days, but sometimes it's 120 days, and sometimes it's 60 days, you don't know what you're going to get.” 

3 Looking for Suppliers Close to Home 

American SMBs are shifting away from overseas suppliers and are bringing production closer to home. According to the benchmark report, only 25% of U.S. respondents prefer offshore suppliers over domestic ones.  

Challenges that range from tariffs and increased compliance regulation to regional political instability overseas, mean SMBs find it harder to work with overseas suppliers. Part of this difficulty comes from the inflexibility or constraints imposed for meeting minimum order quantities (MOQ); the study cited MOQ as a major challenge for 54% of SMBs. 

“The further away you source, the bigger the containerization issue becomes,” says Kukkuk. “If you want to buy things from an overseas supplier, you may already have three-quarters of a container filled with a current order, but the overseas supplier demands that you must fill this container with their MOQ requirements before you even start shipping.”  

The requirement to order extra stock can increase hesitation in purchasing from overseas suppliers, particularly because of additional costs such as overflow warehousing, increased insurance, or refrigeration for managing excess inventory.  

4 Using Financing to Manage Excess Stock    

Excess stock grew to 38% of SMBs' inventory over the past year, which is a sign that companies struggle to optimize their inventory. However, Netstock’s research reveals access to financing may influence an SMB’s willingness to carry the excess. For example, over half (54%) of survey respondents with more than 20% excess inventory rely on inventory financing.  

“One of the interesting findings we identified is the bigger the company, the more excess they’re willing to carry as inventory,” says Kukkuk. “This behavior likely stems from the fact that finance options are more accessible to the larger companies in the survey.”   

While larger SMBs may have the working capital to justify holding onto inventory as a precaution, smaller companies need to be more agile, since they don’t have the luxury of just sitting on inventory.  

5 AI is an Untapped Opportunity 

As artificial intelligence (AI) has become a leading trend in enterprises, SMBs’ adoption of it is often at odds with the hype, based on wider concerns of data alignment and proper use cases. In this regard, only 23% of SMBs who responded said they have invested in AI.  

The two biggest areas the benchmark report identified are concerns about data integrity or security risks (23%) and inconsistent or inaccurate outputs (20%). These adoption barriers are rooted in a lack of confidence in the technology rather than organizational hurdles such as stakeholder buy-in (8%) or prohibitive costs (just 4%).  

“Since SMBs don’t have the resources to employ thousands of data scientists, our approach at Netstock is focused on leveling the playing field for SMBs by allowing them to use AI-based insights to think more quickly and act more strategically,” says Kukkuk. 

To help remedy this reluctance, Kukkuk notes technology providers need to help SMBs adopt AI in two core ways. First, leveraging AI as a recommendation engine by synthesizing the sea of day-to-day information provided in reports and dashboards. Second, fine-tuning machine-learning algorithms by filtering vast amounts of historical data and enriching them with external data for improved forecasting accuracy. 

Leading the way for SMBs: Netstock’s Inventory Management 2024 Benchmark Report 

Netstock is a global leader in supply and demand planning software with more than 15 years’ experience, using cutting-edge technology to empower SMBs to optimize inventory management and streamline their supply chains.  

As such, Netstock is uniquely positioned to bring this first-of-its-kind report to the market — Netstock's Inventory Management 2024 Benchmark Report. Drawing insights from Netstock’s customer base of more than 2,400 SMBs, the report offers critical insights on global trends, challenges, and paths to optimization for inventory management. Netstock continues to enable businesses worldwide to navigate the complexities of supply chain management. Their commitment to innovation and customer success has established them as a trusted partner for SMBs looking to gain a competitive edge in an increasingly dynamic global market.

Resource Link: https://www.netstock.com