Inventory management is rapidly evolving, and staying ahead of the curve is crucial for SMBs. Drawing on insights from Netstock’s customer base of over 2,400 small and medium-sized businesses (SMBs), the Netstock Inventory Management 2024 Benchmark Report provides invaluable insights for SMBs, highlighting industry standards and best practices.
This first-of-its-kind industry report examines key trends, including stock movement, supplier challenges, excess inventory, and AI adoption in future supply chains. Based on Netstock’s findings, the state of inventory management looks promising, with SMBss showing a decrease in inventory holdings—a positive indicator of operational efficiency. Globally, total company inventory value has decreased by 9% year-over-year since early 2023. Despite this progress, there’s still significant potential for further optimization. This report addresses these challenges and more, serving as an indispensable resource for SMBs.
Why this report matters
Inventory is a key lever for improving cash flow and reducing business costs. By leveraging insights from this report, businesses can enhance inventory practices, manage lead times, reduce costs, and be more proactive. Additionally, understanding industry benchmarks helps SMBs measure their performance against peers, identify areas for improvement, and set realistic goals. This comparative analysis is crucial for maintaining competitiveness and ensuring long-term growth for your business.
Key findings and trends
- State of the industry: Over the past year, SMBs have reduced their inventory by 9% globally, signaling improved performance and better alignment with customer demands. Despite this, however, issues with slow-moving inventory persist. In North America, high interest rates have pressured companies to optimize their stock, although spending on inventory has returned to near pre-crisis levels by 2024.
- Supplier reliability: SMBs face significant challenges with long lead times and variability, with 72% citing inconsistent delivery times as a major issue. Most affected companies source from China, though sea freight remains the preferred and often more reliable transport mode compared to land and air.
- Nearshoring: American SMBs are notably shifting towards domestic suppliers, with only 25% preferring offshore sources. This trend highlights the need to invest in predictive supply chain planning tools to enhance visibility and resilience.
- The excess problem: Excess stock now accounts for 38% of SMB inventory, reflecting difficulties in inventory optimization. This issue is prevalent across all business sizes, with larger SMBs seeing even higher levels of overstocking.
- Financing inventory: Over half of SMBs use cash (54%) or credit (53%) to finance inventory. While inventory financing can stabilize cash flow and support growth, high and fluctuating interest rates add pressure. This is especially challenging for retail businesses, where nearly two-thirds (64%) use credit to manage inventory amidst fluctuating seasonal sales.
- Investing in AI: Despite its growing accessibility, only 23% of SMBs have adopted AI. Challenges such as data integrity and security concerns are significant barriers, even though AI has the potential to enhance forecasting, inventory optimization, and demand planning.
Inventory success needs the right technology
From liquidating dead stock to balancing inventories, effective inventory management strategies lie at the heart of business success. These insights reinforce the critical need for robust inventory management software, enabling SMBs with the visibility and predictive capabilities to remain agile and market-ready.
