Research into today’s largest supply chain trends has revealed that only 23 per cent of small- to medium-sized businesses (SMBs) are investing in artificial intelligence (AI).
Netstock’s latest Inventory Management Benchmark Report highlights issues like AI adoption, rising inventory challenges and best practices for optimization across supply chains in 2024.
With regards to AI adoption, data integrity or security risks (23 per cent) and inconsistent or inaccurate answers (20 per cent) were the two biggest challenges Netstock’s survey respondents experienced with AI. AI-powered supply chain solutions can play a pivotal role in helping enhance forecasting abilities, inventory optimization and demand planning for organizations.
Respondents see a clear path to utilizing AI within their supply chain: forecasting (52 per cent), inventory optimization (48 per cent) and demand planning (44 per cent).
The report also shows that long lead times and lead-time variability are top challenges for SMBs. The foremost supplier challenge reported was lead time variability (72 per cent), while 52 per cent reported facing challenges with longer lead times. Inconsistent lead times make planning and optimizing inventory a difficult endeavor. The majority of SMBs struggling with lead time variability source their inventory from China (67 per cent), more than from the U.S. (56 per cent), Canada (21 per cent) and Mexico (just nine per cent). This variability has coincided with more businesses deciding to source production domestically.
American SMBs are shifting away from overseas supply and bringing production closer to home via nearshoring. Only 25 per cent of U.S. respondents prefer offshore suppliers over domestic. The nearshoring boom offers an opportunity to invest in predictive supply chain planning software that supports organizational visibility and resilience.
The survey also revealed that the excess stock problem is growing. Excess stock grew to an average of 38 per cent of inventory, highlighting a struggle for SMBs to manage their inventory. The problem is not exclusive to small businesses, though—large SMBs with over 500 employees saw overstocking rise from 40 to 44 per cent of total inventory.
According to Netstock’s findings, SMBs have held onto fewer goods this year, which is a promising sign of high inventory performance and meeting customer demands. However, businesses are still struggling to get rid of slow-moving inventory, whereas nearly 80 per cent of SMBs suffer from a combination of insufficient forward planning and being overstocked. Purchase orders steadily rose by nine per cent in early 2023, and skyrocketed ahead of the holiday shopping season for retail businesses to 16 per cent. Businesses weren’t moving enough goods to keep up with the big stockpiles accumulated. By 2024, average inventory spending returned to a near identical pre-crisis level (less than one per cent difference from 2023).
“This report is not just a reflection of the current inventory management landscape, but a critical tool for businesses navigating the complexities of today’s global market,” said Netstock CEO Ara Ohanian. “Understanding how your business ranks compared to others in the industry is crucial to enable decision-making that drives innovation and resilience across supply chains. With over $25 billion in inventory managed worldwide, Netstock is uniquely positioned to amplify these findings across the market—empowering companies to make informed decisions, overcome these challenges and stay ahead in an ever-evolving supply chain ecosystem.”
Visit here to view the full report.
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