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Key Insights from Baxter Planning's Report on Service Supply Chain Trends

In a challenging economic landscape marked by escalating inflation, companies within the Service Supply Chain (SSC) sector are adapting to new realities. Recently, Baxter Planning released its comprehensive report, detailing the trends observed in 2024 and projecting potential shifts for 2025. The findings underscore the vital strategies businesses are employing to navigate the increasing costs and evolving customer demands.

Inflation Rates on the Rise

2024 witnessed significant inflationary pressures, with the cost of standard parts reportedly surging by more than 10% throughout the year. This persistent trend, driven by broader economic conditions and potential tariffs, is anticipated to continue into 2025, further complicating the operational landscape for service providers.

Demand Dynamics

On the demand side, the report highlights a robust growth of 14.5% within the service supply chain, despite inflation's heavy toll. Adjusted for inflation, the normalized demand growth appears more modest—just below 5%. This discrepancy reflects the diverse nature of the businesses surveyed and underscores the growing complexity of customer needs.

Inventory Management Strategies

Despite the environment of rising costs, inventory levels in 2024 showed only a slight increase of 3.7%. However, when normalized against inflation, an actual decrease of over 5% is indicated. This shift suggests a concerted effort to enhance cost efficiency, pointing to a likely continuation of the trends established during the post-COVID inventory adjustments.

Increased Efficiency and Velocity

One of the report's most notable findings is a marked rise in inventory velocity, which saw an impressive growth of 20.7%. This increase in operational efficiency reflects the agility that Baxter Planning customers are exhibiting in responding to changing demand patterns while managing inventories strategically.

Maintaining Service Levels

Interestingly, despite these fluctuations in inventory and demand, service levels and fill rates remained stable throughout 2024. The minimal changes noted—in both rates declining slightly by 0.7% and 0.1%—indicate that companies are successfully balancing inventory reductions with the need to maintain customer satisfaction.

Looking Ahead to 2025

As we reflect on these insights, expectations for 2025 show a cautious optimism regarding inflation. Companies are bracing for an anticipated rate of under 5%, alongside mixed concerns about the potential economic impacts related to tariffs. Interestingly, a significant majority, with a 21:1 ratio, perceives these tariffs as likely to have a minor rather than major effect on operations moving forward.

Chad Hawkinson, the Chief Innovation Officer at Baxter Planning, aptly summarizes the current climate: "These metrics highlight the Service Experience Storm our customers are navigating. With inflation exerting significant pressure, companies are finding ways to improve efficiency, control costs, and continue delivering exceptional service."

In an ever-evolving landscape, Baxter Planning remains committed to monitoring these critical metrics and ensuring its customers are equipped with the insights necessary to stay ahead. With over 30 years in service supply chain software, Baxter Planning's expertise continues to provide its global clientele with a competitive edge during these transformative times.

About Baxter Planning

Baxter Planning has established itself as a global leader in Service Supply Chain software, dedicated to providing the innovative technology required for optimizing service parts planning and execution. Their platform, BaxterPredict, has been pivotal in enabling organizations to drive superior customer experiences, ultimately fostering long-term loyalty and business growth.

For more information on their extensive offerings, please visit Baxter Planning.