Exploring Service Supply Chain Trends and Projections for 2025

Analyzing Service Supply Chain Trends Towards 2025

In February 2025, Baxter Planning, a renowned leader in Service Supply Chain (SSC) technology, published its insightful report titled "Service Supply Chain Industry Insights: 2024 Year in Review and 2025 Projections." This report illuminates the dynamic shift in the service supply chain landscape, particularly in the face of challenging economic conditions marked by heightened inflation.

The Ongoing Impact of Inflation

The report reveals that inflation has continued to drive up costs significantly. Standard parts have experienced an increase of over 10% throughout 2024, a trend expected to persist into 2025 due to anticipated tariffs and broader macroeconomic conditions. Companies are compelled to navigate these inflationary pressures by minimizing inventories and catalyzing efficiency improvements to sustain service quality amid uncertainty.

Demand Surges Amidst Inflation

Despite the inflationary context, demand within the service supply chain continues to rise robustly, with a reported growth of +14.5%. However, when adjusted for inflation, the normalized demand growth is less than 5%. This disparity indicates that while the demand is strong, it reflects significant variability based on companies' performance, portraying a landscape with increasingly discerning customers and escalating business complexities.

Inventory Optimization Strategies

In response to these challenges, companies are focusing on inventory optimization. The report indicates that while inventory growth in 2024 was modest (+3.7%), normalizing for inflation reveals an actual decline of more than 5% in inventory levels. This reduction signifies an ongoing commitment to cost efficiency and reflects a cautious approach to inventory accumulation in the aftermath of COVID-19.

Moreover, clients of Baxter Planning have reported a remarkable increase of +20.7% in inventory velocity, attributed to heightened demand coupled with reduced inventory levels. This uptick demonstrates improved operational efficiency, a crucial factor in addressing the pressures of inflation while maintaining service excellence.

Stabilization of Service Levels

Amidst inventory reductions, service levels remained notably stable in 2024, with supply rates and service metrics showing minimal fluctuations of -0.7% and -0.1%, respectively. This consistency is indicative of effective supply chain management practices that prioritize customer service even during times of economic difficulty.

Forward-Looking Perspectives

As stakeholders look ahead to 2025, Baxter Planning anticipates a slight moderation in inflation expectations, projecting figures below 5%. However, concerns linger regarding potential tariff implications, with a significant portion of clients (21%) expecting minimal impact on their operations from tariffs.

Chad Hawkinson, Baxter Planning's Director of Innovation, remarked, "These metrics illuminate the complexities that our clients are navigating. As inflation exerts significant pressures, businesses are innovating to optimize efficiency, manage costs, and deliver outstanding service." Baxter Planning remains committed to tracking and reporting industry metrics, empowering clients to remain ahead in the evolving service supply chain landscape.

About Baxter Planning

Founded over three decades ago and headquartered in Austin, Texas, Baxter Planning has established its reputation as a global leader in service supply chain software. Their comprehensive platform, BaxterPredict, enables organizations to enhance the planning, execution, and resolution processes associated with service parts, leading to superior customer experiences and sustained business growth. Leveraging advanced technologies and a collaborative ethos, Baxter Planning consistently delivers industry-leading results for its clients. Baxter Planning is part of Marlin Equity Partners, a global investment firm with approximately $9 billion in capital commitments, headquartered in Los Angeles, California, with additional offices in London.

For further insights, visit Baxter Planning.