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Supply Chain Insights: Trends for 2024 and Projections for 2025

Baxter Planning has recently released its comprehensive document, the Service Supply Chain Industry Insights 2024 Year in Review and 2025 Projections. This report sheds light on the current state of the service supply chain industry, focusing on the effects of inflation, demand trends, and inventory strategies that shape this crucial sector.

Key Findings

Continued Inflation Impact

Inflation remains a pressing issue for the service supply chain sector, with standard parts costs soaring over 10% in 2024. This monthly growth trend indicates that inflation could remain a critical challenge leading into 2025, influenced by potential tariffs and broader macroeconomic conditions.

Demand Growth Outpacing Inflation

Despite rising costs, overall demand in the service supply chain has surged, showing an increase of 14.5%. However, when adjusted for inflation, the adjusted demand growth appears subdued at under 5%. This discrepancy highlights the varied experiences of businesses across the sector, as comparative demand levels indicate robust service activities, ever-more discerning clients, and increasing operational complexities.

Inventory Optimization

In 2024, inventories displayed a modest increase of 3.7%. Yet, when considering inflation adjustments, there was actually a decline of over 5% in real terms. This trend suggests that companies are focusing on stringent cost containment as a response to inflation impacts, alongside potential inventory depletion following the stockpiles accumulated during the COVID-19 pandemic.

Efficiency Gains Leading to Increased Stock Velocity

Amidst rising demand coupled with lower inventory levels, clients of Baxter Planning reported a remarkable 20.7% increase in stock velocity. This surge has contributed significantly to operational efficiency, reflecting the ability of firms to adapt and enhance their supply chain operations.

Stable Service Levels

Even with pronounced inventory reductions, service level performance remains stable. Rates of fill and service levels shifted slightly, with changes of -0.7% and -0.1%, respectively, throughout 2024.

Looking ahead to 2025, Baxter Planning’s clients expect inflationary pressures to ease slightly below 5% and express mixed concerns regarding the impact of tariffs. Expected minor influences mean that tariffs may not play a critical role in operations, with a ratio of 21 suggesting minimal disruptions.

“These indicators reflect the challenges faced by our clients in maintaining service standards amidst inflationary pressures. The need for enhanced efficiency, cost control, and exceptional service delivery has never been more pronounced,” states Chad Hawkinson, Chief of Innovation at Baxter Planning.

Baxter Planning is committed to continuously monitoring and disseminating valuable industry metrics, equipping clients with insights necessary to navigate the evolving service supply chain landscape.

About Baxter Planning

Baxter Planning stands as a leading global service supply chain software provider. For over three decades, it has delivered exceptional service experiences to innovative enterprises worldwide. Its comprehensive platform, BaxterPredict, enables firms to optimize planning, execution, and resolution processes for spare parts, thereby enhancing customer experiences, fostering long-term loyalty, and driving business growth. Leveraging advanced technology, award-winning AI, and a profound commitment to authentic partnerships, Baxter Planning consistently delivers superior results to its clientele. Headquartered in Austin, Texas, the company operates globally. For more details, visit www.baxterplanning.com.

Baxter Planning is part of Marlin Equity Partners, a global investment firm with total capital commitments reaching approximately $9 billion, which is headquartered in Los Angeles, California, with an additional office in London. For more information, visit www.marlinequity.com.