Updated · Originally published
For many small and midsize businesses (SMBs), 2024 was a year of reacting to nonstop challenges. But 2025 is shaping up differently as the year of rebuilding with strategy and foresight. captures this shift with data drawn from over 130 SMBs and insights from more than 2,400 companies worldwide. Backed by more than 15 years of experience in supply chain optimization, Netstock sheds light on how organizations are transforming uncertainty into opportunity by using more innovative tools, sharper forecasting, and AI-driven decision-making in .
"We're seeing SMBs embrace strategies and technologies that used to be limited to large enterprises. AI is driving that transformation."
— Jefferson Barr, CMO, Netstock
Key Findings from
Published on October 16, the report spotlights the most defining trends shaping supply chain planning this year:
- 63% of SMBs were directly affected by tariffs, and most absorbed the cost rather than risk customer churn.
- AI adoption doubled, with 48% of SMBs now using artificial intelligence in supply chain operations.
- Service levels above 90% increased from 41% to 46%, showing steady resilience amid economic pressure.
- 93% of businesses introduced or expanded product lines in 2025, proving that innovation thrives even in disruption.
- Supplier collaboration climbed sharply, with vendor-managed inventory (VMI) adoption rising from 29% to 44%, and consignment arrangements up from 19% to 25%.
From Reaction to Resilience
In 2024, most SMBs were scrambling to respond to tariffs, shipping delays, unpredictable demand, and volatile pricing. This year, many have pivoted from reactive survival to proactive planning.
The lessons learned were tough but necessary. Spreadsheets couldn't keep pace with fast-changing data. Excess inventory tied up precious cash while stockouts lost customers. Rising costs and tighter credit made every decision count.
Now, those same businesses are building systems designed for adaptability. They're investing in forecasting solutions, leveraging AI for rapid inventory optimization, deepening supplier partnerships, and experimenting with shared-risk models that make the supply chain more agile.
How Tariffs Are Reshaping Supply Chain Strategy
Tariffs were front and center in early 2025, affecting nearly two-thirds of SMBs. Faced with higher costs, 44% chose to absorb the expense rather than raise prices or risk losing customers. They are prioritizing long-term loyalty over short-term margins.
These pressures are forcing strategic change. Long-term supplier contracts dropped from 47% to 36%, while reliance on split sourcing declined nearly 10%. Offshore sourcing decreased slightly (from 31% to 28%) as domestic procurement increased. These trends suggest an early wave of reshoring, or at least a renewed caution regarding global dependency.
The Rise of "Strategic Stock"
Inventory management is evolving in surprising ways. According to Netstock's findings, 30% of SMBs now classify part of their excess stock as strategic. They are deliberately holding extra inventory to buffer against tariffs, delays, or sudden spikes in demand.
But not all excess stock is strategic. Dead stock is creeping upward, too: 17% of SMBs report more than 10% of inventory sitting unsold, up from 12% in 2024. This dual reality highlights the challenge of balance: maintaining resilience without overcapitalizing on slow-moving goods.
The Supply Chain Reality Check
Tariffs weren't the only obstacle in 2025. Supplier performance issues remained a major concern, with 68% of SMBs citing lead time variability as their biggest operational challenge. While costs remain a worry, they ranked lower this year, at 48%.
The report also notes that global stock turns have plateaued. The average remains 5.3, with a median of 3.9; that's virtually unchanged from 2024. A small subset of high-performing companies continues to excel at moving inventory efficiently, but most SMBs are struggling to accelerate sell-through rates.
"For some SMBs, stability may feel like a win. But for others, sluggish stock turns still weigh heavily on cash flow and competitiveness." — Netstock 2025 Benchmark Report
The AI Tipping Point: From Concept to Capability
Artificial intelligence has officially moved from hype to hands-on reality in supply chain planning. AI adoption among SMBs more than doubled in 2025, jumping from 23% to 48%. Future investment plans are also rising. Nearly half of all SMBs say they intend to expand AI capabilities in the coming year.
Only 17% now say they're unsure about investing in AI. That's a dramatic shift from nearly half (47%) who were uncertain last year. This change suggests growing confidence as SMBs see tangible results from early AI initiatives.
According to Netstock's customers, AI is now used for a range of practical functions from demand forecasting and automated replenishment to anomaly detection and supplier analysis. While concerns around data security and transparency persist, understanding and comfort levels have clearly improved.
Perhaps the most telling statistic is that 75% of SMBs are now comfortable delegating parts of their inventory management to AI. Businesses are increasingly relying on machine learning models to make data-driven decisions, flag exceptions, and simulate scenarios more efficiently than human analysts.
2025 marks a turning point as the moment when AI stopped being an abstract idea and became a core operational capability.
What's Next in Supply Chain Planning in D365?
The 2025 Benchmark Report paints a clear picture: SMBs are entering a new era of supply chain maturity. They're building discipline out of disruption. They are increasingly guided by data, empowered by automation, and strengthened through collaboration.
As tariffs reshape sourcing strategies and AI transforms decision-making, the businesses thriving in 2025 are those that learned from the turbulence of 2024.
Unlock your inventory data with Netstock and Microsoft Dynamics. Netstock extracts and analyzes data in your Microsoft Dynamics ERP, enabling you to place orders faster, reduce excess inventory, and minimize stockouts.
To explore the full findings, including deeper insights into tariff responses, inventory optimization trends, and AI readiness, Then our experts at Netstock and see how this information can optimize your company's supply chain planning.
By Netstock,