Double-digit inflation in the Service Supply Chain is driving companies to reduce inventories, improve inventory velocity, and maintain service levels amid economic uncertainty.
AUSTIN, Texas, Feb. 25, 2025 /PRNewswire/ -- Baxter Planning, the leading provider of Service Supply Chain (SSC) technology, today released its Service Supply Chain Industry Insights: 2024 Year in Review & 2025 Projections, offering critical insights into the impact of inflation, demand trends, and inventory strategies shaping the SSC industry.
Key Findings:
- Inflation Continues to Surge - Standard part costs increased by over 10% in 2024, with consistent monthly growth throughout the year. Projections indicate this trend may persist into 2025, exacerbated by potential tariffs and broader macroeconomic conditions.
- Demand Growth Outpaces Inflation - Demand continues to increase in the Service Supply Chain (+14.5%), reflecting strong inflation. When normalizing for inflation, demand grew less than 5% in 2024 with a large standard deviation reflecting the varied businesses within the sample population. The normalized demand reflects solid, if not overwhelming, growth in service businesses generally, as well as increasingly demanding customers and greater business complexity.
- Inventory Optimization in Focus - Inventories experienced minor growth in 2024 (+3.7%). However, when normalized for inflation, inventories actually decreased >5%. This likely reflects continued focus on cost efficiency given the significant impact of inflation, as well as potential continued burndown of post-Covid inventory buildup.
- Efficiency Gains Drive Higher Inventory Velocity - With an increase in demand and declining inventories, Baxter Planning customers enjoyed an increase in inventory velocity of an astounding +20.7%, resulting in improved operational efficiency.
- Service Levels Hold Steady - Fill rates and service levels held flat in 2024, changing -0.7% and -0.1% respectively, even as inventory reductions became more pronounced.
Looking ahead to 2025, Baxter Planning customers anticipate somewhat lower expectations for inflation (<5%) while also having mixed concerns about the potential impact of tariffs. A 2:1 ratio expects tariffs to have a minor rather than major effect on their operations.
"These metrics highlight the Service Experience Storm our customers are navigating," said Chad Hawkinson, Chief Innovation Officer at Baxter Planning. "With inflation exerting significant pressure, companies are finding ways to improve efficiency, control costs, and continue delivering exceptional service."
Baxter Planning will continue to track and share these industry metrics, equipping customers with the insights needed to see ahead and stay ahead in an evolving Service Supply Chain landscape.
About Baxter Planning
Baxter Planning is a global leader in Service Supply Chain software, delivering a Service Experience Advantage to the world's most innovative enterprises for over 30 years. The end-to-end BaxterPredict platform empowers organizations to optimize service parts planning, execution, and resolution, driving superior customer experiences, fostering long-term loyalty, and fueling business growth. By combining purpose-built technology, award-winning AI, decades of practitioner expertise, and a commitment to true partnership, Baxter Planning consistently delivers industry-leading outcomes for its clients. The company is headquartered in Austin, Texas, United States, with offices around the globe. For more information, visit www.baxterplanning.com.
Baxter Planning is a portfolio company of Marlin Equity Partners, a global investment firm with approximately $9 billion in capital commitments. The firm is headquartered in Los Angeles, California with an additional office in London. For more information, please visit www.marlinequity.com.
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