Nearly half (44%) of respondents said they paid higher prices for their inventory due to tariffs, but did not change their purchasing levels. At the same time, 19% chose to reduce their inventory purchases to manage the costs associated with higher rates.
As trade policies change and tariffs rise, it is perhaps not surprising that the report notes slight changes in SMEs’ countries of origin. The percentage of respondents saying they prefer domestic suppliers over foreign suppliers increased slightly, from 19% in 2024 to 21% this year. At the same time, the number of respondents saying they prefer offshore suppliers over domestic suppliers decreased from 31% in 2024 to 28% in 2025. Similarly, respondents who said they preferred a split between domestic and offshore suppliers fell from 47% to 38%. This year, 5% of respondents said they prefer the domestic market, but no domestic supplier is available, and 8% said they don’t know what their company’s preference is.
The report also shows that delivery times lengthened slightly in the first quarter of 2025. “More recently, these delays have begun to ease,” the report said, “suggesting that some of the initial tariff shock is fading. Whether this relief will prove lasting remains to be seen, but the signal suggests that supply chains are beginning to regain their footing after months of volatility.”
This volatility has also led a large portion of SMEs to choose to hold more inventory this year. According to the report, 30% of respondents said that more than 30% of their excess inventory is strategic, deliberately held as a buffer, up from 23% in 2024. Holding excess inventory, however, carries additional risk. Dead inventory is on the rise, with 46% of respondents reporting that 5% or more of their inventory is dead inventory, and 17% reporting that 10% or more of their inventory is dead inventory.
SMEs are particularly vulnerable to volatile market conditions, as many lack mature rates management practices, according to the report. Nearly half of respondents do not have a formal hedging or contracting strategy, and only 36% use long-term supplier contracts. However, the percentage of respondents using a “forward hedge” agreement to set a price or exchange rate for a future purchase increased from 11% to 15%.
However, more and more SMEs are adopting shared-risk strategies for inventory management, according to the report. The percentage of respondents reporting using vendor-managed inventory, where suppliers manage inventory replenishment, increased to 44%, up from 29% in 2024. The percentage using consignment, where the supplier retains ownership until the goods are sold, increased from 19% to 25%.
The report also discusses other trends in supply chain planning, sourcing and inventory management for SMEs. For example, the report found that 48% of respondents said they use artificial intelligence for inventory management, more than double the percentage reported last year.