Almost half (44%) of the respondents said that they paid higher prices for inventory as a result of tariffs but did not change their purchasing levels. Meanwhile 19% chose to reduce inventory purchases in order to manage the costs associated with higher tariffs.
As trade policies change and tariffs rise, it is perhaps not surprising that the report showed some modest shifts in where SMBs are choosing to source from. The percentage of respondents who said that they prefer domestic suppliers over offshore suppliers ticked up slightly from 19% in 2024 to 21% this year. Meanwhile the number of respondents saying they preferred offshore suppliers to domestic ones decreased from 31% in 2024 to 28% in 2025. Likewise, those respondents who said they prefer a split between domestic and offshore suppliers dropped from 47% to 38%. This year, 5% of respondents said they prefer domestic but no domestic suppliers are available, and 8% said that they did not know what their company’s preference was.
The report also showed that lead times ticked up slightly in the first quarter of 2025. “More recently, those delays have begun to ease,” says the report, “hinting that some of the initial tariff shock is wearing off. Whether that relief proves durable remains to be seen, but the signal suggests that supply chains are starting to regain their footing after months of volatility.”
That volatility also led a good portion of SMBs chose to hold more inventory this year. According to the report, 30% of respondents said that more than 30% of their excess stock is strategic, deliberately held as a buffer, up from 23% in 2024. Holding excess stock does come with added risk, however. Dead stock is rising with 46% of respondents saying that 5% or more of their inventory is dead stock, and 17% saying that 10% or more of their inventory is dead stock.
SMBs are particularly vulnerable to volatile market conditions, as many lack mature rate 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 cover” arrangement to lock in a price or exchange rate for a future purchase rose from 11% to 15%.
More SMBs are, however, adopting shared-risk strategies for inventory management, according to the report. The percentage of respondents saying that they used vendor-managed inventory, where suppliers manage stock replenishment, rose to 44% from 29% in 2024. The percentage using consignment, where supplier retain ownership until the goods are sold, increased to 25% from 19%.
The report also addressed other supply chain planning, sourcing, and inventory management trends for SMBs. For example, the report found that 48% of respondents say they are using artificial intelligence for inventory management, more than double the percentage reported last year.
