Global Supply Chain Volatility Index Global Supply Chain Volatility Index

MAY 2023

Global: -0.04

Asia: 0.06  -0.28

EU: -0.37  -0.63

NA: -0.12  -0.27

UK: -0.21  -0.17

 

Global Supply Chains Now Have Spare Capacity for the First Time Since June 2020 as 10 Months of Subdued Demand, Inventory De-Stocking and High Interest Rates Bite: GEP Global Supply Chain Volatility Index

  • Although global demand remains subdued, there has been an uptick since December’s trough, while the trend actually improved slightly in North America in April, indicating some economic resilience
  • Excess supply chain capacity was also driven by global organizations’ drawdown of their safety stocks, which have fallen below their historic average for the first time in three years
  • Supply chain pressures in Asia ease as the economic rebound from China’s reopening peters outs more..

GEP Global Supply Chain Volatility Index

-0.04 

MAY 2023

Asia: 0.06

EU: -0.37

NA: -0.12

UK: -0.21

Interpretating the data:

When the SCVI > 0, supply chain capacity is being stretched. The further above 0, the more stretched supply chains are.

When the SCVI < 0, supply chain capacity is being under-utilised. The further below 0, the more under-utilised supply chains are.

ASIA: Supply chain pressures in Asia ease as the economic rebound from China’s reopening peters outs

EUROPE: Subdued demand is the weakest of regions tracked

UK: Excess capacity is the highest of regions tracked

NORTH AMERICA: Demand, while subdued, improves slightly in April, indicating economic resilience

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About the GEP Supply Chain Volatility Index

The GEP Global Supply Chain Volatility Index is produced by S&P Global and GEP. The GEP Global Supply Chain Volatility Index is derived from S&P Global’s PMI™ surveys, sent to companies in over 40 countries, totalling around 27,000 companies. These countries account for 89% of global gross domestic product (GDP) (source: World Bank World Development Indicators).

The headline figure is the GEP Global Supply Chain Volatility Index. This a weighted sum of six sub-indices derived from PMI data, PMI Comments Trackers and PMI Commodity Price & Supply Indicators complied by S&P Global.

The GEP Global Supply Chain Volatility Index is calculated using a weighted sum of the z-scores of the six indices. Weights are determined by analysing the impact each component has on suppliers’ delivery times through regression analysis.

The six variables used are 1) JP Morgan Global Quantity of Purchases Index, 2) All Items Supply Shortages Indicator, 3) Transport Price Pressure Indicator and Manufacturing PMI Comments Tracker data for 4) stockpiling due to supply or price concerns, and backlogs rising due to 5) staff shortages and 6) item shortages.

A value above 0 indicates that supply chain capacity is being stretched and supply-chain volatility is increasing. The further above 0, the greater the extent to which capacity is being stretched.

A value below 0 indicates that supply chain capacity is being under-utilised, reducing supply-chain volatility. The further below 0, the greater the extent to which capacity is being under-utilised.

A Supply Chain Volatility Index is also published at a regional level for Europe, Asia, North America and the UK. The regional indices measure the performance of supply-chains connected to those parts of the world.

For more information on PMI surveys, PMI Comments Trackers and PMI Commodity Price & Supply Indicators, the GEP Supply Chain Volatility Index methodologies, please contact economics@ihsmarkit.com.