Clark, N.J., Oct. 13, 2023 – The GEP Global Supply Chain Volatility Index — a leading indicator tracking demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses — fell from -0.18 in August to -0.35 in September, with a sharper increase in excess capacity across the world’s supply chains.
Notably, Europe was the principal driver of September’s sharper rise in idle vendor capacity, with suppliers to the continent registering one of the highest levels of spare capacity since the global financial crisis between 2008 and 2009 amid considerable weakness in demand, thereby signalling elevated recession risks.
In stark contrast, excess supplier capacity within North America rose by its smallest margin since April, signalling increased odds of a soft landing for the U.S. economy. Although demand remains under pressure, the decline is slowing, and some companies are reporting price increases from their vendors.
Asian suppliers, after displaying relatively greater resilience in the year-to-date, reported greater spare capacity for the first time since July, reflecting a slump in purchasing activity. This suggests manufacturers in the region are preparing for lower production schedules.
Commenting on the September data, Jagadish Turimella, chief operating officer and co-founder, GEP, explained: “We’re now into our sixth consecutive month of notable excess supplier capacity globally, but the good news is it’s not getting substantially worse, except in Europe, where recession seems likely. By contrast, we expect U.S. suppliers and businesses to be steady for the rest of the year, unless the labor disputes in health care and the auto sector spread, or there is a price spike in oil, its derivates or agricultural commodities.”
Interpretating the data:
SEPTEMBER 2023 KEY FINDINGS :
REGIONAL SUPPLY CHAIN VOLATILITY
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The next release of the GEP Global Supply Chain Volatility Index will be 8 a.m. ET, Nov. 14, 2023.
The GEP Global Supply Chain Volatility Index is produced by S&P Global and GEP. It is derived from S&P Global’s PMI™ surveys, sent to companies in over 40 countries, totaling around 27,000 companies. The headline figure is a weighted sum of six sub-indices derived from PMI data, PMI Comments Trackers and PMI Commodity Price & Supply Indicators compiled by S&P Global.
A Supply Chain Volatility Index is also published at a regional level for Europe, Asia, North America and the U.K. For more information about the methodology, click here.
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GEP is also regularly ranked a top procurement and supply chain consulting and strategy firm, and a leading managed services provider by ALM, Everest Group, NelsonHall, IDC, ISG and HFS, among others. Headquartered in Clark, New Jersey, GEP has offices and operations centers across Europe, Asia, Africa and the Americas. To learn more, visit www.gep.com.
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