Pic: Adobe Stock
GEP is a US-based procurement and supply chain transformation company.
At the forefront of growth is Asia, led by China, India and South Korea.
The inventory cycle has stabilised, with firms neither building up stocks excessively nor aggressively destocking to improve cash flow and cut costs, S&P Global said in a release.
Global item supply remains robust, with reports of shortages at low levels.
The frequency at which global suppliers reported a rise in their backlogs due to labour shortages was at its greatest in nearly a year-and-a-half, indicating that capacity expansion is required to sustainably meet current and future demand.
Global transportation costs remain stable, close to historically typical levels.
The GEP global supply chain volatility index, which tracks demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses, notably increased in May this year to 0.21 from minus 0.18 in April.
Crucially, this was the first time since March 2023 that the index, compiled by S&P Global, is in positive territory, signaling that global vendors are working at capacity and that supply chains are at their busiest for more than a year.
A key factor behind the index’s increase in May was a further improvement in global manufacturing demand, leading factories to ramp up their purchases of raw materials, commodities and components.
The index rose to 0.09 in North America from minus 0.30, its highest since February. May data showed stronger demand from manufacturers in the United States and Mexico, exerting more pressure on North American suppliers.
The index rose to minus 0.13 in Europe from minus 0.55, a 14-month high and signaling a substantial reduction in slack across Europe’s supply chains. This suggests the region’s manufacturing downturn continues to recede.
The index rose to 0.15 in the United Kingdom from minus 0.47. This showed increased capacity pressures at UK suppliers for the first time since January 2023.
The index rose to 0.19 in Asia from 0.07. Suppliers to Asia are the busiest globally, due to particularly strong demand pressures arising from major markets like China, India and South Korea.
Fibre2Fashion News Desk (DS)