The GEP Global Supply Chain Volatility Index, a critical barometer for supply chain professionals, has registered a positive value of 0.21 in May, a stark contrast to April’s -0.18. This shift into positive territory is a first since March 2023, signaling that suppliers are operating at full tilt and supply chains are experiencing their most active period in over a year.
Manufacturing Demand Fuels Growth
A significant driver of the index’s rise is the resurgence in global manufacturing demand. This surge has prompted manufacturers to increase their procurement of raw materials, commodities, and components, with Asia witnessing robust purchasing activity, particularly in export-heavy nations like China, India, and South Korea. North American suppliers, too, are feeling the uptick, with capacity being pushed to its limits, reflecting stronger demand from the US and Mexico. Meanwhile, Europe, which had been trailing behind, is catching up, with the UK showing marked improvements.
Challenges and Optimism Ahead
Despite the positive momentum, the index also highlights challenges such as supplier backlogs exacerbated by staffing shortages. The peak in input levels, the highest in nearly one and a half years, suggests that expanding capacity is essential to meet the current and anticipated demand. Nonetheless, the comprehensive nature of this growth spurt is a promising sign for the global economy as we head into the second half of 2024, according to Mudit Kamar, Vice President at GEP Consulting. This optimistic outlook is set to shape strategies for supply chain leaders looking to navigate the remainder of the year.
