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 — decreased for a third successive month in March to -0.51 and posted its lowest value in almost five years, indicating the highest degree of spare capacity across global supply chains since the height of the COVID-19 pandemic in 2020.
A key finding from GEP’s latest data was a sharp decline in the number of companies building buffers into their stocks. Overall, manufacturers‘ stockpiling was the lowest in nine years, highlighting caution among procurement leaders worldwide about future demand.
„March’s sharp decline in supplier activity was due to the stifling effect of tariffs and tariff-related uncertainty, which had its strongest impact in North America, where manufacturers reported cutbacks to purchasing activity and inventories,“ said John Piatek, vice president, consulting GEP. „Until just last week, most companies had taken a wait-and-see approach. Now, organizations are aggressively exploring every possible way to eliminate costs, push suppliers to absorb tariffs, and de-risk their global supply chains.“
In the U.K., supplier spare capacity rose for the fourth month in succession to a level that has only been surpassed during either the COVID-19 pandemic or global financial crisis period. U.K. factories aggressively destocked and reduced spending during March, suggesting the country’s industrial sector is bracing for a downturn.
Meanwhile in Asia, supply chains are broadly running at full capacity. In March, there was even a slight uptick in regional procurement activity, driven by China and India.
