Input cost volatility continues to pose a major risk for global supply chains, despite recent easing in commodity prices, according to Proxima’s Global Sourcing Risk Index, developed in partnership with Oxford Economics.
“While some commodity prices have eased recently, volatility remains a key risk for procurement leaders, particularly in sectors reliant on globally traded inputs such as construction, energy and healthcare. These swings don’t just impact pricing – they affect predictability, contracts, and competitiveness across entire supply chains,” says Simon Geale, EVP at Proxima. “Procurement leaders need to embed contractual agility, cost hedging, scenario planning, and multi-source strategies to maintain resilience long-term in supply chains, while managing relationships, price predictability and inventory. For example, in volatile markets, value is often lost during the contract lifecycle, but by including price indexation clauses, walk-away rights and structured review triggers, it allows them to evolve with the market shifts.”
Key takeaways:
· Turkey, Saudi Arabia and Brazil have emerged as among the riskiest locations for input cost volatility, with sharp fluctuations in raw materials and intermediate goods prices creating major challenges for global supply chains. Industries heavily reliant on commodity-linked or globally traded inputs are also at heightened risk, with construction, energy, and healthcare identified as the most exposed sectors.
- Turkey continues to face extreme fluctuations in input costs, driven by currency volatility and energy import dependency, which can leave long-term contracts exposed.
- Saudi Arabia remains sensitive to swings in oil prices, which can ripple through energy-intensive industries worldwide.
- Brazil and other emerging economies such as Colombia and South Africa also present high sourcing risks due to dependence on globally traded commodities like iron ore, soy, coal, and coffee, combined with localized factors such as labor unrest and energy instability.
- Developed economies such as Germany, Spain and Australia appear in the Top 10, underlining that no market is immune to global commodity cycles.
· The analysis highlights how inflation cycles, commodity exposure and currency movements are reshaping cost structures across markets. While input cost inflation has slowed in some regions, volatility remains a critical concern for supply chains seeking predictability and resilience.
- Construction faces volatility in steel, cement and timber costs.
- Energy and natural resources remain exposed to swings in fuel, chemicals and metals.
- Healthcare and life sciences risk disruption from volatility in APIs, reagents and base chemicals - as seen during COVID-19 when shortages and cost surges disrupted pharmaceutical production globally.
