The GEP Global Supply Chain Volatility Index expressed little change in September (-0.38 vs -0.39 in August), indicating that global supply chains are operating below full capacity still.
However, Chinese factories report a strong rise in purchasing, pushing global manufacturing procurement activity up at the fastest rate since mid-2022. This expansion pushed Asia's supply chains to near-full utilization.
"This is the new normal for global companies — higher prices, tariff pressure, and slower growth are here to stay," says John Piatek, VP, consulting, GEP. "For supply chain leaders who've been waiting to see how things settle: this is as stable as it's going to get — it's time to start executing their revised strategies."
Key takeaways:
· North American supply chains lost momentum. Manufacturers cited tariff-related delays and growing concerns about the economic outlook, leading many to hold back purchasing and reduce inventory buffers.
· Meanwhile, Europe's supply chains remained underused, as manufacturers in Germany, France, and Italy reduced both purchasing and stockpiles. The region's supply chain activity fell to its weakest level since March, extending its protracted industrial downturn.
· North American manufacturers displayed a reticence to stockpile further in September, after August's bumper rise due to concerns about the economic outlook, although delivery delays and tariff-related disruptions were reportedly hindrances.
· September saw a revival in factory purchasing, which made its strongest gains since June 2022. Asia was central to this uplift, particularly China, as the globe's second-largest economy ramped up buying to facilitate sharper growth in production and sales. Input demand trends were far more constrained in North America and Europe.
· The frequency at which manufacturers across the globe stockpiled due to price or supply fears continued to decrease in September, indicating factory procurement leaders are becoming less concerned about purchase cost inflation or item availability in the near term.
· GEP’s global supply shortages tracker decreased in September, indicating robust item availability. Factories will have little, if any, challenges in sourcing vendors for commodities, components and other intermediate products.
· Staffing capacity was not a constraint for global manufacturers during September. Reports of backlogs rising due to labor shortages fell further below the long-term average and were the lowest in six months.
· Global transportation costs were in line with historically normal levels during September.
