Manufacturers still stockpiling inputs amid anticipation of further disruption

Global supply chain pressures remained high in June despite falling oil prices, according to GEP’s monthly supply chain volatility index report.

Although the global index score fell by 0.18 points to 1.37, the June data reflected elevated uncertainty regarding the US-Iran ceasefire. An index value above 0 indicates supply chains are being stressed, while a value below 0 means supply chain capacity is being underutilized.

Reports of stockpiling materials due to price or supply concerns rose again in June and were the highest since January 2023. The data suggests procurement managers are holding surpluses to guard against shortages and inflation.

Purchasing of inputs remained strong in June, driven by North America and Asia. In the US, input buying rose at its fastest rate since April 2022.

“The rise in stockpiling and persistent order backlogs point to one clear conclusion: businesses still don’t trust the global trading environment to remain stable,” said John Piatek, vice president, consulting, GEP. “Despite lower oil prices and easing transportation costs, companies continue buying ahead because they expect further disruption.”

Asia’s regional index score fell to 1.95 in June from 2.96 in May, as easing transport costs drove the decline. Although transport costs were lower than April and May, they were still high by historical standards.

North America’s index score fell to 1.17 from 1.69 for a three-month low.

Europe’s score fell to 1.13 from 1.43, although continental factories reduced buying volumes by the largest degree since the start of the US-Iran war.