Measuring when there will be a light at the end of the supply chain tunnel

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Like most of the world, you are likely tired of hearing that ‘there are supply chain issues’. We are all painfully aware that these issues have been impacting everything from the availability of materials and equipment for manufacturers, to the ability to process cargo at ports and provide products on store shelves for the consumer.

The good news is that earlier this year in the U.S., the Federal Reserve Bank of New York introduced a new tool called the Global Supply Chain Pressure Index (GSCPI), designed to help determine supply constraints within the economy.

How It Works
According to the New York Fed, the GSCPI integrates several common transportation and manufacturing metrics already used to gauge disruptions in individual parts of the supply chain. The index looks at them in totality, in order to provide a more comprehensive summary of potential disruptions affecting domestic and international supply chains.

Data Breakdown
The GSCPI is composed of data from a variety of transportation indexes, plus country-specific manufacturing data from Purchase Manager Index (PMI) surveys for seven economies that are linked through global supply chains: the European Union, China, Japan, South Korea, Taiwan, the U.K. and the U.S.

Through this data, the GSCPI tracks country-specific details that are critical to understanding performance of the supply chain including:

  • – Delivery Time, a measure of whether supply chain delays impact producers
  • – Backlogs, the volume of orders that firms have received but have not yet fulfilled; and,
  • – Purchased Stocks, or inventory accumulations across the economy

The transportation data that is included, measures the cost of shipping raw materials (the Baltic Dry Index), container shipping rate changes (the Harpex Index), and the cost of air freight transportation to and from the U.S., and to and from Asia and Europe as measured by the U.S. Bureau of Labor price indices.

The Latest Outlook
According to the latest GSCPI data released by the New York Fed, supply chain pressures decreased globally in July, a trend also observed over the two previous months. This is perhaps evidence of light beginning to shine at the end of the tunnel; however, supply chain pressures remain at historic highs.

Global supply chain pressures appear to be easing (for now), but an ever-changing threat landscape exists. Economic uncertainty, industry volatility, geopolitical changes, and pandemics are all factors that have a material impact on cash flow. Boosting the cash position of both buyers and sellers is a sure way to get liquidity in the channels and to ensure goods and services can be delivered on time.

Providing Micro, Small and Medium Enterprises (MSMEs) with options to enhance the sustainability of the supply chain process, is of high priority to a growing global population dependent on access to jobs, goods, and finance.

Triterras strives to continuously stay ahead of the market by offering solutions that help build critical resiliency for the world’s supply chain and its MSME participants, and believes our digital and comprehensive approach can only further ease supply chain pressures such as those related to delivery times, prices, and inventory planning. As a platform provider, we know the importance of increasing business agility and resilience, and how providing access to working capital trapped in the supply chain positively impacts growth, stability, and innovation at a global level.

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