GEP Global Supply Chain Volatility Index—No Recovery in Sight

by Carolyn Mathas

The GEP Global Supply Chain Volatility Index tracks demand, shortages, transportation costs, inventories, and backlogs by surveying 27,000 businesses.

The latest results indicate that at the end of 2023, global supply chain capacity was underutilized—showing the most significant drop since July. The Index fell to -0.44 in December from -0.34 in November, the ninth consecutive month of spare capacity across global supply chains.

In Asia, supplier capacity rose to levels not seen since June 2020, and recessionary conditions are ripe in Europe—manufacturers are cutting back at a level rarely surpassed in two decades.

Interestingly, demand for raw materials, commodities, and components has been at its lowest since the start of 2023, which concerns near-term global production levels. Order books for suppliers to North America and Asia deteriorated in December, showing signs of weakness in major economies. Asian supply chains were the most underutilized in three-and-a-half years, with manufacturing industries in the region’s major economies, such as Japan, South Korea, and Malaysia, worsening. Slack in North America’s supply chains remained far less widespread than in mid-2023. In addition to soft supplier order books, there are historically low reports of item shortages and backlogs, suggesting supply levels that will cause further downward pressure on the prices of goods.

Key findings include:

  • A downturn in demand for raw materials, components, and commodities worsened in December.
  • Purchasing cutbacks were at the strongest seen since the beginning of 2023
  • Reports of safety stockpiling due to price or supply concerns held steady. Businesses are unlikely to have excess in their inventories.
  • Item shortages are at their lowest level since January 2020
  • The number of companies experiencing backlog accumulation due to lacking staff fell further at year’s end. Workforce capacity does not restrict suppliers.
  • Global transportation costs are running below their long-term average and dipped to a five-month low in December.
  • Regional results include:
    • The Index in North America fell to -0.39, from -0.21, its lowest level since August, well below its recent bottom of -0.85 in June. 
    • In Europethe Index fell to -0.92 from -0.85, its lowest in three months.
    • In the U.K., after rising to -0.58 in November, its highest since April, the Index dropped to -1.05 in December, the lowest since April 2020, showing weakness across U.K. manufacturing. 
    • And, in Asia, the Index fell to -0.42 from -0.24, its lowest level in the post-pandemic era and pointing to growing signs of weakness.

For more information on the Index, visit

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