Manufacturers accelerated precautionary stockpiling in October

Manufacturers accelerated precautionary stockpiling in October, reflecting growing concerns about future inflation and supply disruptions, according to a report from supply chain tech firm GEP.

That was the finding from the latest “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs, based on a monthly survey of 27,000 businesses.

According to the report, the increase was particularly pronounced in North America, where the safety stockpiling indicator more than doubled from September, and Europe, where inventory building rebounded sharply. This signals that manufacturers are purchasing additional materials to protect production against higher future costs and potential shortages, even as the pace of global purchasing growth moderates.

While this inventory buildup may support manufacturing activity in the near term, it also ties up working capital and creates a risk of weaker purchasing demand once companies have accumulated sufficient stock. Meanwhile, global transportation costs increased for the second consecutive month, adding to already high inflationary pressures here.

This story was originally published by Supply Chain Quarterly. Read the full story at Supply Chain Quarterly →