Inside GEP's Global Volatility Index March 2025

Global supply chains are running below capacity as caution persists in procurement and manufacturing, according to March’s GEP Volatility Index

As the GEP Global Supply Chain Volatility Index dips again in March, supply chains worldwide continue to show high levels of unused capacity. This marks the third consecutive month of decline, with the index falling to -0.51 — its lowest point in nearly five years.

The reading indicates spare capacity in global supply networks at levels not seen since the early months of the COVID-19 pandemic in 2020.

The GEP Global Supply Chain Volatility Index is built from responses gathered from 27,000 businesses. It serves as an early signal for changing demand and supply conditions, tracking shortages, transportation costs, inventory stockpiles and production backlogs.

The index is structured around a baseline of 50 and any figure above that reflects growth, while any figure below suggests a contraction. The further a reading sits from 50, the more pronounced the shift.

One of the clearest signals in March’s data is the sharp drop in stockpiling activity by manufacturers.

According to GEP, this behaviour - often used to buffer supply chains from disruption - is now at its lowest point in nine years. It signals widespread caution among procurement teams, who are holding off on buying in anticipation of unpredictable future demand.

John Piatek, Vice President of Consulting at GEP, notes that this retreat is especially evident in North America: "March's sharp decline in supplier activity was due to the stifling effect of tariffs and tariff-related uncertainty, which had its strongest impact in North America, where manufacturers reported cutbacks to purchasing activity and inventories."

"Until just last week, most companies had taken a wait-and-see approach," he adds.

"Now, organisations are aggressively exploring every possible way to eliminate costs, push suppliers to absorb tariffs, and de-risk their global supply chains."

This trend points to a change in procurement behaviour, where the focus has shifted from resilience to cost control. Many organisations are now seeking ways to limit exposure to geopolitical pressures and tariffs while avoiding the financial burden of holding excess stock.

Regional shifts in supply chain capacity

Regional results show distinct contrasts across global supply networks. In North America, the index plunged to -0.63 from -0.18, the steepest monthly drop among all regions.

Manufacturers across the US, Canada and Mexico are scaling back both production and inventory levels, highlighting their growing uncertainty around costs and trade policy.

The United Kingdom posted an even sharper contraction. The index there fell to -1.23, its lowest since mid-2020. UK factories are actively cutting stock and spend, signalling preparations for a potential downturn in the country's industrial activity.

Spare capacity in the UK has now increased for four months running, with current levels only exceeded during the global financial crisis and the pandemic.

Across mainland Europe, there are tentative signs of stabilisation. The regional index nudged up to -0.63 from -0.72. This still reflects substantial underutilisation but suggests the worst may be over for European industry. Demand for input materials, though still down, fell by the narrowest margin seen in nearly three years.

In Asia, the picture is more upbeat. The region's index stands at -0.12, slipping slightly from February’s neutral 0.00, but still reflecting a supply chain system close to full utilisation. China and India, in particular, saw small increases in procurement activity during March, offsetting dips elsewhere.

In terms of demand, the index shows global appetite for raw materials, parts and commodities remains steady. Activity sits close to its long-term average, though geographical gaps are clear: North America shows a weakening trend, while parts of Europe and Asia pick up the slack.

Stockpiling behaviour continues to weaken. March saw the lowest reports of safety stockpiles since July 2016. This reinforces the idea that procurement managers remain hesitant, preferring to avoid adding to inventories while trade outlooks remain uncertain.

Material shortages are no longer a dominant concern. GEP’s indicator on item availability shows strong supply across critical goods, with vendors holding enough stock to meet client demand. Labour shortages also appear to be under control, with no major backlogs reported due to staffing limitations.

Transport costs globally dropped to their lowest level so far this year, aligning with longer-term averages. This stability in logistics is another indication that supply chains, while underused, are not experiencing capacity stress.

The GEP Global Supply Chain Volatility Index is jointly produced by S&P Global and GEP.

It uses data drawn from S&P Global’s Purchasing Managers' Index (PMI) surveys, combining six sub-indices to gauge demand, availability, price pressure and operational capacity across sectors. A positive index value reflects strained systems and high volatility. A negative value reflects spare capacity and reduced strain.

Source: Supply Chain Digital