Quick Bites | Supply chains de-stress

Just-in-time manufacturing is back, and not a moment too soon. Disruptions of supply chains during pandemic lockdowns were the catalyst in the explosion of inflationary pressures across the globe. The normalisation of supply chains is thus a major pre-requisite for the unwinding of inflation, at least in the goods space. The pandemic wrecked supply chains, undermining the once-seemingly foolproof strategy of scheduling production as soon as components arrived on site. The just-in-time philosophy was replaced by a just-in-case response, but with the dissipation of goods inflation, and the de-stressing of supply chains, a more normal environment appears to be asserting itself.

The chart below shows a decline in supply chain stress in the initial months of 2024 to the lowest point since February 2021. A lower measurement means less stress in the supply chain. With zero representing an average level of stability for the US over the last 15 years, the index is still displaying an elevated level of stress at 1.04 in February. While a complete return to pre-pandemic normalcy in 2024 is unlikely, there are positive developments such as the partial comeback of just-in-time inventory strategies.

Source: KPMG, Association for Supply Chain Management, Axios Visuals

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