Global supply chain risk falls for third straight quarter, despite political uncertainty
The CIPS Risk Index fell for the third consecutive quarter to 80.3, down from 81.3 in Q2, despite global political uncertainty and the ongoing renegotiation of long-standing trade deals, such as the North American Free Trade Agreement (NAFTA) and the
Despite recent falls, the Q3 score is only slightly below the Index's all-time high of 82.6 in Q4 2016. The Index, produced by
Although the damage caused by Hurricane Harvey in the US had a localised impact on supply chains, the weather event did not have a discernible impact on the global supply risk index, with
The largest drop in risk was in Western &
On top of this, the EU Free Trade Agreement (FTA) with
However, political risk around the world continues to threaten to spill over into the economy and impact supply chain risk. This is particularly significant in the US, where the lack of clarity from the
"Although supply chain risk has fallen for three consecutive quarters, it remains close to its all-time high and businesses must prepare accordingly. In a period of prolonged supply chain risk, it's crucial that businesses have a network of alternative suppliers when disruption inevitably hits.
"The outcomes of various ongoing negotiations, such as Brexit and
"The Global Supply Risk Index score improved for the third straight quarter, falling from 81.3 in Q2 2017 to 80.3 in Q3. While the sustained improvement in the GRI is a positive for global supply chains, the index remains in high-risk territory. The Q3 reading is only slightly below the all-time high of 82.6 in Q4 2016. To put this in perspective, the average GRI score over the last four quarters (Q3 2016 to Q3 2017) was 81.5, while the average for the ten years 2006-15, which included the Great Recession, was 62.3.
"Political risk is the common theme in supply chain risks across most of the world in Q3, and will remain so in the near term. Increased political risk brings with it impediments to the implementation of the right growth-friendly policies. While it is true that global growth is on a much firmer footing globally than it was a year ago, government policy will be ever more important, particularly as central banks across the advanced economies begin/continue their slow but steady withdrawal of monetary stimulus."
Notes to Editors:
About the CIPS Risk Index, powered by
First launched in
The Index helps sourcing professionals understand the risks to which their supply chains are exposed, articulate questions and scenarios for key suppliers, inform assurance activities, check the readiness of contingency plans, support the negotiation of risk transfer in contracts, and establish factors which may impact the financial stability of tier one and sub-tier suppliers upstream. Regular production of this Index will help procurement and supply professionals communicate and justify risk-informed sourcing decisions and support effective Supplier Relationship Management.
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