Supply chain heatmap
Developments in supply chains can be seen in the first edition of our supply chain monitor, which we plan to release quarterly for the time being. Central to this is the supply chain heatmap, which we first published in our report Rebuilding Supply Chains. This shows, along the lines of various indicators (about freight, production, demand, prices and uncertainty), where the pressure on supply chains has increased or decreased in recent months since the start of the Covid-19 crisis.
Easing pressure on supply chains does not necessarily mean good news
Easing pressure means, for example, that the waiting time for products to be transported by containers from one side of the world to the other has decreased. However, the fact that indicators in the heatmap turn green does not always mean good news from a broader economic perspective. Reduced consumer sentiment, for example, reduces demand and thus pressure on the supply chain, but can have negative consequences for individual companies, such as being stuck with expensive inventories. What the heatmap also reveals is that shortages of raw materials and labor create continuous pressure on supply chains.
Strong link between disruptions and supply chain problems
Looking at the heatmap over several quarters, one can see that there is a connection between global disruptions and pressure on supply chains. In the first quarter of 2020, we see some indicators (especially those related to uncertainty), turning red. In the first quarter of 2022, we see the same thing happening, for example, due to sharply rising fuel prices.
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