Disruption top concern in Citi’s supply chain report

Disruption remains at the top of concerns for businesses that rely on global supply chains, says a new report from financial services company Citi.

The Covid-19 pandemic, followed by the war in Ukraine, have demonstrated how fragile those global supply chains are, the report says. Many companies that have experienced the pain of those disruptions now seek resiliency wherever they can.

The report, entitled Supply Chain Finance: Uncertainty in Global Supply Chains is Going to Stay, surveyed over 2,000 respondents and features highlights from Citi Research’s Global Supply Chain Pressure Index. That index shows that overall levels have fallen back to pre-pandemic norms, however supply chain stresses remain. Inflation and rising interest rates are common across many countries.

“While reshoring and nearshoring may seem like the next steps, buyers and suppliers alike indicate that the higher priority is resiliency or redundancy deeper into the supply chain,” wrote Jane Fraser, Citi’s CEO, in the report’s introduction.

Organizations are focusing on inventory management strategy, producer partnerships, and are investing more in digital tools, Fraser wrote. The surveys show they are as focused on resiliency in their financial supply chains as they are in their physical supply chains.

The index eased in December 2022 while overall pressures remain somewhat above pre-pandemic readings. That improvement largely reflects easing in the global consumers’ demand for goods, the report says. The lessening of supply chain pressures should lead to a cooling in global goods inflation. However, these developments may also mean a risk of a recession.

Overall, five themes emerged from the surveys of suppliers and large corporations:

  • Rising prices, interest rates and high inflation are impacting global supply chains, with CFOs and treasurers working to ensure resilience in their financial supply chains
  • Corporations and suppliers want to strengthen relationships to mitigate further disruption. Shifts in order patterns have complicated demand forecasting, while many have embraced track-and-trace technologies
  • Pandemic disruptions have yielded to geopolitical tensions as main threat to supply chain funding stability
  • Survey respondents are optimistic about the prospects for exports and international sales growth in the next six months
  • While ESG remains a focus area, a lack of clarity surrounding definitions and measures has impeded progress