A Closer Look at the GSCPI

The Global Supply Chain Pressure Index (GSCPI) is a composite index that tracks the state of global Supply Chains using data from the transportation and manufacturing sectors. It is updated monthly and provides insights into Supply Chain conditions, including delivery times, prices, and inventory. The GSCPI integrates data from various sources, such as components of the Purchasing Managers Index (PMI) in different countries, to offer a comprehensive view of global Supply Chain pressures.

The Global Supply Chain Pressure Index (GSCPI) is a very useful tool for understanding the state of global Supply Chains. The index is updated monthly and offers insights into delivery times, prices, and inventory, allowing for a nuanced understanding of global Supply Chain pressures.

The GSCPI is updated at or shortly after (U.S.) 10:00 a.m. on the fourth business day of each month. The GSCPI is a product of the Applied Macroeconomics and Econometrics Center (AMEC).

History

The GSCPI was introduced by the Federal Reserve Bank of New York and has been in use since 1997. It was designed to provide policymakers, businesses, and consumers with a tool to understand the state of global Supply Chains and to monitor how global Supply Chain pressures vary from the average.

Functions & Benefits

The GSCPI serves as a valuable tool for policymakers, businesses, and consumers. It helps policymakers assess the overall health of global Supply Chains, aiding in the formulation of trade policies and economic strategies.

For businesses, the index provides insights into Supply Chain conditions, enabling them to optimize production and inventory management. Additionally, consumers can benefit from the GSCPI by gaining a better understanding of potential impacts on prices and the availability of goods.

How Businesses Can Use It

Businesses can leverage the Global Supply Chain Pressure Index (GSCPI) in several ways to enhance their supply chain management and decision-making processes, what follows is a more detailed explanation of how businesses can use the GSCPI.

Supply Chain Constraints & Economic Conditions

The GSCPI allows businesses to gauge the significance of supply constraints concerning economic conditions. By monitoring the index, businesses can better understand how these constraints evolve, providing insights into potential Supply Chain disruptions.

Predicting & Managing Supply Chain Pressures

Companies can use the GSCPI to predict and manage Supply Chain pressures. By analyzing the index, businesses can anticipate fluctuations in Supply Chain pressures and take proactive measures to mitigate potential disruptions. This can include adjusting production schedules, inventory levels, and sourcing strategies to adapt to changing Supply Chain conditions.

Supply Chain Disruption Overview

The GSCPI provides businesses with an overview of potential Supply Chain disruptions. By tracking regional indicators across different economies, including the U.S., U.K., Europe, and Asia, the index offers valuable insights into inflation, trade, and globalization trends. This information can help businesses assess the impact of Supply Chain disruptions on their operations and make informed decisions.

Standard Deviation Analysis

As part of the Supply Chain management process, companies can use the GSCPI to understand better standard deviations from the average for global Supply Chain pressures. When the index is high, it indicates higher Supply Chain pressure, while a low index suggests less pressure. This information can guide businesses in assessing the relative intensity of Supply Chain pressures and making informed operational and strategic decisions.

Using Integrated Metrics

The GSCPI integrates 27 variables from commonly used metrics, including data from global transportation costs and regional manufacturing surveys across seven economies. This comprehensive approach allows businesses to gain a detailed snapshot of potential Supply Chain disruptions, enabling them to make data-driven decisions in their Supply Chain management processes.

Key Variables in the GSCPI

• Cross-Border Transportation Costs: This variable tracks the costs associated with cross-border transportation, reflecting changes in global trade and logistics costs.
• Changes in Shipping Rates: It encompasses fluctuations in shipping rates, providing insights into the dynamics of the shipping industry and its impact on Supply Chain pressures.
• Airfreight Costs: This variable reflects the costs associated with airfreight, offering insights into the air cargo sector and its influence on Supply Chain dynamics.
• Manufacturing Data: Data from manufacturing surveys across different economies is integrated into the index, providing information on production levels, new orders, and employment trends, offering a comprehensive view of Supply Chain conditions within specific regions.
• Baltic Dry Index (BDI): The BDI tracks the cost of shipping raw materials, such as coal or steel, providing insights into global shipping and trade activity, and reflecting changes in demand for raw materials and the overall health of the shipping industry.
• Harpex: It tracks worldwide price trends in the charter market for container ships, offering insights into container shipping costs and market trends.
• US Bureau of Labor Statistics Indexes: These indexes measure changes in air-freight rates to and from the US, providing insights into air cargo costs and their impact on Supply Chain pressures.
• Purchasing Managers Index (PMI) Surveys: PMI surveys from several countries, including measures for new orders, delivery times, backlogs, and purchased inventories, offer insights into manufacturing and service sector trends, reflecting changes in economic conditions and Supply Chain pressures.

If you need a remote Supply Chain Specialist, Subject Matter Expert, Advisor, Consultant, or Project Manager or know someone who does, please reach out to me directly on LinkedIn.

Further Reading;

o You can watch the Central Bank of New York video explaining the Global Supply Chain Pressure Index?here.

o The GSCPI is a product of the?Applied Macroeconomics and Econometrics Center?(AMEC).

o You can read the Central Bank of New York overview page explaining the Global Supply Chain Pressure Index?here.

o You can find the current Global Supply Chain Pressure Index (GSCPI) interactive visual?here.

• Check out my LinkedIn article, “Using the Right External Data Points for Supply Chain AI Tools” here.