Nigeria and the rest of the world continues to experience supply challenges as the global supply chain remains under pressure. This is because the global supply chain has struggled to keep pace with and rise above the effects of COVID-19.
The Global Supply Chain Pressure Index (GSCPI) dropped from 3.82 in January 2022 to 3.31 in February 2022. However, the still high index value is reflective of a supply chain still under pressure.
The Global Supply Chain Pressure Index (GSCPI), estimated by the Federal Reserve of New York, measures cross-border transaction cost and country-level manufacturing. The index incorporates 27 metrics to arrive at its final value. Some of the factors it considers include transport cost, duration of goods on arrival, the time it takes to fulfil orders by companies, and the volume of inventory built by companies.
At zero, the index signifies average supply pressure, however, a value above zero indicates pressure on the supply chain. Thus, the higher the value above zero, the greater the pressure on the supply chain.
The global supply index has been steady since 1997. Before the pandemic, the index rarely exceeded one. Even when some countries experienced natural disasters, like the 2011 tsunami in Japan, the index value did not exceed two. However, the effect of economic closure due to COVID-19 saw the figure rising above four.
Data shows that the global supply chain before the coronavirus outbreak was just a little above average. The GSCPI was 0.2 in December 2019 and increased to 0.6 in January 2020.
However, with the spread of COVID-19 and the impact on the economy from February 2020, the index increased to 1.23 by February of 2020. The index continued to increase over the months to July when it was 2.91. The ease of lockdown in August saw it drop to 1.34 and further to 0.68 and 0.21 in September and October 2020, respectively.
The supply chain pressure then increased again in November and has continued to increase over subsequent months to peak at 4.5 in December 2021.
Since the beginning of 2022, the pressure has begun to ease as the GSCPI dropped to 3.82 in January 2022 and then to 3.31 in February. However, it is still at a high pressure point.
The outbreak of COVID-19 led to a change in the consumption pattern of consumers and economic closures further hindered the production of goods in sufficient quantities.
This pressure on the supply chain is caused by port congestion and labour and trucking shortages, increased delay in delivering of goods at designated destinations, delayed confirmation of orders by companies; among others.
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