Almost a third of suppliers suffer from a deterioration in their cash flow position
The emerging delta between orders and invoices suggests that working capital is not flowing to suppliers to support the sudden surge in customer demand. In a survey of suppliers, Tradeshift found that almost a third of respondents had seen their cash flow position deteriorate in the past six months. Almost half said the number of late customer payments had increased since the beginning of the year.
“The pattern we’re seeing in our data suggests that supply chain activity is starting to find a level that’s currently set at a hundred miles per hour,” said Christian Lanng, CEO of Tradeshift. “Many suppliers have been left ailing from the events of the past year. Now they are being asked to run a marathon with no fuel in the tank. It’s no wonder that cracks are showing, especially in manufacturing. ”
Latest data from IHS Market suggest that factories in the core eurozone countries ran at a record pace in 2021. Tradeshift’s own analysis shows that the total transaction volume in the supply chains in the EU region increased by 14.5 percent in the first quarter. Transaction volumes in the US, which had increased 29 percent in the fourth quarter, fell back to the global average in the first quarter with an increase of 10.2 percent.
Growing order volume: pandemic throws global supply chains into turmoil
In the UK, transaction volumes have declined significantly since the pandemic. But there are signs that trading activity may turn. A 6 percent increase in transaction volume in the first three months of 2021 brought supply chain activity to pre-pandemic levels in Q1-2020.
“A year ago, COVID upset global supply chains. Today the rush to recover is causing further interruptions, ”Lanng continues. “The lack of transparency in the supply chains makes them extremely vulnerable to volatility. Digitization enables companies to build more resilient, collaborative supply chains. But we have to think much further: It is not only important to improve transparency along the supply chain for the buyer, but above all to use systems that also support suppliers and create value for buyers and suppliers. ”
Also read: Fulfillment – Loxxess is expanding capacities at the Aurach location.