Preparing for a downturn that may or may not come requires accounting for what is different this time around, a consultancy warned.
Gartner recently revealed economic uncertainty is clouding the future of supply chains, and conflicting signals can significantly increase planning challenges. Properly controlling costs, and navigating demand volatility ahead of a potential recession, requires supply chain leaders to consider some critical differences between current conditions and earlier downturns.
“In general … [the] environment is economically ambiguous. Record inflation and governments’ fiscal responses are contributing to recession concerns but other typically reliable indicators of a recession — the credit and term spreads — are signalling that the risk is low,” the company’s website said.
“Unemployment is likely to rise according to some models but – for now – remains at multidecade lows. Then there are the still-unsettled global geopolitical conditions after Russia’s invasion of Ukraine.”
The remarks came as the state of the market dramatically shifted towards a potential recession in 2023.
Some key factors include:
- most supply chains have depleted critical resources and safety stocks, and face similar constraints upstream
- labor markets remain extremely tight with more jobs open than people looking for employment
- travel restrictions have created labor shortages while bad freight actors made untenable bottlenecks across global freight and transport functions.