Global Supply Chains are Struggling to Keep Pace with Spiking Orders Volumes, Tradeshift Data Reveals

Published 

London – Business to business trade activity grew by 10% in the first quarter of 2021, but a recent surge in order volumes is creating fresh challenges for suppliers after a year of intense disruption, new transaction data from Tradeshift can reveal.

According to Tradeshift’s latest Index of Global Trade Health, order volumes jumped 16.9% in Q1 and one in five suppliers are concerned about their ability to keep pace with demand. The strain on supply chains is particularly acute among manufacturers. Order volumes across the sector were up by 80% year on year in March, but invoice volumes grew by just 20% over the same period. 

The emerging delta between orders and invoices suggests that working capital is failing to flow through to suppliers to support the sudden ramp-up in customer demand. In a survey of suppliers, Tradeshift found that nearly a third of respondents had seen their cash flow position deteriorate over the past six months. Nearly half said that they’ve seen an increase in the number of late customer payments since the beginning of the year. 

“The pattern we’re seeing in our data suggests supply chain activity is beginning to find its level and that level is currently set at one hundred miles per hour,” said Christian Lanng, CEO, Tradeshift. “A lot of suppliers have been left beaten up by events of the past year. Now they’re being asked to run a marathon without any fuel in the tank. It’s no wonder cracks are starting to appear, particularly in the manufacturing sector.” 

Recent data suggests factories in the Eurozone’s manufacturing heartlands have been running at a record pace in 2021. Tradeshift’s own analysis shows that total transaction volumes across the region’s supply chains grew by 14.5% in Q1. U.S. transaction volumes, which leapt 29% in Q4, fell back into line with global averages in Q1, rising 10.2% during the period.

In the UK, transaction volumes have been running at a significant deficit since the pandemic, but there are signs that trade activity may be turning a corner. A 6% rise in transaction volumes during the first three months of 2021 brought supply chain activity up to parity with the pre-pandemic level in Q1 2020.

Christian Lanng commented: “A year ago, an unprecedented event caused havoc among global supply chains. Today, an unprecedented recovery is creating further disruption. The lack of transparency in supply chains makes them extremely vulnerable to volatility. Digitalisation is seen as a way of building more resilient, collaborative supply chains. But we need to take the conversation beyond simply delivering transparency for buyers and look at whether the systems we are deploying are also delivering equivalent value and support to suppliers.”

Most recent episodes

Achieving Treasury Centralisation with In-House Banking as a Service

Catherine Hill (Salesforce), Christof Hofmann and Dirk Kronshage (Deutsche Bank) join TMI's Eleanor Hill to consider how treasury centralisation can be successfully achieved...

34:31

Exploring ESG Investing

Security, liquidity and yield have traditionally been the treasurer’s top investment considerations. But with the call for greater corporate social responsibility – and the solid performance of sustainable investments – ESG is now becoming a fourth...

00:00

Crypto Assets: The Questions Every Treasurer Should Be Asking

Are crypto assets really a viable treasury investment? If so, how can you enter – and exit – the market with the least possible risk? How does the custody of crypto assets work? What are the accounting and tax...

56:18

Building a Digital Treasury: Resilience Meets Agility

Karen Gilhooly and Brian McKenney (HSBC) talk to TMI’s Editor, Eleanor Hill, about the imperative need for treasurers to invest in technology if they wish to enhance the strategic value that they bring to the...

15:25

EACT 2021 Survey: Top Trends Revealed

Jan Dirk van Beusekom, BNP Paribas, and François Masquelier, EACT, discuss the findings from the 2021 EACT Survey, which garnered responses from over 340 corporate companies. Hear a detailed overview of the key trends that have captured the attention of European...

28:48

Taking Care of Cash: Cigna Treasury’s Digital Transformation

Cigna, a global health services provider, encountered a multitude of challenges when its 70,000 employees were plunged into a remote working environment. Payments concerns, bold digital aspirations and the requirement...

17:05

Treasury on Demand: Are you Ready?

A need to react quickly to new business requirements is driving a new age in treasury, characterised by on-demand concepts. In our latest podcast covering the Journeys to Treasury report, Steven Lenaerts, BNP Paribas, and Christian Mnich, SAP, explore the drivers...

23:08

Smart Treasury: The Future is Now

In this TreasuryCast episode, our guests from Standard Chartered, Sunday Domingo and Byron Gardiner, discuss best practice approaches in a data-driven treasury environment. The experts also consider how treasury responsibilities such as working capital and...

34:56

Co-Creation in Action: Treasury Evolution

Think co-creation is just a buzzword? Then it’s time to think again. As Pierre Fersztand, Global Head of Cash Management, Trade & Payments, BNP Paribas, explains, value-adding solutions are being implemented as a...

16:02

Leading Edge Supply Chain Finance: Smart and Sustainable

TMI’s Eleanor Hill is joined in the virtual TreasuryCast studio by Gwynne Master, Managing Director and Global Head of Trade, Lloyds Bank, to discuss all things supply chain finance, an area that has faced...

11:19