After a turbulent two years for production lines, global supply chains are entering 2026 in a noticeably quieter state. The latest GEP Global Supply Chain Volatility Index, drawn from a monthly survey of 27,000 companies, shows another month of underutilised capacity across most major regions. Manufacturers continued to limit purchasing in November, signalling a weakening outlook for the start of the new year.

The headline index registered -0.29, its eighth straight month in negative territory, pointing to slack rather than strain across the world’s supplier networks. For corporate treasurers, the findings paint a picture of operational stability but also softer commercial momentum. Reduced input costs and gentler working capital cycles sit alongside a more challenging revenue backdrop, demanding careful balance as 2026 approaches.

North America pulls back as industrial sentiment softens

North America recorded the steepest decline in input demand of any region in November. The regional index fell to -0.53, its weakest reading since March, as manufacturers cut orders ahead of the new year. This sharper pullback reflects growing uncertainty about near-term demand and a desire to keep inventories lean while the economic picture becomes clearer.

Treasury teams supporting North American operations may find that lower purchasing requirements ease immediate liquidity pressures, even as a softer production pipeline raises questions about revenue resilience in the first half of 2026.

Asia remains subdued but pockets of resilience emerge

Asia’s reading rose slightly to -0.16, suggesting less spare capacity than in October but still a generally subdued environment. Chinese factories continued to pull back sharply on purchasing amid weak global demand. At the same time, parts of Southeast Asia provided a counterpoint, with Indonesia and Vietnam showing more resilience.

For corporates with significant Asian supply chains, the divergence may require more nuanced cash flow planning and procurement strategies. China’s caution contrasts with more stable conditions in ASEAN markets, shaping different financing and hedging needs within the region.

Europe and the UK continue to lag

Across Europe, industrial fragility persisted. The index dipped to -0.33 as factories once again opted to cut purchasing rather than expand production. Germany and France recorded particularly cautious behaviour. The UK, however, posted a notable improvement, rising to -0.20, its highest level in a year. Although still below zero, the uptick suggests the country’s manufacturing downturn may be losing intensity.

For treasurers, Europe remains the region where receivables risk warrants the closest attention. The potential for payment delays rises when pipelines stagnate and demand remains weak.

Softer demand, lean inventories and easing pressures

The wider picture across the global manufacturing economy reinforces the sense of caution heading into 2026. Purchasing of commodities, intermediate goods and components slowed again in November, shaped by reduced factory buying in China, weaker demand conditions in the United States and persistent softness across major European industrial economies. This environment typically reduces short-term funding needs, although it also makes revenue pipelines more unpredictable.

Inventory strategies continued to favour minimal buffer stock. Very few procurement managers reported raising stock levels due to supply fears, which indicates limited concern about shortages or sudden price inflation. Lean warehouses ease working capital pressure, allowing treasurers to reallocate liquidity to areas that may deliver higher strategic value.

Supply-side conditions are equally benign. Material shortages remain well below historical trends, meaning manufacturers face few challenges in sourcing components. Labour shortages have eased to levels only marginally above average, and transport costs, although slightly higher in November, remain in line with long-term norms.

This alignment of conditions signals an operating environment defined far more by slack than by bottlenecks. It gives treasurers a rare window of predictability: fewer emergency sourcing requests, steadier cash-conversion cycles and clearer decision-making horizons for FX, commodity hedging and procurement financing.

A buyers’ market and a moment of leverage

With abundant spare capacity and little evidence of stockpiling or supply stress, the balance of power remains firmly with buyers. John Piatek, Vice President of Consulting at GEP, notes that companies are watching the US Supreme Court closely and many expect a pause or rollback in tariffs. He argues that with supply chains this slack, the environment heading into 2026 remains a buyers’ market, offering real leverage for securing favourable terms.

That leverage matters. Corporate treasurers may find 2026 to be an opportune year to revisit supplier contracts, reshape payment schedules, diversify procurement routes and lock in more competitive pricing while conditions remain benign.

Treasury takeaways

The latest index suggests that the major risks for corporate treasury functions are shifting away from supply disruptions and cost inflation and towards the demand side of the economy. The risk landscape now revolves around softening industrial pipelines, uneven regional performance and the possibility of delayed customer payments as buyers themselves adopt a more cautious stance.

Treasurers will need to prioritise liquidity planning that reflects a cooler demand environment. Cash flow forecasting may require greater scrutiny of receivables exposure, particularly in sectors tied closely to North American or European manufacturing. At the same time, the easing of working capital pressures gives corporates space to optimise their funding mix, renegotiate supplier arrangements and pursue efficiency-led savings.

The stability in supply chains also allows treasurers to refine hedging strategies. With material shortages low and price pressures contained outside of tariffs, volatility in input costs may be more manageable, enabling more deliberate and less reactive risk management.

A calmer end to 2025 but uncertainty remains

The world’s supply chains are closing out 2025 with slack capacity, subdued demand and reduced cost pressure, creating a more stable platform for planning than many corporates have seen in several years. Yet the calm brings its own challenges. A slower industrial cycle can weigh on revenues, complicate forecasting and force treasurers to prepare for multiple scenarios as 2026 unfolds.

Still, for the moment, the message from the GEP index is clear: supply is available, pricing power remains with buyers and operational risk has eased markedly. Treasurers now have a valuable opportunity to consolidate, negotiate and position their organisations to take advantage of any upswing, whenever it arrives.