Cottrill Research, LLC

Wells Fargo Introduces Tool to Measure Supply Chain Constraints

Wells Fargo Introduces Tool to Measure Supply Chain Constraints

Wells Fargo Introduces Tool to Measure Supply Chain Constraints

Wells Fargo has announced that it has built its own tool, The Pressure Gauge, to answer the one question “that business owners, policymakers, consumers and financial markets” have all been trying to answer: When will supply chain pressures begin to ease? Acknowledging that expertise “in an impossibly broad collection of fields from inventory management to manufacturing to shipping and global trade” would be required, Wells Fargo economists explain:

We certainly do not claim that degree of expertise, but we realized that to measure current supply chain constraints, you need to source data from all of these fields. We have aggregated a variety of indicators to do that, dividing these components into five main categories: time, volume, price, inventory and labor. Within most of these categories, we use both domestic and international indicators, although we lean more heavily toward domestic measures as our primary focus is the impact to the U.S. economy.

Sources identified include Institute for Supply Management (ISM), Bloomberg LP, Taiwan Ministry of Finance, U.S. Department of Labor, Drewry, U.S. Department of Commerce, National Federation of Independent Business (NFIB), Indeed.com and Wells Fargo Securities.

In an update posted today, reflecting data from the July ISM report, the Pressure Gauge “shows that calling the peak for supply constraints remains premature. Every data point available for July is flashing amber to red. Bottlenecks are therefore likely to keep the heat turned up on prices and keep inflation elevated in the coming months, and inventory restocking is not yet in the cards. While the easing in the supplier delivery index is a step in the right direction, supply chains remain a long way off from the seemingly frictionless state of before COVID.”

Photo by CHUTTERSNAP on Unsplash

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