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Using supplier delivery times to anticipate buyers’ and sellers' markets
 
Changes in supplier lead times can signal shifts between buyers’ and sellers’ markets.

A movement of the suppliers’ delivery index above 50 means delivery times have shortened on average, which usually means suppliers have become less busy due to demand for their products falling.

Conversely, a delivery times index reading below 50 signals a lengthening of suppliers’ delivery times, which is usually caused by strong demand making suppliers busy and unable to meet orders without incurring delivery delays.



Shorter delivery times is often indicative of a shift to a buyers’ market, with suppliers often keen to offer discounts to generate sales.



On the other hand, longer delivery times often indicates a shift to a sellers’ market, as manufacturers are willing to pay more to ensure delivery of the raw materials they require to maintain production.



In most cases, the end result is a passing-on of the higher costs to customers by manufacturers, so longer lead times lead to higher output prices and vice versa.



 
 
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