Facing Global Disruption: Strategies to Transform Value Chains into Opportunities in the Modern Economy

Jakarta, INTI - In recent decades, global value chains have encountered unprecedented pressures. Climate change, geopolitical tensions, and disruptive technological advancements pose significant challenges to manufacturers and global supply chain players. Responding to these issues, the World Economic Forum (WEF), in collaboration with the global consultancy firm Kearney, released a report titled "From Disruption to Opportunity: Strategies for Rewiring Global Value Chains."

The report offers a strategic framework for companies to face global uncertainty, transforming threats into opportunities, and steering value chains toward sustainability. This article explores the main trends discussed in the report, the real-world challenges companies face, and innovative solutions for building resilient value chains for the future.

1. Global Trends in Value Chains: Five Pillars of Transformation

The WEF study identifies five major trends reshaping global value chains. By understanding and embracing these trends, companies can strengthen their position in the modern economy. Below are the trends highlighted in the report:

1. Shifting from Global to Globally-Connected Local: Value chains are moving toward globally connected yet locally based networks. Rather than relying solely on global production centers, they are increasingly incorporating regional facilities closer to consumer markets.
2. From ‘Doing Digital’ to ‘Being Digital’: Companies are expected to transform into fully digital entities by integrating intelligent technology across all operational aspects, rather than just implementing digital tools.
3. From Economies of Scale to Economies of Skill: Organizations are now focusing on developing workforce skills to adapt to technological changes, shifting away from scale-driven efficiencies to skill-driven value.
4. From Regulatory Compliance to Innovative Sustainability: Sustainability is no longer just about adhering to environmental regulations; it now emphasizes proactive innovation to reduce environmental impact.
5. From Cost-Driven to Customer Value-Driven: Customer value is now the primary focus in supply chain adjustments, with greater emphasis on meeting customer needs and preferences.

2. Implementation Challenges: Bridging the Gap between Ambition and Operational Reality

The WEF report finds that while companies have high ambitions to strengthen their value chains, complex challenges, costs, and limited resources often hinder operational progress. In a survey of 300 executives, 92% of respondents said they prioritized regionalizing their value chains. However, only 28% plan to operate in specific regions by 2030, highlighting the disparity between strategic ambition and the available resources to achieve these goals.

Moreover, only 1% of companies have achieved full automation, whether through robotic or AI technologies. The majority still rely on legacy systems, which are inflexible and slow to integrate with new technologies. This results in higher costs and challenges in implementing digital solutions.

3. Proposed Solutions: Digital Transformation and Sustainability

The WEF highlights several steps companies can take to meet these challenges, including the adoption of intelligent technologies, workforce skills enhancement, and collaboration with third-party partners.

• Digital Transformation: AI and digital technologies like IoT (Internet of Things) and RFID (Radio Frequency Identification) can provide better visibility throughout the supply chain. According to the report, only 15% of respondents have successfully adopted AI-powered planning solutions, which provide advantages in demand forecasting and supply optimization.
• Upskilling and Reskilling: Around 60% of the global workforce requires retraining to adapt to increasingly sophisticated technologies. The WEF suggests that companies develop analytical skills, creative thinking, and resilience among their employees to keep up with the demands of the digital age.
• Sustainability: Amid pressure from consumers and governments, companies are now prioritizing sustainability in the value chain process. For example, electronics manufacturers are reducing their carbon footprint in supply chains by selecting suppliers committed to sustainability. However, only 14% of companies have redesigned their manufacturing networks to reduce Scope 3 emissions, which encompass indirect emissions related to the entire value chain.

4. The Impact of Sustainability on Value Chains

Sustainability is now a primary driver of global value chain restructuring. According to the WEF survey, 45% of companies rank sustainability as one of the most important factors in transforming the supply chain. Organizations that successfully implement sustainability strategies throughout their value chains can reduce their carbon footprint, cut costs, and improve operational efficiency.

However, WEF notes that sustainability often brings cost challenges. The survey reveals that 66% of industry leaders prioritize suppliers with sustainability credentials, even if it means higher costs. This indicates a significant shift in perspective, where companies are moving beyond cost-driven decisions and emphasizing environmental responsibility.

Meeting the challenges of global disruption requires comprehensive and collaborative strategies. By leveraging digital technology, enhancing workforce skills, and prioritizing sustainability, companies can build resilient value chains. Collaboration between the public and private sectors is essential to ensure that future value chains are stronger and more competitive. The WEF will continue to provide a neutral platform for cross-sector collaboration to address these global challenges.