WEF, Kearney Report: Manufacturing’s Rhetoric vs Realities

A whitepaper by the World Economic Forum and Kearney has highlighted a disconnect between manufacturers strategic intent and operational delivery

The World Economic Forum in collaboration with Kearney has revealed that only 1 in 100 manufacturers are able to fully automate processes. 

The organisation's new white paper ‘From Disruption to Opportunity: Strategies for Rewiring Global Value Chains’ is based on a survey of over 300 global operations executives combined with 30 detailed consultations. It reveals a noticeable gap between the rhetoric and the realities dominating global manufacturing when it comes to value chain transformation. Manufacturers want supply chain transformation, but are struggling to bridge a disconnect between operational delivery and strategic intent. 

The whitepaper maps these insights against the five key trends that are reshaping global value chains, while exploring the approaches of leading manufacturers who are proactively meeting this reshaping with innovative strategies. 

“With today’s report revealing five clear trends shaping the next generation of supply chains, it is evident that industry leaders recognise the need for a wholesale rewiring of value chains in response to societal, environmental, and geopolitical upheavals.” says Per Hong, Senior Partner at Kearney.

"However, there is still work to do when it comes to operational delivery, largely due to the scale and complexity of the necessary changes, along with the opportunity costs. Closing this gap will require resources, patience, flexibility and agility, but must be a focus to overcome future value chain disruption.”

Here’s the full Manufacturing Digital breakdown of the five major trends covered in the study, and the disconnects they reveal in global manufacturing.

From Disruption to Opportunity: Where is the disconnect?

1. Sustainability: 45% of respondents identified sustainability as a critical driver- one of the two most important- for supply chain reconfiguration. However, only 14% are seeking to reduce Scope 3 emissions by redesigning their manufacturing network.

Disconnect: Treating sustainability as a tertiary PR issue or a matter of regulatory compliance. Creating sustainable manufacturing operations has to be done holistically, through circular economic approaches where every element of the supply is configured to reduce waste, optimally use resources and lessen environmental impact.


2. AI industrial solutions: 64% of executives say AI solutions are a key means to driving supply chain improvements, but only 1 in 100 have eliminated manual spreadsheets, like those that utilise Excel. 

Disconnect: In order to fully embrace AI industrial solutions manufacturers have to move beyond established legacy methods of data collection and organisation. AI implementation like sustainability needs to exist across the organisation, otherwise manufacturers are missing out on vital opportunities for enhanced efficiency and productivity.


3. Customer value: 60% of surveyed leaders said customer value was a major priority in shaping supply chain reconfiguration. But it was 15% who could cite tangible actions that would strengthen areas of customer value- like resilience, performance and sustainability.

Disconnect: As digital technology dramatically changes the way manufacturers will conceptualise and appeal to their customers, tangible action to maintain their loyalty is key. The report argues manufacturers need to move their operations from being cost-driven to being customer-value driven.


4. Multi-local value chains: 92% of organisations are regionalising their manufacturing footprint, but only 28% of them are aiming for nearly all-in-region-for-region operations by 2030

Disconnect: Manufacturers need to move to multi-local value chains to maximise their productivity, efficiency and impact across nations. Being a global company doesn’t necessarily equal being a globally connected company. Using digital solutions to streamline and connect operations both across and within nations is something the report encourages as a strategic goal moving forwards. 


5. Employee skills: 60% of the workforce needs upskilling to bridge the digital skills gap, but only 23% of operations executives say the majority of their workforce is equipped with the operations and supply chain skills they need by 2030.

Disconnect: Manufacturers are embracing digital transformation and emerging technologies, but need to ensure their staff can utilise them effectively. The report calls this moving from economies of scale to economies of skill, recognising that it is manufacturers ability to effectively utilise and implement software that will give them a competitive edge moving forward.

The report identifies lack of resources and time as the biggest obstacles manufacturers face when addressing these disconnects. In order to address this, manufacturers must embrace holistic data-driven methods to increase efficiency and leverage increasingly interconnected networks.

To achieve actual resilience, sustainability and agility manufacturers must transform their awareness of necessary changes into action. Otherwise they may struggle to preserve their value chain moving forwards with increasing competitiveness and disruption.

Kiva Allgood, Head, Centre for Advanced Manufacturing and Supply Chains, World Economic Forum (Credit: CIOLook)

“Value chains are being reshaped by increasingly frequent disruptions stemming from emerging technologies, climate change and geopolitical challenges,” says Kiva Allgood, Head of the Centre for Advanced Manufacturing and Supply Chains, World Economic Forum.

"As these disruptions grow in intensity, it is important that manufacturers prioritise redesigning and fortifying value chains to not only navigate turbulence but also design value chains that are fit for the future, delivering positive economic, social, and environmental impact."

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