New framework helps companies respond to disruptions in Global Value Chains

The paper explores three global value chains: the cotton industry, the electronics industry and the automotive industry. It explains that by measuring and effectively responding to disruptions in these three global value chains, the total value could increase about 65 percent over three years. No response could result in a loss of up to 28 percent in those global value chains.

‘Global Value Chains are undergoing profound changes’, says Borge Brende, president, World Economic Forum. ‘Stakeholders should no longer stand alone in this complex environment, but rather form new partnerships and take a multistakeholder approach to more efficiently use, transform and trade resources. The World Economic Forum and United Nations Development Programme provide a pioneering platform, where public and private sectors, including international organizations, come together for collaborative action and gain access to advanced tools, such as the Strategic Value Framework.’

FOCUS ON PRODUCTS NOT COST

Businesses and governments can respond to potential disruptions by reorienting business models in three key ways:

• From upstream to downstream: The importance of tailoring supply to customer needs is growing.

• From economies of scale to economies of skills: Innovation and a talented and specialist workforce are becoming increasing important.

• From focusing on the costs to focusing on products: Generating value will depend on a wider view across global value chains.

‘Global value chains have helped fuel significant global economic development and GDP growth, but the current global system of production will evolve radically in the next decade,’ says UNDP administrator Achim Steiner.

‘This reports highlights some of the disruptive trends and how new forms of public-private partnership can help mitigate these threats and secure more inclusive and sustainable development.’

USE IN MANY DIFFERENT INDUSTRIES

An interactive tool created as part of the Strategic Value Framework allows users to explore how disruptions, such as emerging technologies, the climate emergency and trade tensions, could impact their existing global value chains.

The outcomes of the framework serve to inform and guide stakeholders in the transition to the future of production and global value chains.

The Government of Bangladesh will be a pioneer, using this tool to facilitate dialogues and actions on the textile industry, the country’s most important export business.

‘The manufacturing textile sector represents 80 percent of Bangladesh total export,’ says Mohammed Shahriar Alam, state minister for foreign affairs of Bangladesh.

‘We need new partnerships and proactive approaches, with tools such as the Strategic Value Framework, to be better prepared for the future of production and global value chains.’

The World Economic Forum www.weforum.org