Scenario planning for the future of manufacturing value chains

Jan 10, 2024

Value chains: Navigating the opportunities and challenges that may arise in different scenarios. Image: Unsplash.

Jagjit Singh Srai

Director, Research; Head, Centre for International Manufacturing, Institute for Manufacturing, University of Cambridge

Kiva Allgood

Head, Centre for Advanced Manufacturing & Supply Chains, Member, Exec. Committee, World Economic Forum

This article is part of: World Economic Forum Annual Meeting

The landscape of advanced manufacturing and value chains is transforming rapidly in an era marked by global disruption.
The Global Future Council on Advanced Manufacturing and Value Chains works on scenarios around how key issues will affect the configuration of value chains between 2030 and 2050.
Here we introduce the concept of long-term scenario planning for advanced manufacturing and value chains – the opportunities and challenges.

In an era marked by rapid technological advancements, geopolitical shifts, and environmental imperatives, the landscape of advanced manufacturing and value chains is profoundly transforming. As executives and leaders in the public and private sectors chart their course into the future, today’s decisions will have an effect well into 2030 and beyond. While the debate on potential future configurations for manufacturing value chains is ongoing, many larger organizations have already planned their principal asset allocation and investments until 2030.

Against this background, the Global Future Council on Advanced Manufacturing and Value Chains has set out to explore how key issues will shape the configurations of value chains between 2030 and 2050. This workstream aims to provide leaders in manufacturing, academia, government, and civil society with pragmatic insights and concrete guidelines to navigate the opportunities and challenges that may arise in different scenarios in the future.

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How is the World Economic Forum contributing to build resilient supply chains?

In this scoping publication, the council introduces the concept of long-term scenario planning for advanced manufacturing value chains and explores the key dimensions, opportunities, and challenges that may have the most significant impact on future value chain configurations.

What are the key challenges and opportunities?

As a first step, during the Annual Meeting of the Global Future Councils, the council identified three key challenges and related opportunities that the manufacturing ecosystem will continue to encounter in the immediate future:

Accelerating the net-zero transition in manufacturing value chains requires a broad spectrum of initiatives, spanning analytics-driven energy consumption reduction, adoption of sustainable feedstocks such as (bio)materials, and a step-change in remanufacturing and recycling.
Navigating geopolitical tensions and how organizations are rethinking value chain strategies to increase flexibility and resilience to mitigate disruptions, including actions like dual sourcing, reshoring, adding transparency measures across the value chain via analytics, and rethinking the positioning and scale of buffer inventories.
Upskilling the manufacturing workforce to fully utilize advanced manufacturing and digital technologies that will define the future of manufacturing.

Scenario planning based on time horizons

Scenario planning, often described in the industry as corporate foresight, is traditionally viewed as a method that enables an organization to establish the groundwork for a forthcoming competitive advantage. Facing such systemic challenges therefore requires a longer outlook than the typical five and 10-year horizon. The council will develop its scenario-building analysis regarding the future configuration of manufacturing value chains based on three time horizons: 2030, 2040, and 2050:

2030 represents an anchor point. Here the Council recognizes many businesses already have investment plans for this time frame, allowing further projections to be grounded in current operations and planning, as evidenced through case studies. Key challenges and opportunities are understood and the aim is to capture this near-term baseline scenario for key manufacturing value chain sectors.
2040 represents a steppingstone along our journey to the future where scenario planning tools will be used to explore future trajectories.
2050 is a visionary timeline that allows stakeholders to step out of an incremental mindset, and to consider ambitious alternatives, a north star, and examine the long-term decisions necessary in the coming years to reach this goal.

Factors informing the future of advanced manufacturing and value chains

To start developing scenarios for 2030, 2040 and 2050, the Council identified a set of eight factors informing the future of advanced manufacturing and value chains:

Consumption patterns: Will society shift towards sustainable consumption or perpetuate current environmental strain?
Cybersecurity: Will our collective efforts fortify digital landscapes, ensuring robust cybersecurity, or will vulnerabilities persist, exposing societies to systemic risks?
Environmental issues: Will global communities earnestly commit to sustainability goals, taking decisive actions to combat environmental challenges, or will rhetoric surpass tangible efforts, leaving our planet vulnerable?
Global relations and trade: In the evolving geopolitical landscape, will nations collaborate to build a future of shared prosperity through open global relations and trade, or will protectionism and rivalry hinder international cooperation?
Regulatory complexity: Will regulatory frameworks adapt, finding a balance that fosters innovation while ensuring ethical practices, or will increasing complexity stifle progress, creating barriers that impede responsible advancements?
Social equity: In pursuing social equity, will transformative measures bridge gaps, fostering a future of inclusivity, or will existing disparities hinder equal opportunities for all?
Technology adoption: Will emerging technologies be harnessed to enhance human well-being and address societal challenges, or will rapid adoption outpace ethical considerations, leading to unintended consequences and inequalities?
Workforce/skills: As automation and AI reshape industries, will proactive measures ensure a workforce equipped with adaptable skills for a dynamic job landscape, or will the pace of change leave segments of society behind, widening skill gaps?

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Mapping against uncertainties

Based on these, the Council will develop scenarios and then map these out against three key uncertainties below, identified as factors that will most influence alternative configurations of future manufacturing value chains:

Environmental issues: The level of commitment of the global community to achieving sustainability goals.
Global relations + trade & regulatory complexity: The future development of global relations and trade and the following regulatory environment.
Technology adoption: The way organizations can leverage technology, depending on the direction societies take on issues one and two.

The output of the scenario analysis will also be used to identify actionable insights on challenges and opportunities leaders can use to leverage each scenario.

To achieve the ultimate goal of charting different potential pathways along the timeline (ending up in different scenarios for 2040 and 2050), the first step will be a series of case studies further to assess the status quo and near future of 2030. This effort will focus on charting the trends for a series of industries, starting with food and beverage, electric vehicles, consumer and industrial electronics, healthcare, material sourcing, and energy.

Future of value chains

Join us in understanding and shaping the future of advanced manufacturing and value chains. We invite all leaders in manufacturing, academia, government, and civil society to contribute to this effort by sharing insights and case studies. In a world of disruptive changes, your input and this Council's work will be beneficial for leaders in navigating the changing configuration of manufacturing value chains. Inform the Council's transformative journey and help in shaping a future we collectively build.

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