Supply chain and manufacturing transformation: Key takeaways from Davos 2025

A new manufacturing paradigm is emerging where sustainability, intelligence and resilience are mutually reinforcing strengths.
Image: Getty Images
Kiva Allgood
Head, Centre for Advanced Manufacturing & Supply Chains, Member, Exec. Committee, World Economic ForumStay up to date:
Advanced Manufacturing
- Supply chains are at a transformative crossroads where the convergence of sustainability and innovation requirements is reshaping value creation.
- Digital innovation in manufacturing is enhancing, not replacing, human capabilities.
- Business performance and ecological benefits are often naturally aligned in the new paradigm.
As we gathered at the World Economic Forum's Annual Meeting 2025 in Davos, one thing became abundantly clear: Manufacturing and supply chains stand at a pivotal moment, comparable to the rise of the internet a generation ago.
Just as that transformation fundamentally reshaped how businesses operate and engage with customers, today's convergence of sustainability imperatives and digital innovation is revolutionizing how we think about production and value creation. We are witnessing the emergence of a new industrial paradigm where sustainability, intelligence and resilience are not competing priorities, but mutually reinforcing strengths.
The power of digital transformation
This year's Global Lighthouse Network awards celebration marked a significant milestone in manufacturing's digital journey, with our network growing to 189 manufacturing facilities worldwide, including 25 Sustainability Lighthouses. These facilities exemplify what's possible when companies fully embrace digital transformation – not through incremental improvements, but through what one CEO described as a "mental revolution", fundamentally rethinking how they operate and whom they hire.
The impact of this transformation extends far beyond traditional metrics. While Lighthouse facilities are achieving remarkable productivity gains of 70% while reducing energy costs by 40% and time to market by 40%, their real significance lies in demonstrating a new model of manufacturing excellence. Through advanced analytics, artificial intelligence and digital twins, these facilities are showing how technology can enhance human capabilities rather than replace them. As Anish Shah, CEO of Mahindra Group, explained during the Keeping up with Smart Factories session, their digital transformation has enabled real-time production rerouting, predictive quality control, and energy optimization – all while empowering workers to make more informed decisions.
The human element remains central to this digital revolution. Stephanie Pullings Hart, Executive Vice President at Nestlé, observed that successful transformation requires bridging generational divides and unlocking the combined potential of digital natives and experienced manufacturing talent. This insight has profound implications for how we think about workforce development and organizational change in the digital age.
'Industries in the Intelligent Age' at Davos 2025
Sustainability as a driver of performance
Another powerful insight emerging from our discussions is the increasingly clear connection between sustainability and business performance. We're seeing that initiatives that drive resilience and productivity often naturally deliver environmental benefits. When companies optimize their processes to use less water, less energy and fewer materials, they're simultaneously improving their environmental footprint and their bottom line. This alignment of environmental and economic imperatives is creating new opportunities for innovation and growth across industries.
The electric vehicle sector offers compelling evidence of how embracing green transformation and digital integration together can drive business success. CATL, which has become the world's largest EV battery manufacturer with a 37% global market share, exemplifies this potential. As Co-Chairman Pan Jian explained: "In China, we no longer call them EVs; we call them EIVs – where the 'I' stands for 'intelligent'. The 'I' is what truly makes the difference. Without the intelligence aspect, EV penetration in China would never have exceeded 30%." This integration of sustainability with digital innovation has created entirely new pathways for growth.
The construction sector provides another powerful example of green transformation driving economic opportunity. As Mexico's Secretary of Environment Alicia Bárcena Ibarra shared, the sector generates 160,000 jobs annually, while leading the way in decarbonization efforts. By focusing on sustainable building practices and circular economy principles, the industry is simultaneously addressing environmental challenges and creating new economic opportunities. This has been highlighted by Ferrovial SE and other recent lighthouses, which have showcased technology innovations in the circularity domain and an over 60% reduction in scope 1, 2 and 3 emissions. These successes demonstrate how environmental leadership can become a catalyst for innovation and market expansion.
Reimagining supply chains
The events of recent years, including the COVID-19 pandemic, have fundamentally altered how companies think about their supply networks. The focus has shifted from pure efficiency to balancing trade-offs between cost, performance, resilience and sustainability, with companies developing sophisticated scenario-planning capabilities. Our community of chief operating officers and supply chain leaders is exploring new frameworks for evaluation and decision-making, as reflected in our recently released white paper Beyond Cost: Country Readiness for the Future of Manufacturing and Supply Chains, which identifies seven critical factors for countries seeking to attract manufacturing investment.
The complexity of this transformation cannot be understated. As Maersk's CEO Vincent Clerc reminded us, building today's global supply chains took 25 years of careful development. Each tier of suppliers – from final assembly to components to raw materials – required not just physical infrastructure but the development of specialized capabilities, workforce training and quality systems. When considering supply chain reconfiguration, companies must account for this layered complexity and recognize that meaningful transformation requires sustained, long-term commitment to building new capabilities and relationships throughout the value chain.
The human dimension
Perhaps no challenge looms larger than developing the workforce of tomorrow. During one particularly meaningful multilateral discussion at Davos 2025, we brought together representatives of the public and private sectors – a US governor, trade union leaders, industry executives and startup founders – to address the critical need for new career pathways in advanced manufacturing. The consensus was clear: We must make manufacturing careers more attractive to young talent while providing clear development paths.
Singapore's approach, outlined by Deputy Prime Minister Gan Kim Yong, offers valuable insights. Their comprehensive workforce development programmes combine formal education with industry-specific training, ensuring technological advancement benefits workers at all levels. Through initiatives like Skills Future Singapore and company training committees, they're creating a model for public-private collaboration in workforce development that deserves careful study.
The transformation of work itself requires equal attention. Roland Busch, CEO of Siemens, emphasized how AI and automation are changing job roles: "People have to get used to having a digital colleague, a digital agent ... They will never take your job away, but they take your existing job away and create a new one." This evolution demands new approaches to training, development and workforce engagement.
Building inclusive ecosystems
The scale of transformation ahead requires unprecedented collaboration between stakeholders. As Damilola Ogunbiyi, Special Representative of the UN Secretary General, reminded us, this transition offers emerging economies the opportunity to "industrialize from the start in a better way", leapfrogging older technologies to build manufacturing capabilities that are sustainable and digitally enabled from the outset.
Elizabeth Shuler, president of the AFL-CIO, emphasized the importance of ensuring this transformation creates quality jobs: "Working people want to be part of defining this future and making it a prosperous, safe one for the workers who will power these industries. EVs are a chance to build a new middle class – but only if we make worker voices part of the equation."
This inclusive approach is already showing results. Kentucky Governor Andy Beshear shared how his state has attracted $14 billion in energy technology investments, including three of the world's largest battery plants, demonstrating how environmental leadership can drive regional economic revitalization while creating high-quality employment opportunities.
Looking ahead
As we navigate this transformative period, two imperatives stand out. First, stay calm and strategic: The uncertainty in today's environment requires careful planning and scenario development. Second, be courageous. This is indeed a turning point for manufacturing, and those who invest boldly in digital and sustainable transformation will be best positioned to thrive.
The symbiotic relationship between sustainability and digital innovation will increasingly shape manufacturing's future. Companies that recognize this connection and invest accordingly will find new opportunities for growth while contributing to environmental progress. At one level, this is profoundly simple: As Olivier Blum, CEO of Schneider Electric noted: "Sometimes we tend to make it very complicated, but there is a strong financial case which is about saving energy."
The manufacturing sector has a unique opportunity to drive both economic prosperity and environmental progress. Through collaborative action and shared purpose, we can create a future of manufacturing that works better for everyone – more sustainable, more intelligent and more inclusive. The transformation is already underway. Those who embrace it while ensuring its benefits are broadly shared will help write the next chapter of industrial progress.
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