Global production on brink of exponential change, only 25 countries to gain, says WEF report
January 12, 2018
A new report launched by the World Economic Forum (WEF) on Friday reveals that only 25 countries are in the best position to gain as production systems stand on the brink of exponential change. Recognizing the impact of the Fourth Industrial Revolution and emerging technologies, the Readiness for the Future of Production Report 2018, developed in collaboration with AT Kearney, provides a snapshot of today's global production landscape.
The new framework is made up of two main components: Structure of Production, which measures a country's production; and Drivers of Production - the key enablers that position a country to capitalize on the Fourth Industrial Revolution to transform production systems. Recognizing that each country has its own unique goals and strategy for production and development, participants are assigned to one of four archetypes: Leading (strong current base, high level of readiness for the future); High Potential (limited current base, high level of readiness for the future); Legacy (strong current base, at risk for the future); or Nascent (limited current base, at risk for the future).
Helena Leurent, Head of the Future of Production System Initiative of the World Economic Forum, said: "Our work seeks to shape a future where new technologies in production systems help unlock human potential, tackle and solve challenges that have previously been insurmountable, and where all benefit."
Johan Aurik, Managing Partner and Chairman of A.T. Kearney, said: "In a changing production landscape, each country will need to differentiate itself, capitalize on competitive advantages and make wise trade-offs in forming its own unique strategy for the future of production."
EIGHT FINDINGS OF THE REPORT
- Global transformation of production systems will be a challenge, and the future of production could become increasingly polarized in a two-speed world. The 25 countries in the Leading archetype account for over 75% of global manufacturing value added (MVA), while 90% of the countries have a low level of readiness.
- Different pathways will emerge as countries navigate the transformation of production systems. Advanced manufacturing will not be the chosen path for all: some may seek to capture traditional manufacturing opportunities in the near term, while others will pursue a dual approach, or prioritize other sectors altogether.
- All countries have room for improvement. No country has reached the frontier of readiness, let alone harnessed the full potential of the Fourth Industrial Revolution in production.
- Common challenges within each archetype indicate potential future pathways for Leading, Legacy, High Potential and Nascent countries. Countries can learn from each other, while pursuing their own unique strategy.
- Technology brings the potential for leapfrogging, but only a handful of countries are positioned to capitalize. Lagging countries can enter emerging industries at a later stage without the legacy costs of earlier investment.
- The Fourth Industrial Revolution will trigger selective reshoring, nearshoring and other structural changes to global value chains. Emerging technologies will change the cost-benefit equation for shifting production activities.
- Readiness for the future of production requires global solutions. Globally connected production systems need not only sophisticated technology but also standards, norms and regulations for all.
- New and innovative approaches to public-private collaboration are needed to accelerate transformation. Every country faces challenges that cannot be solved by the private sector or public sector alone.