A report from the World Economic Forum and Kearney highlights the global shift towards regionalisation, resilience, digitalisation, and sustainability in supply chains.
joint report from the World Economic Forum (WEF) and Kearney, Beyond Cost: Country Readiness for the Future of Manufacturing and Supply Chains, examines how global manufacturers are adapting their strategies in response to geopolitical shifts, trade disruptions, and technology advancements.
The report underscores a paradigm shift in supply chain decision-making: companies are no longer prioritising cost alone, but instead balancing cost, performance, resilience, and sustainability when selecting manufacturing and sourcing locations
Shifting supply chain strategies
The regionalisation trend is gaining momentum, with more than 90 per cent of global manufacturers prioritising regional supply networks to build resilience and ensure continuity in the face of disruptions.
A survey of 300 global operations executives, conducted as part of the report, found that nearly two-thirds of manufacturers are implementing a “power-of-two” geographical sourcing strategy. This means securing supply from at least two distinct regions to mitigate risks related to trade conflicts, regulatory shifts, and climate-related disruptions.
The report categorises countries into four key archetypes, based on manufacturing’s contribution to GDP and GDP per capita:
- Adapters – low manufacturing contribution to GDP and below-average GDP per capita (e.g., Brazil, India).
- Convergers – low manufacturing contribution but above-average GDP per capita (e.g., Denmark, US).
- Connectors – high manufacturing contribution but below-average GDP per capita (e.g., Mexico, Vietnam).
- Scalers – high manufacturing contribution and above-average GDP per capita (e.g., Ireland, Singapore).
The FDI Confidence Index within the report highlights that Connectors like Vietnam and Mexico are seeing rising foreign direct investment (FDI), while Adapters (such as Brazil and India) have experienced declining attractiveness for inward investment.
Seven key readiness factors
The report identifies seven critical factors that determine a country’s readiness for supply chain investment:
- Infrastructure: Transport networks, digital connectivity, and logistics capabilities.
- Resources and energy: Stable supply chains for raw materials, access to renewable and traditional energy sources.
- Technology: R&D ecosystem, IP protection, and adoption of advanced manufacturing technologies.
- Labour and skills: Availability of STEM-skilled workers, workforce costs, and training programs.
- Fiscal and regulatory environment: Business-friendly tax policies, investment incentives, and ease of doing business.
- Geopolitical landscape: Trade policies, FDI attractiveness, and political stability.
- Environmental, Social & Governance (ESG) – Sustainability standards, net-zero commitments, and corporate social responsibility initiatives.
Public and private sector initiatives
The report highlights global initiatives that align with these readiness factors, showcasing both government-led programs and public-private partnerships that are reshaping supply chain ecosystems:
Singapore’s Smart Industrial Parks: These “plug-and-play” industrial zones provide integrated logistics, utilities, and research hubs to attract advanced manufacturing investment.
UAE’s Demand Side Management Programme: A government-led initiative focused on enhancing energy efficiency in industrial operations.
India’s Production-Linked Incentive (PLI) Scheme: This scheme offers financial incentives to companies investing in domestic manufacturing, aiming to reduce reliance on imports and strengthen India’s role in high-tech production.
Mexico’s labour law reforms: Updates to worker protections and wage structures to ensure compliance with international trade agreements.
The report also emphasises the critical role of corporate initiatives in driving industrial competitiveness:
Singapore’s Sustainability Partnership – Manufacturers are collaborating with the Singapore Economic Development Board to integrate renewable energy into industrial operations, aiming for carbon neutrality in manufacturing by 2050.
Intel & Israel’s R&D Expansion – Intel has invested $50 billion in Israel’s semiconductor industry, supported by government tax incentives and infrastructure development, reinforcing the role of high-tech manufacturing in national supply chains.
Global supply chain trends and Australia’s Position
The report identifies “Scalers” (e.g., Ireland, Singapore) as dominant hubs for high-tech manufacturing, while “Connectors” (e.g., Mexico, Vietnam) are becoming preferred destinations for cost-competitive production.
Australia ranks highly in several key readiness factors, particularly in:
- Energy security: Strong renewable energy investments place Australia among the top global performers in sustainable energy.
- Labour & Skills: High availability of STEM talent and trade-skilled workers supports advanced manufacturing growth.
- Sustainability & ESG: The country’s net-zero commitments and sustainable supply chain policies make it an attractive location for green manufacturing investments.
However, the report notes that Australia must continue improving its logistics infrastructure to enhance its competitiveness as a regional supply chain hub. While Singapore and Ireland have leveraged digitalisation and logistics efficiency to strengthen their positions, Australia’s physical infrastructure lags behind in terms of port connectivity and freight efficiency.
Key takeaways
The Beyond Cost report highlights that:
- Manufacturers are shifting to multi-regional sourcing strategies to reduce supply chain risks.
- Technology and digitalisation are critical differentiators in supply chain investment decisions.
- Sustainability and ESG factors are now central to industrial policy, influencing investment trends and trade agreements.
- Public-private partnerships play a vital role in shaping national competitiveness, as governments and corporations collaborate on innovation, workforce development, and energy transition efforts.
The report concludes that companies and countries adapting to these shifts will be better positioned to manage future disruptions and capitalise on new supply chain opportunities. ν