BUSINESS

Shift to ‘glocalization’ vital to organizations’ success in 2021

January 26, 2021

ABU DHABI/BOSTON — The Global Manufacturing and Industrialisation Summit (GMIS), and leading professional services firm, PwC, Tuesday launched a new report outlining the 2021 key global trends that will enable manufacturers to succeed at glocalization. The report, titled ‘The journey from globalization to glocalization, how COVID-19 has accelerated the shift to more local and flexible operations’ highlights that companies must regionalize their footprint, increase the use of robotics for manufacturing and logistics, and change the cost model for production and sourcing.

The report states that amid these emerging themes, COVID-19 has ensured that the case for moving from global to ‘glocal’ operations has gained significant momentum. The opportunities and related risks of glocalization vary in importance between regions and sectors. With a focus on the Middle East, Germany, India, the United States, Greater China, and the United Kingdom, the report reflects various global perspectives where the pandemic has accelerated efforts by industrial companies to make inflexible global footprints more agile and responsive to demand.

Anil Khurana, global industrial manufacturing & automotive leader & principal at PwC in the United States, said: “In a post-pandemic world where reliable, real-time data is essential for both business and health and safety reasons, we anticipate an emerging trend for greater supply chain and operational collaboration between companies — whether through sharing automation technology to devise innovative, rapid solutions to bottlenecks, or joint sourcing of protective equipment to shield employees from the virus.

“A global economic disruption is unfolding in front of our eyes. The COVID-19 crisis hit when global supply chains were already under pressure from new tariffs and restrictions resulting from trade disputes. We now realize that designing operations and supply chains on the basis of cost optimization alone can create risks, as the recent shortages in medical supplies, personal protective equipment (PPE), semiconductors, and others has shown us.

“How can future value chains deliver flexibility and resiliency, while enhancing the customer experience, in the midst of a number of geopolitical concerns? This “glocalization” balancing act may mean different things for different countries, but at its core, it relies upon agile and multi-location global operations, and use of technology and digitalisation to ensure data-driven insights and decisions, greater transparency and resiliency, and improved efficiencies even at less-than-global scale.”

Khurana added: “This creates an imperative for countries and companies to upskill their workforce and enhance digital capabilities to stay competitive and relevant. We anticipate an emerging trend for greater supply chain and other forms of collaboration among groups of countries and companies, by both sharing lessons learned as well as co-developing new innovative solutions, as the recent experience with vaccine development and distribution has shown.”

The report highlights how digitalization and automation enable companies to go more local by taking labour out of the supply chain and manufacturing equation. Furthermore, traditional supply chain approaches that focus narrowly on cost efficiency need to be broadened.

Factoring in flexibility, resiliency, and customer experience can create differentiation in the marketplace and drive improved revenue growth. The report also focuses on how COVID-19 encourages supply chain and wider operational collaboration between companies, with automation helping to solve bottlenecks with innovative, rapid solutions.

Badr Al-Olama, head of the organizing committee for the Global Manufacturing and Industrialisation Summit, said: “Digitalization is critical to rolling out and implementing successful glocalization strategies. Companies that have used advanced supply chain technologies have achieved greater transparency, flexibility, and local asset utilization, in addition to seeing operational savings.

“However, if manufacturers fail to recognize the power of digitalization, they will likely see their competitive edge erode. Across the Middle East, countries are prioritising the potential of the digital revolution, constantly seeking ways to support organisations — from the manufacturing sector and beyond — to develop their digital knowledge and capabilities.”

Providing a Middle East perspective, Dr. Bashar El-Jawhari, partner and leader of Industry 4.0, procurement and supply chain, PwC Middle East, said: “Despite challenges posed by the pandemic, we believe that the region is well-prepared for a successful ‘glocalization’ journey in two respects. Firstly, major public and private sector companies have experience at building sustainable, flexible operations in a region afflicted by continuous challenges.

“Secondly, in recent years Middle Eastern countries led by the United Arab Emirates (UAE), Saudi Arabia and Qatar have made massive investments in information and communications technology (ICT) in order to reduce their dependence on oil revenues by creating dynamic, digitalised ‘knowledge economies’. As a result, manufacturers in the Middle East now have access to world-class technology to modernize and localize supply chains and production.”

The report was developed following the virtual panel session involving leading experts at PwC from across the world at the Global Manufacturing and Industrialisation Summit’s Digital Series to discuss the increasing shift to ‘glocalization’ on a national scale brought on by COVID-19, and its impact on operations and supply chains.

The panel offered detailed views on different regional approaches and drivers used to forge a path to success amid this shift. The panel included Dr. Bashar El-Jawhari from PwC Middle East; Cara Haffey, partner and leader of Manufacturing and Automotive, PwC UK; Brett Cayot, partner, strategy & operations, PwC USA; Jan Nicholas, partner and leader of operations consulting team, PwC Hong Kong; Shashank Tripathi, partner, government strategy & transformation leader and leader of aerospace & defence practice, PwC India; and Dr. Michael Wagner, partner and leader of PwC’s Fit for Growth transformation platform in EMEA, Strategy& Germany. — SG


January 26, 2021
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