Davos 2023 has once again welcomed Government ministers, business leaders and other powerful individuals back to the Swiss mountains to talk about global economics. Obviously with good intentions in mind (and the amount of personal PR) but what were the talking points?
Davos 2023 always draws in the crowds; whether it be politicians, business leaders or multitude of journalists looking for a sound bite. As we approach our fourth year since the Pandemic took hold across global markets, we have lived through what feels like a series of crises. The War In Ukraine, inflation and energy price hikes (both together, ‘Cost of Living’) have dominated thinking in boardrooms and households across the World.
This year’s event at the small mountain town of Davos, not only the first face to face session since 2020, but also the largest attendance of World leaders, CEOs, Economists and other dignitaries (last count had 51 Heads of State, 56 finance ministers, 19 central bank governors, 30 trade ministers and 35 foreign ministers as well as many CEOs of banks, tech companies and industry). The main challenges highlighted were:
1. The Climate crisis
2. Pandemic recovery and preparation
3. Food Poverty
4. Sustainable business development
Kristalina Georgieva (MD of the IMF) reminded us that the world has dealt with “unthinkable crisis after unthinkable crisis” and yet we remain resilient. “The next chapter must focus on building resilient people – backed up by education, health and social protection”.
Notably, and particularly relevant to many company’s supply chains, China’s Vice Premier, Liu He, announced that ‘China’s back’ post the end of their Covid Restrictions and also made the case in private with business leaders.
Once the talking had been done, and the dust had settled (should we be saying snow? ), what were the key talking points at Davos 2023?
1. Global disruption is not slowing down. Companies must prioritize building resilience across their business today to prepare for tomorrow, Mckinsey.
A range of markets to create a mix of near-shoring and far-shoring will help embed this resilience. Strong relationships where collaboration is central will allow for greater agility versus transactional relationships which are more binary and have a short term horizon.
2. No region is an island.The future of globalization needs diversification rather than decoupling, Mckinsey
Many companies are becoming wary of a quick return to the globalised ultra-efficient supply chains and just in in time distribution of the past. Recognising that they need to strike a harmonious balance point between local, regional, and global supply lines.
3. Leaders must balance the energy transition and energy resilience to achieve a net-zero future, Mckinsey
A timely transition to Net Zero commitments can only be achieved with increased political will, capital access and a recognition of climate justice. Although for the first time in 2021 Wind and Solar power accounted for over 10% of global energy production (Source: WEF)
4. Health matters, preparing for the next Pandemicwill be crucial in delivering a more robust response than to Covid-19
The future of global healthcare and building resilience to the next pandemic will be based on four key pillars. Equitable access to healthcare systems and outcomes, healthcare system transformation, technology and innovation and environmental sustainability.
Clearly, the points highlighted impact Global Trade, or rather Global Trade needs to evolve to address some of these macro-challenges. There is a case that trade as we knew it some ten years ago is no longer relevant for even the present when one recognise the need to balance the traditional aspects of quality and cost delivery whilst marrying environmental and social data (carbon footprint being particularly relevant post COP27). A necessity for deeper collaboration and visibility in data and working on shared visions for the future.
As a global sourcing company, we are at the forefront of these changes and challenges. Working with our clients to deliver against their sourcing strategies whilst building resilience and strong future partnerships. We aim to create shared value across the entire length of the supply chain.
If you would like to discuss any of these topics in more detail, review your sourcing strategy and its resilience, a
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