Driving forces affecting global value chains1 Manufacturers face a future defined by uncertainty and disruption – transforming their value chains is a necessity. With global value chains subject to change, the Global Future Council on Advanced Manufacturing and Value Chains recognized that manufacturers are operating in a landscape of shifting uncertainties – driving the urgency of transforming and future-proofing value chains. In response, the council identified the main driving forces that will shape manufacturing and operations through 2050. Drawing on operational expertise, insights from the Global Future Council Network and analysis of the ongoing disruption currently affecting industry, the council outlined eight driving forces that will continue to shape the ongoing rewiring of global value chains. These eight driving forces serve as a common denominator, affecting the actions across three distinct time horizons – near-term adaptations by 2030, mid-range structural shifts by 2040 and longer-term systemic transformations by 2050. Each driving force, and associated uncertainties selected by more than 140 senior experts in workshops, has helped the council in shaping insights for navigating the gradual but fundamental reconfiguration of global value chains already under way. The eight driving forces, include notable uncertainties and trends, are as follows (see also Figure 1): 1 Global relations and trade The global economic landscape is experiencing a profound reconfiguration, with regionalization emerging as a critical strategic response to mounting uncertainties. Trade and investment restrictions against the backdrop of increasing regional disputes are reshaping traditional value chain configurations. Additionally, the newfound flux of tariffs and trade policies is creating a volatile environment, requiring businesses to remain agile and responsive to sudden regulatory shifts. These changes are compelling organizations to navigate a complex terrain marked by escalating geopolitical tensions and increasingly fragmented market access. Regulatory complexity The regulatory landscape continues to be a labyrinthine ecosystem, characterized by fragmentation and complexity across geographical and industrial boundaries. Industry leaders are facing multidimensional challenges in which regulatory frameworks are evolving at varying speeds, adding to uncertainty from inconsistent implementations and cross-border ambiguities.2 The uncertainty of unplanned regulatory interventions is transforming investment strategies,3 compelling businesses to develop agile models of governance capable of navigating intricate webs of emerging regulatory requirements. Consumer behaviour and expectations Top uncertainties in value chains often arise from unforeseen and changing consumer demands, as shifting preferences and expectations can make it challenging for businesses to adapt quickly to evolving trends. Additionally, there are uncertainties around the end of life (EOL) and extension of the life of products, as certain consumer demographics increasingly demand longer-lasting, recyclable or repairable products,4 but businesses may struggle to provide clear strategies for these transitions. Additionally, changing consumer expectations, influenced in part by social media, have increased demand for fast or instant delivery options. Climate disruption Climate change will likely increasingly disrupt global supply chains, posing significant challenges to logistics, manufacturing and overall value chain operations. Extreme weather events, such as floods, might disrupt production, delay shipments and damage essential infrastructure. Furthermore, 2 3 4 From Shock to Strategy: Building Value Chains for the Next 30 Years 5

From Shock to Strategy 2025