To build distributed scale, not concentrated scale The rethinking: Decades of cost optimization created concentrated mega-facilities, which enable efficient economies of scale, but become critical single points of failure in an era of geopolitical conflict, climate shocks and heightened protectionism. The mandate: Replacing concentration with federation. Distributed scale means creating globally coherent, but regionally autonomous and agile networks of production and innovation hubs that are digitally connected, locally resilient and policy-aligned. How to achieve distributed scale: – Design a federated architecture: Modularize production so capacity can shift seamlessly across geographies. A federated network captures economies of learning, not just of scale through a blend of internal resources and external partners, that allows assets to be reconfigured rapidly as conditions evolve (see “Imperative in action 3”). – Invest in light, flexible factories: Smaller, automated and energy-efficient facilities shorten supply lines and can be repurposed quickly to local market demands or disruptions. Adopting on-demand solutions like 3D printing further enhances this adaptability, drastically shortening supply lines and boosting market responsiveness (“see Imperative in action 4”). – Deploy modular techniques: Standardize equipment and processes into standardized, repeatable “blocks” or modules so new sites can be swiftly replicated in months, not years. This allows production capacity to adapt quickly to supply shocks, demand changes or regional disruptions (see “Imperative in action 5”). – Anchor in policy opportunity hotspots: Locate capacity where industrial incentives, energy reliability and trade access align. Factor policy and regulation into every cost and risk assessment, viewing them as strategic inputs, not afterthoughts. Distributed networks don’t replace globalization; they rewire it – creating multiple, connected regional engines that together form a resilient global system.Imperativ e2 The number of leaders regionalizing production for agility and scale has surged nearly 300% from five years ago. Cohesive global network for adaptive manufacturing Siemens launched its Mosaic strategy based on the CRISP framework (“connected; resilient and robust; intelligent; sustainable; people centric”) to integrate globally distributed factories into a cohesive, digitally connected production network. Mosaic plants are designed to operate autonomously, scale capacity flexibly, support peer factories and share operational intelligence via a centralized planning and scheduling system. The approach emphasizes adaptability and decision superiority – enabling Siemens to maintain delivery commitments, control costs and respond swiftly to any disruptions. Networked mills reinvent industrial scale Nucor’s distributed “mini mill” model (200-300 kilotons vs. 10-20-million-ton mega mills) allowed it to respond quickly to post- COVID demand swings, avoid grid capacity constraints and tap into wider labour pools. Each mill operates autonomously for local flexibility. To prevent coordination gaps, Nucor set up a central business technology unit to standardize data and order routing. The model shows how distributed scale can boost competitiveness under volatility. IMPERATIVE IN ACTION 3 IMPERATIVE IN ACTION 4 Global Value Chains Outlook 2026: Orchestrating Corporate and National Agility 13