**Davos**: In light of geopolitical tensions and protectionist measures, 75% of companies are diversifying suppliers to enhance resilience, according to a new survey presented at the World Economic Forum. Key trends include domestic sourcing and ‘friendshoring’ to navigate evolving trade environments.
In the face of escalating geopolitical uncertainties and protectionist measures, businesses globally are strategically re-evaluating their supplier relationships and supply chain structures. According to recent research conducted by Economist Impact and DP World, a significant majority, approximately 75% of companies, are choosing to diversify their supplier bases rather than consolidating them, indicating a notable shift towards achieving resilience within a fragmented global trading environment.
These insights were unveiled at the World Economic Forum, where findings from a comprehensive survey involving over 3,500 supply chain executives from various industries and regions were presented. The data highlights the urgency for companies to adapt as they confront the challenges posed by intensified protectionist policies and shifting geopolitical dynamics.
Prominent trade hubs emerging in this context include countries perceived as politically neutral, such as Vietnam, Mexico, India, the United Arab Emirates, and Brazil. The survey reports that 71% of executives recognise these regions as instrumental in alleviating trade risks, while 69% regard them as essential for addressing supply chain disruptions resulting from ongoing global conflicts.
An important trend noted is the increase in sourcing from within the United States, with 40% of firms indicating a strategy to expand domestic procurement efforts. Meanwhile, 32% of businesses are adopting dual supply chains, a practice that enhances flexibility by allowing companies to maintain production capabilities across multiple locations. The concept of ‘friendshoring’, which involves relocating supply chains to politically aligned countries, is gaining popularity as well, with 34% of organisations exploring this tactic to mitigate tensions among major global powers.
In addition to geopolitical considerations, executors of supply chains cite prolonged inflation and elevated interest rates as pressing economic hurdles, with 33% identifying these factors as significant challenges. To adeptly navigate these complexities, organisations are increasingly utilising AI-driven analytics, diversifying supplier relationships, and leveraging neutral trade hubs to uphold operational stability.
Sultan Ahmed bin Sulayem, DP World Group Chairman and CEO, articulated the pressing need for businesses to promote agility and innovation in their operations. Speaking at the World Economic Forum, he stated, “Global trade today is more complex than ever, demanding agility, resilience, and innovation. Our infrastructure, expertise, and advanced technology empower businesses to thrive in this evolving landscape.”
Looking ahead, the future of global supply chains appears to be contingent on businesses that proactively integrate emerging technologies, develop adaptive supplier networks, and embrace risk mitigation strategies. Such proactive measures not only foster resilience but also unveil new opportunities for growth and operational efficiency in an ever-evolving global trade environment. Companies that successfully embrace diversification and innovative technological solutions are likely to be best positioned for success amidst the growing volatility in international markets.
Source: Noah Wire Services
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