The pandemic has first and foremost been a human disaster, but it has also exposed the fragility of global systems and supply chains by uncovering hidden bottlenecks.
Data sharing and ally-shoring are two measures to get these systems back on track and to help tackle the worldwide environmental, economic, political, and societal issues we face now and in years to come.
Data sharing sets the stage for supply chain collaboration
International collaboration comes to life once basic agreements on issues like data sharing are put in place. Every part of the world has different fields of expertise—and there is a tremendous opportunity to benefit from the knowledge of our international counterparts.
For example, U.S. companies and regulatory bodies can learn from their European peers in the industrial domain and look at the development of rules like the EU’s General Data Protection Regulation (GDPR) or IoT (internet of things) security standards to ensure more robust data privacy.
Pulling from another international example, Germany reported that automobile exports accounted for almost 64% of its production in 2020, making it the EU’s leader in that field. This extensive knowledge of the internet of things, smart data, and process analytics for manufacturing and supply chain helped to digitize other critical processes such as the COVID-19 vaccine rollout.
The practice of applying specific domain expertise—whether it’s in manufacturing, health care, or other areas—to universal problems shows the value of prioritizing outcomes over competition, the elevation of an industry over the success of an individual company.
Ally-shoring is the new onshoring
Countries can also build strategic relationships to optimize trade, supply chains, and more. Ally-shoring, a.k.a. friend-shoring, is the practice of sourcing essential goods and services from countries that share similar values and a commitment to transparent international trade.
Like onshoring—the movement of manufacturing back within domestic borders—it has gained ground in recent years as a way to support the economy and circumvent rising foreign production costs. In fact, the Biden administration demonstrated support for ally-shoring and proposed tactics to achieve it in its June 2021 report, which assessed supply chain vulnerabilities.
Moving an analog process from one place to another doesn’t correct the underlying issue. It only papers over the cracks of the real problem: Supply chains have long suffered from a lack of digitalization. However, locating operations in parts of the world that share a similar commitment to digital transformation, data sovereignty, and open standards will make a fundamental difference in moving supply chains into a digital age.
By working together to rewire supply chains and coproduce high-tech products in emerging sectors, countries will not only be able to rebuild bruised alliances, they can even establish global economic and digital leadership. In doing so, the U.S. and its allies can provide more viable alternatives to the Chinese technological and economic models that some countries have little choice but to adopt.
In the automotive and mobility sector, 30% of the U.S.’s trade with EU allies is in intermediate goods. A coproduction model in which countries make products together will be especially effective for electric vehicles and other emerging mobility products. Ally-shoring can also be beneficial in times of crises, such as the ongoing semiconductor shortage or the Suez Canal blockage which held up an estimated $9.6 billion of goods.
While European and U.S. car manufacturers do compete for the same buck, both sides can reduce their costs of production and time to market by cooperating. They may then compete at the consumer level, but they do so knowing they are more sustainable in an economic sense—and potentially in environmental and societal senses as well. When smart people work together, great things can be achieved.
Global economies have taken significant steps toward forging alliances that spread common market values and industrial leadership, but there is more work to be done in terms of international collaboration. Data sharing concerns and competitive mindsets must be overcome for global markets to partner on mitigating universal challenges.
Sanjay Brahmawar is the CEO of Software AG, an enterprise software company.
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