Why the Global Value chain is important for growth

Countries who embrace the Global Value Chain create the opportunity for the to leap-frog the development process of the country. It allows the country to generate growth by moving to higher-value-added tasks, when countries incorporate more technology and skilfulness in their agriculture, manufacturing and other productions services. It will help the economy to improve infrastructure of the country, which is the roads and bridges. With the right strategies put in place this can also help for the developing countries to maximise on their participation into the Global value chain.

For the South African economy, it will allow for empowerment of Global trade amongst a variety of countries and will boost the economy, it is very powerful driver of growth. It will result in better infrastructure within the country. It will allow South Africa trade their natural resources to allow for more economical growth within the country. Africa being a major food producer does not easily reach the supermarket chains or the rest of the world, but being part of the global value chain may assist in getting to the global market much easier and faster, especially if bigger countries invest in them. The Governments need to have clear visions amongst each other as to how it can add value to the Global world. Countries also benefit greatly by maximising their attention potential of the domestic economy and by strengthening its connection to the Global value chain.

Some reasons as to why the Global Supply Chain in Post-Pandemic international companies need to make their networks more resilient

Companies should rethink strategies and focus on their value chain at a granular level, as to how much they depend on foreign trade. Companies should identify their vulnerabilities by mapping out their full supply chain which would include all distribution facilities and transportation hubs. This will help identify where the company was hit the worst and why from the pandemic. With identifying these problem areas, they can try and source local/domestic suppliers of materials which they may have needed. They could also find solutions as to maybe not depending on one/two specific suppliers and looking into these supplier’s supply chain, the 2nd and 3rd tiers of their supply chain as to where the suppliers may source their materials from. This will allow for the building better relationships with suppliers. It was found when diving this deep that some suppliers sourced their materials from similar areas of the world too. They could also see if higher volumes would have been bought, would it have sustained for the period for their end product to be produced or would they run into other aspects of redundancy. They could also see if the cost to source the items locally/domestically was cheaper than sourcing items from foreign trade. Companies could also have a look at manufacturing items in-house instead of sourcing from elsewhere.

Countries need to possibly increase domestic/local production. This will grow employment in the home countries and reduce their dependency on risky sources which might drastically affect their supply chain should the world be hit with another hard lockdown. This may require companies to invest in small production or manufacturing companies domestically which would in turn boost the economy and allow for not that harsh shut downs should the world be faced with another pandemic. This is not saying that companies should only invest in local/domestic companies but have them as an option just in case.

This is something Sasol is now looking into, with either embracing or investing in the smaller SMME companies and even allowing the bigger companies to connect with the smaller SMME group to boost the economy in certain areas where Sasol is based. They are empowering the SMME group with knowledge and new skill sets of how to tackle the production group they fall within.

They also allowing for diversification and being open and transparent to the public. Some big Healthcare manufacturers also outsources the manufacturing of ventilators, giving the outsourced companies the accurate specification for them to help produce products as the company was manufacturing at full capacity. This help with shared responsibility and knowledge and assisted in supplier investment to build great supplier partnerships.

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