Public-Private Sector Dialogue Series is jointly organized by Globsec US Foundation and Globsec
Seismic geopolitical changes continue to pressure supply chains adversely impacting national defence and economies. With so much uncertainty, Koray Köse, Chief Industry Officer at Everstream Analytics led our third Public-Private Sector Dialogue to provide expertise on how to increase resilience and reduce exposure.
Key takeaways:
Group 1: Re-globalisation and restructuring: the impact of geopolitical shifts & conflicts on value chains as well as supply chains.
- Enhancing Supply Chain Resilience: Develop strategies for proactive risk management, including diversification of sourcing and leveraging near-far sourcing models. This approach helps in minimizing dependency on a single source or single country.
- Value-based over Cost-based: Foster trade relationships that are not only cost-efficient but also socially and environmentally sustainable. Adjust procurement policies to prioritize value-based procurement over cost-based, considering the long-term sustainability of supply chains.
- Infrastructure Investment and Subsidies: Investments towards strengthening infrastructure and social security are essential for supply chain transformation, including ports, roads, transportation networks, and technology upgrades.
- Focus on Sophistication and Resilience in Policy Making: Policies should aim for sophistication in supply chain management, going beyond single KPIs like cost to include factors that benefit society, such as ESG standards.
- International Cooperation and Diplomacy: It is crucial to enhance understanding of not only global trade dynamics, but of specific countries that are featured in the supply chains. Especially the countries that have differing political systems. Trade should be utilized as a tool for diplomacy, leveraging mutual needs to find optimal solutions.
- The AI and Big Data Phenomena: The prevalent misconception assumes that AI will resolve supply chain issues, yet it has the potential to amplify existing underlying problems. While AI proves effective for monitoring, its design must include safeguards to prevent a single point of attack from collapsing the entire supply chain.
Group 2: NATO & EU ensuring resilient supply chains: Defence Production Action
- Holistic Mindset Shift & Proactive Planning: Move from reactive to proactive approaches in defense. Test the resilience of supply chains through “backcasting” and controlled self-disruption simulations. Increase production capacities with a focus on long-term planning (5-10 years) to balance industry uncertainty.
- Political Willingness, Public Support & Adaptive Role of NATO: Recognize the need for decisive political willingness. Explain to the public the importance of investing in resilient supply chains to secure democracies. Acknowledge differences in risk awareness between private and government sectors within NATO. Enhance collaboration, provide predictability through long-term orders, and balance operational needs with cost-effectiveness.
- Preparation for Prolonged Warfare, Off-the-Shelf Procurement & Comprehensive Cost Considerations: Emphasize readiness beyond day one for a long war. Build larger stocks, make existing technology “smart,” and research civilian production line conversion for crucial components. Acknowledge the shift from quality to quantity and coooperate with member states in a procurement information hub for larger orders, particularly for standard off-the-shelf equipment. Align decisions with economic justifiability.
- Strategic Use of Defense Spending & Predictability, Leadership Challenges: Incentivize diversification of suppliers, maintenance of stocks, and regionalization without compromising efficiency. Encourage steady government investment in sustainable production capabilities. Balance immediate readiness needs with long-term resilience. Address bureaucratic delays, lack of leadership, and government unwillingness to absorb costs.
- Sustainable Ammunition Production & Public-Private Collaboration: Encourage a measured and moderate increase in ammunition production aligned with government readiness needs. Prioritize sustained, steady production over dramatic ramp-ups for stability and resilience. Balance private industry incentives with strategic policies. Leverage private ownership and supportive programs for stock maintenance, regionalization, and resource diversification.