1. Establish domestic supply chains
First, governments should establish domestic supply chains for vital goods. Throughout the pandemic, many countries faced supply chain problems related to food and medical supplies. They were forced to find alternatives to imports by establishing their own factories or converting production lines. By increased localization of selected food and medical supply chains, GCC governments would ensure their resilience to shocks, and generate other socio-economic benefits.
2. Set the right balance
Second, they should set the right balance between localization, regionalization, and globalization. They need to secure strategic autonomy by eliminating excessive dependence on international supply chains. Simultaneously, they should build a carefully considered network of international suppliers to reduce supply-side risk and take advantage of the efficiencies of globalization.
3. Promote innovative technologies
Third, governments should promote innovative technologies such as Blockchain to instill monitoring mechanisms for cross-border trade, manage supply-side concentration risk, and increase transparency. As GCC countries scale up their manufacturing activities, they should clearly set out their national supply-side risk tolerance level with defined guidelines on product origin and desired exposure to different global manufacturing hubs.
4. Establish a policy framework
Fourth, they should establish a policy framework which encourages domestic production and sourcing of supplies. This would involve providing the right environment and incentives to attract investors and suppliers to the region and redirect GCC manufacturers towards domestic and regional suppliers.
5. Accelerate investment
Fifth, governments should accelerate investment in digital infrastructure and technologies, and promote their adoption by domestic manufacturers. GCC manufacturers need to catch up with “industry 4.0,” the intelligent, digital automation that is reshaping manufacturing. Governments should coax manufacturers to deploy cyber-physical-network technologies and advanced data analytics which have already become standard supply chain management tools in advanced economies. To become relevant and merely competitive on a national or regional scale, GCC manufacturers will need to master these technologies. GCC governments will be well-advised to extend equivalent support to their manufacturing champions to that which advanced economies provide to their own.
6. Run rigorous stress tests
Sixth, an appropriate government body should run rigorous stress tests to analyze the response of manufacturers, particularly in critical industries, to various sorts of disruption. This simulation would help regulators and industry leaders to gauge the resilience of supply chains and take the necessary action to strengthen them.