Supply chain executives in large companies continuously struggle to hire and retain talented, white-collar employees in China, according to SCM World’s annual Chief Supply Chain Officer Report.
A global study of almost 1,400 executives—co-led by Dr. Hau Lee—found that rising labor costs and poaching are the biggest concerns in China.
Almost two-thirds of those surveyed are concerned about the rising cost of knowledge workers in China, with respondents in the hi-tech, industrial, chemicals and retail sectors particularly worried. It’s a similar picture on staff retention, where more than half (55 percent) of supply chain executives say they are concerned about poaching of their most talented employees.
Survey respondents based in the Asia-Pacific region (almost a quarter of the sample) are even more concerned about both issues than their counterparts in the Americas or Europe. On rising costs, 72 percent say this is a problem in China, while on staff retention the figure is 63 percent.
Overall, China was ranked as the riskiest country, by far, to operate in from a human resources standpoint, well ahead of other emerging markets such as India, Brazil and Mexico. And China ranked well behind the U.S. and slightly behind Germany in terms of value for money.
As a result of the findings, the report suggests that companies could be nearing a tipping point, according to Kevin O’Marah, Head of Faculty, SCM World and co-author of the report.
“China is clearly no longer a low-cost country in the traditional sense,” said O’Marah. The implications for talent management in a global supply chain strategy include a need to diversify away from Asia—and China in particular. A move back toward high-wage countries may make sense for organizations working to balance their talent portfolio.”
Digital and ecommerce
The steady growth of online shopping is increasing supply chain complexity at many levels and forcing those closest to the consumer to adapt. Approximately three-quarters of survey respondents expect changes to their manufacturing strategies and distribution networks, while 56 percent expect brands to increase their direct-to-customer fulfillment channels.
By a ratio of 4:1, respondents expect consumers to be increasingly receptive to offers trading price, convenience and selection against each other rather than merely seeking the lowest possible price.
Social media plays little role today in supply chain strategies, as 47 percent see "no effect” today. But survey respondents confirmed that in the future, many see opportunities to get customer feedback (56 percent), inform product innovation (46 percent) or warn of supply disruptions (41 percent).
Additionally, most supply chain professionals shy away from the idea of mining individuals’ private Web data (Facebook pages, Google searches, etc). But other sources of customer insight are seen as fair game.
Social and environmental responsibility
The trend towards Social and environmental responsibility (SER) initiatives seems unstoppable and companies are becoming less tolerant of violations.
Almost a third of companies now give no warning to suppliers when they breach SER standards, and of these, almost half immediately terminate the relationship. Among those that do warn first, those terminating rather than reducing business has grown year on year. In addition, only a quarter of firms believe they have good visibility of SER performance across their extended supply network.
More than half of respondents report good results from SER efforts in complying with government regulations and laws and in improving both supplier relationships and customer satisfaction. But measuring benefits is a challenge for almost six out of 10.