SUPPLY CHAIN & PROCUREMENT. Talent trends. Insights into hiring, roles, skills and salaries for your team. Mainland China H1 2018

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1 SUPPLY CHAIN & PROCUREMENT Talent trends Insights into hiring, roles, skills and salaries for your team Mainland China H1 2018

2 96% of employees surveyed in supply chain and procurement across China are concerned about the impact of AI on their job. Economic growth is creating jobs but employees concerned about future China no longer considered a low-cost sourcing destination While China was once considered primarily an industrial manufacturer of low-cost goods, it is transforming into a global hub of supply chains. According to a global survey, the proportion of supply chain leaders who consider China a low-cost provider dropped from 70% in 2012 to below 50% in 2016, a trend economists expect to continue. 1 The same study also found continued global support for China as a crucial part of the supply chain, indicating that it s under transformation from an industrial to a consumer-oriented paradigm. This means that hiring requirements are changing significantly to be focused on service-based skills. To gauge the challenges of employers and employees, Hudson has carried out research in supply chain and procurement. This report conveys the results from Hudson research conducted in October Employees are concerned about the impact of AI Despite strong economic conditions and hiring intentions among Chinese supply chain and procurement hiring managers, the rapid rise of Artificial Intelligence (AI) and machine learning could significantly impact the jobs market in the near future. 2 Hudson research Oct. 2017: Supply Chain & Procurement employees, China Although the majority of employees reported that they expected their jobs to remain intact over the next three years, 9 out of 10 employees we surveyed in supply chain and procurement functions are concerned about the potential impact of AI on their roles. 1 Trends in Global Sourcing, 2017, HIS Markit

3 AI a slow fuse? Small impact to teams so far but employees concerned about future 3

4 Will AI change the shape of your team? According to Hudson s survey, 55% of supply chain and procurement employees expect AI to impact on their role in the next few years. As businesses become more complex, with more sales channels and platforms for the supply chain function to support, AI will alleviate burdens by taking care of repetitive tasks such as data entry, while individuals with niche skill sets will be required to perform the more specialist tasks. 11% of supply chain and procurement hiring managers report that AI has impacted their team. Top 3 ways that AI is impacting teams 1. Analyzing data and forming conclusions 2. Replacing some repetitive job tasks e.g. data entry 3. Necessitating the learning of new technology 4 Hudson research Oct. 2017: Supply Chain & Procurement employers and employees, China

5 How concerned are employees about the impact of AI on their jobs? While many believe that AI will transform the industry, the implications are different for employers and employees. 2.5 in 10 very concerned 2 in 10 slightly concerned 5 in 10 moderately concerned How will AI impact supply chain and procurement? Machine learning technology is already in use by some procurement applications in areas like spend analytics and contract analytics. Currently, AI is being used to automate processes related to expenditure data in order for organizations to identify opportunities to streamline their operations. In a workforce fuelled by technology, human skills remain vital, particularly analytical and data science skills, which helps people understand and capitalize on both the opportunities and constraints of AI within the supply chain and procurement space. 0.5 in 10 not at all concerned In the next three years, how likely do you think it is that your job will exist in its current form? 2% 2% 45% 6% 45% Very Likely Moderately Likely Somewhat Likely Not Sure Not At All Likely Hudson research Oct. 2017: Supply Chain & Procurement employees, China 5

6 Employment Market Insights 6

7 Hiring demand & supply: Increasing competition for top job seekers More supply chain and procurement employees are required as China shifts from low-cost sourcing destination to global supply chain hub. Additionally, as business globally becomes more complex and unpredictable, supply chain employees are required to support more and more platforms and sales channels. As a result, those with niche skill sets are in high demand. According to a recent report 1, this shift towards major supply chain hub has meant that local firms are now in more demand from Chinese job seekers, and MNCs are having to compete more for the best talent. China - Employer hiring intentions CHINA - EMPLOYMENT MARKET INSIGHTS Maintain headcount 62 % Increase headcount 33 % H H H H H H1 Decrease headcount 5 % % of employees open to opportunities or actively searching 60% Only 1 in 5 supply chain and procurement employees intend to stay in their current roles, while 60% are open to being approached. The shift from MNCs towards domestic firms has created an environment where the majority of supply chain and procurement employees are open to new possibilities. 20% 20% Open to new opportunities - i.e. passive job seeker Actively seeking a new job - i.e. in the process of applying for jobs Hudson research Oct. 2017: Supply Chain & Procurement employers and employees, China 1 Bain & Company, LinkedIn China, 2017 Employee intentions Planning to stay in current job 7

8 CHINA - EMPLOYMENT MARKET INSIGHTS Hiring challenges: Niche skills in high demand We re currently seeing newer businesses looking for more niche supply chain skill sets and leaner processes than the more traditional MNCs. As a result, many supply chain employees lack the specialized talents that fast-growing businesses require, and this is a major hiring challenge for organizations planning to grow. Another ramification of the talent-short market is that top talent is quickly snapped up by competitors. Top 3 hiring challenges 1. Finding candidates with the relevant technical skills 2. Finding candidates with strong leadership capabilities 3. Finding candidates with the right cultural fit for your team What are the main reasons for the hiring challenges? 1. Talent shortage in the market due to requirements of niche skill set 2. Candidate quality high expectations and not enough cultural fit 3. Long recruitment process right candidate has then taken another offer Do you expect to pay more to attract new hires? If so, how much more do you expect to pay for people (for the same profile) you re hiring today compared to a year ago? 80% Up to 10% more Up to 15% more Up to 20% more Up to 30% more More than 30% 37% 47% 10% 6% YES What attracts supply chain and procurement employees to a new role? Career progression The right salary Work/life balance 43% 20% 16% 8 Hudson research Oct. 2017: Supply Chain & Procurement employers and employees, China

9 Leadership challenges: Engage employees through clear career paths Given the top reason that people leave is related to career dissatisfaction, supply chain and recruitment leaders have the opportunity to improve retention by addressing the need. While salary disappointment is a factor, it s not the key issue for employees in this field so although 82% of hiring managers are anticipating offering pay rises to improve retention, leaders also shouldn t neglect to set actionable career milestones to engage talent around their goals. Top leadership challenges Helping employees adapt to change Developing and training employees Keeping employees engaged and motivated Top 3 reasons why employees leave 1. Lack of career progression 2. Want to work closer to home 3. Dissapointed with salary CHINA - EMPLOYMENT MARKET INSIGHTS Do you expect you will need to give more in pay rises to retain staff? If so, how much more do you expect to pay in pay increases to retain people compared to a year ago? 82% Up to 10% more Up to 15% more Up to 20% more Up to 30% more More than 30% 48% 36% 10% 6% YES Top 3 alternatives to a pay rise 1 Flexibility at work 17% 2 Housing allowance 14% 3 Children's education 12% Hudson research Oct. 2017: Supply Chain & Procurement employers and employees, China 9

10 CHINA - EMPLOYMENT MARKET INSIGHTS Process management roles in demand Companies are prioritizing lean operations and responsiveness. As technology allows greater transparency throughout the supply chain 1, organizations are looking to effective managers to analyze the data and create efficiencies. Change management skills required As China s business environment transforms from a low-cost sourcing destination to a global supply chain and procurement hub, hiring managers in this industry need people who are able to thrive, lead and stay competitive. That means having the soft skills to drive and manage change, think strategically and communicate both with internal and external stakeholders. In-demand roles and skills: Change management top priority Most in-demand job functions/ roles: Distribution Center Manager Indirect Sourcing Manager Supply Chain Project Manager Demand Planning Manager Sourcing Manager Supply/Vendor management Most in-demand technical skills: Continuous improvement Strategic thinking Intercultural communication Supply chain management 1 Wass, S. 2017, OpenText and BlockEx to build supply chain finance blockchain platform, Global Trade Review, Nov. 16, 2017, opentext-and-blockex-to-build-supply-chain-finance-blockchain-platform/ 10 Most in-demand soft skills: Driving and managing change Learning agility Drive for results Negotiation and influencing skills Innovative thinking

11 Remuneration: Employees expecting and receiving pay rises Although the overall hiring demand for supply chain and procurement talent is softer, with certain skill sets in high demand in a skill-short market, salaries are increasing nonetheless. 3 in 5 supply chain and procurement employees reported that they expect their salary to increase by more than 10%. 31% of China supply chain and procurement employees believe they are paid below market rate Only 29% of supply chain and procurement employees in China say they would stay at their organization for another 12 months even if they receive a pay rise CHINA - EMPLOYMENT MARKET INSIGHTS Did you receive an increase to your base salary in the past 6 months? If so, how much has your base salary/rate increased by? 39% 1-2% 3-5% 6-8% 9-10% 11-15% 16-20% Over 20% 5% 26% 48% 5% 11% 5% YES Did you receive a bonus in the past 6 months? If so, how much was your bonus? 57% 0-5% 6-10% 11-15% 16-20% Over 20% 18% 11% 28% 25% 18% YES Expectations of pay rises By how much do you expect your base salary to increase at your next review? Increase by more than 10% Increase by 6-10% Increase by 0-5% Remain the same 59% 29% 10% Hudson research Oct. 2017: Supply Chain & Procurement employees, China 2% 11

12 Salary guide: Supply Chain & Procurement* 12 *This salary guide is a compilation of salary and market information provided by Hudson consultants, clients, candidates and other sources across Asia. Information was gathered by drawing on the extensive knowledge of our specialist recruitment consultants across Hudson s specialist practice groups. Salary ranges are approximate guides only. They relate to base salaries and exclude bonuses/incentive schemes/stock options etc.

13 Assistant Manager CHINA (RMB '000) Manager Senior Manager Director Vice President or above Manufacturing Supply (Automotive, Heavy Industry, Electronics, Medical Device, etc.) Sourcing ,000+ 1,000-2,500 Direct Material Sourcing ,500 1,500-2,500 Indirect Material Sourcing ,500 1,500-2,500 Supply Chain ,500 1,500-2,500 Supplier Development ,500 1,000-2,500 Demand Planning ,500 N/A Warehouse ,500 N/A Transportation ,500 N/A Material Planning ,500 1,000-2,500 Customer Service N/A N/A Customs/Trade Compliance ,500 1,500-2,500 Plant - Supply Chain ,500 N/A Plant - Planning ,500 1,500-2,500 SALARY GUIDE 13

14 SALARY GUIDE Assistant Manager CHINA (RMB '000) Manager Senior Manager Director Vice President or above Consumer Supply (FMCG, Consumer Durable, Retail, Pharmaceutical etc.) Direct Material Sourcing ,500 1,500-2,500 Indirect Material Sourcing ,500 1,500-2,500 Supply Chain ,000 1,500-2,500 Supplier Development ,500 1,500-2,500 Demand Planning ,500 N/A Warehouse ,500 N/A Transportation ,500 N/A Import & Export N/A N/A Material Planning ,500 1,000-2,500 Customer Service N/A N/A Customs/Trade Compliance ,500 1,500-2,500 Third Party Logistics Branch Management N/A N/A N/A Business Development ,500 1,000-2,500 Key Account Management ,500 1,000-2,500 Solution ,500 N/A Consultancy ,500 N/A Operation ,200 1,200+ Ocean ,200 1,200+ Air Freight ,200 1,

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16 Contact Adam Harman Director Methodology Hudson undertook quantitative research with hiring managers and employees across Asia to analyze the talent landscape and provide insights on what employers might expect in 2018 and beyond. We canvassed the views of over 3,500 employers and employees in Asia in September and October 2017, across multiple job functions. From these findings we developed this report for the supply chain and procurement profession a combination of the survey findings and Hudson's specialist insights on the hiring landscape. Percentages don't always total 100% because respondents could select more than one option for certain questions. Hudson Supply Chain & Procurement Hudson's specialist recruitment consultants have the in-depth market knowledge of salaries, job titles and hiring trends to ensure you achieve the best outcome for your organization at the appropriate remuneration. We build highly nurtured and engaged pools of select talent so you can find the right person quickly. This means greater speed and precision in placements, and higher satisfaction for both clients and candidates. Our proprietary assessment tools and techniques will help you find candidates with the right technical skills and capabilities for the role and for your team, so you can achieve higher performance and superior business results. Hudson Recruitment (Shanghai) Ltd EA Licence Number: 沪人社 号