How China is causing worldwide inflation
The days of China being a cheap manufacturer and shipper of goods may be coming to an end.
With workers’ wages predicted to increase 80 percent over the next five years, cheap labor will drive products’ prices up. That will have an adverse effect on the global supply chain, as consumers in the United States are heavily reliant on China’s cheap labor.
“What we will have for the next 30 years is inflation,” William Fung, managing director of Li & Fung, told the Wall Street Journal. “A lot of Western managers have never coped with inflation.”
It looks as if China’s seemingly endless workforce may be reaching its limit. Before, when employees demanded higher wages in China, new workers were brought in who worked for the same amount or less, which kept costs down.
But with family-planning policies in the country taking their toll, a once limitless workforce is coming to an end, which will in turn drive prices in the United States up.
The wage gap between China, an emerging economic power, and other developing countries is shrinking, according to Fung.
“China was the thing that kept the price low,” Fung said. “China was the benchmark. With the China price rising, everyone else wants to raise prices.”
Fung continued to say that consumers won’t be as active with higher prices, which could mean that people in the United States and other developed Western countries may have to adopt “new consumption trends.”
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.