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Indonesia's manufacturing employment hits record

Source: BBC

Employment growth in Indonesia’s manufacturing industry hit a record high in June according to Nikkei Indonesia Manufacturing purchasing managers’ index survey. Companies scaled up to match higher order books caused by the shifting of global Manufacturing landscape beyond BRIC to other emerging countries, including Indonesia and the rest of ASEAN members reports the latest DHL research.

The PMI — a composite of manufacturing output, new orders, exports and employment measures — increased to 51.9 in June, compared to 50.6 a month earlier.

The rate of increase in new orders and output both reached a 23 month high. Output growth resumed in June after suffering from stagnation a month earlier as the improving domestic demand matched the slower decrease of new orders from abroad.

Both pre-and post-production inventories also increased in the period, while the manufacturing employment rose to the fourth successive months in June — the sharpest pace on record since 2011. The survey-record rise suggests that businesses expect the upturn in incoming new work to be sustained as we move to the second half of the year.

Indonesia's manufacturing employment hits record

“A stronger increase in costs combined with better demand conditions is likely to lead goods producers to further increase their own charges in the near term,” Pollyanna De Lima, an economist at Markit, said in a note.

The country’s global share of manufacturing has remained at around 0.6 percent over the last 15 years. “Now is a critical moment for Indonesia to implement further reforms that will enhance the competitiveness of its manufacturing and services sectors, especially tourism.” said Ndiame Diop, the World Bank’s Lead Economist for Indonesia.

A version of this appeared in Jakarta Globe on July 1. Read the full article here

supply chain challenges in Southeast Asia reached a turning point

Source: Reuters, Ralph D. Freso

The supply chain challenges in Southeast Asia have reached a turning point owing to the scarcity of supply chain professionals, increased consumer diversity and fragmented supply chains. Transforming supply chains to reach market potential is a mammoth task but it can become a source of competitive advantage and drive global growth for businesses.

The many layers of suppliers, localized delivery and route to consumer practices, and lack of transparency and consistency in information flows make it incredibly difficult for businesses to achieve the next wave of global growth but also positions global businesses to capitalize on growing demand in these markets. For most companies the potential is clear; the challenge is how to address it.

As companies move their factories from China to Southeast Asia due to rising labor costs and the move away from an export-based economy, they should grasp the opportunity to carry out a full supply chain review to identify how they should configure their supply chains better.

Accelerate the supply chain transformation with best practice

Bringing best practice into the strategy from elsewhere can accelerate the transformation. Labor remain a big challenge for this relatively young region for the manufacturing industry meaning there is limited supply chain knowledge and a lack of experienced professionals and high staff turnover as employees are quick to leave for even marginally higher wages.

To capture the full potential in Southeast Asia, it is best to establish a physical presence and subsequently localize knowledge and skills.

This can be done by setting up R&D centers or developing region specific leadership and training programs. Coupled with a long-term focus on developing local supply chain knowledge and people capabilities, it can ensure a successful transformation.

A version of this appeared in Supply Chain Digital on June 20. Read the full article here.