How Maslow's Hierarchy Effects the Supply Chain

This week I attended the Council of Supply Chain Management's annual conference in San Diego. It's the first event I have been to in a long time that actually was close to being a sell out - several sessions were standing room only and the hallways were jammed with traffic, both encouraging signs for industry.

I'll share more on the conference in future posts, but this week I would like to focus on a conversation I had during lunch. On Monday, I met with a gentleman from Ireland who is responsible for helping Irish multi-nationals find regions in the world to establish new facilities for manufacturing, logistics, call centers and fulfillment. While eating some really amazing mashed potatoes, sorry Grandma, he explained how the Irish government views the sensitive topic of offshoring labor to low cost jurisdictions. Basically, they look at Maslow's Hierarchy of Needs, which as you probably know looks at the basic needs a human being requires for survival, and then they compare that to a region of the world to measure them as a potential location site. Let's look at Vietnam for example. They consider the needs of the average Vietnamese worker to be on the bottom end of the pyramid as they are mostly concerned with physiological and safety needs, such as food, drink and housing. Since these needs are so necessary for survival, the Vietnamese workforce is willing to work for lower wages then say a wealthy country like England or France that has a workforce higher up on the pyramid that is looking for belonging and esteem, which can come with a high paying job.

As these factors are considered when looking for places to offshore, organizations, such as this branch of the Irish government, need to predict when the region is going to shift from one level of the hierarchy to the next. If they predict right, their clients can benefit in the region for the long term. If they predict wrong and move into a region that is just getting ready to jump to the next level, it could be a wash.

As you could forecast, eventually this will all come full circle and all regions of the world will reach esteem and actualization at some point. I remeber when I turned 14 and was making $120 a week. I thought that this is all I would need to survive for the rest of my life. But as I spent my hard earned money, I wanted more to reach that level of actualization. The same will happen to Vietnam, China and India. I guess the advantage will flow to the corporations that can postpone the inevitable as long as possible.