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Q2 2017 AI Barometer: 2017 Brings Product Quality Issues and Ethical Challenges

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Global supply chains off to a rocky start in 2017, as product quality fails to show improvement while ethical compliance deteriorates. Read more in AI’s Q2 barometer

Q2 2017 AI Barometer: 2017 Brings Product Quality Issues and Ethical Challenges

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2017 BRINGS PRODUCT QUALITY ISSUES
AND ETHICAL CHALLENGES
ASIAINSPECTION Q2 BAROMETER
HONG KONG, APRIL 6, 2017
ASIAINSPECTION (AI)
A LEADING GLOBAL QUALITY CONTROL AND COMPLIANCE SERVICE PROVIDER
THAT PARTNERS WITH BRANDS, RETAILERS AND IMPORTERS AROUND THE WORLD
TO SECURE, MANAGE AND OPTIMIZE THEIR SUPPLY CHAIN
today announces its 2017 Q2 Barometer, a quarterly synopsis
on outsourced manufacturing and the quality control services industry.
SOURCING GEOGRAPHIES: CHINA
MAKES A STRONG START IN 2017
+20%TAIWAN
+10%MALAYSIA
+5.0% VIETNAM
+16%CHINA
SOUTH AFRICAN REGION +23.5%
YEAROVERYEARGROWTH
2017 BRINGS CHALLENGES TO
HUMAN RIGHTS IN SUPPLY CHAINS
Percentage of “Red” (non-compliant) factories rose to 30% , from 27% in 2016
Average ethical scores at 7.9 out of 10
Most violations found in working hours and wages
30%of "Red" factories
ETHICAL AUDIT SCORES VARY BY REGION
SOUTHEAST ASIA
8.8
C.	 SOUTHERN CHINA
7.9
NORTHERN CHINA
7.1
SOUTH ASIA
8.5
ETHICAL COMPLIANCE TRENDS BY INDUSTRY
MOST
IMPROVED
IN Q1 2017 VS. 2016
Bodycare and
Accessories
8/10
(10-pt improvement)
WORST
PERFORMER
IN Q1 2017 VS. 2016
Toys and Juvenile
Products
7.3/10
(8-pt drop)
TOP ISSUES AMONG
WORST-PERFORMING
INDUSTRIES
Health & Safety

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Q2 2017 AI Barometer: 2017 Brings Product Quality Issues and Ethical Challenges

  • 1. 2017 BRINGS PRODUCT QUALITY ISSUES AND ETHICAL CHALLENGES ASIAINSPECTION Q2 BAROMETER
  • 2. HONG KONG, APRIL 6, 2017 ASIAINSPECTION (AI) A LEADING GLOBAL QUALITY CONTROL AND COMPLIANCE SERVICE PROVIDER THAT PARTNERS WITH BRANDS, RETAILERS AND IMPORTERS AROUND THE WORLD TO SECURE, MANAGE AND OPTIMIZE THEIR SUPPLY CHAIN today announces its 2017 Q2 Barometer, a quarterly synopsis on outsourced manufacturing and the quality control services industry.
  • 3. SOURCING GEOGRAPHIES: CHINA MAKES A STRONG START IN 2017 +20%TAIWAN +10%MALAYSIA +5.0% VIETNAM +16%CHINA SOUTH AFRICAN REGION +23.5% YEAROVERYEARGROWTH
  • 4. 2017 BRINGS CHALLENGES TO HUMAN RIGHTS IN SUPPLY CHAINS Percentage of “Red” (non-compliant) factories rose to 30% , from 27% in 2016 Average ethical scores at 7.9 out of 10 Most violations found in working hours and wages 30%of "Red" factories
  • 5. ETHICAL AUDIT SCORES VARY BY REGION SOUTHEAST ASIA 8.8 C. SOUTHERN CHINA 7.9 NORTHERN CHINA 7.1 SOUTH ASIA 8.5
  • 6. ETHICAL COMPLIANCE TRENDS BY INDUSTRY MOST IMPROVED IN Q1 2017 VS. 2016 Bodycare and Accessories 8/10 (10-pt improvement) WORST PERFORMER IN Q1 2017 VS. 2016 Toys and Juvenile Products 7.3/10 (8-pt drop) TOP ISSUES AMONG WORST-PERFORMING INDUSTRIES Health & Safety
  • 7. STRUCTURAL SAFETY DETERIORATES FURTHER 69% 30.5% FACTORIES IN NEED OF REMEDIATION COMPLIANT FACTORIES Decreased from 37% in 2016 and 41% in 2015 4% 65% in need of improvement with critical safety risks FACTORYCOMPLIANCEQ12017
  • 8. PRODUCT QUALITY: OVERALL LITTLE IMPROVEMENT ON 2016
  • 9. MANUFACTURING QUALITY TRENDS BY REGION Inspection failure rates remain high in South Asia: Bangladesh: 61.7% India: 55.3% Pakistan: 52.6% China shows gradual improvement over the long term, with Beyond AQL rates around 30% Turkey makes strides in product quality: rate of failed inspections pushed under 20% , a two-year low
  • 10. QUALITY PERFORMANCE DISPARATE BY INDUSTRY Textiles remains the worst offender: 41.7% products short of specifications Toys & Juvenile Products rejection rates remain flat around 30% Accessories and Eyewear show improvement at 21.3% and 15% Beyond AQL rates (down 3 and 4 points compared to 2016)
  • 11. SAFETY RECALLS RAMPANT IN THE E&E SECTOR Hoverboards under massive product safety investigation after a deadly fire Large home appliances at risk of fire and explosion Laptop batteries of leading brands
  • 12. QUALITY IN LAB SHOWS NO TANGIBLE IMPROVEMENT INDUSTRIES AT RISK Toys and childcare articles Food contact items MAJOR VIOLATIONS Pb Pht Lead and lead paint Phthalates Excess levels of restricted chemicals
  • 13. 7) CHEMICAL COMPLIANCE: A CHALLENGE FOR SUPPPLIERS TO US AND EU MARKETS Test results for SHIPMENTS TO THE US 8% children’s products contained lead 11% toys contained phthalates 8% food contact items failed FDA chemical requirements SHIPMENTS TO THE EU 5%+ failed REACH requirements for restricted or banned chemicals 11%of toys contained phthalates
  • 14. AsiaInspection (AI), a leading global quality control and compliance service provider that partners with Brands, Retailers and Importers around the world to secure, manage and optimize their supply chain. ABOUT ASIAINSPECTION YOUR EYES IN THE FACTORY!™
  • 15. ABOUT ASIAINSPECTION YOUR EYES IN THE FACTORY!™ DEDICATED ACCOUNT MANAGER A supply chain partner offering advice on your specific needs INDUSTRY LEADING TURNAROUND Onsite within 48 hours. Reports the same day 80% of the time COMPREHENSIVE ONLINE MANAGEMENT Use your real-time dashboard to benchmark and identify your high performing suppliers FLEXIBLE Cancel or modify orders up to 4pm the day before the inspection for free PRODUCT EXPERTISE Hundreds of off-the-shelf customizable product specific checklists TRUSTED AND TRULY INDEPENDENT 100% QC. AI is not involved in sourcing and protects your factory information MOBILE Book, check reports and make decisions on the go ALL-INCLUSIVE PRICING Easy to budget. No hidden costs