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QUALITY, SAFETY, ETHICS: SUPPLY CHAINS
STILL STRUGGLE IN 2017
ASIAINSPECTION Q3 BAROMETER
HONG KONG, JULY 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 Q3 Barometer, a quarterly synopsis
on outsourced manufacturing and the quality control services industry.
GLOBAL SOURCING TRENDS: CHINA KEEPS UP
GROWTH PACE, REGIONAL COMPETITION NOT
FAR BEHIND
+10.4%VIETNAM
+25.4%CAMBODIA
+15%CHINA
SOUTH AFRICA +7.7%
YEAROVERYEARGROWTH
2017 IS PROVING CHALLENGING TO ETHICAL
COMPLIANCE AND STRUCTURAL SAFETY
Share of fully compliant (“Green”) factories dropped to 27.5% (vs. 34% in 2016)
Critical non-compliances were found in up to 32.5% factories
Average ethical scores dropped to 7.5 out of 10, from 7.9/10 in 2016
Lowest scores awarded on the criteria “working hours and wages” and
“waste management”
32.5%offactorieshadCritical
non-compliances
LESS REGIONAL VARIANCE IN
ETHICAL COMPLIANCE
SOUTHEAST ASIA
8.6
*
* 9% improvement on 2016
CHINA
7.6
ETHICAL COMPLIANCE TRENDS BY INDUSTRY
BEST ETHICAL
SCORES IN Q2 2017
E&E
8.2/10
LOWEST ETHICAL
SCORE IN Q2 2017
Toys and Juvenile
Products
7.2/10
PROMINENT
NEGATIVE TREND
Textile
from 7.8/10 in 2016
to 7.2/10 in 1H 2017
Cross-industry average
7.5/10
UNEVEN PROGRESS IN STRUCTURAL SAFETY
Share of compliant
factories up 3.5 pts :
36.5% in Q2 2017 vs.
33% in 2016
Remediation
underway, but not
complete in 59.5%
factories
Up to 4% of facilities
still have immediate
safety risks
COMPLIANCE IN LAB REMAINS CHALLENGING
FOR US AND EU IMPORTERS
STATE OF SHIPMENTS TO THE US AND EU
13% products contained lead
9% lots contained banned phthalates
REACH COMPLIANCE (EU)
11.5% products failed lab tests
13%of products
containedlead
MECHANICAL HAZARDS:
A MAJOR REASON FOR PRODUCT RECALLS
Recalls for choking hazard and small parts frequent in Q2 2017
High failure rates for mechanical compliance lab tests:
10% of shipments 7% of shipments
10%of shipment to
the US failed
PRODUCT QUALITY IN FACTORY:
SLOW IMPROVEMENT IN THE LONG TERM
* down 4 points YoY
MANUFACTURING QUALITY TRENDS
BY REGION
South Asian manufacturers improve
on last year, but rejection rates still
50%+ in major sourcing hubs:
Bangladesh: 53.9%
Pakistan: 50.5%
India: 49.3%
China continues trend for gradual
improvement: 31% Beyond AQL in
1H 2017, vs. 33% in 1H 2016
PRODUCT QUALITY BY INDUSTRY STILL VARIES
Textiles in the lead for
quality failure: 40%
products Beyond AQL in
Q2 2017
Accessories and
Eyewear quality trend
flat around 20% and
13% Beyond AQL
Toys and Juvenile
Products, E&E: down 2
points vs. 2016 Beyond
AQL values, to 29% and
25% respectively
www.asiainspection.com
info@asiainspection.com
facebook.com/asiainspection
twitter.com/asiainspection
linkedin.com/company/asiainspection




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AsiaInspection Q3 Barometer: Quality, Safety, Ethics: Supply Chains Still Struggle in 2017

  • 1. QUALITY, SAFETY, ETHICS: SUPPLY CHAINS STILL STRUGGLE IN 2017 ASIAINSPECTION Q3 BAROMETER
  • 2. HONG KONG, JULY 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 Q3 Barometer, a quarterly synopsis on outsourced manufacturing and the quality control services industry.
  • 3. GLOBAL SOURCING TRENDS: CHINA KEEPS UP GROWTH PACE, REGIONAL COMPETITION NOT FAR BEHIND +10.4%VIETNAM +25.4%CAMBODIA +15%CHINA SOUTH AFRICA +7.7% YEAROVERYEARGROWTH
  • 4. 2017 IS PROVING CHALLENGING TO ETHICAL COMPLIANCE AND STRUCTURAL SAFETY Share of fully compliant (“Green”) factories dropped to 27.5% (vs. 34% in 2016) Critical non-compliances were found in up to 32.5% factories Average ethical scores dropped to 7.5 out of 10, from 7.9/10 in 2016 Lowest scores awarded on the criteria “working hours and wages” and “waste management” 32.5%offactorieshadCritical non-compliances
  • 5. LESS REGIONAL VARIANCE IN ETHICAL COMPLIANCE SOUTHEAST ASIA 8.6 * * 9% improvement on 2016 CHINA 7.6
  • 6. ETHICAL COMPLIANCE TRENDS BY INDUSTRY BEST ETHICAL SCORES IN Q2 2017 E&E 8.2/10 LOWEST ETHICAL SCORE IN Q2 2017 Toys and Juvenile Products 7.2/10 PROMINENT NEGATIVE TREND Textile from 7.8/10 in 2016 to 7.2/10 in 1H 2017 Cross-industry average 7.5/10
  • 7. UNEVEN PROGRESS IN STRUCTURAL SAFETY Share of compliant factories up 3.5 pts : 36.5% in Q2 2017 vs. 33% in 2016 Remediation underway, but not complete in 59.5% factories Up to 4% of facilities still have immediate safety risks
  • 8. COMPLIANCE IN LAB REMAINS CHALLENGING FOR US AND EU IMPORTERS STATE OF SHIPMENTS TO THE US AND EU 13% products contained lead 9% lots contained banned phthalates REACH COMPLIANCE (EU) 11.5% products failed lab tests 13%of products containedlead
  • 9. MECHANICAL HAZARDS: A MAJOR REASON FOR PRODUCT RECALLS Recalls for choking hazard and small parts frequent in Q2 2017 High failure rates for mechanical compliance lab tests: 10% of shipments 7% of shipments 10%of shipment to the US failed
  • 10. PRODUCT QUALITY IN FACTORY: SLOW IMPROVEMENT IN THE LONG TERM * down 4 points YoY
  • 11. MANUFACTURING QUALITY TRENDS BY REGION South Asian manufacturers improve on last year, but rejection rates still 50%+ in major sourcing hubs: Bangladesh: 53.9% Pakistan: 50.5% India: 49.3% China continues trend for gradual improvement: 31% Beyond AQL in 1H 2017, vs. 33% in 1H 2016
  • 12. PRODUCT QUALITY BY INDUSTRY STILL VARIES Textiles in the lead for quality failure: 40% products Beyond AQL in Q2 2017 Accessories and Eyewear quality trend flat around 20% and 13% Beyond AQL Toys and Juvenile Products, E&E: down 2 points vs. 2016 Beyond AQL values, to 29% and 25% respectively