Emerging market sourcing raises fears

18 May 2008
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19 May 2008 | Steve Bagshaw

Increased sourcing from emerging markets is creating concerns over product safety, quality and environmental standards, according to a new study.

The latest Innovation in Emerging Markets report from Deloitte surveyed 650 global manufacturing executives. It revealed that for two thirds of respondents these topics have become more important when choosing emerging market suppliers.

"Manufacturers are feeling the heat - especially with all the negative publicity related to sourcing from emerging markets," said Hans Roehm, managing partner of the Deloitte Global Manufacturing Industry Group.

The annual survey covers executives at manufacturing firms in the developed and emerging economies. Three quarters of those surveyed from developed economies said they had increased use of developing economy suppliers over the past three years - half have done so "significantly", but with several high-profile cases involving safety and quality, the study showed senior executives beginning to manage risks more closely.

"Executives anticipate a greater demand for higher standards of transparency," said a Deloitte spokesman. "In addition to upgrading standards and testing, many viewed the need to provide customers with more sourcing information to allay fears about safety, quality and environmental standards." The report gives details of how some companies are managing these risks successfully by more frequent visits to suppliers' facilities, a willingness to address managerial skills and working conditions during visits and an expectation that testing levels will increase significantly.

To view the report see www.deloitte.com/manufacturing

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