China Precision Injection Molding Suppliers

- Jul 06, 2017-

Quality, Safety, Ethics: Supply Chains Still Struggle in 2017

Global Sourcing Trends: China Keeps Up Growth Pace, Regional Competition Not Far Behind

  Halfway through 2017, AI’s onsite inspection and supplier audit statistics paint a picture of the ongoing struggle between old-school sourcing giants and their up-and-coming competition. China is still keeping ahead of its projected economic growth of 6.5% in 2017, with inspections and audits volumes rising +15% YoY in Q2 2017. Its competitors in Southeast Asia are not far behind: for instance, inspection demand in Vietnam and Cambodia in Q2 2017 rose by +10.4% and +25.4% respectively, in line with recent projections for the region’s robust economic growth in the medium term.i By contrast, in South Asia, where countries continue to see reduced economic growth in 2017, inspection and audit demand remained more sluggish, with the exception of Pakistan, which achieved +6.6% YoY growth this quarter after a rough start to the year.

Meanwhile, South Africa confirms its rise as a strong regional contender for apparel manufacturing outside of Asia, with second quarter’s inspection volumes rising +7.7% YoY.

2017 is Proving Challenging to Ethical Compliance and Structural Safety

   AI data from Q2 2017 shows that manufacturers still struggle with ethical compliance across many industries and sourcing destinations. During the past quarter, up to 32.5% of factories were scored "Red" for critical non-compliance (vs. an average of 27% in 2016). The percentage of fully compliant "Green" factories dropped several percentage points to 27.5%, while 40% of factories received an "Amber" ranking, indicating that they still required improvement.

In terms of ranking criteria, working hours and wages compliance was tied with waste management for the lowest average scores of 6.7 out of 10 (at the end of 2016, average scores in these categories were 7.3 and 7.1, respectively).

Regional disparity of ethical scores was less pronounced this quarter. In China, factories appear to be on a downward trend, as average ethical scores decreased by 3.8% in 2017 YTD compared to 2016, to an average of 7.6.

  Meanwhile, suppliers in South and Southeast Asia are scoring higher than China YTD with 8.6 on social compliance, a +9% improvement vs. 2016.

    Among the industries serviced by AI, the E&E sector, by essence more automated and technically advanced, had the best ethical scores: 8.2 out of 10 compared to the cross-industry average of 7.5. By contrast, ethical performance in the textile and apparel industry has been slipping since the start of 2017, scores dropping from the 2016 average of 7.8 to 7.2/10 in Q2 2017. This goes to show again that the more labor-intensive the industry, the more prone it is to social and ethical shortcomings.

  "From the data our auditors collect on the ground every day over the course of thousands of audits, it is obvious that significant progress of ethical compliance in global supply chains is still uneven and won’t happen overnight," said Sebastien Breteau, the founder and CEO of AsiaInspection. "It’s a long-term game of incremental improvement: regular onsite follow-ups and close supervision are required if one wants real lasting impact on working conditions in factories."

AI data for the past quarter shows that uneven progress is also the case for the state of structural and fire safety of factories worldwide. On one hand, the ratio of compliant factories has crept up to 36.5% (vs. 33% in 2016); on the other, some 4% of factories were found to have immediate safety risks (vs. 2.5% at the end of 2016). Remediation is underway, but not complete, in up to 59.5% of factories. ( Above are reference document from Asia Inspection ) .

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