Product quality poses greatest risk of global outsourcing

Nearly 70% out of 59 executives surveyed in a global study said product quality was the single greatest risk to global sourcing, but less than half reported they were very confident of managing the risks associated with product safety, according to a PricewaterhouseCoopers’ report.In its report, ‘Global Sourcing: Shifting Strategies,’ PricewaterhouseCoopers surveyed 59 executives from retail and consumer companies in eight countries, including Canada.The study found cost is the main driver of global sourcing decisions, yet 21% of respondents do not know what savings to expect. The survey also found one-quarter of respondents did not know what their actual savings were, largely due to lack of organized measurement techniques.Overseas outsourcing has become so widely embraced that the cost savings generated no longer necessarily provide a competitive advantage, the report continues. “As executives watch competitors reduce cost through overseas sourcing they have no choice but to follow suit because ‘everyone else is doing it too,'” the report says.A quarter of respondents outsource more that 75% of their product globally. Given such a high percentage of respondents that lack confidence in managing product quality risk, more active steps are needed to manage this exposure, the study says.”Sustainability concerns have clearly gained ground in the retail and consumer goods sector, illustrated by the fact that 41% of respondents feel climate change is one of the most significant risks to their supply chain,” it continues.”However, almost one-third of respondents were not very confident or not confident at all about their organization’s ability to properly manage carbon footprint risks.”