Global | Manufacturing | C&IP | Emerging Markets

Recent publicity over problems with product safety, product quality and environmental standards in emerging markets have made these into critical issues for boards of directors, senior management and investors of global manufacturers. The result has been a significant financial and reputational risk for manufacturers sourcing from suppliers in emerging markets.

The "Innovation in emerging markets: 2008 annual study" by the Global Manufacturing Industry group of Deloitte Touche Tohmatsu explores how manufacturers from developed and developing countries view product safety, product quality and environmental standards in emerging markets and how they are managing their exposure to risk stemming from sourcing from these markets.

Based on a global survey of more than 650 executives across various manufacturing sectors, including industrial equipment, process industries, automotive, consumer goods, medical equipment, pharmaceuticals, telecommunications, and aerospace and defense, the report provides perspectives on how companies are:

Responding to risks in emerging market sourcing
Taking steps to upgrade standards
Selecting emerging market suppliers
Monitoring emerging market suppliers
Building a sustainable supply chain

For global manufacturers, sourcing successfully from emerging markets is not a question of avoiding the risks but of managing them effectively through enhanced vendor selection, testing, monitoring and contract provisions. While implementing more rigorous standards is likely to result in higher operating costs, manufacturers have the opportunity to turn this challenge into a competitive advantage — building brand equity and commanding higher prices by providing guarantees that their products meet the strictest standards.

Deloitte contacts are available to discuss the key findings of the study. For more information, contact: Mimi Lee, Global Marketing director, Manufacturing.