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Innovation in emerging markets: 2008 annual study

Managing product sourcing risks in emerging markets

Innovation in emerging markets

A spate of high-profile product recalls involving emerging market suppliers has made product safety and product quality top issues for manufacturing companies. Also, in response to a rising “green” consciousness among consumers, global manufacturers are paying more attention to the potential environmental impact of their production processes.

The “Innovation in emerging markets: 2008 annual study” by Deloitte’s Global Manufacturing Industry Group 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 upgrading 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 instead 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. 

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