Future of Sourcing - QIMA https://www.futureofsourcing.com/tags/qima en Sourcing Disruption to Continue In 2022 https://www.futureofsourcing.com/sourcing-disruption-to-continue-in-2022 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Sourcing%20Disruption%20to%20Continue%20In%202022%20%20Breteau.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Sourcing%20Disruption%20to%20Continue%20In%202022%20%20Breteau.jpg" title="While 2021 was a bust for many who hoped that supply chain disruptions would abate, it appears the trend will continue well into 2022." class="colorbox" rel="gallery-node-2144-S4nvdvkyBew"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Sourcing%20Disruption%20to%20Continue%20In%202022%20%20Breteau.jpg?itok=8Fo4AHZ6" width="624" height="325" alt="While 2021 was a bust for many who hoped that supply chain disruptions would abate, it appears the trend will continue well into 2022." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>While 2021 was a bust for many who hoped that supply chain disruptions would abate, it appears the trend will continue well into 2022 says QIMA&#39;s&nbsp;Sébastien Breteau. He shares recent data that sheds light on sourcing diversification activities in China, Vietnam and India, as well as troubling data on human rights and worker safety.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/five-technologies-to-future-proof-supply-chain-inspections">Five Technologies to Future Proof Supply Chain Inspections</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <h1>Sourcing Disruption to Continue In 2022&nbsp;</h1> <p>A volatile 2021 taught businesses a tough lesson about the fragility of supply chains. Just when many thought we were out of the woods, the promising trends toward recovery reversed. Supply chains quickly snapped amid the resurgence of COVID-19 outbreaks, China&rsquo;s utility crisis, logistics woes, labor issues, and mass supply shortages.</p> <p>In more positive news, consumer demand is strong. Even against records shortages, consumers splurged during the holiday season, and spending hit an all-time high in the United States according to the <a href="https://www.cnbc.com/2021/12/03/holiday-shopping-2021-spending-set-to-blow-past-records-nrf-says.html" target="_blank">National Retail Federation</a> (NRF). After predicting a year-on-year increase of 8.5% to 10.5%, NRF revised this figure to a whopping 11.5%, affirming consumer appetite to spend.</p> <p>However, with supply still short, this means unprepared businesses are missing out on a big opportunity to seize consumer demand.</p> <p>While some of the media headlines positioned the supply chains&rsquo; issues as a &ldquo;<a href="https://www.npr.org/2021/12/13/1063901970/the-toymakers-supply-chain-nightmare-before-christmas" target="_blank">nightmare before Christmas</a>,&rdquo; recent data from QIMA suggests that the disruption is poised to linger long into 2022. Businesses should take note of the following trends, as they are projected to shape the sourcing landscape this year.</p> <h2>China Sourcing Veers Off Track, but Recovery in 2022 is Still Possible</h2> <p>Reflecting a pattern observed in many of Asia&rsquo;s sourcing markets in 2021, China flaunted a remarkable rebound in the first half of the year as it outpaced most other countries in containing the virus.</p> <p>While this success stuttered in Q3 onwards in Asia at large, the world&rsquo;s leading manufacturing market is showing itself to be even more resilient compared to its regional competition. Notably, inspection and audit demand in China exploded +21.5% in 2021 over 2020. This growth even trounced pre-pandemic 2019 by +13%.</p> <p>Unfortunately for China, though, the second half of 2021 proved disappointing for its giant manufacturing industry as widespread power outages shut down factories and stymied orders. Adding salt to the wound, the blackouts happened in September &ndash; just as factories were looking to fill holiday orders from their buyers.&nbsp;</p> <p>However, demand for inspection and audits in China rebounded relatively quickly in most major consumer goods categories, including textile/apparel, toys and homeware. An important exception was the electronics and electricals industry, which has seen inspection and audit demand diminish steadily since May 2021. This is happening as more electronic manufacturers feel the pain of the global semiconductor chip shortage.</p> <p>QIMA data on inspections and audits reflects caution from Western buyers, with buyers being hesitant to expand sourcing in China throughout 2021. Instead of returning to China in droves, the data suggests many buyers simply maintained their existing business relationships with Chinese manufacturers. Subsequently, China&rsquo;s share among the top-five sourcing regions of both U.S.- and EU-based buyers in 2021 remained at a three-year low.</p> <p>China&rsquo;s sourcing patterns in 2021 foreshadow a post-pandemic recovery that, while not being derailed completely, has veered off track. In addition, power outrages may remain a threat in upcoming months. Accompanying this threat, the upcoming Winter Olympics in Beijing may impose further manufacturing restrictions in northern China. Subsequently, while there is reason to be optimistic for China&rsquo;s sourcing footprint in 2022, buyers should nonetheless heed caution and be prepared for further disruption.</p> <h2>Vietnam&rsquo;s Boom and Bust Reflects Buyer Hesitation</h2> <p>The collapse of sourcing in Vietnam in 2021 sheds light on how volatile the modern global sourcing landscape is, revealing the compounding effects of pandemic-related disruptions.</p> <p>In the first half of 2021, Vietnam experienced a tremendous growth spurt as enthusiastic buyers from the West eagerly flocked back to a familiar sourcing market that had been enjoying much attention pre-pandemic. In January through June 2021 &ndash; a period where Vietnam was successfully containing the spread of the virus &ndash; QIMA recorded a robust +67% growth versus pre-pandemic 2019.</p> <p>This rosy success story was interrupted in late July by the arrival of the Delta variant, when the country entered a stifling lockdown period. The latest data from QIMA shows Vietnam&#39;s manufacturing industry remained sluggish through the end of the year, even though the virus containment measures were lifted in October.&nbsp;</p> <p>Sharp labor shortages are likely a factor in Vietnam&rsquo;s slow path to recovery, as factory staff left the cities en masse. This left a shocking shortage of over 100,000 workers in the south of Vietnam. As a result, in late November, over a third of factories in Vietnam were reported to be operating below 80% capacity. In many cases, orders were even being delayed by more than eight weeks.</p> <p>The footwear and apparel sector in Vietnam has been among the hardest hit by the lockdowns and accompanying labor shortages, with inspection and audit demand plummeting -29% year-over-year in the fourth quarter. As a result of this dramatic reversal of fortune, Vietnam inspections and audits grew by a modest 3% in the first half of 2021 compared to the double digit booms it tracked during the pre-pandemic period. Based on this lethargic rebound, Vietnam&#39;s recovery is expected to be gradual and should last well into 2022.</p> <h2>India Enjoys the Benefit of Sourcing Diversification</h2> <p>Even though <a href="https://thediplomat.com/2021/08/the-rcep-conundrum-japan-awaits-indias-return/" target="_blank">India infamously bowed out</a> of the recently launched Regional Comprehensive Economic Partnership (RCEP) free-trade agreement, it&rsquo;s nonetheless experiencing exciting new surges in sourcing. Acclaimed by experts as an increasingly attractive sourcing market among many product categories, recent QIMA data shows buyers are shifting their gaze from China and making India a preferred alternative sourcing market.</p> <p>When comparing 2021 to the pre-pandemic period, the South Asia region at large flaunted double-digit expansion in inspection and audit demand. But India, specifically, has emerged as the conclusive favorite &ndash; outperforming its neighbors and the region as a whole in three out of four quarters of the year.</p> <p>India&#39;s newfound success can be attributed to surging interest among U.S.-based brands by and large: QIMA survey data shows the share of buyers naming India among their top-five sourcing regions nearly doubled in 2021 compared to 2019.</p> <p>After crossing the 2021 finish line with an impressive overall +60% spike in inspection and audit demand compared to pre-pandemic 2019, this figure astoundingly jumped +129% among U.S.-based buyers. Now, the next test for India is whether it can combat the threat of Omicron and keep the momentum going in 2022.</p> <h2>Sourcing Volatility is Wreaking Havoc on Human Rights and Worker Safety</h2> <p>Against the turbulent headwinds of the pandemic, workers around the world face <a href="https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021#:~:text=The%20COVID%2D19%20pandemic%20is,severity%20of%20the%20economic%20contraction.">rising poverty and mass job losses</a> estimated to be around four times that seen during the 2008-2009 global financial crisis, according to a report released last year by the <a href="https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_766949/lang--en/index.htm">UN International Labour Organization</a>.</p> <p>Even though diversification helped many buyers navigate disruptions in the short term, 2021 saw ethical compliance in global supply chains crumble at an alarming rate. Factory scores clocked in at a four-year low and nearly a third (29%) of the factories QIMA audited were identified as being critically non-compliant and in need of immediate intervention. This represents the highest share since 2017.</p> <p>Due to specific challenges presented by the pandemic, violations were unsurprisingly extensive in areas related to health and safety. In this area, 2021 scores dropped -7.5% compared to 2020. QIMA also tracked rampant violations in the area of working hours and wages, with scores dropping -8% in 2021 compared to 2020.&nbsp;</p> <p>By geography, QIMA audit data indeed shows deteriorating ethical scores in many key sourcing markets &ndash; especially in Southeast Asia. For example, Myanmar is among the worst offenders in the world: its 2021 ethical scores plunged -18% compared to 2020.</p> <p>These disheartening trends in human rights and worker safety are perhaps all too unsurprising and familiar. Unfortunately, data from recent years have shown human rights and ethical compliance falling by the wayside more and more as businesses are forced to operate in survival mode, prioritize cost concerns and diversify sourcing to less familiar geographies.</p> <p>We saw ethical compliance drop first during the throes of the U.S.-China trade war. Now the decline in ethical compliance continues to rear its ugly head during the pandemic and the ongoing supply chain crunch.&nbsp;&nbsp;</p> <h2>Looking Ahead</h2> <p>After a devastating 2020, many had placed their bets on 2021 being a year of recovery and a return to the pre-pandemic normal. Despite some glimmers of hope, the year did not live up to these expectations. Moreover, by some measures of sourcing metrics &ndash; such as ethical compliance &ndash; the situation became even more bleak.&nbsp;&nbsp;</p> <p>Amid new COVID-19 variants, disparate vaccination rates and varying regional approaches to virus containment, the pandemic continues to burden global supply chains. When you combine this with the woes of raw material shortages, logistics hurdles, labor issues and rapidly escalating ethical risks, global supply chains are expected to remain volatile throughout 2022.</p> <p>The struggles businesses have faced thus far do not have to be all for naught, as there have been many teaching moments throughout the pandemic. If emerging supply chain trends are kept top of mind, businesses will be able to exercise higher levels of agility and resilience &ndash; and nimbly adapt to the everchanging sourcing landscape.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/compliance" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Compliance</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/qima" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">QIMA</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Sourcing Disruption to Continue In 2022 - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/sourcing-disruption-to-continue-in-2022"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/north-america" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">North America</a></div><div class="field-item odd"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Thu, 03 Mar 2022 17:00:00 +0000 Sébastien Breteau 2144 at https://www.futureofsourcing.com https://www.futureofsourcing.com/sourcing-disruption-to-continue-in-2022#comments Beyond Buzzwords: Embarking on the Quality 4.0 Transformation Journey https://www.futureofsourcing.com/beyond-buzzwords-embarking-on-the-quality-40-transformation-journey <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Beyond%20Buzzwords_Embarking%20on%20the%20Quality%204.0%20Transformation%20Journey.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Beyond%20Buzzwords_Embarking%20on%20the%20Quality%204.0%20Transformation%20Journey.jpg" title="Embarking on the Quality 4.0 Transformation Journey" class="colorbox" rel="gallery-node-2100-S4nvdvkyBew"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Beyond%20Buzzwords_Embarking%20on%20the%20Quality%204.0%20Transformation%20Journey.jpg?itok=iEU29a_H" width="624" height="325" alt="Embarking on the Quality 4.0 Transformation Journey" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>With Quality 4.0 practices, brands can use data-driven quality control to generate real-time feedback and take a proactive approach to quality.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/five-technologies-to-future-proof-supply-chain-inspections">Five Technologies to Future Proof Supply Chain Inspections</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>While previous industrial revolutions relied on developments in steam machines, electricity and telecommunications, the fourth industrial revolution is powered by big data, advanced manufacturing techniques, cloud computing, machine learning and artificial intelligence. As the fourth industrial has risen, so too has the notion of Quality 4.0, a term recently coined to refer to the shifts in performance excellence we&rsquo;re seeing in <a href="https://futureofsourcing.com/from-procurement-police-to-the-chief-partner-officer">today&rsquo;s age of digital transformation</a>.</p> <p>The new moniker recognizes we are living and working in mankind&rsquo;s fourth industrial revolution, where quality standards are being transformed by technology. For example, in today&rsquo;s e-commerce marketplace, consumers don&rsquo;t just return a product when the quality doesn&rsquo;t match their standards; they also publish reviews online. In the Quality 4.0 landscape, businesses must adopt a new approach to managing quality control programs.</p> <h2>Harnessing the Power of Data</h2> <p>Data features prominently in Quality 4.0, particularly when it comes to the quick collection of large amounts data and efficient processing. Today&rsquo;s best practices in quality rely on data, with technology innovating processing methods and enabling new ways of accessing information about production and distribution.</p> <p>To be successful in Quality 4.0 implementation, brands must make data central to all decision-making. In traditional models, quality control managers must rely on information that is out-of-date and obsolete almost as soon as it arrives. To complicate matters even further, managers in traditional models are never certain of the accuracy of that data. With suppliers collecting data with pen and paper measurement, too much room is left for human error. Not only is traditional data collection slow and imprecise, the data is not easily accessible on the backend &ndash; making a complete, accurate picture of QC nearly impossible to achieve.</p> <p>Unsurprisingly, more than one-third (37%) of organizations report poor metrics as the main obstacle in the way of achieving quality objectives, according to a recent survey conducted by LNS Research. However, Quality 4.0 puts technology to work for managers and empowers inspectors on the ground in factories to make accurate observations efficiently.</p> <p>Furthermore, inspectors can provide these insights to quality control managers in real time. Notably, new quality management technology lets brands select and enact standardized metrics for each individual product. Thus, with the help of such technology, brands can customize quality standards to align with their product lines specifically.</p> <h2>Fostering Stronger Connections Between Brands and Suppliers</h2> <p>Importantly, Quality 4.0 makes communication and connection easier. As brands with global supply chains have learned during the COVID-19 pandemic, situations and circumstances can change quickly. Products available today may come into short supply tomorrow and transportation delays could trigger a domino effect on the value chain. Therefore, it&rsquo;s vital that decision-makers have good information about their suppliers. This way, they can pivot as necessary and shift to other suppliers if a disruption is to occur.</p> <p>As an example, the apparel industry, when compared to electronics, is late to the game in adopting Quality 4.0 processes to manage quality programs. In most shipment orders, quality control inspections occur once a garment is manufactured. Defects are only addressed after the fact, making it difficult to identify where in the manufacturing process they appeared. This potentially wastes time and exhausts other resources, especially if defects are the result of problems happening early on in the manufacturing process.</p> <p>Quality is crucial in <a href="https://futureofsourcing.com/2021-state-of-manufacturing-report-reveals-shifting-trends">manufacturing and supply chain management</a>. Not only does each defective product represent a loss of time and materials in that one item, but companies also run the risk of ruining their reputation when poorly made products go to market. In the long run, poor quality is expensive with returns and rework generating extra costs and bad customer reviews sinking sales.</p> <p>With Quality 4.0 practices, brands can use data-driven quality control to generate real-time feedback and take a proactive approach to quality. In the long term, this creates a new framework for supplier relations and allows brands to sustain stronger relationships. Owing to transparency, trust and teamwork, the relationship transcends the typical vendor contract. This puts brands in a better position to build partnerships with suppliers they can grow alongside with, now and well into the future.</p> <h2>Putting Quality 4.0 to Work</h2> <p>There are three key steps brands can take when embarking on the Quality 4.0 journey.</p> <p><strong>Step One:</strong> The first step in implementing Quality 4.0 is to identify an appropriate Quality Management System (QMS) partner, selecting a program that fits the size of the current business but allows for scalability. Ideally, a QMS is strong on two levels. First, the technology should be stable, intuitive and backed by tech support attuned with the brand&rsquo;s global supply chain. Second, the partner should know sourcing practices deeply and practically. This means they know what quality practices look like in real-world factories, with real-world products being made by actual people.</p> <p><strong>Step Two:</strong> Training is one of the most important pillars for implementing Quality 4.0 practices. Before putting QMS technology place, brands should prioritize workshops and educational programs for employees and supplier partners. Much of the training is cultural, with Quality 4.0&rsquo;s main strength being the dissolution of barriers between management and factory workers on the ground. In a recent study published by <em>Forbes</em>, 88% of consumers stated that they expect the companies they purchase from will have ethical and environmental standards matching their own. By prioritizing training, brands can help proliferate their best practices and values across their supply chains.</p> <p><strong>Step Three:</strong> In the final step, brands must commit to putting Quality 4.0 across the entire length of the supply chain. Defective products are so expensive that, as explained by <em>TotalRetail</em>, one return of a $50 pair of shoes could offset the profit made from as many as three successful sales.</p> <h2>Adopting a QMS to Thrive in Quality 4.0</h2> <p>A robust, modern QMS enables brands to leverage the advances of Quality 4.0. The Fourth Industrial Revolution is inspired by interconnectedness and seamless integration. On this note, a strong Quality 4.0 QMS produces clean, clear reports from technologically-assisted inspection results. The system then transmits these reports to management in real-time.</p> <p>The true secret to the power of Quality 4.0 is the accuracy of that data and management&rsquo;s ability to use it &ndash; quickly and accurately &ndash; for analysis, problem-solving and strategic planning. If a brand&rsquo;s QMS doesn&rsquo;t provide standardized yet customizable metrics and reporting, they&rsquo;re sorely missing out on everything Quality 4.0 has to offer.</p> <p>Though the conduit for launching Quality 4.0 is in technology, success is still ultimately in the hands of people. High standard QMS providers include training as part of an overall package. Brands should select QMS providers offering robust on-boarding as well as sustained training to address upgrades in technology, emerging conditions in the market and changes in business needs.</p> <p>In a survey published recently by business consultation experts BCG, 74% of respondents reported Quality 4.0 developments will most greatly benefit manufacturers. Nearly two-thirds of respondents stated Quality 4.0 initiatives will have a significant impact on their businesses within five years. Despite recognizing these benefits, only 16% of respondents reported their companies have begun implementing such initiatives.</p> <p>The Quality 4.0 adoption gap offers an incredible competitive advantage opportunity for businesses who are ready to make the leap. Partnering with a <a href="https://www.qimaone.com/" target="_blank">QMS provider</a> can jumpstart a business&rsquo;s modernization efforts and put them on track to thrive in Quality 4.0.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/quality-40" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Quality 4.0</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/fourth-industrial-revolution" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Fourth Industrial Revolution</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/qima" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">QIMA</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Beyond Buzzwords: Embarking on the Quality 4.0 Transformation Journey - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/beyond-buzzwords-embarking-on-the-quality-40-transformation-journey"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 29 Dec 2021 02:00:00 +0000 Sébastien Breteau 2100 at https://www.futureofsourcing.com https://www.futureofsourcing.com/beyond-buzzwords-embarking-on-the-quality-40-transformation-journey#comments Five Technologies to Future Proof Supply Chain Inspections https://www.futureofsourcing.com/five-technologies-to-future-proof-supply-chain-inspections <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/5%20Technologies%20to%20Future%20Proof%20Supply%20Chain%20Inspections%20%281%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/5%20Technologies%20to%20Future%20Proof%20Supply%20Chain%20Inspections%20%281%29.png" title="Five Technologies to Future Proof Supply Chain Inspections" class="colorbox" rel="gallery-node-2084-S4nvdvkyBew"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/5%20Technologies%20to%20Future%20Proof%20Supply%20Chain%20Inspections%20%281%29.png?itok=WgUpK4IO" width="624" height="325" alt="Five Technologies to Future Proof Supply Chain Inspections" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Five Technologies to Future Proof Supply Chain Inspections</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/new-trends-and-challenges-for-sourcing">New Trends and Challenges For Sourcing</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The COVID-19 pandemic has jolted digital transformation into overdrive, with technology adoption enabling businesses across industries to accommodate remote work and operations. But now more than 18 months into the crisis, businesses that source globally remain ensnared by rampant order delays, factory lockdowns, persistent transit challenges, rising costs and debilitating mass shortages.</p> <p>To raise resiliency and thrive post-pandemic, businesses with a global sourcing footprint must continue to accelerate the digital transformation journey. As poor quality and non-conformities can have severe impacts on business value, leading businesses will be the ones that innovate by implementing digital quality and supplier management solutions and driving real-time, data-based decision-making. This way, they can prevent risks of volatile supply and demand patterns, while still protecting essential quality and compliance measures as they rebuild their supplier networks.</p> <p>However, with so many tools and platforms on the market, choosing where to go next can be a daunting task. The following are five key technologies and functions that businesses should prioritize as they digitize inspections across their supply chains.</p> <h2>Cloud Computing and Remote Connectivity</h2> <p>With inspections being done offsite and often in multiple locations, businesses need easy-to-deploy software solutions that can be operated without extensive support from the IT department and can work within their existing IT ecosystem. Ideally, the inspection solution can integrate across devices on the cloud and plug in to existing PLM and ERP solutions via APIs. In doing so, data can be centralized, removing data duplication and the errors that can come with it.</p> <p>Another key feature for digital inspections is the ability to function offline or with limited internet connection. As brands diversify their sourcing footprint to new geographies, they must consider varying digital ecosystems. With so many factories and inspection sites lacking internet connectivity, platforms that require an internet connection are basically obsolete and potentially detrimental to the inspection process.</p> <h2>Artificial Intelligence and Machine Learning</h2> <p>When it comes to safeguarding a business&rsquo;s sourcing footprint, the most valuable data is generated daily on the factory floors. Artificial intelligence (AI) and machine learning (ML) help businesses achieve real-time visibility of vital metrics such as product quality, compliance and supplier performance. Through the use of these technologies the supply chain team can turn data from various sources into actionable insights, empower more informed decision-making and accurately assess risk that may affect their supply chain, now and in the future.</p> <p>An innovative application of machine learning and artificial intelligence for quality control is the use of voice command technology to perform time-consuming measurements. While still making headway in the supply chain space, voice tech has already proven itself to be far more than a passing technology trend.</p> <p>Most digital inspection platforms in today&rsquo;s marketplace use IoT-connected rulers and other automation measures. But these tools require businesses to additionally invest in dedicated devices for all factories and provide intensive training to all employees or suppliers involved in the process. When supply chains engage hundreds or thousands of parties, this becomes a costly endeavor.</p> <p>Moreover, the precision between devices is inconsistent, with up to a 10% delta between two measurements, according to QIMAone data. In the long-term, such a wide margin of error presents grim implications for quality control and process efficiency.</p> <p>Unless other connected devices that require additional costly investments and intensive training, measurements powered with voice recognition require minimal onboarding. Notably, there&rsquo;s a low learning curve as most people are already familiar with the functions of speech recognition technology thanks to devices like Google Assistant or Amazon Alexa. By infusing the inspection process with accurate speech recognition capabilities, the inspectors, armed with just a tablet or other mobile device, can simply speak up and upload their data directly and immediately to a cloud-based system.</p> <h2>Predictive Quality Analytics&nbsp;</h2> <p>Predictive quality analytics (PQA) anticipates the impact of high-risk events and pinpoints root causes, leading to reduced quality issues and a stronger pulse on products and raw materials. To be successfully deployed, PQA needs clean, reliable and standardized large amounts of data collected along the supply chain &ndash; from raw material factories to assembly suppliers, warehouses and retail stores</p> <p>Essentially, &nbsp;digitization enables easier and more effective data collection and analysis &ndash; core to supply chain decision-making, collecting insights at every touchpoint and illuminating real-time visibility from factory floor to shelf. However, while algorithms can be intricate and specialized, data must be accessible and actionable for a business&rsquo;s decision-makers.</p> <p>When data summaries are available and manageable in a single place, rather than across multiple systems that don&rsquo;t sync up or communicate with each other, businesses can continuously ingest insights and take action accordingly. For example, through performance tracking insights, they can review individual supplier and inspector metrics to easily identify the best and worst performers across their sourcing footprint. With risk radar, they can build a risk profile for each supplier and factory, which helps anticipate problems sooner rather than later.</p> <h2>Automation</h2> <p>To complement data analytics, automation should use a balanced model that empowers suppliers with intelligent design and third-party monitoring. There are three fundamental functions of automation: risk-mitigation, decision-making and reporting.</p> <p>With data-based decision-making based on AQL criteria, a platform can automatically suggest a result (pass or fail) and accept or refuse a shipment for pre-shipment inspection (PSI). Proactive alerts can be automatically triggered, along with corrective and preventative action plans to suppliers to identify the root cause and solve the issue as quickly as possible. Finally, an inspection report can be automatically issued and used in a standardized format populated with all of the data collected during the inspection.</p> <p>Moreover, a digital platform can change the back-end processes for how inspections are scheduled. A &ldquo;smart booking&rdquo; function leverages advanced risk management to automatically assign inspections to a business&rsquo;s internal inspectors or supplier&rsquo;s staff. When indicators show potential integrity issues &ldquo;on the ground&rdquo; with suppliers, the platform can trigger an inspection with third-party experts.</p> <p>By automating inspection allocation based on location, product expertise, teams&rsquo; schedules and severity of the issue, businesses maximize their resources and save time in the long term.&nbsp;&nbsp;</p> <h2>Collaborative Network</h2> <p>Whether navigating disruptions spurred by the <a href="https://www.supplychaindive.com/news/china-supply-chains-procurement-sourcing-resilience-vietnam/606321/" target="_blank">U.S.-China trade war</a> or the pandemic, businesses have learned that they cannot succeed alone and must prioritize supplier relationship management (SRM). Against volatile consumer demand and economic uncertainty, SRM is perhaps the single most critical differentiator that will decide supply chain success or failure.</p> <p>To successfully digitize supply chain inspections and assert strong SRM, businesses must loop suppliers into a computer-based collaborative network so they can bring together entities that are autonomous, geographically distributed and heterogenous in their operations. While entities may vary in culture, values and social capital, a collaborative network brings them together on a computer network so they can better achieve common goals.</p> <p>A collaborative network allows a business to bring their suppliers on board the digital transformation journey. This way, meaningful benefits are unlocked for all parties. For example, a digital inspection program can be bolstered by innovative features such as integrated inspector apps, actionable insights, automation tools, configurable workflows, API integration and interactive reporting. To strengthen supplier onboarding, many digital platforms also offer training courses on operational workflows and best practices.</p> <p>In <a href="https://www.qimaone.com/" target="_blank">QIMAone&rsquo;s annual survey</a>, supplier communication and quality were cited as serious issues by 59% and 41% of respondents, respectively. However, compared to their peers, businesses with highly digitized supply chains cut concerns of supplier communications and quality in half, according to QIMA data. Providing collaborative training and onboarding as part of digital transformation will help businesses overcome challenges and future proof their SRM framework, instilling the supply chain with the &ldquo;3Ts&rdquo; of trust, transparency and teamwork.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/machine-learning" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Machine Learning</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/qima" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">QIMA</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/china" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">China</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Five Technologies to Future Proof Supply Chain Inspections - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/five-technologies-to-future-proof-supply-chain-inspections"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 16 Nov 2021 02:00:00 +0000 Sébastien Breteau 2084 at https://www.futureofsourcing.com https://www.futureofsourcing.com/five-technologies-to-future-proof-supply-chain-inspections#comments New Trends and Challenges For Sourcing https://www.futureofsourcing.com/new-trends-and-challenges-for-sourcing <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/New%20Trends%20and%20Challenges%20For%20Sourcing.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/New%20Trends%20and%20Challenges%20For%20Sourcing.png" title="New Trends and Challenges For Sourcing" class="colorbox" rel="gallery-node-2056-S4nvdvkyBew"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/New%20Trends%20and%20Challenges%20For%20Sourcing.png?itok=LBX2Mjbf" width="624" height="325" alt="New Trends and Challenges For Sourcing" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>New Trends and Challenges For Sourcing</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/the-three-pillars-of-successful-supply-chain-risk-management">The Three Pillars of Successful Supply Chain Risk Management</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>With the <a href="https://www.wsj.com/articles/global-recovery-accelerates-but-delta-variant-clouds-outlook-11627034563" target="_blank">COVID-19 Delta variant threatening pandemic recovery</a> around the world, brands that source products globally are facing supply chain challenges in a business landscape mired by transit limitations, factory shutdowns, surging shipping costs, delays, labor shortages and rampant supply shortages. As brands shuffle to meet volatile consumer demand, recent data on <a href="https://www.qima.com/qima-news/2021-q3-barometer-china-recovery-slows" target="_blank">inspection activity</a> and digital transformation initiatives outline the most recent trends that are reshaping sourcing and supply chain strategies.</p> <h2>Virus Resurgence Threatens China&rsquo;s Remarkable Rebound</h2> <p>Building on momentum after a promising first quarter, China&rsquo;s sourcing footprint continued to gain ground through the second quarter and recorded growth that exceeded 2019 levels, according to a <a href="https://www.qima.com/qima-news/2021-q3-barometer-china-recovery-slows" target="_blank">quarterly inspection and audit report.</a></p> <p>Demand for inspections and audits in China expanded by a colossal 34% year-over-year (YoY) in the second quarter of 2021, which represents 21% growth when compared to the same time period during 2019 &ndash; long before the COVID-19 pandemic tore apart global supply chains.</p> <p>However, with the world still entrenched in the pandemic and all eyes on the Delta variant, China&rsquo;s stunning rebound is putting a gentle foot on the brakes. The pace of expansion decelerated through the second quarter, slowing from 25% growth in April (compared to 2019 figures) down to 20% growth in May and then 17% growth in June.&nbsp;</p> <p>Unfortunately for China, the interest of Western buyers in its sourcing largely follows the same downhill trend &ndash; especially for North American buyers. While demand from U.S.-based brands for inspections in China was up by 10% in the second quarter (when compared to the second quarter of 2019), the pace of the rebound has also been losing steam on a month-to-month basis.</p> <p><span style="font-size: 13.008px;">While China&rsquo;s rebound in sourcing has been remarkable, it is worth noting that the recovery has not touched all consumer goods industries the same way. For example, while homewares and electronics recorded double-digit YoY growth in the first half of 2021 (compared to both 2020 and 2019), inspection and audit demand is still trailing behind pre-pandemic levels in some of the country&rsquo;s key sectors, such as eyewear and the clothing (textile and apparel) industries.&nbsp;&nbsp;</span></p> <h2>Sourcing Demand in South Asia Skyrockets</h2> <p>After a disastrous 2020, when clothing brands sat on mountains of <a href="https://www.ft.com/content/f030f125-0a15-4097-bb5f-4b0543544ec3" target="_blank">unsold inventory worth billions of dollars</a>, the textile and apparel sector is in comeback mode. As consumers emerge from quarantines and reenter public spaces, the clothing industry has compensated for its aforementioned reduced interest in China with continued expansion through various sourcing markets elsewhere in Asia.</p> <p>In particular, South Asia&rsquo;s established markets are recording explosive growth, with demand for inspections in textiles and apparel up 81% in India and 66% in Bangladesh in the first half of 2021 when compared to pre-pandemic 2019, according to the quarterly inspection and audit report.&nbsp;</p> <p>Growing demand for textile inspections was also recorded in markets of Southeast Asia (including Cambodia, Indonesia and Vietnam), South and Latin America (including Mexico, Haiti and Guatemala) and the Mediterranean (including Turkey, Morocco, Jordan and Egypt). Markedly, while the latter region has traditionally been favored as a sourcing market for European-based buyers, the second quarter of 2021 saw it recording an uptick in inspections and audits from U.S. buyers.</p> <p>The growth in these alternative markets suggest that brands remain focused on diversifying sourcing from new markets to circumvent sustained pandemic delays and alleviate uncertainties about the future.</p> <h2>Soaring Demand from Western Buyers</h2> <p>As the sourcing industry in multiple sectors and regions continues to defy the pandemic slump and vigorously climbs upward, some markets in Southeast Asia are benefiting from exceptionally high buyer interest. For example, Vietnam, Cambodia, Indonesia and Thailand all recorded double-digit growth in demands for inspections and audits in the second quarter, according to the quarterly inspection and audit report.</p> <p>Cambodia, in particular, remains high on the list of go-to alternative sourcing markets for U.S. buyers. In the second quarter of 2021, volumes for inspections and audits in Cambodia shot up nearly 100% compared to 2020; when compared to pre-pandemic 2019, 2021 volumes in the second quarter still represented a 23% YoY increase.</p> <h2>Digitization Illuminates Blind Spots and Enhances Quality Control</h2> <p>Up to 77% of companies admit to having sourcing blind spots in their supply chains, according to a recent survey of global brands from our digital and technology division QIMAone, and two-thirds report that they don&rsquo;t have streamlined communications in place with their suppliers.</p> <p>When you couple this lack of transparency with supplier delays &ndash; like we continue to see amid pandemic disruptions &ndash; it spells out disaster for a brand&rsquo;s sourcing footprint. Inevitably, to be successful, brands must illuminate these blind spots and achieve end-to-end supply chain visibility, particularly in the inspection process.</p> <p>Being successful on this front may require a shift in operational priorities, however. While pricing and perceived value have traditionally been seen as the main drivers of consumer trends, brands may be surprised to learn how influential quality measures are on the bottom line too. Poor quality costs can add up heftily and account for up to <a href="https://asq.org/quality-resources/cost-of-quality" target="_blank">40% of operational expenses</a> when there&rsquo;s an underlying problem.</p> <p>Moreover, some brands may be unprepared to level up quality control programs in an evolving consumer marketplace. According to a <a href="https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer-sentiment-during-the-coronavirus-crisis" target="_blank">recent survey on consumer sentiment</a>, product quality was found to be a key driver for 40% of younger consumers, suggesting that the focus on quality will continue to sharpen into the future.</p> <p>Considering the mounting prominence of quality, the case for sourcing digitization is quite compelling: 14% of brands say that product quality issues have a &ldquo;very serious impact&rdquo; on their business; but for those with highly digitized supply chains and sourcing processes, this number is cut down to just 7%.</p> <h2>Looking Ahead: Balancing Diversification With Compliance Objectives</h2> <p>Unfortunately, according to historical inspection and audit data, a sudden surge in export volumes has brands diversify sourcing markets &ndash; such as what we&rsquo;re seeing in South Asia and Southeast Asia &ndash; often comes at the cost of quality and ethical missteps, including compromised worker safety.</p> <p>This correlation is once again rearing its ugly head as brands try to move to the other side of pandemic recovery, according to data gathered by structural engineers during field audits at reopened factories. Among the factories inspected for structural, fire and electrical safety thus far in 2021, two-thirds were found in need of remediation, according to the quarterly inspection and audit report. Fire safety was a particularly dire concern, with over half of the factories audited in the first half of 2021 requiring improvements in the near term.</p> <p>Meanwhile, ethical compliance overall continues to plummet at an alarming rate, with average ethical scores dwindling by a further 4% (when compared to the first quarter of 2021) to scrape a three-year low. These troubling figures show that the ongoing specter of the pandemic &ndash; as factories globally struggle to reorganize, recoup and adapt to volatile consumer demand cycles &ndash; threatens to undo much of the pivots and improvements that brands made toward ethical supply chains in the pre-pandemic period.</p> <p>To forge ahead safely and responsibly in today&rsquo;s uncertain sourcing landscape, brands must prioritize human rights, environmental sustainability and quality in their recovery programs &ndash; or risk facing costly lawsuits, hefty fines, operational inefficiencies and irreparable brand damage.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/china" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">China</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/qima" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">QIMA</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/compliance" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Compliance</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digitalization" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digitalization</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="New Trends and Challenges For Sourcing - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/new-trends-and-challenges-for-sourcing"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Wed, 22 Sep 2021 02:00:00 +0000 Sébastien Breteau 2056 at https://www.futureofsourcing.com https://www.futureofsourcing.com/new-trends-and-challenges-for-sourcing#comments