|The Quality Executive Board Identifies Best Practices and Major Risk Factors for Managing the Quality of Goods Sourced from China|
While Keenly Aware of the Risks, Many Companies Do Not Actively Manage and Monitor Their Chinese Suppliers and Most Lack the Ability to Fully Trace Faulty Imported Goods or Replace Their Suppliers in a Crisis
WASHINGTON--(BUSINESS WIRE)--Sept. 25, 2007--The Quality Executive Board (QEB), a leading provider of best practices research, executive education, and decision-support services to Chief Quality Officers and senior process excellence leaders today announced the results of a groundbreaking survey, Supplier Quality Management Practices for China, which highlights best practices and major risks for companies sourcing from China. The QEB is a membership program of the Corporate Executive Board (NASDAQ: EXBD) (http://www.exbd.com), the premier network for leaders of the world's largest public and private organizations.
Seeking to help executives at large companies benchmark their supplier quality management practices for China and to identify common challenges, the QEB undertook an extensive survey of current practices and perceived risk factors. The Board's analysis reveals that there is still no substitute for having a good team on the ground: Companies who are most confident about their Chinese suppliers rigorously screen and qualify those suppliers. In-person plant visits are universally popular and viewed as highly effective. While all respondents agree that the most effective way to monitor suppliers on a continuous basis is to have company staff placed at the Chinese supplier, only 17% of companies employ this method. Other key findings include:
-- Nearly 20% report that the cost of sourcing from China can at times exceed the savings: One-fifth of companies report the total costs of managing and ensuring supplier quality in China frequently or occasionally exceed the labor cost savings. -- Only about a quarter of companies have contingency plans to replace their Chinese suppliers: Companies voiced significant concerns with Chinese suppliers, including poor product quality, loss of data privacy, intellectual property violations, and reputation risks such environmental pollution, product safety issues and human rights violations. Yet most had no contingency plans in place to replace their Chinese suppliers or could only replace some of their Chinese suppliers in the event of a crisis. -- Companies have great difficulty maintaining traceability of goods sourced from China: Only a quarter of respondents report certified full traceability down all tiers of their supply chain.
CEB Program Director Peet van Biljon says, "The research suggests that no company can be complacent about the products and materials they source from China; we are just beginning to understand the full magnitude of the Chinese sourcing problem."
The survey was taken by member companies of the Quality Executive Board and its sister programs, the Procurement Strategy Council (PSC) and the Manufacturing Leadership Board (MLB). It is part of and ongoing QEB research program to identify and document best practices in Supplier Quality Management.
Sixty large companies representing a broad cross-section of industries responded to the survey. More than half of these companies are either Fortune 500 or Global 500 companies and the 60 companies have a combined revenue of over $1.2 trillion dollars.
About the Corporate Executive Board
The Corporate Executive Board Company (NASDAQ: EXBD) is a leading provider of best practices research and analysis focusing on corporate strategy, operations, and general management issues. EXBD provides its integrated set of services currently to more than 3,700 of the world's largest and most prestigious corporations, including over 80 percent of the Fortune 500. These services include best practices research studies, executive education seminars, management implementation toolkits, customized research briefs, and Web-based access to a library of over 300,000 corporate best practices.
CONTACT: Corporate Executive Board Joni Renick, 202-777-9499 email@example.com www.executiveboard.com SOURCE: Corporate Executive Board