AI’s 2018 Q1 Barometer offers a collection of unique insights on the state of sourcing, quality and compliance in 2017, as well as the trends that will shape the sourcing landscape of 2018. The analysis is based on the findings of AI Annual Global Sourcing Survey of 250+ companies working across 8 regions and 7 consumer products segments, as well as data gathered in the course of 250,000 inspections, lab tests and audits performed in 85 countries in 2017.

1. WHAT DOES 2018 HOLD FOR
GLOBAL SUPPLY CHAINS?
AI 2018 Q1 BAROMETER

2. GLOBAL SOURCING TRENDS: CHINA
MAINTAINS LEADERSHIP WITH PROMISE OF
FURTHER GROWTH IN 2018
* Source: 2018 AI Global Sourcing Survey of 250+ businesses
China inspection
volumes
+9% 50%
AI clients expect to
source more from
China in 2018*

3. GLOBAL SOURCING TRENDS:
CHINA’S COMPETITION IN THE ASIA PACIFIC
DEMANDFORINSPECTIONSRISESINASIAPACIFIC
Vietnam remains a strong regional
competitor for Footwear
+12%CAMBODIA
SOUTH KOREA +25.9%
+19.3%THAILAND

4. SOURCING DIVERSIFICATION CONTINUES
Inspection
volumes in the
SOUTH AFRICAN
region expand
by +11% YoY in
2017
Sourcing from
LATIN AMERICA
expected to
increase among
AI clients

5. GLOBAL SOURCING EXPECTATIONS
FOR 2018 AND BEYOND
Trade policy uncertainty named as the most
impactful factor for supply chains in 2018-2020
Technological trends (automation, big data, 3D
printing) viewed as less influential by comparison

6. TOP SOURCING CHALLENGES OF 2018:
COST AND QUALITY
Cost of production
and raw materials
named the top
sourcing challenge
of 2017 and 2018
Product quality
expected to be a
greater concern in
2018

7. ETHICAL COMPLIANCE REMAINS
CAUSE FOR CONCERN
Ethical scores
down by 4%
Share of critically
non-compliant “Red”
factories up to 32%
(vs. 27% in 2016)
Food industry
shows strongest
deterioration, with
11% drop in ethical
scores compared to
last year
Most businesses’ views on compliance are overly
optimistic and in stark contrast to factual audit data

8. SUPPLY CHAIN VISIBILITY REMAINS A STRUGGLE
ONLY 11%
of companies have full
supply chain visibility
89%
Blind spots present in
89% of supply chains
ONLY 55%
An average business
knows only 55% of
their suppliers
(38% for SMEs)

9. IN-FACTORY PRODUCT QUALITY
SHOWS OPTIMISTIC TREND
of products outside
AQL in 2017 vs.
27% in 2016
23% 70%
of AI clients reported
an improvement
in product quality
during past 12 months

10. QUALITY PERFORMANCE BY INDUSTRY
WORST PERFORMER:
Textiles and Apparel
33% Beyond AQL
MOST IMPROVED:
Toys and recreational products
(5-point drop in Beyond AQL)

11. PRODUCT SAFETY AND COMPLIANCE
PROVES DISAPPOINTING IN 2017
OF AI CLIENTS SAY THEIR PRODUCT SAFETY
AND COMPLIANCE IMPROVED IN 2017
54%ONLY
REPORT A DETERIORATION IN PRODUCT
COMPLIANCE COMPARED TO 20164%

12. US VS. EU: DISPARATE PERFORMANCE IN LAB
TEST FAILURE RATES
DOUBLED FOR PRODUCTS
INTENDED FOR THE US
Banned
phthalates
found in
9.0%
8.1%
contained
unacceptable
levels of
heavy metals
REACH COMPLIANCE (EU)
IMPROVED BY 35%
COMPARED TO 2016:
Phthalate
content: 3.5%
failed tests
Heavy metal
content: 3.2%
failed tests

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