Executive Briefings

Consumers' Concern About Product Safety Impacts Manufacturers' Supply Chains

A survey that examines manufacturer and consumer perceptions about how products are made, sold, bought and consumed reveals a focus on quality, supply chains that are more transparent than ever but a decline in overall optimism, according to Underwriters Laboratories.

The findings in this year's The Product Mindset survey, culled from interviews with manufacturers and consumers in the United States, China, Germany and India, show a steep decline in optimism and increased expectations about quality, safety and the environment. These expectations are driving more complex supply chain dynamics, where traceability and sourcing are the tools manufacturers are leveraging to help deliver reliable, cost-effective products that consumers are demanding.

"The volatility in today's world is causing companies and people to look at the products they make and consume with more scrutiny than ever before," said Keith Williams, UL CEO. "We are seeing manufacturers showcase aspects of their supply chain as consumers demand more transparency. Where a product's made, how it's made and what's in it are paramount."

The study reveals that product safety remains fundamental and that the environmental orientation of a manufacturer's operations and the product features are growing in importance. Specifically, the study highlights the growing concerns about the origins of manufactured products, including where their components and raw materials are sourced.

"It is clear from this year's report that supply chain issues are top of mind for global manufacturers but also in the line of sight of consumers in both developed and emerging economies. The report strongly suggests that these trends will accelerate in the coming years as manufacturers strive to meet consumer demand for increased quality and safety in the things they purchase and use," stated Clyde Kofman, UL chief strategy officer.

Highlights of the report include:

"¢ Sourcing is becoming more global, with 46 percent of manufacturers increasing their sourcing from other countries over the next five years. Seventy-nine percent of those manufacturers note they will add additional countries to their roster versus replacing existing current sources.

"¢ Forty-three percent of manufacturers are not highly satisfied with their ability to expand into new markets.

"¢ Seventy-six percent of manufacturers believe global sourcing is a means to improve product quality, a 19-percent increase from what manufacturers noted last year, reflecting manufacturers' need to enhance competitiveness in a volatile and financially challenged global marketplace.

"¢ Only 30 percent of consumers strongly believe manufacturers use the best possible ingredients, raw materials or components in their products.

"¢ Fifty-seven percent of consumers are aware of which country the products they purchase are manufactured in; yet, 62 percent of consumers believe it is more important to know where a product's parts are from than where a product was assembled.

"¢ Over the next five years, 44 percent of consumers state that knowing where a product is from will become more important.

"¢ On average 48 percent of consumers feel manufacturers have not taken adequate steps to ensure both they and their suppliers are committed to workplace safety and the ethical and fair treatment of workers.

"¢ Less than one quarter (24 percent) of Chinese consumers and less than half of Indian consumers (40 percent) say manufacturers have not taken adequate steps to ensure that both they and their suppliers are committed to the ethical/fair treatment of workers and workplace safety compared with 65 percent of U.S. consumers and 64 percent of German consumers.

"¢ Manufacturers rank quality as the number one most important driver of their success today and number one most important future driver.

"¢ Manufacturers think consumers care most about quality, with 38 percent stating it is the most important issue for consumers.

"¢ Ninety-one percent of manufacturers believe performance testing is becoming more important.

"¢ Consumers cite quality as the number one reason to explain why they select the products they buy.

"¢ Quality also ranks as the first or second most important type of product information for consumers across the food, building materials, high tech and smart appliance categories.

"¢ Consumers are able to demonstrate a nuanced understanding of product safety issues, picking online security as their number one high-tech safety concern, while selecting toxin emissions/indoor air pollution as the number one concern for home building materials.

"¢ Consumers prioritize product safety for products that are in or surrounding their bodies due to the immediate impact to their health or exposure over extended periods of time. Consumers rank product safety as most important to fresh (29 percent) and processed foods (27 percent) and home building materials (23 percent) versus high tech (10 percent) and smart appliances (9 percent). Product safety is also the information consumers most want when considering purchasing food or home building materials, but safety information is not among the top three types of information consumers want for consumer electronics or smart appliances.

"¢ Sixty-eight percent of manufacturers feel it is very important to clearly show consumers what ingredients/components are included in their products.

To obtain the full study with all key findings, click here.

Source: Underwriters Laboratories

The findings in this year's The Product Mindset survey, culled from interviews with manufacturers and consumers in the United States, China, Germany and India, show a steep decline in optimism and increased expectations about quality, safety and the environment. These expectations are driving more complex supply chain dynamics, where traceability and sourcing are the tools manufacturers are leveraging to help deliver reliable, cost-effective products that consumers are demanding.

"The volatility in today's world is causing companies and people to look at the products they make and consume with more scrutiny than ever before," said Keith Williams, UL CEO. "We are seeing manufacturers showcase aspects of their supply chain as consumers demand more transparency. Where a product's made, how it's made and what's in it are paramount."

The study reveals that product safety remains fundamental and that the environmental orientation of a manufacturer's operations and the product features are growing in importance. Specifically, the study highlights the growing concerns about the origins of manufactured products, including where their components and raw materials are sourced.

"It is clear from this year's report that supply chain issues are top of mind for global manufacturers but also in the line of sight of consumers in both developed and emerging economies. The report strongly suggests that these trends will accelerate in the coming years as manufacturers strive to meet consumer demand for increased quality and safety in the things they purchase and use," stated Clyde Kofman, UL chief strategy officer.

Highlights of the report include:

"¢ Sourcing is becoming more global, with 46 percent of manufacturers increasing their sourcing from other countries over the next five years. Seventy-nine percent of those manufacturers note they will add additional countries to their roster versus replacing existing current sources.

"¢ Forty-three percent of manufacturers are not highly satisfied with their ability to expand into new markets.

"¢ Seventy-six percent of manufacturers believe global sourcing is a means to improve product quality, a 19-percent increase from what manufacturers noted last year, reflecting manufacturers' need to enhance competitiveness in a volatile and financially challenged global marketplace.

"¢ Only 30 percent of consumers strongly believe manufacturers use the best possible ingredients, raw materials or components in their products.

"¢ Fifty-seven percent of consumers are aware of which country the products they purchase are manufactured in; yet, 62 percent of consumers believe it is more important to know where a product's parts are from than where a product was assembled.

"¢ Over the next five years, 44 percent of consumers state that knowing where a product is from will become more important.

"¢ On average 48 percent of consumers feel manufacturers have not taken adequate steps to ensure both they and their suppliers are committed to workplace safety and the ethical and fair treatment of workers.

"¢ Less than one quarter (24 percent) of Chinese consumers and less than half of Indian consumers (40 percent) say manufacturers have not taken adequate steps to ensure that both they and their suppliers are committed to the ethical/fair treatment of workers and workplace safety compared with 65 percent of U.S. consumers and 64 percent of German consumers.

"¢ Manufacturers rank quality as the number one most important driver of their success today and number one most important future driver.

"¢ Manufacturers think consumers care most about quality, with 38 percent stating it is the most important issue for consumers.

"¢ Ninety-one percent of manufacturers believe performance testing is becoming more important.

"¢ Consumers cite quality as the number one reason to explain why they select the products they buy.

"¢ Quality also ranks as the first or second most important type of product information for consumers across the food, building materials, high tech and smart appliance categories.

"¢ Consumers are able to demonstrate a nuanced understanding of product safety issues, picking online security as their number one high-tech safety concern, while selecting toxin emissions/indoor air pollution as the number one concern for home building materials.

"¢ Consumers prioritize product safety for products that are in or surrounding their bodies due to the immediate impact to their health or exposure over extended periods of time. Consumers rank product safety as most important to fresh (29 percent) and processed foods (27 percent) and home building materials (23 percent) versus high tech (10 percent) and smart appliances (9 percent). Product safety is also the information consumers most want when considering purchasing food or home building materials, but safety information is not among the top three types of information consumers want for consumer electronics or smart appliances.

"¢ Sixty-eight percent of manufacturers feel it is very important to clearly show consumers what ingredients/components are included in their products.

To obtain the full study with all key findings, click here.

Source: Underwriters Laboratories