2Sustain

A new quarterly report from Boston-based AMR Research shows that the down economy, brand threats, and product quality failures continue to be the key challenges facing global supply chains today.

Specifically, lower consumer spending ranks as the number one supply chain risk this quarter, according to 37% of the companies that participated in the AMR Research survey. 35% of respondents identified product quality failures as the second top risk. Volatile energy prices came in at number three.

The report also provides insight regarding the methods companies are using to mitigate risks and which of these methods are proving successful. AMR Research found that the most popular strategy used to mitigate risks is collaboration with trading partners. Almost half (48%) of survey respondents said they’re utilizing this strategy; 18% identified it as their most successful method for risk mitigation.

AMR Research also asked companies about their plans for global sourcing and manufacturing. Not surprisingly, survey respondents identified China as the country that introduces the most risk to supply chains. But even so, China continues to be attractive because of its lower labor costs (cited by 51% of those participating in the survey), lower material costs (26%), and reach to a developing consumer market (12%).

The report includes data that indicates that India, with its burgeoning middle-class consumer base and increasing cost competitiveness for both materials and labor, is emerging as an up-and-coming alternative to China. However, the survey results also show that India’s immature physical infrastructure remains a major stumbling block for global firms looking for sourcing and manufacturing options.