GLOBAL - Perceived cost barriers to improving product safety are unfounded, according to new independent global research which suggests that escalating consumer demand coupled with substantial annual recall costs, mean investing in enhanced product safety should not only improve consumer wellbeing but drive commercial success.
The research, conducted by testing, inspection and certification services provider TÜV SÜD, is the first to investigate product safety practices alongside consumer attitudes and experiences in the consumer electronics, children products and food and beverage sectors. Undertaken in the United States, the United Kingdom, China, India and Japan – markets that represent almost half of worldwide GDP – the research included surveys of more than 5,000 consumers and 500 management-level employees in manufacturers, distributers and retailers.
Tackling product safety to address consumer concerns
Results of the TÜV SÜD Safety Gauge research indicates increased consumer concern about product safety, with 63% of those surveyed stating that product safety is very important to them now, up from 47% in 2007.
Furthermore, 51% of consumers stated they have experienced unsafe products in the last five years. Cuts from sharp edges (24%), allergic reactions (21%) and injuries from product design (18%) were the most common causes.
In addition, at least 58% of the consumer respondents did not think that government legislation, including penalties on companies that fail product safety, are strict enough.
However, companies surveyed appeared to be more cost-conscious rather than safety-conscious, and estimated they would need to increase production costs by 19% to achieve the highest safety standards available. Yet, they admitted that with current standards in place they have had to conduct an average of 10 product recalls in the last five years alone at a cost of nearly 10% of revenue.
About one third of companies surveyed agreed that their own company’s awareness of safety practices is low and around 47% believe product safety is a serious issue in their industry. In addition, half of manufacturers, distributers and retailers do not undertake any form of independent testing on their products, despite the fact that more than 80% of consumers consider third party testing important.
Companies held back by cost should reconsider their safety standards and practices though.
Responses from the surveyed consumers suggest that improving safety standards makes commercial sense as the respondents listed safety as one of the most important criteria when purchasing a product, above brand.
Nearly 77% also said they are willing to pay an average premium over standard prices of 16% for products that achieve exemplary safety standards.
“The results indicate companies are overestimating the cost required to achieve exemplary safety standards,” said Ishan Palit, Chief Executive Officer, TÜV SÜD Product Service Division. “From our experience, attaining the highest safety requires significantly less than an increase of 19% in production costs.
“Furthermore, in some instances, increases in production costs are not required at all. For example, many companies we work with have improved the safety of their products by tightening the quality and safety requirements imposed on suppliers, and thereby improving the safety standards throughout the entire value chain.“
Palit continued, “It is beneficial for all companies to investigate the potential for implementing such initiatives, bearing in mind the cost of product recalls extends beyond the physical act into reputational damage and reduced future sales.”
One other area for improvement highlighted by consumers is in information dissemination, with increased calls for more transparency in product safety labelling. Nearly 29% said they don’t understand product safety labels at all at present, suggesting companies that adhere to high standards could achieve a competitive advantage by more clearly communicating their products enhanced safety on packaging.
The current state of safety
Encouragingly, the study suggests significant improvements to product safety practices have been made over the last five years in major manufacturing markets across the world. However, 56% of organisations are still unable to trace all Components in their products throughout their supply chain and about 47% cannot guarantee that the entire supply chain meet product safety requirements.
Palit said, “The complexity of modern supply chains in terms of both depth and geographic reach has made it increasingly difficult for organisations to trace all of the Components in their products. However, complete traceability is not impossible and must be pursued because the first step to solving an issue is identifying the source of the problem.
“Companies are working hard to improve product safety. However, the results of this research indicate that the issues highlighted such as limited component traceability, independent testing and awareness of basic safety practices are common across major manufacturing hubs.
“Hopefully this study will go some way to helping organisations understand that high product safety levels not only enhance consumer wellbeing but add genuine value to products and mitigate risk. These attributes are essential for remaining competitive and profitable in today’s fragile economic times,” he concluded.