Product testing is a process in transition. Once almost exclusively carried out in-house, there is a growing tendency to outsource it to specialists in the field. Looking ahead, growth is expected to accelerate across the industry as supply chains lengthen and regulations become more stringent.
From mobile phones to fridges, from door frames to double glazing and from X-ray machines to conveyor belts: name almost any engineered product and the chances are that the item and all its components will have been through at least one testing cycle.
The rationale behind this trend is clear. Supply chains are increasingly long and convoluted, with materials and parts often crossing the world several times before being installed. Products are increasingly complex, involving numerous components and complicated mechanics. And regulation is increasingly onerous.
Against this backdrop, testing is a must, not just to make sure that products work, but also to prevent safety glitches and ensure regulatory compliance. The stakes are high. With everyday consumer goods, such as laptops, irons and toasters, customers expect them to work, and they will punish manufacturers if products are below par. And in mission-critical industries, the consequences of failure can be catastrophic.
In October 2018 and March 2019, for instance, two Boeing 737 Max planes were involved in fatal crashes, in which hundreds of people died. After the second crash, the fleet was grounded by aviation authorities and airlines around the world, subject to safety tests.
“Regulation and the risks associated with non-compliance are the main drivers of our business,” says Lyn Trimble Carson, director of compliance testing at PwC UK. “More companies are operating globally, and this naturally increases their exposure to varied regulatory systems. Vast regulatory reform has also taken place over the past decade, with most jurisdictions now hosting deeper and far more punishing regimes than those that existed before the financial crash.”
Testing is a must, not just to make sure that products work, but also to prevent safety glitches and ensure regulatory compliance
High-profile disasters can provoke action, too. The Grenfell Tower tragedy of 2017 and the Notre Dame fire earlier this year have encouraged regulators to tighten requirements around the processes, materials and equipment used in construction and building products.
“Testing is very important to make sure that these things absolutely don't happen,” says Charles Noall, chief executive of Element Materials Technology, a global materials testing and product qualification specialist. “There are changes in requirements about how specific products related to fire safety are being tested, and that's increasing the volume of testing.”
Bridgepoint-backed Element works across several sectors, including fire and building, oil and gas, and aerospace and transportation. A leader in its sector, Element operates industry-accredited laboratories, including state-of-the-art equipment and services. This carries weight, as market-leading customers often carry out regular inspections of suppliers’ facilities to ensure they are top of the range.
“The trend has been moving in favour of more stringent testing for many years now, and increasingly, businesses are outsourcing testing to companies that have specialist expertise,” Noall says.
Surge in activity
The aircraft industry exemplifies this development. Testing is performed at every stage of the manufacturing process and concerns have understandably deepened in recent months.
“When a plane is built, first you need to test the raw materials, then the alloy, then the semi-finished component, and finally you test and inspect the finished product,” Noall explains. “We test components to make sure they will perform as expected, and with a view to their life cycle, too: how long they are going to perform to the right standards?”
Element also employs industry experts, who can advise customers on whether their products are fit for their purpose and help them to fix discrepancies if any are detected. These experts can also perform a useful role before goods hit the market, as testing is crucial to research and development (R&D). In the automotive sector, for example, the move towards hybrid, electric and semi-autonomous cars has prompted a surge in testing activity.
“We work with the big three automotive manufacturers in Detroit, who are all developing new capabilities and technologies. There are new entrants coming into the market, too, such as Tesla, bringing disruptive technology into what has historically been a rather staid industry,” says Noall.
Regulatory drivers will ensure that the total market will continue to grow and that the proportions will change in favour of the outsourcers
Traditionally, R&D testing has been carried out in-house, but manufacturers are beginning to appreciate that specialists can provide more consistent and effective outcomes.
“The urgent and pressing need to ensure that systems are up to scratch can increasingly only be met by specialisation, in terms of people and technology,” says Trimble Carson. “It’s far more efficient to acquire that specialisation through a partner with pre-existing regulator relationships and a deep subject matter expertise than it is to strike out alone.”
Outsourcing can also improve both the quality of a product and the reputation of the company that makes it.
“We are specialists in running testing laboratories; often our customers are not,” says Noall.
The industry itself is developing, too. Traditionally highly fragmented, there is a move towards greater consolidation, which is a logical step as technologies become more intertwined. Drive-assisted and semi-autonomous cars, for instance, need systems that communicate with the outside world, so car manufacturers now deploy advanced telecommunications technology within their vehicles. This is a significant leap for the automotive industry: the car has remained fundamentally the same for a century, and sector-specific testers may not have the requisite telecommunications expertise to provide top-level professional service. In essence, as technology becomes embedded in products across the manufacturing spectrum, through the much-vaunted advance of the Internet of Things, there will be a growing need for cross-industry expertise within the testing field.
Companies have realised that it's much better to have a well-engineered product that goes into service and performs, both reputationally and from a cost standpoint
Given the advance of technology, it is perhaps unsurprising that software testing is growing at speed, driven by constant innovation, cut-throat competition and steep customer expectations. If the software fails, a product can swiftly become unloved and ultimately worthless, so producers are highly focused on delivering the right results – and they recognise that the costs can be high. According to professional services network Deloitte, testing represents as much as 40 per cent of total software development expenditure.
As such, manufacturers are keen to employ testers at the forefront of their field, who are most likely to deliver success.
Qualitest is a global software testing and quality assurance specialist. Acquired by Bridgepoint earlier this year, the business employs artificial intelligence to perform engineering and testing services, mindful that technologies change, security threats evolve and brands need every advantage to stay ahead. Speed is of the essence too: customers do not just need tests to be accurate, they also need them to be quick to keep up with demanding production schedules. Trimble Carson points to PwC’s Cassandra, a digital worker that checks letters written by banks, doing in 15 seconds what takes a person 35 minutes. “Human insight is still crucial though. You still need to have a feel for a business when you’re performing services that are essentially mission critical,” she says.
“When you are testing processes, for example, it helps to understand how someone working for the organisation you’re helping might instinctively react to a situation, and why they have designed an internal process in a particular way,” she adds.
Warranty claims and product recalls are extremely expensive, and today’s hyper-connected world means that even the smallest issue can take flight and become a reputational nightmare. Testing offers the best guarantee against potential faults and growing recognition of this fact is translating into solid performance across the premium testing industry. “Companies have realised that it’s much better to have a well-engineered product that goes into service and performs, both reputationally and from a cost standpoint. Poor products in the market will be much more costly to maintain,” says Noall.
The urgent and pressing need to ensure that systems are up to scratch can increasingly only be met by specialisation, in terms of people and technology
The testing sector has shown a certain resilience, too, with premium firms defying the ebbs and flows of the investment cycle. Looking ahead, positive momentum is likely to persist, but it will also evolve as products become ever more complex, customers become more demanding and regulators strive to ensure that goods are both functional and safe. “The future of this sector is likely to see increased specialisation as compliance continues its steady creep up the risk agenda,” says Trimble Carson.
Today, the global quality assurance market is valued at around $250 billion, yet only 20 per cent of that is outsourced. This is widely expected to change over time. “Regulatory drivers will ensure that the total market will continue to grow and that the proportions will change in favour of the outsourcers,” says Mike Allen, head of research at investment bank Zeus Capital. “The trend to outsource is seen across the globe. As standards are harmonised, it makes sense to have a consolidated operator that can do cross-border testing.” n