Strategic Drivers and Technological Evolution in the Dynamic Test, Inspection, and Certification (TIC) Sector.
The acquisition of Lloyd’s Register Quality Assurance (LRQA) by Goldman Sachs serves as a poignant illustration of the burgeoning opportunities within the test, inspection, and certification (TIC) sector, currently valued at a staggering US$250 billion.
Raymond James Investment Services emphasises that an estimated US$100 billion of this market is outsourced to service providers, underscoring the sector's pivotal role in ensuring product quality, compliance, and safety across global supply chains.
Over the past two decades, significant mergers and acquisitions have reshaped the TIC landscape, particularly in Europe, where 48% of acquisitions have been located. However, the recent purchase of LRQA by USA-based Goldman Sachs signifies a notable shift, amplifying the strategic drivers fuelling this sector's evolution.
Strategic Forces Steering TIC Acquisitions:
Sustainability: The increasing significance of Environmental, Social, and Governance (ESG) factors is evident in recent acquisitions. Goldman Sachs' emphasis on LRQA's strong ESG capabilities signals a growing focus on sustainable quality within the industry. TIC service providers such as Bureau Veritas, DNV, and SGS are aligning their offerings with global campaigns emphasising sustainable practices.
Digital Assurance: The acquisition of LRQA is envisioned to accelerate the transformation into a digitally enabled assurance provider. Forecasts suggest that digital technologies will significantly impact 40% to 60% of the current TIC market over the next decade. However, implementing seamless digital assurance systems remains a challenge, despite promising opportunities.
Regulation: Governments worldwide are recognising the value of voluntary TIC in enhancing regulation and competitiveness. Initiatives like the USA FDA's strategy for imported food safety and the UK Government's White Paper on Regulation for the 4th Industrial Revolution emphasize the role of voluntary standards in expediting safe innovation.
Implications for Various Stakeholders:
Quality Assurance Functions: Digital assurance technologies sought by TIC firms will be accessible directly to industry and sector schemes. In-house quality assurance functions and regulators can harness these technologies for managing intricate value chains.
Management System Standards Writers: Evolving performance evaluation methods may necessitate a reevaluation of frameworks like Annex SL that underpin management systems.
Auditors: Accreditation sectors will play a pivotal role in ensuring trust and transparency amid evolving demands. However, adaptation to digitally driven "Assurance 4.0" will require new skill sets for interpreting data and systems.
While fully automated digital assurance remains on the horizon, the sector is witnessing increased competition from digital-focused TIC entities, as indicated by the BCG report. As the industry strides toward digital transformation, stakeholders across the TIC landscape are poised for a paradigm shift that promises both challenges and opportunities.
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