Buyers pressurising garment suppliers financially, report says

Majority garment suppliers have been affected by high-pressure cost negotiation strategies, impacting their social, environmental, quality, and other compliance performance, says a report by Better Buying. Supported by C&A Foundation and Humanity United, Better Buying is the first initiative to focus on empowering suppliers and amplifying their voices.

Following the spring launch of the Better Buying Purchasing Practices Index (BBPPI), the second report has focused on identifying industry's efforts to improve purchasing practices in supply chains globally.

The index includes ratings from 319 suppliers across 38 countries and measures the performance of 67 retailers and brands. Buyer performance has been measured against seven key categories of purchasing practices namely planning and forecasting, design and development, cost and cost negotiation, sourcing and order placement, payment and terms, management of the purchasing process, and win-win sustainable partnership.

The use of negotiation strategies has increased since the last report. Some of the negotiation strategies include not paying for samples (61.4 per cent), not paying on time (only 64.5 per cent of retailers and brands paid bulk order invoices on time) or not paying the full price as indicated in a purchase order (27.3 per cent). Over 20 per cent of suppliers indicated that fewer than 80 per cent of the orders received from retailers or brands were priced to cover the cost of social, environmental, quality, and other compliance requirements.

"From these actionable insights, retailers and brands can work to streamline their operations, create stronger partnerships with suppliers and monitor their efforts over time. In fact, a few brands have informed us that they have set up internal improvement projects based on the BBPPI results. Similarly, suppliers can better evaluate current and potential customers and business partners and understand how to allocate resources more efficiently. Suppliers that rate their customers help provide retailers and brands with critical information needed to drive purchasing practices improvements over time," Marsha Dickson, co-founder, said.

The index has incorporated data submitted anonymously by suppliers through its online platform to rate the purchasing practices of buyers within the apparel, footwear, and household textiles industries globally. The findings highlight an urgent need for retailers and brands to ensure their negotiation processes promote fair and sustainable partnerships. The report reveals that suppliers experience increasingly more financial pressure from their customers.

Interestingly, the index has revealed a significant difference between European and North American practices. North American retailers forecast more consistently and accurately than European retailers, which enhances the ability of suppliers to plan its productions. Industry-wide transformation of purchasing practices demands action, the report stated.