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Suppliers facing issues due to unilateral buyer decisions
15 Apr '20
2 min read
Pic: Better Buying
Suppliers are facing a devastating range of issues stemming from unilateral decisions made by buyers without regard for the resulting impacts on suppliers, according to a recent survey by Better Buying. The survey elicited responses from 294 suppliers from 39 countries about the supply and demand challenges they are experiencing due to the COVID-19 crisis.
It also asked questions about how their buyers’ purchasing practices are further affecting business and workers. Better Buying is funded by C & A Foundation and Humanity United.
However, collaborative efforts that some buyers are taking to help ease the pressure on supplier businesses and workers provide examples that others can follow during crisis management and recovery, the survey found.
Better Buying’s guidelines highlight critical steps for buyers to take now and in the near future to help support resilient supply chains that can weather the pandemic-created storm and be ready to meet demand when it returns.
While best practices can be difficult to discern, some suppliers reported ways their buyers are helping them wade through this difficult time.
Cancellation of orders is by far the biggest impact suppliers are experiencing with 70 per cent reporting their buyers have pursued this approach to addressing cash flow problems. Reduction in volumes of existing orders, postponing the shipment dates of existing orders and changing forecasted volumes are examples of other brand and retailer practices that are negatively affecting a majority of suppliers’ businesses now and will continue to do so for several months.
In terms of impact on workers, the most prominent has been the reduction in hours of work or underemployment as reported by 35 per cent of suppliers; another 29 per cent report workers have been laid off, though the current impact on workers vary in different regions of the world.
In the short term, it is critical for buyers to help manage the supplier cash flow crisis. A first critical step will be for buyers to use whatever formal financial mechanisms are available to secure the cash needed to cover their accounts payable to suppliers, which includes paying for existing orders, Better Buying said in a press release.
It also asked questions about how their buyers’ purchasing practices are further affecting business and workers. Better Buying is funded by C & A Foundation and Humanity United.
However, collaborative efforts that some buyers are taking to help ease the pressure on supplier businesses and workers provide examples that others can follow during crisis management and recovery, the survey found.
Better Buying’s guidelines highlight critical steps for buyers to take now and in the near future to help support resilient supply chains that can weather the pandemic-created storm and be ready to meet demand when it returns.
While best practices can be difficult to discern, some suppliers reported ways their buyers are helping them wade through this difficult time.
Cancellation of orders is by far the biggest impact suppliers are experiencing with 70 per cent reporting their buyers have pursued this approach to addressing cash flow problems. Reduction in volumes of existing orders, postponing the shipment dates of existing orders and changing forecasted volumes are examples of other brand and retailer practices that are negatively affecting a majority of suppliers’ businesses now and will continue to do so for several months.
In terms of impact on workers, the most prominent has been the reduction in hours of work or underemployment as reported by 35 per cent of suppliers; another 29 per cent report workers have been laid off, though the current impact on workers vary in different regions of the world.
In the short term, it is critical for buyers to help manage the supplier cash flow crisis. A first critical step will be for buyers to use whatever formal financial mechanisms are available to secure the cash needed to cover their accounts payable to suppliers, which includes paying for existing orders, Better Buying said in a press release.
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