Suppliers being pressured for lower prices: Better Buying
03 Sep 19 3 min read
Suppliers in the lowest cost locations are being pressured for even lower prices, according to Better Buying Index Report 2019. Better Buying's first ever geographic analysis reveals struggles faced by suppliers around the world, with 38 per cent of Bangladesh suppliers reporting their buyers hold them to last year’s prices, despite inflation and rising wages.
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Better Buying's report, the third such report, is designed to empower sustainable business between buyers and suppliers within the apparel, footwear and household textile industries and to improve purchasing practices in supply chains globally. The most recent findings highlight the longstanding sourcing strategies used across geographical locations and the varied ways that suppliers are pressured.
The report shows that locations with the lowest production costs, such as South-East Asia and Bangladesh, experience the highest pressure from their customers to lower prices. Moreover, results demonstrate that the longer retailers / brands and suppliers are in a business relationship together, the more suppliers experience pressure on cost negotiations.
On the other hand, geographical locations with reputations for concerning workplace conditions are incentivised for compliant production (63 per cent in Bangladesh), while locations such as the United States are hardly given any incentives for being compliant with buyer codes of conduct (19 per cent).
"Better Buying believes that retailers / brands and their suppliers need to come together in new, truly strategic partnerships that draw on each partner’s core competencies and strengths to create supply chains designed to meet volatile market demands. These supply chains will also need to contribute positively to the environment and people making our products," the global initiative said.
“These practices and their associated challenges are the result of decades of cooperative business relationships between buyers and their suppliers. Nevertheless, it needs to change toward more balanced relationships with all suppliers. Better Buying supports retailers / brands and their suppliers in making this transition, bringing insights from both parties into strategising for improvements. By providing expanded transparency between supply chain partners and facilitating dynamic, solutions-oriented feedback, we change processes that deliver meaningful social, environmental, and business impacts,” said Marsha Dickson, president and co-founder, Better Buying.
The Better Buying Purchasing Practices Index includes 802 verified ratings from 715 suppliers across 52 countries, and measures the performance of 71 retailers and brands. This is a sharp increase from the last index in 2018, which saw participation from 319 suppliers across 38 countries and included 67 retailers and brands. Buyer performance is measured against seven key categories of purchasing practices: 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. (RKS)
Fibre2Fashion News Desk – India
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