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'60% suppliers not incentivised for code of conduct'
May '18
Over 60 per cent of the suppliers are not incentivised for being compliant to buyer codes of conduct, in spite of the incentives being essential for improving purchasing practices, according to a recent report. The report also says that the length of a relationship between buyers and suppliers does not have an impact on the nature of buying practices.

It does not matter whether buyers have had relationships with suppliers for one, five, or even 20 years – suppliers experience generally the same purchasing practices, says the first Better Buying Purchasing Practices Index (BBPPI) report.

The BBPPI finds room for all companies to improve, as well as evidence of good practice. The report notes that the average overall Better Buying score for buyers was 2.5 out of 5 stars (scores were awarded using a 0 to 5-star rating system), meaning that the kinds of practices suppliers face result in significant challenges. In most cases, suppliers were paid on time and at the price agreed upon (4.5 out of 5 stars for payment and terms), while the worst performing category was sourcing and order placement with an average of 0, meaning that suppliers were not rewarded for compliance to their codes of conduct and legal requirements and receive highly inconsistent order volumes from month to month.

Buyers scored better where they had a direct relationship with the suppliers rating them compared with buyers using a third party, which is reflected in overall Better Buying scores, cost and cost negotiation, and management of the purchasing process categories. No significant correlation was found between the length of a buyer-supplier relationship and overall Better Buying scores, which implies that a long-term relationship does not improve purchasing practices, adds the report.

Better Buying uses 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. It is designed to support industry efforts to improve purchasing practices in supply chains globally.

“Current business practices are unsustainable and need to be overhauled if we expect companies to achieve financial, environmental, and social sustainability goals. Brands and retailers must provide their suppliers with predictable business, sufficient lead times, fair financial deals, and incentives for compliant factories. The BBPPI empowers suppliers to share concerns about poor supply chain management and the issues they face,” said Marsha Dickson, Better Buying co-founder.

‘’The BBPPI supports brands and retailers, multistakeholder initiatives, investors, and other stakeholders looking to improve purchasing practices. Rather than assessing the policies and procedures of buying companies, it instead measures their impact on suppliers using confidential data-driven surveys,” said Doug Cahn, Better Buying co-founder.

Better Buying, supported by C&A Foundation and Humanity United, is an initiative to focus on empowering suppliers and amplifying their voice. The platform tracks and releases performance scores and analysis about purchasing practices, allowing trends to be uncovered. The benchmark report summarizes the results and key findings from the first cycle of BBPPI data collection carried out in Q4 2017. It includes ratings from 156 suppliers across 24 countries and measures the performance of 65 buyers. 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 CSR harmonisation. (KD)

Fibre2Fashion News Desk – India

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