Poor purchasing practices can prevent supplier compliance with company codes of conduct

Poor purchasing practices can prevent supplier compliance with company codes of conduct

A new initiative has been launched to try to improve the purchasing practices of apparel retailers and brands by asking suppliers to rate their performance – with the results listed and shared publicly.

The idea is that sharing this information and making it widely available will create "a race to the top" and help eliminate bad purchasing practices such as putting pressure on a supplier to deliver to short lead times, or make lots of changes to an order, particularly at the last minute – which can lead to problems such as excessive working hours, wage violations and unauthorised subcontracting and increased use of temporary labour.

While Better Buying is still in its feasibility stage, testing of the data input and scoring processes will begin this summer and the initiative is expected to become fully operational next year.

"The purchasing practices of brands and retailers have been discussed for over a decade, yet the challenges for suppliers in accommodating demands for low prices and quick production continue," explains Marsha Dickson, Irma Ayers Professor of Human Services at the University of Delaware, who co-leads Better Buying.

"By providing a way for suppliers to safely voice a wide range of concerns and providing the information publicly, we hope to create a race to the top among brands and retailers as they consider ways to transform their business practices in support of human rights in their supply chains."

The scheme will collect suppliers' anonymous ratings of brands' and retailers' purchasing practices, with these ratings then combined and scored to identify those buyers who perform best.

Suppliers will be asked to rate across different parameters, ranging from whether adequate time has been allowed for production, the extent that actual orders vary from capacity booked, and whether contractually agreed payment and terms have been met. They will also be asked to rate the quality of the relationship they have with their buyers.

Sharing this information on a public platform will also allow buyers to post details about the work they are doing to improve purchasing practices and to respond to their ratings.

"Better Buying will provide more detailed information for brands and retailers on a broader set of purchasing practice issues than has commonly been available in the past," says Doug Cahn, principal of The Cahn Group, who co-leads Better Buying.

A long-time professional in the field of labour and compliance in global supply chains, including a 15-year tenure at Reebok International, he adds: "Better Buying is designed to showcase the buyers with better practices and help companies share and learn about ways to improve. We expect Better Buying to result in better business practices and better protections for workers."

The initiative began in August 2015 with background research on purchasing practices and ways to build a credible rating system. Face-to-face consultations followed with manufacturers in Bangladesh, Cambodia, China, Hong Kong and Vietnam.

A survey of suppliers was used to narrow down potential measures of purchasing practices that would be most important for business success and workplace conditions in factories, and that have readily available data that suppliers would be willing to provide in rating buyers' purchasing practices.

A multi-stakeholder workshop held earlier this month in Geneva identified refinements that can improve the value of Better Buying for all stakeholders – and testing the methodology for inputting and scoring data will begin this summer.

"Ratings systems are becoming increasingly important to socially responsible investment firms and mainstream asset managers," notes Bennett Freeman, former senior vice president, sustainability research and policy at Calvert Investments and chair of the advisory board at the Responsible Sourcing Network (RSN). "Better Buying gets down to the level of core operational functions and has the potential to make a significant impact."

Seed funds have been provided by C&A Foundation, while Fair Factories Clearinghouse is the technology partner for the initiative.