• Better Buying has published a report based on its new Purchasing Practices Index (BBPPI).
  • It found that the length of a relationship between buyers and suppliers does not have an impact on the nature of buying practices.
  • Over 60% of suppliers are not incentivised for being compliant to buyer codes of conduct.
Having a long-term relationship with a supplier does not improve purchasing practices

Having a long-term relationship with a supplier does not improve purchasing practices

The length of a relationship between buyers and suppliers has little impact on the nature of buying practices, new research has found, with many suppliers finding little incentive to be compliant to buyer codes of conduct.

The findings are from a benchmark report published by Better Buying based on its new Purchasing Practices Index (BBPPI), designed to support apparel, footwear and textile industry efforts to improve purchasing practices in supply chains globally. It uses ratings from 156 suppliers across 24 countries and measures the performance of 65 buyers.

Claimed to be the first independent global index, the data is submitted anonymously by suppliers through the Better Buying online platform against seven key categories: planning and forecasting; design and development; cost and cost negotiation; sourcing and order placement; payment and terms; and management of the purchasing process.

Contrary to expectations, the outcome of the benchmark report proves that the length of a relationship between buyers and suppliers does not have an impact on the nature of buying practices. This means that it doesn't matter whether buyers have had relationships with suppliers for one, five, or even 20 years – suppliers experience generally the same purchasing practices.

Furthermore, the report found that over 60% of suppliers are not incentivised for being compliant to buyer codes of conduct, while it also indicates that incentives are essential to improving purchasing practices.

"Current business practices are unsustainable and need to be overhauled if we expect companies to achieve financial, environmental, and social sustainability goals," said Marsha Dickson, PhD, Better Buying co-founder. "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."

The scores reveal that while buyers are performing well in some areas, improvements are needed in others. The average overall score for buyers in this cycle was 2.5 stars, with scores ranging from 0 to 5 stars.

Payment and terms, which measures whether suppliers are paid on time and at the price agreed in the contract, was the best performing category across the board. It received an average score of 4.5 stars.

Sourcing and order placement was the worst performing category across the board, with an average score of 0 stars and the highest score reaching only 3.5 stars.

The report also found improvements in the planning and forecasting category are needed. Nearly four out of ten buyers didn't ask their suppliers to reserve capacity in advance, confirming that a large amount of business comes from buyers chasing last-minute production. Open-to-buy is an increasingly large part of buyers' business and a challenging one for suppliers.

Overall scores revealed a better performance for buyers who ordered directly from the supplier (2.5 stars) as compared with buyers using a third party (2 stars).

"Good communication and dialogue between buyers and suppliers is critical in bringing products to market," the report explains. "It can be concluded that a direct line of communication between the buyer and supplier is more efficient than involving a third party, and is especially critical in the design and development phases where the style, fit, and quality details of the product are refined."

The report suggests that by using the information generated by Better Buying, brands can identify how their buyers, product developers, and employees responsible for bringing product to market can improve their day-to-day business activities, thus helping their suppliers uphold better labour standards.

"The impact of poor purchasing practices on suppliers and the inefficiencies they cause for buyers pose material and reputational risks, and threats to workers in supply chain relationships," it explains. "Without predictable business, adequate production time, mutually beneficial financing, and incentives for suppliers helping to achieve shared goals, there can be no sustainable business for suppliers or buyers."

It offers a number of recommendations for buyers:

  • Improve the predictability and consistency of business with suppliers
  • Offer and maintain enough time for production
  • Eliminate financial tactics that erode suppliers' abilities to cover the costs of business
  • Support and incentivise suppliers' sustainable business operations.