Better Buying Index Report Spring 2018 - Purchasing Practices Performance in Apparel, Footwear, and Household Textile Supply Chains
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Better Buying Index Report Spring 2018 Purchasing Practices Performance in Apparel, Footwear, and Household Textile Supply Chains
ABOUT BETTER BUYING Better Buying is an initiative that supports industry-wide transformation of buyer purchasing practices to ensure business relationships allow buyers and suppliers to achieve their financial, environmental, and social sustainability goals. Anonymous supplier ratings of buyer purchasing practices are aggregated, scored, and made available to the buyers and suppliers. Ratings are updated every six months and eventually made public along with buyer comments, and examples of best and improving practices. Detailed analytic reports, along with key recommendations, are made available to buyers who have been rated a minimum of five times. Co-founded by Marsha Dickson, Ph.D., and Doug Cahn, Better Buying was launched during an 18-month feasibility study funded by C&A Foundation in 2015 and is currently a project of the University of Delaware. For more information, visit: www.betterbuying.org. Report written by Dr. Marsha A. Dickson, co-founder of Better Buying, with support from Dipti Bhatt, research associate and Doug Cahn, co-founder. Dickson, Marsha A. (2018). Better Buying Purchasing Practices Index, Spring 2018: Purchasing Practices Performance in Apparel, Footwear, and Household Textile Supply Chains. Available at www.betterbuying.org. Copyright 2018, Better Buying. All rights reserved. ACKNOWLEDGEMENTS Better Buying appreciates the support of its primary funder, C&A Foundation, and secondary funder, Humanity United. The opinions expressed are those of Better Buying and do not necessarily reflect the views of its funders. Better Buying Index Report Spring 2018
Contents
Executive Summary 2
1. Introduction 4
2. Methodology 6
CONTENTS
3. Scores and Ratings 14
4. Key Findings 16
5. Conclusions and Recommendations 32
Appendix 38
Better Buying Index Report Spring 2018 1Executive Summary
In recent years, purchasing practices and their impact on suppliers’ ability
to provide decent working conditions have come under increasing scrutiny
worldwide. In recognition of the need for buyers such as brands and
retailers to improve purchasing practices, Better Buying has been created to
support the transformation of buyer-supplier relationships so that all parties
can achieve their financial, social, and environmental sustainability goals.
Better Buying has now launched 4. Sourcing and Order Placement: 7. C
SR Harmonization: measures
a first-of-its-kind index – Better measures if buyers are rewarded the internal alignment of buyer
Buying Purchasing Practices Index for compliance with their codes of companies on corporate social
(BBPPI) – using data submitted conduct and month-to-month order compliance goals and their
anonymously by suppliers through fluctuation. contribution to reducing industry-
its online platform to rate the 5. P
ayment and Terms: measures if wide audit duplication.
purchasing practices of buyers suppliers are paid on time and at
against seven key categories: the price agreed in the original This report summarizes the results
contract. and key findings from the first cycle
1. P
lanning and Forecasting: of BBPPI data collection carried out
6. M
anagement of the Purchasing
measures the extent to which in Q4 2017. It includes ratings from
Process: measures the amount
buyers include suppliers in 156 suppliers across 24 countries
of time offered to the supplier for
production plans, as well as and measures the performance
the development and production
the accuracy of planned orders of 65 buyers within the apparel,
phases in which buyers are required
compared with orders actually footwear, and household textiles
to complete key actions outlined in
placed. industries globally.
a Time and Action Calendar.
2. D
esign and Development:
measures the delay or inaccuracy Buyers have been awarded scores
of technical and production using a 0 to 5-star rating system.
details provided by buyers to
suppliers. This category also
BETTER BUYING SCORE AVERAGE OF ALL SUBMITTED
covers the frequency to which
RATINGS (N=218)
suppliers receive orders for
products they develop. Overall
3. C
ost and Cost Negotiation: Planning and Forecasting
measures if suppliers are Design and Development
given enough funds to
meet buyer expectations, Cost and Cost Negotiation
including production costs and Sourcing and Order Placement
compensation for suppliers to
Payment and Terms
meet buyer codes of conduct and
legal requirements. Management of the Purchasing Process
CSR Harmonization
x
2 Better Buying Index Report 2017 Methodology
Spring 2018 Executive SummaryThe scores reveal that while buyers 1. Current business practices are • M
ulti-stakeholder initiatives
are performing well in some areas, unsustainable and in order to whose members have made
improvements are needed in others. facilitate sustainable supply commitments to responsible
EXECUTIVE SUMMARY
The average overall score for buyers chains, buyers must begin to: purchasing practices and
in this cycle was 2.5 stars. The best • Improve the predictability and improving workplace conditions
performing category was Payment and consistency of their business with can use the BBPPI to measure
Terms with 4.5 stars, while the worst suppliers. their performance across the
performing category was Sourcing seven categories of purchasing
• Offer and maintain enough time
and Order Placement which received practices.
for production.
an average of 0 stars.
• Eliminate financial tactics that 3. The BBPPI is a practical tool for
In addition to presenting the overall erode suppliers’ abilities to cover improvement and will spur a ‘race
Better Buying scores, the report the costs of business. to the top’ across all categories of
delves into the complexities of • Support and incentivize buyers:
buyer-supplier relationships (page sustainable business operations. • A
ll apparel, footwear, and
14 onwards) across each category household textiles buyers can
by taking into account a number of 2. Industry-wide transformation now use the BBPPI to review
factors such as geographic location of buyer purchasing practices their own practices and begin to
and Buyer Type. demands leadership: change their day-to-day practices,
• W
hile the BBPPI has created so that performance in purchasing
The BBPPI provides an internationally an opportunity for suppliers to practices improves over time.
recognized framework for measuring communicate their experiences, • B
uyers from under-represented
purchasing practices, as well more buyers are needed to types such as General Retail and
as an action agenda to promote engage with the process by Department Stores, and their
labor standards and sustainable inviting their suppliers to peers within these types, such as
purchasing practices within supply participate in upcoming rating footwear or active wear buyers,
chains globally. cycles, so they can better should engage with Better Buying
understand their purchasing to gain actionable information as a
The recommendations of this practices and identify areas of basis for making their categories
report are therefore divided into focus for improvement. stand out for best (rather than
three parts: first to reveal best and • D
epartment stores especially are worst) practices.
worst practices and to emphasize encouraged to engage with Better
the need for an internationally Buying so that the BBPPI can
recognized index such as the BBPPI, reflect the experiences of a more
second to highlight the importance representative group of suppliers.
of stakeholder engagement with
• S
uppliers should submit ratings
the index, and third to identify
rather than waiting for invitations
opportunities for buyers to improve
from their buyers. By increasing
their ratings.
the amount of ratings, Better
Buying can improve accuracy,
identify more trends, and provide
a knowledge base from which
improvements can be made.
Better Buying Index Report Spring 2018 Executive Summary 31. Introduction
Buyers, such as international brands and retailers,
are increasingly concerned about the impact of
their purchasing practices on suppliers’ ability
to provide decent working conditions. Large and
unpredictable order requests with tight timelines
at the lowest possible cost are known to place
significant hardships on suppliers, often resulting in
substandard factory environmental and workplace
performance. Poor practices can also prevent
suppliers from running sustainable businesses and
pose potential risks in supply chains. Therefore,
improved purchasing practices not only have a
positive impact on the workplace, but they also
support buyers’ financial performance and help to
maintain stable and responsive supply chains.
4 Better Buying Index Report Spring 2018 IntroductionBetter Buying is an independent, other key stakeholders get up-to- reporting will allow stakeholders to
third-party initiative with a mission date information about purchasing track improvements in purchasing
to transform relationships between practices and how they are practices over time.
the suppliers responsible for changing—hopefully for the better—
INTRODUCTION
manufacturing products and the over time. The BBPPI is the first in a growing
companies that buy them, so suite of Better Buying indices
that all parties can achieve their This report summarises the results that provides performance data
financial, environmental, and and key findings from the first cycle and statistics measuring the
social sustainability goals. Better of BBPPI data collection carried performance of buyer companies on
Buying provides clear and relevant out in Q4 2017. It identifies best a range of business practices that
information, feedback, and analysis practices in purchasing and supply impact their financial, environmental,
to buyers about their purchasing chain processes and highlights and social sustainability goals, as
practices with the broader goal of those purchasing practices in need well as the goals of their business
accelerating improvements in supply of improvement. It is intended to partners. A second tool will be
chains globally. 1 broaden stakeholder understanding released soon. Over time, Better
of the most challenging day-to- Buying expects to expand its work
The first ever Better Buying day business practices faced deeper into supply chains and
Purchasing Practices Index (BBPPI) by suppliers working with buyer across multiple sectors, such as
measures the performance of 65 companies to bring products to toys, electronics, and food and
buyer companies within the apparel, market. The findings gathered can beverages.
footwear, and household textiles be used by:
industries against seven categories An independent external evaluation
of purchasing practices. The BBPPI • Professionals in corporate of Better Buying’s work by Keystone
uses data submitted anonymously social responsibility and labor Accountability stated:
by suppliers based on their compliance to identify how their
business experiences with specific own businesses are contributing “Better Buying could become the
customers. to human rights violations. keystone species that supports
• Industry professionals focused an entire ecosystem of actors
All ratings are aggregated, turned on business operations and working together to improve buyer
into scores, and subsequently made profitability to manage their practices. Its ratings could become
available to the buyers being rated businesses more efficiently and the informational basis that is the
and the suppliers that submitted profitably. flywheel that drives the entire buyer
the ratings. Ratings are regularly practices improvement machine.”
• Investors, financial institutions,
updated by suppliers and are
insurers, and auditors who can use
eventually made public together
the findings to assess potential
with comments from buyers
supply chain risks, not only
about examples of best practice
reputational but material risks
and steps taken to improve their
associated with supply disruption.
practices. Suppliers, buyers, and
Regular cycles of data collection and
1
Better Buying provides the opportunity for suppliers - as opposed to factories - to rate their buyer. Information pertaining to purchasing practices is
most often held in the corporate supplier office in direct contact with the buyer, and not at factory level. A supplier, therefore, is defined as a parent
company that owns one or more facilities or places orders in independently owned and operated factories on behalf of their clients, the brands and
retailers. It is understood that a factory may also be a supplier if it has direct contact with the buyer’s product creation teams and no other corporate
office intervenes in the buyer-supplier relationship.
Better Buying Index Report Spring 2018 Introduction 52. Methodology 6 Better Buying Index Report Spring 2018 Methodology
HOW WAS BBPPI Better Buying takes a continuous WHAT PURCHASING
CREATED? improvement approach, by improving PRACTICES ARE RATED?
and refining ratings, scorings, and
Better Buying identified the data as more knowledge is acquired. The BBPPI rates buyers against
purchasing practices that matter seven different categories of
METHODOLOGY
most to suppliers. After initial METHODOLODY purchasing practices:
desktop research, additional data CHALLENGES
was sourced from: 1. Planning and Forecasting
Refining the research questions 2. Design and Development
• Field research of critical buying down (from hundreds to a few 3. Cost and Cost Negotiation
practices in Hong Kong, China, dozen) often involved excluding 4. Sourcing and Order Placement
Bangladesh, Cambodia, and questions that stakeholders would 5. Payment and Terms
Vietnam. presumably expect to see in 6. Management of the Purchasing
evaluating purchasing practices. Process
• Input from additional stakeholders
Care was taken to avoid duplicate 7. CSR Harmonization
through 40+ formal consultations.
impact assessment. For example,
• Supplier survey results which a question about design changes Suppliers are required to respond
determined the availability of to finalized styles or those already to all questions to prevent them
information and their willingness in production was not included. from rating buyers only in the areas
to rate. This is because the key concerns where performance needs to be
• A pilot study testing the ability associated with this practice had improved. This provides a robust
to receive supplier ratings and been addressed in questions and fair evaluation of the business
the value of the results for relating to whether enough time relationship buyers have with their
distinguishing good and bad was offered for production and if suppliers.
performance. the buyer was flexible in adjusting
ship dates to maintain the necessary HOW ARE THE DATA
A short and concise list of questions production time. COLLECTED AND
was then drafted to address the
VERIFIED?
suppliers’ most important concerns. In addition, practices that the
supplier could not directly observe Data are collected on an online
The question and response were excluded, for example, platform built and hosted by Fair
categories were designed to be problems stemming Factories Clearinghouse. High
objective and draw on business data from interpersonal relationships levels of hardware and software
suppliers already had or could make within buyer companies. The security, coupled with tightly defined
available. The response categories supplier may be aware of these operating procedures, protect the
of many questions can help to issues, but due to the second-hand data provided by suppliers.
distinguish improvements over time. nature of the information are not
Questions with a more dichotomous able to properly evaluate the impact
‘yes’ or ‘no’ response are combined on their business. High levels of hardware
with extended response questions.
and software security,
The proprietary scoring applied to
a single category of purchasing
coupled with tightly defined
practices also allows Better Buying operating procedures,
to track improvements over time. protect the data provided
by suppliers.
Better Buying Index Report Spring 2018 Methodology 7The BBPPI is supplier-centric The proprietary scoring system is HOW ARE THE DATA
and focuses on empowering built into the data platform and when ANALYZED AND STARS
and amplifying their voices in submitting the rating suppliers can AWARDED?
order to address the impact instantly see the stars earned by the
of poor purchasing practices buyer they have rated. Suppliers are Better Buying uses a 0 to 100-point
on supplier ability to achieve encouraged to rate as many of their scoring system to calculate overall
financial, environmental, and social buyers as possible. scores and scores for each category.
sustainability goals. To obtain supplier After the Better Buying system
participation, effort has gone into Before using the submitted ratings, scores each question and category
approaching suppliers directly, Better Buying carries out a data of purchasing practices, a star
without the intervention of buyers. verification and cleaning process ‘grading’ is applied to the scores as
This has been facilitated through the whereby documents provided by follows (see Table 1).
support of industry associations, key the supplier to prove a business
relationship are reviewed and the Better Buying awards scores using a
individuals in industry, word of mouth,
plausibility of data is checked. 0 to 5-star rating system.
and other approaches. Additionally,
some buyers have engaged with us
to invite their suppliers to participate.
Supplier participation is completely NUMERICAL SCORE STARS AWARDED
STARS AWARDED
voluntary. 96-100 points
90-95 points
84-89 points
The BBPPI is supplier-
centric and focuses on 78-83 points
empowering and amplifying 72-77 points
their voices in order to 66-71 points
address the impact of poor 60-65 points
purchasing practices…
54-59 points
46-53 points
Suppliers register on the Better
Buying platform by creating a basic 37-45 points
profile; they may designate up 36 or fewer points
to four individuals to input data.
Ratings for each buyer are created Table 1. Stars and corresponding numerical scores
separately. The supplier chooses
to ‘create a new rating’, selects
the company they are rating, and
uploads a document to demonstrate
a business relationship within the
last six months. They then complete
the questionnaire specific to their
business relationships with that
buyer.
8 Better Buying Index Report Spring 2018 MethodologyBetter Buying uses the weighting
system outlined in Figure 1 to
determine the weight of each WEIGHT IN OVERALL SCORE
purchasing practices category
in the overall score.
METHODOLOGY
CSR Harmonization
Planning and
After verification, Better Buying Forecasting
downloads all approved ratings 10%
submitted during the rating cycle Management of 15%
the Purchasing
and carries out additional analysis Design and
Process 15%
of the aggregated data. 10% Development
Basic descriptive statistical analysis
is conducted for the scores and 15% 20%
Payment and
responses to each question.
Terms Cost and Cost
Averages for the purchasing practice
15% Negotiation
categories are based on scales
from 0 to 100. Smaller averages Sourcing and
reflect poorer purchasing practices Order Placement
while larger averages reflect better
purchasing practices. Standard
deviation (SD) reflects the variability Figure 1. Weight of seven categories of purchasing
practices to the overall Better Buying score
of scores around the averages and
gives an indication of the spread of
buyer performance in a category. A
larger SD indicates a wider range of
responses and scores.
PARTICIPATION IN Q4 A further 15 ratings of buyers whose
2017 RATING CYCLE orders had been products other than
Analysis of variance (ANOVA) was apparel, footwear, and household
also used to test for differences A total of 243 ratings were submitted textiles were also omitted. These
on the basis of characteristics of in the first cycle of BBPPI data ratings have been withheld from this
the buyers rated and suppliers collection carried out in Q4 2017. benchmark report as they are out
submitting ratings, as well as simple of scope, but have been analyzed
Ten ratings were rejected during
linear regression examining the separately and made available to the
the data verification and cleaning
relationship between measures. buyers.
phase. Ratings were rejected when
duplicates were submitted, the Of the total 243 ratings submitted,
supplier could not demonstrate a 218 were used in this benchmark
current business relationship, or report.
incorrect data was supplied.
Better Buying Index Report Spring 2018 Methodology 9About the buyers that were rated
A total of 65 buyers across the industry were rated (see Table 2). Individual buyer
ratings are not included in this report but have been made available to the buyer
companies in cases where minimum numbers of ratings were received.
APPAREL, ACCESSORIES APPAREL RETAIL DEPARTMENT STORES GENERAL RETAIL
AND LUXURY GOODS (N=63) (N=9) (N=79)
(N=67)
360 Sweater Company Abercrombie & Fitch Debenhams Retail Plc Sainsbury’s Supermarkets
Ltd.
Armani American Eagle Outfitters House of Fraser (Stores) Target Corporation
Ltd.
Canada Pooch Benetton S.p.A J.C. Penney Tesco Stores Ltd.
Dimensions Bonmarché Ltd. Kohl’s Deparment Stores, Inc. The White Company (UK) Ltd.
Fashion Pool GmbH Burberry Ltd. Macy’s, Inc. Walmart
Fenix Group C&A Nordstrom, Inc.
Hakro GmbH Charles Tyrwhitt Shirts Ltd.
Hanes Destination Maternity
Coorporation
Helly Hansen AS Express
Karen Millen Fashions Ltd. Gap Inc.
Kate Spade, LLC Hobbs Ltd.
L.L. Bean, Inc. Inditex
Levi Strauss & Co. J. Crew Group Inc.
Mammut Sports Group AG JP Boden & Co Ltd.
Masai Clothing Company ApS Mark’s Work Wearhouse Ltd.
Mountain Equipment Co-Op Peek & Cloppenburg KG
New Balance International Sportsgirl Pty Ltd.
Ltd.
No Ordinary Designer Label The Cato Corporation
Ltd.
Pretty Green The Children’s Place
PVH Corporation The Edinburgh Woollen Mill Ltd.
Ralph Lauren Corporation The Talbots Inc.
Rapha Racing Ltd. Urban Outfitters
Reiss Ltd. White Stuff
Seasalt Ltd.
Strategic Partners
Sugartown Worldwide LLC
Tommy Bahama Group, Inc.
Uber A/S
VF Corporation
W. L. Gore & Associates GmbH
Whistles Ltd
Table 2. Buyers rated during Q4 2017 by buyer type
Note. ‘N’ refers to the number of ratings submitted. Companies in bold font engaged with Better Buying to invite suppliers to participate.
10 Better Buying Index Report Spring 2018 MethodologyTable 3 shows most buyers are LOCATION OF RATED BUYERS
located in Europe/United Kingdom
REGION AND COUNTRY FREQUENCY %
(47.7%) and United States (47.7%).
(N=65)
Asia Pacific 3 4.6%
METHODOLOGY
Buyers were classified into
Australia 1 1.5
four buyer types according to
information from Standard & Poor’s Hong Kong 2 6.2
NetAdvantage Database, which uses Europe/UK 31 47.7
Standard Industrial Classification Denmark 1 1.5
(SIC) and the North American
Germany 4 6.2
Industry Classification System
Italy 1 1.5
(NAICS) to categorize companies for
the purpose of investment research. Norway 2 3.1
Three classifications are taken from Spain 1 1.5
the NetAdvantage Database, while Sweden 1 1.5
‘General Retail’ has been developed
Switzerland 1 1.5
by Better Buying to correctly capture
another group of retailers. The four United Kingdom 20 30.8
buyer types include: North America 31 47.7
Canada 3 4.6
• A
pparel, Accessories, & Luxury United States 28 4.3
Goods: buyers (or brands)
that develop, source, and then Table 3. Location of rated buyers
wholesale their products to Note. This information is based on what the supplier submitted.
retailers, but may also have
direct retail sales. Companies
As well as approaching suppliers
in this category may also own
directly to solicit participation, eight
manufacturing facilities.
buyers took leadership roles in the
• Apparel Retail: buyers who sell
Q4 2017 rating cycle (highlighted
products they source and develop
in bold in Table 2) by providing
primarily through their own stores.
their full or partial supplier lists and
• D
epartment Stores: buyers who invitations for their suppliers to
sell multiple brands in their retail participate. Better Buying used the
stores, and who may also develop information and invitation letters to
and source private label products. contact suppliers and urged them to
• G
eneral Retail: buyers who sell take the opportunity to give honest
multiple brands in their stores, and anonymous feedback. Several
and may also develop private label buyers engaged in this process
products. These buyers stock food, thanks to the encouragement
general merchandise, housewares, of multi-stakeholder initiatives
or other categories making them making commitments to responsible
distinct from apparel retail and purchasing practices.
department stores.
Better Buying Index Report Spring 2018 Methodology 11About the suppliers who submitted ratings
Better Buying protects the anonymity of suppliers by withholding the
identities of those who submit ratings and the raw data they provide. The
ratings from 156 suppliers across 24 countries were grouped into regions,
analyzed, and included in this benchmark report (see Table 4).
SUPPLIER HEADQUARTER
REGION AND COUNTRY FREQUENCY (N=156) %
Asia Pacific 1 0.64
Australia 1 0.64
East Asia 36 23.08
Cambodia 4 2.56
Korea, Republic of (South Korea) 12 7.69
Malaysia 1 0.64
Taiwan 13 8.33
Thailand 3 1.92
Vietnam 3 1.92
EEMEA (Eastern Europe/Central and 7 4.49
Western Asia, Middle East, Africa)
Mauritius 1 0.64
Tunisia 1 0.64
Turkey 5 3.21
China/Hong Kong 51 32.69
China 22 14.10
Hong Kong 29 18.59
South Asia 20 12.82
Bangladesh 1 0.64
India 17 10.90
Pakistan 1 0.64
Sri Lanka 1 0.64
US/Canada 23 14.74
Canada 4 2.56
United States 19 12.18
Western Europe/UK 18 11.54
France 1 0.64
Ireland 1 0.64
Italy 1 0.64
Portugal 7 4.49
Sweden 2 1.28
United Kingdom 6 3.85
Table 4. Location of supplier headquarters
12 Better Buying Index Report Spring 2018 MethodologySuppliers were asked to indicate SUPPLIER BUSINESS FREQUENCY %
their business model (see Table 5). MODEL (N=156)
Factory owners 111 71.15
Of those suppliers owning factories, Licensee/Agent/Vendor 59 37.82
METHODOLOGY
the average number of factories
Brand/Wholesaler 21 13.46
owned was just over four and
the average number of workers
Table 5. Supplier business model
employed in those factories during
Note. Suppliers could pick more than one business model.
the high season was 5,672 (see
Table 6).
CHARACTERISTICS AVERAGE SD MINIMUM MAXIMUM
Suppliers maintained a fairly large (N=111)
number of customers. The average No. of factories owned 4.15 4.74 1 24
is skewed higher because of the Total number of workers 5671.77 10091.78 23 60000
large customer base held by a few at factories owned by
suppliers with unique business supplier (during high
season)
models (see Table 7). The median
Total number of workers 5296.93 9618.06 20 55000
number of customers was 20 and
at factories owned by
the average buyer-supplier business supplier (during low
relationship spanned fewer than 10 season)
years (see Table 8).
Table 6. Factory characteristics
CUSTOMERS AVERAGE SD MINIMUM MEDIAN MAXIMUM
(N=218)
No. of different 39.32 100.94 2 20 1300
customers
in the last 12
months
Table 7. Number of different customers
YEARS AVERAGE SD MINIMUM MAXIMUM
(N=218)
No. of years of relationship 9.42 7.27 1 37
Table 8. Years of business relationship supplier has with buyer
Better Buying Index Report Spring 2018 Methodology 133. Scores and Ratings 14 Better Buying Index Report Spring 2018 Scores and Ratings
Table 9 outlines the scores of In Q4 of 2017 the average overall
the 218 submitted ratings from Better Buying score for buyers was
the Q4 2017 rating cycle. Color 2.5 stars out of 5, but the scores
The industry benchmark
SCORES AND RATINGS
differentiates between good assigned to individual companies does not represent
scores of between 4 to 5 stars varied widely, from a low of 0 stars a standard of good
(green), average scores of 2 to 3.5 to a high of 4.5 stars (see Table 9). performance, it simply
stars (turquoise), and poor scores The best performing category was in indicates average industry
of 1.5 stars or less (purple). It is Payment and Terms (4.5 stars), while performance during the
important to note that the industry the worst performing category was
rating period.
benchmark does not represent a in Sourcing and Order Placement
standard of good performance, it (0 stars).2
simply indicates average industry
performance during the rating As we begin to recognize individual
period. companies with higher ratings and
identify their best practices, these
buyers will provide a roadmap for
others to follow.
BETTER BUYING SCORE AVERAGE ALL SUBMITTED
RATINGS (N=218)
Overall
Planning and Forecasting
Design and Development
Cost and Cost Negotiation
Sourcing and Order Placement
Payment and Terms
Management of the Purchasing Process
CSR Harmonization
Table 9. Overall Better Buying scores and average scores across seven categories of
purchasing practices (0 to 5 stars).
2
The numerical scores associated with the star ratings can be found in Table A1 of the Appendix.
Better Buying Index Report Spring 2018 Scores and Ratings 154. Key Findings
In this section, we go beyond the stars
and look at purchasing practices in more detail.
16 Better Buying Index Report Spring 2018 Key FindingsBEST BUYER To calculate this rating, suppliers
PERFORMANCE IS IN were asked about the various ways
Nearly one-quarter of
PAYMENT AND TERMS buyers may use to avoid paying in
suppliers reported their
full. The score indicates whether
Payment and Terms, which measures the buyer treats its suppliers fairly buyers used various tactics
KEY FINDINGS
whether suppliers are paid on when it comes to the payment and to get out of paying in full…
time and at the price agreed in the terms of the orders. As is the case in
contract, was the best performing many buyer-supplier relationships,
Where a bill is paid on time, it
category across the board. It failure to adhere to the payment and
doesn’t necessarily mean it was
received an average score of 4.5 terms of the order can put financial
paid in full. Nearly one-quarter of
stars, with scores ranging from 0 to strain on suppliers and increase
suppliers reported their buyers used
5 stars. risks throughout the supply chain. In
various tactics to get out of paying
addition, failure to pay on time can
in full, for reasons that had nothing
be a leading indicator of bankruptcy,
to do with supplier performance
The best performance was information which will be helpful for
(see Table 10).
in Payment and Terms, suppliers and financial partners.
which measures whether An optional question in the Q4 2017
Most suppliers (92.7%) reported
suppliers are paid on time rating cycle asked ‘Beyond paying
their buyers paid the bills on time.
the bill on time and in full, what do
and at the price agreed in For those that were late, delays
good Payment and Terms practices
the contract. ranged from 10 to 180 days, with an
look like?’ The responses indicated
average of 38-day delay (SD = 48.75).
that going beyond the basics and
providing some favorable terms for
the supplier would be ideal. Some
PAYMENT REDUCTION FREQUENCY % OF ALL favorable practices from buyers
PRACTICES (N=218) SUBMITTED
RATINGS included:
Discounts/rebates required by the buyer 22 10.1%
after price was agreed • P
aying sample invoices before the
Late or unsubstantiated claims of quality 12 5.5 samples ship (8.3%)
defects • I ssuing letters of credit so that
Requirement to provide discount or switch 10 4.6 suppliers are paid promptly and
currency used in the order due to currency avoid having to take an external
fluctuations
line of credit at high interest rates
Reduction in payment due to price drop in 6 2.8 (6.9%)
raw materials
• P
aying for volume orders in full on
Reduction of payment for arbitrary 4 1.8
administrative procedures or before shipment (4.1%)
Other 15 6.9 • P
aying deposits on volume orders
(0.9%).
Buyer did not use practices to avoid full 167 76.6
payment
Table 10. Practices used to avoid full payment
Better Buying Index Report Spring 2018 Key Findings 17Better Buying is making some
ORDER changes to the questions and
RISK-TO-REWARD scoring of the Payment and Terms North American buyers
category for the upcoming rating (0.5) had better scores
Order Risk-to-Reward (ORR)
measures how much monthly
cycle to better capture these good on Sourcing and Order
practices. Advance payment and Placement than buyers in
unit volume varies from
favorable terms will be scored,
the average order over the Europe/UK (0 stars) or Asia
and a new question on payment
year, and provides a clearer
of sample invoices will be added.
Pacific (0 stars).
understanding of the volatility
These changes mean scores for this
in the month-to-month Do buyers reward suppliers
category are likely to differ in the
relationship. ORR is based on for compliance to their codes
next industry benchmark report.
the coefficient of variation, of conduct? More than 60%
which is calculated by dividing
WORST BUYER of suppliers reported that no
SD of the month-to-month
PERFORMANCE IS IN incentives were received for their
order volume during the year
SOURCING AND ORDER compliance to buyers’ codes of
by the average of those orders,
PLACEMENT conduct (see Table 11). This puts
and multiplying the figure by compliant suppliers’ costlier
100 to convert the scores to a Sourcing and order placement operations in head-to-head
percentage. encompasses two topics: competition with suppliers who may
be doing little to ensure the health
The risk part of the equation 1. Do buyers reward suppliers for and safety of their workers.
underscores the challenges compliance to their codes of
suppliers face in adjusting to conduct?
dramatic peaks and troughs of 2. T
o what extent do month-to-
orders. The reward part of the month orders fluctuate? More than 60% of
equation considers the average suppliers reported that no
order size received from the Sourcing and Order Placement incentives were received
buyer with recognition that was the worst performing category for their compliance to
larger volume is generally more across the board, with an average
beneficial to suppliers. buyers’ codes of conduct.
score of 0 stars and the highest
score reaching only 3.5 stars.
Suppliers having no risk, or an
ORR of 0 would be the best Scores for individual buyers were
case scenario. In scoring this, dependent on where the buyer
orders that are primarily basic was headquartered. Buyers in
products are differentiated from North America (0.5 stars) received
those that are primarily fashion better scores in Sourcing and Order
products because suppliers Placement than buyers in Europe/UK
acknowledge that there are no (0 stars) or in Asia Pacific (0 stars). 3
fashion products without order
volatility.
3
Further details on that analysis can be found in Table A2 of the Appendix.
18 Better Buying Index Report Spring 2018 Key FindingsTo what extent do month-to-month INCENTIVES FREQUENCY % OF ALL
orders fluctuate? Having too much (N=218) SUBMITTED
RATINGS
business in some months and none
Premium prices 7 3.2%
or too little in other months makes
it difficult for suppliers to plan and Larger volume 55 25.2
KEY FINDINGS
maintain a workforce. More favorable mix of products 24 11.0
Consistent minimum volume of production 23 10.6
In sharing information about the per month
volume of orders they received every Buyer-paid training for skill building/ 17 7.8
month from their buyers, it becomes capacity development
easy to understand how challenging Option to set higher minimum order level 10 4.6
it is for suppliers to plan production
Other incentive 4 1.8
with erratic shifts of volume from
No incentives were provided 132 60.6
month-to-month. To compare the
vastly different volume of orders
from buyers, we have calculated Table 11. Incentives provided to suppliers for compliance/CSR
the Order Risk-to-Reward (ORR).
Across all suppliers, the average
ORR was 102% but with quite a bit of
variability experienced by suppliers.
ORR ranged from a low of 0 to a high
of 346% (See Table 12).
FREQUENCY (N=218) % OF ALL SUBMITTED RATINGS
ORDER RISK TO REWARD % BASIC ORDERS FASHION BASIC ORDERS FASHION
(70% OF ORDERS (30% (70% OF ORDERS (30%
RATINGS) OF RATINGS) RATINGS) OF RATINGS)
(N=153) (N=65) (N=153) (N=65)
ORR=0 8 2 5.2% 3.1%
ORR=1-20 6 4 3.9 6.1
ORR=21-40 16 8 10.5 12.3
ORR=41-60 26 8 17.0 12.3
ORR=61-80 22 9 14.4 13.8
ORR=81-100 16 6 10.5 9.2
ORR=101-120 15 7 9.8 10.8
ORR=121-140 8 4 5.2 6.2
ORR=141-160 3 2 1.9 3.1
ORR=161 or more 33 15 21.6 23.1
Table 12. ORR for basic and fashion orders
Better Buying Index Report Spring 2018 Key Findings 19Figure 2 shows an example where
monthly orders fluctuate from a low MONTHLY ORDER VOLUME FLUCTUATIONS
of 20,000 to a high of 800,000 units
per month, or 137% according to
900,000
Better Buying’s ORR measure. A high
800,000
ORR indicates inconsistent month-
700,000
to-month ordering; in this case, risk
600,000
Unit volume
that is over 100 times the reward.
500,000
400,000
ORR differed by the region where
300,000
buyers were located. More steady
200,000
and consistent business was
100,000
reported as coming from buyers in
0
North America, who had an average 1 2 3 4 5 6 7 8 9 10 11 12
ORR of 85.4% (SD=72.5). This Months
compares with volatile average
orders coming from buyers based in
Figure 2. Sample monthly order volume fluctuations
Europe/UK (ORR=123.8%, SD=78.9)
and Asia Pacific (ORR=144.1%,
SD=82.8). 4
What happens as a result of
In addition, ORR differed depending
inconsistency in monthly volume?
on where the suppliers were More steady and consistent
Some suppliers indicated they were
headquartered. Suppliers located business was reported reluctant to be completely honest
in East Asia (all countries except as coming from buyers in about how monthly order fluctuation
China/Hong Kong) experienced North America. impacted working conditions (an
lower ORR/less volatility in orders
optional question in this first rating
(average of 73.2%, SD=69.9) than
What explains these regional cycle which will be scored in the
suppliers located in China/Hong
differences? One reason may be future). Over 42% indicated that
Kong (average ORR of 116.4%,
that suppliers headquartered in the month-to-month variability
SD=75.5) and Western Europe/UK,
Europe/UK are viewed by European they experienced in buyer orders
where suppliers experienced the
buyers as ‘domestic’ suppliers, able did not impact working conditions
most volatility of all regions (average
to quickly respond to unexpected (see Table 13). Others reported
of 155.6%, SD=100.4). 5
needs, even though their production a range of impacts, including:
may be scattered all over the world. overtime within the law or code
In addition, buyers may assume that requirements, overtime in excess
the vast capabilities and resources of law or code requirements, hiring
of suppliers in China/Hong Kong of temporary workers, unauthorized
make them better able to respond subcontracting, reduced hours/
to dramatic peaks and troughs in underemployment, and layoffs/
production. retrenchment of workers.
4
Information about the statistical testing is available in Table A3 of the Appendix.
5
See Table A4 in the Appendix for more information about the statistical testing.
20 Better Buying Index Report Spring 2018 Key FindingsWhile it is difficult to imagine IMPACTS ON WORKING CONDITIONS FREQUENCY % OF ALL
a fashion industry without any (N=218) SUBMITTED
RATINGS
variability, we did observe some
Subcontracting approved by the 14 6.4%
low ORR for fashion products in this
buyer
round of data collection. With this
KEY FINDINGS
Overtime within the law or code 86 39.4
information, we can start to identify
requirements
the leading factors which contribute
Hiring of temporary/casual labor 45 20.6
to inconsistent orders and work
with buyers to help improve their Unauthorized subcontracting 8 3.7
purchasing practices. Overtime in excess of law or code 21 9.6
requirements
PLANNING AND Inability to meet wages and social benefit 7 3.2
FORECASTING IS IN requirements
CRITICAL NEED OF Reduced hours/underemployment 29 13.3
IMPROVEMENT Layoffs/retrenchment of workers 14 6.4
Other impact 8 3.7
Improvements in the Planning and
Forecasting category are needed. No impact on working conditions 93 42.7
Planning and Forecasting measures
the extent to which buyers include Table 11. Impacts of month-to-month order variability on working conditions
suppliers in product order plans, as
well as the accuracy of the buyers’
planned orders compared with
orders actually placed.
Planning and Forecasting received NUMBER OF DAYS FORECAST WAS RECEIVED
IN ADVANCE OF ORDER PLACEMENT
an average score of 1.5 stars, with
the scores ranging from 0 to 5 stars.
While the majority of suppliers 6.4%
(83.9%) reported receiving 16.1% 6.4% 180+ days
forecasts (or some other form 6% 150-179 days
of production insight) from their 120-149 days
buyers, they also indicated they had 10.1%
not been received far enough in
13.3% 90-119 days
60-89 days
advance. About a quarter reported
30-59 days
that the forecast was received 23.9%
only 30 to 59 days in advance of 17.9% 29 days or less
order placement (see Figure 3). No forecast provided in advance
In contrast, 18.8% of all supplier
ratings reported buyers provided
a forecast 120 days or more in
advance of order placement. Figure 3. Days forecast was received in advance of order placement
Better Buying Index Report Spring 2018 Key Findings 21In some instances, when capacity
WHAT DOES was booked in advance it did not
INACCURATE match up with the actual orders
What is more concerning
FORECASTING LOOK received. Nearly 24% of all suppliers than accuracy of
LIKE AND HOW DOES reported that the actual orders forecasting was that
IT POTENTIALLY varied by +/- 10% or less, which is nearly 4 out of 10 buyers
IMPACT WORKERS? a level of accuracy all buyers should didn’t ask their suppliers
strive for. Another 22.5% of the to reserve capacity in
If the buyer reserves capacity
ratings showed the forecast was
for 100,000 units and comes advance. This confirms that
within +/- 11-20% (see Figure 4).
in 40% over, the supplier now a large amount of business
needs to find space to produce comes from buyers chasing
What is more concerning than the
40,000 more units. Even with
accuracy of forecasting is that nearly last-minute production…
20% difference, the supplier
four out of 10 buyers didn’t ask their
is still looking for ways to
suppliers to reserve capacity in
produce 20,000 more than
advance. This confirms that a large
planned. What are the options?
amount of business comes from
Overtime… subcontracting…
buyers chasing last-minute production
hiring temporary labor.
for styles they had not anticipated
in advance or those selling more
Suppliers may be fortunate
rapidly than expected. Open-to-buy
enough to create capacity by
is an increasingly large part of buyers’
pushing back the ship date
business and a challenging one for
of another order. Or the order
suppliers.
itself may be much smaller than
anticipated. If the supplier
commits only a portion of its
VARIATION OF ORDERS COMPARED WITH
capacity in advance, they may
CAPACITY RESERVED FOR THE BUYER
be able to accommodate larger
than expected orders. This is
40
risky too, as the order may fall 36.7
35
short and leave workers with
30
nothing to do, except look for a
% of ratings
25 23.4 22.5
job at a busy factory elsewhere.
20
15
10 7.8
5 3.2
1.8 1.8
0.5 0.9 0.9 0.5 0
0
+/- +/- +/- +/- +/- +/- +/- +/- +/- +/- +100% No
10% 11-20% 21-30% 31-40% 41-50% 51-60% 61-70% 71-80% 81-90% 91-99% or more capacity
or less booked in
advance
Extent of order variation
% of all submitted ratings (n=218)
Figure 4. Accuracy of capacity booked versus orders received
22 Better Buying Index Report Spring 2018 Key FindingsHELP NEEDED IN DESIGN Half of all suppliers indicated When tech packs are delivered late,
AND DEVELOPMENT that 90-100% of tech packs incomplete, or with inaccuracies
were delivered accurately and on there are delays in production.
Design and Development received an time. Tech packs act as a recipe Subsequent problems arise if the
average score of 2.5 out of 5 stars. The book for supplier costing and free on board (FOB) price has already
KEY FINDINGS
scores ranged from 0 to 5 stars which production. They contain detailed been locked and the specifications
indicates some companies are far specifications for materials including require more costly than anticipated
outperforming others. fiber content, weight of fabrics, techniques or materials.
seam types, stitch counts, trim and
Design and Development measures the embellishment details, as well as
lateness or inaccuracy of technical and size measurements and quality
production details provided to suppliers control indicators.
by buyers. This category also covers the
frequency with which suppliers receive
orders for products they develop.
More than one-third of suppliers indicated that they
received orders for fewer than 40% of the products
Scores in Design and Development they developed. This is a low hit rate given the time and
varied according to the region where resources that go into development.
the supplier was headquartered.
Suppliers based in China/Hong Kong
suffered from lower buyer performance % OF ORDERS RECEIVED AS COMPARED
in Design and Development (2 stars),
WITH PRODUCTS DEVELOPED (HIT RATE)
40
as compared with suppliers based in 35
36.2
South Asia (3 stars) and in Western 30
% of ratings
25
Europe/UK (3 stars). 6 20
15 13.3
10.1
10 7.8 8.7 7.3
6 6.4 4.1
The vast majority of suppliers (95.9%) 5
0
were developing products for the buyers 100% 90-99% 80-89% 70-79% 60-69% 50-59% 40-49% 39% Did not
they rated, yet infrequently won the Orders received for products developed (hit rate)
or less develop
products
volume order for those products. Over % of all submitted ratings (n=218) for the
buyer
a third of suppliers indicated that they
Figure 5. Hit rate on products developed for the buyer
received orders for fewer than 40% of
the products they developed, a low hit
rate given all the time and resources
that go into development. In contrast, % OF TECH PACKS DELIVERED ACCURATELY AND ON TIME
just 6% of suppliers received orders
38.5
for every product they developed for a 40
35
buyer and a further 13.3% of suppliers 30
% of ratings
25 22.9
reported receiving orders on nine out of 20
10 products they had developed. 7 15 12.4 11
10 5.5
5 4.1 2.3 1.8
0.9 0.5 0
0
6
See Table A5 in the Appendix for details. 100% 90-99% 80-89% 70-79% 60-69% 50-59% 40-49% 30-39% 20-29% 10-19% Less than
7
Some suppliers produce samples for pay 10%
% of tech packs
without an expectation of receiving volume
orders. Currently, however, Better Buying % of all submitted ratings (n=218)
requires suppliers to have volume orders to
demonstrate a business relationship with the Figure 6. Accurate and on time delivery of tech packs
buyer being rated.
Better Buying Index Report Spring 2018 Key Findings 23DO PRICES SET BY
NEGOTIATION STRATEGIES THAT PRESSURE BUYERS COVER
SUPPLIERS TO ACCEPT LOWER PRICES COMPLIANT
PRODUCTION?
• Take it or leave it—meet the • Continuing to negotiate prices
target cost or the supplier will after bulk production has started The Cost and Cost Negotiation
not win the order • Threatening to move production category evaluates whether suppliers
• Allowing short response times of existing programs or cutting are given enough funds to meet all
to price demands orders in the future the buyer’s expectations, including
production costs, and compensation
• Using an online bidding strategy • Asking for price commitments
for workers that meet buyer codes of
versus a ‘partnership’ negotiation based on a larger volume than
conduct and legal requirements.
strategy actual quantity ordered
• Comparing suppliers only on • Making changes to product
Cost and Cost Negotiation received an
price instead of a full range of specifications after FOB price is
average score of 3.5 stars, with scores
attributes locked
ranging from 0 to 5 stars.
• Sharing competitors’ bids or • Making changes to terms (e.g.,
pressure to meet competitor payment, ship dates, quantities, Under half of suppliers (38.1%)
costs from across different factories) after issuing purchase indicated that the prices they received
countries order for all of their products covered
• Requiring supplier to meet • Persistently calling or emailing, compliant production. An additional
specific elements of other asking for lower price, multiple four out of 10 said 80 to 99% of their
suppliers’ cost structure rounds of negotiation, or other orders were priced to cover compliant
• Demanding across the board fatigue producing tactics production. The remaining 20.6%
price cuts from previous orders • Using threatening language or received a large amount of orders
or years negotiating in an angry tone where the costs were too low to cover
compliant production (see Figure 7).
• Demanding level prices be
maintained from year to year with
How do suppliers end up with orders
no consideration for inflation
that don’t cover all the costs of
production? A supplier may accept an
order at a lower price in the hope of
snagging a major buyer’s business for
the future, or they may do so in order
Over 43% of suppliers to keep their workforce employed in
reported experiencing periods where orders were less than
high pressure negotiating anticipated.
strategies.
Buyers’ negotiation strategies are
also a leading factor in Cost and Cost
Negotiation ratings. Over 43% of
suppliers reported experiencing high
pressure negotiating strategies (see
box to the left). Negotiation strategies
were not taken into consideration in
this cycle of data collection but will be
24 Better Buying Index Report Spring 2018 Key Findingsincorporated when calculating Cost
and Cost Negotiation scores moving PERCENT OF ORDERS RECEIVED AS COMPARED
forward. WITH PRODUCTS DEVELOPED (HIT RATE)
40 38.1
35
Some regional differences were
KEY FINDINGS
30
% of ratings 25 22
observed in the ratings for Cost 20
19.3
and Cost Negotiation. First, scores 15
7.9
10
varied depending on the region in 5 3.7 2.8 0.9 1.4 0.9
3.7
0 0.5
0
which the buyer was headquartered.
100% 90-99% 80-89% 70-79% 60-69% 50-59%40-49% 30-39%20-29% 10-19% 5-9% Less
Buyers headquartered in Europe/ than
Percent of orders 5%
UK (4 stars) had better costing % of all submitted ratings (n=218)
practices than those headquartered
in North America (3.5 stars). 8 Figure 7. Orders priced for compliant production
may suggest that buyers are not Scores on Cost and Cost Negotiation
Buyers headquartered in complying with increased labor also varied significantly according to
Europe/UK (4 stars) had costs. Better Buying was unable to the region where the supplier was
better costing practices determine whether the largest orders headquartered. Suppliers based in
than those headquartered placed in the countries outlined in East Asia reported that their buyers’
in North America (3.5 table A7 (Appendix) was due to buyers Cost and Cost Negotiation strategies
directing them to do so, or because were the worst (2.5 stars). Buyers
stars).
the suppliers were turning to their whose suppliers were based in
lowest price options. Nevertheless, China/Hong Kong, US/Canada and
Second, scores varied according to price pressures are being felt more Western Europe/UK all received 4
the region of the world in which the acutely by the factories and workers in stars and buyers whose suppliers
buyer’s largest order was placed.9 these countries. were based in South Asia earned
Suppliers reported more price 3.5 stars. Suppliers in East Asia may
pressure coming from buyers whose have higher overhead costs, making
largest orders were placed in East compliant pricing even more difficult
Asia (Cambodia, Indonesia, Malaysia, The larger number of when buyers negotiate prices across
Thailand, and Vietnam). The scores orders being produced in multiple regions.
were significantly lower (2.5 stars) Cambodia and Vietnam…
than when the largest orders were where labor costs have
placed in China/Hong Kong (4 stars),
risen dramatically suggests
South Asia (4 stars), or US/Canada (4
stars).10 The higher volume of orders
that buyers’ pricing may
being produced in Cambodia and not be keeping up with
Vietnam (East Asia region), where the inflationary changes in
labor costs have risen dramatically, these producing countries.
8
Refer to Table A2 of the Appendix.
9
Statistical details can be found in Table A6 of the Appendix.
10
Details of the locations where rated buyers’ largest orders were produced is in Table A7 of the Appendix.
Better Buying Index Report Spring 2018 Key Findings 25HOW ARE BUYERS
MANAGING THE KEY MILESTONES IN TIME AND ACTION CALENDARS
PURCHASING PROCESS? • Hand-off of detailed style • H
and off of tech pack for bulk
Managing the Purchasing Process information for design proto production
received an average score of 3.5 with samples (e.g. initial Tech Pack • R
elease of purchase order
scores ranging from 0 to 5 stars. or detailed sketch and material
• O
rdering bulk production
descriptions)
materials
This category assesses the amount • Ordering proto sample materials
• O
rdering or technical details for
of time offered to the supplier during • Comments on fit/proto samples packaging (e.g. labels, hang tags,
development and production. Buyers
• Trims and artwork sample instructions) for bulk production
are required to complete all key actions
approvals • F
it sample approval
outlined in a Time and Action (TNA)
Calendar specific to the production • Lab dips/color sample approvals • M
aterial/s approval
cycle. • Wash/finishing sample approvals • S
ize set appoval
• Style consolidation and release • F
inal pre-production sample
Nearly all suppliers (95.9%) reported of sale sample order sign-off
that TNA calendars were used by their • Ordering sales sample materials • Q
uality testing approvals
buyers and the majority (86.2%) found
• Sales sample approvals (production test of fabric,
that the calendar, or the contract terms,
• Quality testing approvals material, garment, etc.)
provided enough time for production.
These figures provide a good starting (development test of fabric, • T
op of production sample
point. However, it is concerning that material, garment, etc) approvals
nearly 14% of ratings indicate there is • Bulk order confirmation • F
inal inspection approval
not enough time for production from • Bulk order quantity forecast • S
hipping sign-off
the start.
It is concerning that To ensure a smooth production Suppliers revealed that it is often
process, buyers should meet the deadlines in the development or pre-
nearly 14% of ratings
deadlines as outlined in the TNA production stages that are missed. To
indicate there is not
calendar. The ratings indicated that just better understand which deadlines are
enough time for production half of all buyers met their deadlines most often missed and to help buyers
from the start. 90% or more of the time (applicable improve in this category, this measure
to a buyers largest orders only), and will be altered for future rating cycles.
15.6% of those met all the deadlines
in their TNA calendars (see Figure 8).
Worryingly, 22% of buyers failed to
meet deadlines more than 79% of the
time.
26 Better Buying Index Report Spring 2018 Key FindingsFrom the data, we can see that
PERCENT OF CALENDAR DEADLINES MET most buyers are adhering to their
40
responsibilities of providing enough
34.4 time for production and adjusting
35
shipping dates or prices when
KEY FINDINGS
30 28
needed. Just 8.7% of the buyers
25
responsible for delays did not
20
15.6
amend the ship dates or prices
% of ratings
15 (see Table 14).
10 7.3
6
5 4.1
2.3 2.3
0
100% 90-99% 80-89% 70-79% 60-69% 50-59% 40-49% Less
From the data, we can
than
5%
see that most buyers
Percent of calendar deadlines met
are adhering to their
% of all submitted ratings (n=218)
responsibilities of
Figure 8. Calendar deadlines met
providing enough time for
production and adjusting
shipping dates or prices
when needed.
FLEXIBILITY AND ACCOUNTABILITY FREQUENCY % OF ALL
FOR DELAYS (N=218) SUBMITTED
RATINGS When buyers are not accountable
No changes/requirements/performance 79 36.2% in ensuring adequate production
failures made by the buyer or nominated time, suppliers incur the unexpected
suppliers necessitated flexibility/
accountability to ensure adequate
costs and associated risks to make
production time up for lost time. This can often lead
The buyer was flexible in adjusting 120 55.0 to unauthorized subcontracting,
shipping dates and/or prices to ensure unpaid overtime, or the supplier
adequate production time having to pay for costly air shipment.
The buyer was responsible for delays but 19 8.7
did not amend ship dates or prices
Table 14. Buyer flexibility and accountability for delays
Better Buying Index Report Spring 2018 Key Findings 27You can also read
