Better Buying Index shows progress in supplier relationships

The 2024 Better Buying Partnership Index Report enables suppliers in global supply chains to anonymously rate the quality of the commercial partnerships with their brand and retailer, and other buyer customers. Suppliers submitted 1,413 ratings in Q4 2023, 72.5 per cent of which were for Softgoods (apparel, footwear and household textiles) buyers, with the remaining 27.4 per cent for Consumer Goods buyers (a category which includes companies primarily doing business in consumer goods such as perfumes, cosmetics, home care products, toys, home appliances and sports equipment).

In 2023, Softgoods achieved the highest partnership score to date of 48, an increase of 8 points on the previous ratings cycle in 2022 and surpassing the score of 39 for the initial ratings cycle, held in 2021. Partnership quality improved in all 12 areas measured, with the largest increases being seen in the efforts being made by buyers to improve environmental performance in supply chains (up 12.6 per cent), followed by the efficiency of operational processes (11 per cent) and efforts to improve working conditions (10 per cent). The score for Consumer Goods (44) was slightly lower than it was for Softgoods, demonstrating the broader sector’s need to focus on developing fairer purchasing practices, the report said.

Sixteen buyer companies subscribed with Better Buying for this latest ratings cycle, of which four were repeat subscribers, having participated in all three ratings cycles to date. Three of the four have consistently improved their scores every year. The improvements being made by Better Buying repeat subscribers for this ratings cycle mirror those seen in the 2023 Better Buying Purchasing Practices Index Report, published last month, which also saw year-over-year subscribers continuing to make improvements, even as the overall progress in the industry remained static.

Recommendations for Buyers:

1. Low scores in the Consumer Products category demonstrate the broader sector’s need to focus its attention on developing fairer purchasing practices. Better Buying invites more Consumer Products companies to join its next data collection.
2. The continuous improvement of Better Buying repeat subscribers provides strong support for the fundamental role of supplier data in improving buyer purchasing practices. Buyers need to embrace greater transparency, for example by sharing their Better Buying Scorecards and Company Reports with stakeholders, as evidence that improvements are being made.
3. Buyers looking to improve their supplier partnerships should focus on improving business stability, a key practice for supplier sustainability and one of the Five Principles of Responsible Purchasing.
4. Companies should continue to focus on improving their communication practices with suppliers, a theme that was also highlighted in the BBPI 2023 Report. Dialogue should be focused on achieving consistent ordering patterns, enhancing operational efficiency, and improving the stability and predictability of business.
5. Suppliers rating customers in the Consumer Products sector noted particular challenges and opportunities in relation to operational efficiency and business stability. Buyers should conduct a thorough review of processes to identify and eliminate inefficiencies that impact suppliers, such as bottlenecks in approval workflows or redundant tasks.

Dr. Marsha Dickson, president and co-founder of Better Buying Institute, commented: “The continuing improvements being made by Better Buying repeat subscribers provide strong support for the value of supplier data in improving buyer purchasing practices. We encourage companies to embrace greater transparency, for example by sharing their Better Buying Scores and Company Reports with external stakeholders such as ratings bodies and investors, as evidence of the improvements they are making. We would also like to invite more Consumer Goods companies to subscribe with us for the next ratings cycle, as lower partnership scores in this category indicate that there is a lot of progress to be made.

“The improvement in partnership quality score is encouraging, because strong buyer-supplier relationships are the foundation for driving purchasing practices improvements across the board and achieving shared goals of profitability and sustainability. Buyers should focus on the Five Principles of Responsible Purchasing – stability, visibility, time, fair financials, and shared responsibility, and on developing effective, two-way dialogue with suppliers focused on key practices such as achieving consistent ordering patterns, enhancing operational efficiency, and improving the predictability of business.”

The report is published to coincide with the opening in Paris, this week, of the annual OECD Forum on Due Diligence in the Garment and Footwear Sector. Better Buying is holding a virtual side session at the OECD, bringing major global brands and retailers, suppliers and manufacturers, funding bodies and NGOs together to look at how to empower suppliers, and support buyers, to use data to accelerate purchasing practices improvements.

Fibre2Fashion News Desk (KD)