From Lao Ban’s desk – Week # 41
A worldwide survey on how buyer purchasing practices impact wages and working conditions amongst their vendors shows:
- 52% of vendors are accepting orders below the cost of production
- 29% of vendors struggle to pay workers
- 40% of vendors are likely to sub contract orders to other companies due to low prices
- 60% of vendors admitted that they had to take full responsibility for financing social compliance and other ethical and environmental requirements, including audits
Though the survey was done mostly amongst the clothing and textile vendors to the ready made garment industry, it can be extrapolated to the finished leather vendors to global shoe and accessories brands.
The research identified many areas of conflicting messages. For example, while many brands require vendors to respect their Code of Conduct, their buying practices often sit at odds with such initiatives.
Most buyers have been found to negotiate aggressively on product quality , delivery and more importantly on price , and ethical criteria takes a back seat.
It was found that there is a low willingness on the part of buyers to accept basic increases in vendors cost of production due to labour costs and other accompanying overheads, thus reducing the vendors interest in constantly upgrading themselves in compliances.
Majority of the vendors were found to shoulder financial responsibility for research and development, with no back to back guarantees from the buyer.
Added to this, poor forecasting, late ordering, short lead times, put vendors under tremendous pressure, leading to increased overtime hours and lower wages. This has been further aggravated by todays fast fashion’s multiple seasons and short lead times.
The research concludes that the way forward would be a better understanding and collaboration within the supply chain and some of the recommendations are:
- Sharing responsibility and risk
- Building a deeper understanding of the product and production process
- A more equitable distribution of financial commitments all towards a common goal