Supplier insights from latest Better BuyingTM research reveal that some of the most impactful measures companies can take are low cost, and require minimal changes to a brand’s workflow.
Better BuyingTM’s latest report – Purchasing Practices & Sustainability: What improvements are suppliers seeing? focuses on four key areas:
- Design and development
- Investment in cost-reducing alternative technologies
- Expectations and incentives for CSR/compliance and environmental sustainability performance
- Impacts of steep variations in month-to-month order volume
Design and development
The Design and development stages are critical points for avoiding and eliminating waste. Improving the alignment between sample requests and actual orders reduces waste and eases the financial burden on suppliers who have made significant investments in producing those samples.
Giving feedback on reasons for rejecting samples enables suppliers to better understand their buyers’ expectations and make improvements to future samples, leading to less waste in the sampling process.
Setting a target price prior to beginning development gives clarity about what is possible in terms of design and eliminates the likelihood that costly trims, embellishments, and other details will need to be removed later in the process – or pressure put on suppliers to include them at reduced cost. Improving the conversion rate of samples is a key driver in reducing waste, with one supplier noting that about 30% of their material waste is due to dropped styles.
Suppliers also highlighted poor communication and excessive design changes as top contributors to waste in the sampling process, with one commenting that the “hidden cost is huge.”
Extensive internal reviews, late comments, inaccurate tech packs, and numerous sample requests impact lead times and increase the pressure on suppliers to deliver on time.
Investment in alternative technologies
For sustainability efforts to be long-lasting, costs and benefits need to be spread more evenly between buyers and suppliers. Just 8.9% of suppliers reported that their buyer invests in alternative technologies to help them save on operational costs.
The most common type of investment involved software upgrades, which enable suppliers to conduct data-driven analysis, improve communication with their buyers, and increase efficiency. Next was investment in 3D or virtual sampling technology, which helped some suppliers cut down on the number of physical samples required, leading to less material waste and reducing their financial burden.
Expectations and incentives
For those that did receive incentives, shared goal setting was the most frequently reported for both CSR/compliance and environmental sustainability. Next were larger order volumes and a more favorable mix of products. One of the most coveted incentives – premium prices – was much less frequently reported by suppliers.
A number of themes emerged from supplier responses in relation to incentives and rewards:
- When price, quality, and delivery dominate buyers’ conversations with suppliers, sustainability can be deprioritized or ignored altogether
- Incentives and rewards need to be more clearly defined, and explained by buyers
- Clear incentive and reward structures, where the benefits are clearly defined and explained to suppliers, support compliance.
Monthly Order Variability (MOV)
This year, Better BuyingTM also examined the impacts of monthly order [volume] variability (MOV), including for the first time various business and environmental sustainability impacts.
Better BuyingTM uses a metric called ORR Order Risk-to-Reward (ORR) to measure MOV over the course of a year and make data comparable across suppliers with vastly different volumes of production. ORR compares the consistency of month-to-month orders based on the volume suppliers report were shipped for specific customers each month.
It is the percentage of risk (measured by order volatility) to reward (measured by average orders) over a period of time. An ORR of zero, although rare, is ideal, as it represents steady and consistent business throughout the year. Best practice is to keep the ORR as low as possible.
In 2020, the average ORR across all softgoods ratings was 90.4%, ranging from a low of 0% to a high of 363%. Average ORR scores were higher for fashion than for basic orders, reflecting the added unpredictability of fashion products due to seasonal and trend factors.