"Progress in Purchasing Practices Foiled by ‘Distrust and Disrespect’"

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Better Buying’s 2023 Index report, published Thursday, collated more than 1,240 data points for 33 buyers...

....The majority of Better Buying subscribers showed gains in cost and cost negotiation (+3 points) and payment and terms (+2 points), two elements that directly impact suppliers’ financial sustainability.

In 2023, 44.3 percent of suppliers surveyed said that 100 percent of their buyers’ orders covered all the costs required to produce the order, compared with 41.9 percent in 2022. Nearly 48 percent of suppliers said that their buyers used high-pressure tactics during the costing negotiation process, a 3.5 percent decline from 51.4 percent in 2022. More than 74 percent of respondents said that 100 percent of their buyers paid bulk production invoices without delay, a 5.3 percent jump from 68.9 percent in 2022.

These are positive developments....

Even so, there are caveats....Some suppliers, for instance, told Better Buying that negotiations to convince buyers to cover increasing wages, proved difficult. Payments are also seeing a trend toward longer terms, something that can impede cash flows and cause financial stress. The number of suppliers who agreed to payment terms of more than 91 days—orders of magnitude longer than the pre-pandemic norm of 30-60 days—increased from 14 percent in 2022 to 22 percent in 2023.

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Buyers should cover the full cost of compliant production... Investing in advanced forecasting tools and supply chain management systems .... can [also] go a long way to enhancing accuracy and paring down uncertainties. Long-term formal commitments, an area that Better Buying looked into for the first time, are another important overture—more than 72 percent of suppliers reported formal commitments of less than a year, which don’t provide the same level of reliable support that factories need to upgrade operations, working conditions and wages.

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