«We had a rare experience with a Swedish buyer. They covered 2/3 of the air fright costs»
- Chinese factory representative
Responsible purchasing is also referred to as sustainable sourcing or ethical purchasing. More important than the term used, is to understand that it regards the buying companies' own policies and practices, not the suppliers'.
Responsible purchasing strategies & practices regard how suppliers are selected/deselected; the Terms & Conditions; sampling, order placements, changes and cancellations; price negotiations, payments and alike.
Purchasing strategies and practices can have significant adverse impact in the supply chains. Some examples are:
Short lead times, frequent and/or last minute order changes are found to be key root causes to excessive overtime and hence increased risk for accidents and injuries.
Rush orders can lead to illegal sub-contracting to factories with bad working conditions - included child labour.
Delayed payment from buyers might delay payment of wages to workers.
Price pressure when sourcing and negotiating prices squeezes the suppliers profit margins and hence ability or willingness to pay decent wages and invest in more environment-friendly equipment..
Typical consumer goods like apparel and footwear, where speed to market almost has become a prerequisite are well documented risk sectors. However in today’s globalized economy, characterized by non-transparent supply chains, procurers in public and industry sectors are exposed to the same risks.
With increased awareness, the (missing) link between procurement and supplier compliance is increasingly referred to in global frameworks such as UN Guiding Principles, OECD Guidelines for multinational companies and GRI.
Research and companies' experience also show that poor procurement might cause negative impact on the buying company's own bottom-line. On the positive side, changing the company's procurement strategy and practices might be easier than you think!
Through in-house capacity building across departments, RBA assists companies identify manageable and measurable actions on how to improve internal procurement policies and practices for enhanced supplier compliance. We provide neutral facilitation of supplier surveys for objective and constructive input on improvement areas. Practice shows that suppliers are more open about their clients' poor procurement practices when responding to neutral parties.
On compliance cost calculations, manufacturers are both part of the challenge and the solutions. Based on surveys and dialogue with about 1500 suppliers across sector and countries, we find that suppliers have insufficient knowledge in calculating a unit price which covers the cost of compliance. Complemented with building purchasers and merchandisers' knowledge on how to request cost of compliance in their price quotes, we build suppliers' capacity on how to calculate cost of compliance in their pricing.
RBA Responsible Purchasing Services
We assist private and public companies with responsible purchasing strategies and practices in the following ways:
1. In-house training
We help companies identify manageable and measurable purchasing policies and practices for enhanced supplier compliance
Target groups: Purchasing/Sourcing Directors; Purchasers, Merchandisers; Designers; Quality Controllers;
Logistics; Finance and Sustainability Executives
English, Scandinavian languages
2. Neutral supplier survey
We facilitate neutral and constructive input from suppliers on buyers' compliance-gaps and improvement potential
3. Cost of Compliance calculations
We train suppliers on how to calculate cost of compliance in the unit price
We train purchasers on how to request cost of compliance in their price quotations
4. Supply Chain Management
RBA collaborates with Factlines on Supply Chain Management:
Contact us for more information