Why we need an industry charter on buying practices | The Daily Star
12:00 AM, April 26, 2021 / LAST MODIFIED: 12:48 AM, April 26, 2021

Why we need an industry charter on buying practices

Must we keep on making the same old mistakes? Last year during the pandemic, I wrote extensively about the issue of purchasing practices and their impact on garment supply chains and their workers. The pandemic, as we found out, proved a fertile ground for some retailers (some but by no means all) to ride roughshod over the issue of purchasing practices. This included refusing to pay for complete and in-progress orders, extending their payment terms (often to 90 days or more) and demanding huge discounts on orders.

As suppliers, we were—and continue to be—very much dependent on the goodwill of brands when it comes to payment. Some brands stepped up to the plate and looked out for their suppliers, but far too many others took advantage of a weak regulatory environment in which the penalties for reneging on contracts are essentially non-existent.

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We all know the impact of these poor purchasing practices. They have made an already bad situation even worse and ultimately hit those people right at the bottom of the supply chain—garment workers.

The irony in all of this, of course, is that our industry talks regularly about corporate social responsibility and the importance of looking after garment workers.

Well, here is a fact: garment workers will continue to be exploited, to live with uncertainty, to have months where they do not receive a pay check, and times when they cannot put food on the table until our industry gets to grips with this issue.

When I wrote about this last year, I was hopeful that, finally, the pandemic might be the wake-up call our industry needs to address purchasing practices. I thought that the public pressure placed on brands which had reneged on contracts and walked away from completed orders might actually lead to change. Maybe the industry would sign up to a binding agreement on this issue similar to the Bangladesh Accord? Or perhaps governments would step in and regulate?

It dismays me to say that I have yet to see any evidence of change in this area. Most recent reports show that, actually, unit prices for apparel continue to fall and suppliers are being squeezed as hard as ever. Market forces are doing their thing, essentially meaning too many suppliers fighting over too little business placing downward pressure on prices.

Has anything at all changed? I have seen a couple of things. In recent months, the main trade bodies of leading textile hubs have established the Manufacturers Payment and Delivery Terms Initiative. This initiative has been started by the STAR Network—which is supported by GIZ FABRIC—and by the International Apparel Federation (IAF).

The Better Buying Institute has also done some incredible work in drawing attention to the issue of purchasing practices and how bad practice harms suppliers and their workers. This work has been in progress for several years and shows great promise.

Meanwhile, the German Partnership for Sustainable Textiles has announced that in 2021, its annual topic will be purchasing practices. In recent media communication, this industry body acknowledged that responsible purchasing practices enable suppliers to plan their production and working hours effectively and to pay workers fairly. At the same time, they enable suppliers to invest in the overall improvement of working conditions and thereby strengthen resilience in the supply chain.

In fact, we know all of this because in industry we have been talking about it for so long.

Will the above initiatives change things? I think they are laudable and that it is good that these issues are now getting more and more spotlight. Purchasing practices certainly appear to have risen up the agenda in our industry.

My concern is that after more than a decade of talking on this issue and having had 12-months in particular where the relationship between brands and suppliers has been under the microscope like never before, we are yet to see anything tangible, or concrete put in place to tackle this. There are no binding rules, nothing is set in stone or codified, there are still no penalties for brands that renege on contracts.

Hand on heart, does anybody in our industry genuinely believe this issue can be changed from within? Does anybody really think that a collection of disparate initiatives can place enough pressure on buyers to do the right thing and consistently pay their suppliers on time on agreed terms?

Albert Einstein said that the definition of madness is doing the same thing over and over and expecting a different result. This seems to be where we are now on this issue. We have spent years expecting our industry to regulate itself, of saying the same things, of talking the same talk. And still: we seem to be no further forward.

I sincerely hope the aforementioned initiatives, and much other well-meaning work in this area, have some success. But for my own part, the only real, long-term solution I can see is something legally-binding that the whole industry signs up to. This would be an industry charter, a set of minimum agreed conditions around brand purchasing which all buyers and sellers must adhere to.

The idea would be that such a charter would have an independent regulator and include signatories from across the board in industry—brands, suppliers, industry bodies, and unions. In many ways this would be modelled on an initiative such as the Bangladesh Accord which, for all its critics, has achieved spectacular results.

The difference here is that such a charter would need to be global so that no one garment sourcing hub was placed at a competitive disadvantage or otherwise. Perhaps the STAR Network initiative mentioned above could take on board or adapt the principles of such a charter. But it cannot be voluntary in my view. Voluntary simply does not work.

This is a global problem which needs a global solution—and sooner rather than later.

Like many, I am tired of having these conversations and often feel like I am a record stuck on repeat. I refuse to accept the solution is not out there, especially if brands are as serious about addressing this as they say they are.

Well, are they?

 

Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).

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