During the second quarter of 2024, Better Buying conducted its eighth annual evaluation cycle for its Better Buying Purchasing Practices Index Report 2024.
27 buyer companies took part, a slight increase from the previous year’s 26 and among these participants, 22 had also taken part in the prior cycle, allowing for direct year-over-year comparisons.
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A total of 1,273 suppliers provided 1,553 ratings. Of these ratings 1,300 pertained to soft goods and evaluated 40 buyers; 27 of these buyers were subscribers to Better Buying, accounting for 1,287 supplier ratings.
Key findings from Better Buying’s 2024 index report
• Suppliers reported that buyers accepted existing audits rather than conducting new ones rose by over two percentage points from last year to reach 90.5%.
• Sporting goods buyers were significantly more likely than fashion goods buyers to provide forecasts well in advance — 29.4% did so more than half a year ahead compared to only 8.2% of fashion goods buyers.
• There was a five-point decline from last year in suppliers reporting that buyers agreed on capacity beforehand for repeat orders.
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By GlobalData• High-pressure cost negotiation tactics were reported by 51.8% of suppliers dealing with fashion goods buyers versus only 41.3% with sporting goods buyers— a ten-point gap.
• A decrease was observed in suppliers reporting formal long-term commitments from buyers. Those reporting no commitment at all increased from 42.5% in the previous year to 47.5% this cycle.
• The average Order Risk to Reward (ORR) ratio climbed significantly to 96.6%, up from last year’s average of 79.8%.
Conclusions and recommendations for buyers
• Sporting goods purchasers are setting higher standards in purchasing practices compared to fashion goods purchasers. Despite this being partly attributed to an increased number of ratings for fashion goods buyers who typically have weaker practices, it is imperative that both groups work towards narrowing these gaps and enhancing their purchasing behaviours.
• The interconnections between various purchasing practice areas call for an integrated strategy towards improvements rather than isolated efforts.
• With significant strides made towards audit harmonisation this year, it is recommended that buyers accept current audits instead of mandating new ones, which can help streamline processes and reduce supplier fatigue while fostering better cooperation.
• Buyers should seek long-term engagements with suppliers through extended contracts which support better capacity planning and investment into sustainability initiatives. Emphasising precise forecasting and transparent communication can aid suppliers in resource management and build mutual trust. Finally, engaging in fair cost negotiations that consider inflationary pressures and increasing costs is crucial for sustainable partnerships between buyers and suppliers.
Better Buying Institute president and co-founder Dr Marsha Dickson said: “While the overall soft goods score has remained stable, the individual category scores and responses to individual questions tell a better story about the improvements and declines buyers are making. I’m especially excited about the big gains some companies have made in certain categories.’
“The distinct differences in purchasing practices between sporting goods and fashion goods buyers are startling in a lot of ways. We’d expect forecasting to be more problematic for fashion goods buyers, but didn’t expect to see lower performance in nearly every aspect of the business. This points to the need for more of these types of companies to subscribe with Better Buying and get to work on their purchasing practices.”
