ACT BRANDS ASSESS THEIR PURCHASING PRACTICES: KEY FINDINGS

Improving brand purchasing practices is of critical importance for enabling the payment of living wages. Purchasing practices matter for the ability of suppliers to pay living wages and their willingness to participate in collective bargaining.

To have a better understanding of the required changes in purchasing practices, a Purchasing Practices Self-Assessment (PPSA) tool was developed by an ACT working group in 2016. The PPSA includes 55 questions, covering 16 areas of purchasing practices. It was piloted in 2017, and the first round of responses was gathered later during the same year. In 2019, the first round of PPSA was extended to 4

additional brand members and 1 brand member which updated its answers from the previous round.

The PPSA General Report 2019 combines the results of both rounds: it covers the responses from 18 brands and 1506 respondents from buying, merchandising, sourcing, management and design.

1506 staff members of 18 ACT member brands completed the PPSA

The survey tool includes two types of items: questions about policies and questions about actual conduct. Higher scores are indications of better purchasing practices. The report outlines the findings of the “average brand”, which is calculated based on the results of all brands that participated in the self-assesment. Also, the minimum and maximum values of all responses are presented. The results are presented section-by-section, by showcasing the percentages of the responses and by comparing minimums and maximums of brands to the average brand. In this way the report aims to provide a general idea of the situation in the industry.

The survey identified a number of good purchasing practices that are generally followed by the ACT member brands. It also revealed areas where considerable improvement is needed, such as price quotation and negotiation, terms of payment, planning and forecasting, and communication between departments as well as with suppliers. The survey also shows major differences between brands regarding purchasing practices.

ACT global purchasing practices commitments

  1. Brands commit that purchasing prices include wages as itemised costs.
  2. Brands commit to fair terms of payments.
  3. Brands commit to better planning and forecasting.
  4. Brands commit to undertake training on responsible sourcing and buying.
  5. Brands commit to practice responsible exit strategies.
Moreover, the questions about practices helped to identify the level of employees’ knowledge about specific policies or established common practice regarding purchasing practices. If a considerable number of people within different departments do not know whether a certain practice exists, or when people in the same company have different views on company policies, then it means that there is a need to improve internal communication about the required policies and practices.

Focus areas for improvement have been derived from the average rating by respondents. After the PPSA in 2017, each brand reviewed its individual results internally and compared them to the ACT benchmark provided by the average outcomes in the PPSA. The findings of the PPSA helped the ACT members to identify five key areas that are most relevant to support the payment of living wages. In November 2018 the ACT members agreed on five global purchasing practices commitments. The commitments are specifications of the ACT Memorandum of Understanding (MoU) which each member brand has signed with IndustriALL Global Union.

In the ACT MoU, member brands have inter alia committed themselves to ensure that their respective purchasing practices facilitate the payment of a living wage. They have also committed themselves to develop a mechanism to link their Purchasing Practices to collective bargaining at industry level so that manufacturers are able to meet the negotiated terms of agreements on wages and working conditions.
This requires continuous dialogue and collaboration with manufacturers, trade unions and governments at country level to support the social and economic upgrading of the national textile, garment and footwear industry. This 2019 round of the Purchasing Practices Self-Assessment provides up-to-date insights to support this dialogue. As the role of purchasing practices has been recognized as essential to achieving living wages, ACT member brands will continue to work on their purchasing practices those in order to facilitate the payment of a living wage through collective bargaining.

As the next step, the Purchasing Practices Assessment (PPA) survey among suppliers will help to reveal whether the brands’ self-assessment matches the experience of suppliers. This will feed into the upcoming ACT accountability and monitoring framework.

The PPSA will be complemented by a Purchasing Practices Assessment (PPA) that will ask suppliers for their perspectives. This will help to reveal whether the brands’ self-assessment matches the experience of suppliers. Suppliers will be asked to indicate the purchasing practices that have the biggest impact on their ability and motivation to pay a living wage negotiated through collective bargaining at industry level. To prepare for this, a PPA pilot survey was rolled out with 28 suppliers in Turkey.

The next step for ACT is to collectively develop an accountability and monitoring framework for the ACT purchasing practices commitments to be able to compare developments and improvements over time.

The PPSA (to survey brands) and the PPA (to survey suppliers) will play an important role to gather information on the respective perspectives on changes in purchasing practices. The results will be compared with each other and analysed to provide insights on the implementation of the ACT purchasing practices commitments.