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ARTICLE: Do you know how the Better Buying Purchasing Practices IndexTM was created?

An article from Dr. Marsha Dickson, President and Co-Founder of Better Buying Institute

I’ve been noticing lately the need to repeat important information about Better BuyingTM supplier surveys.

Employee turnover among buyers, suppliers, and other stakeholders leaves gaps in experience and knowledge of Better BuyingTM history, and the potential for confusion, regarding decisions about what we measure, how we measure it, and why we measure it the way we do. 

The publication of this 8th scorecard from the Better Buying Purchasing Practices IndexTM, seems a good opportunity to review the rigorous research and development Better BuyingTM carried out to create measures of impactful purchasing practices that offer a standardized way to compare buyer performance with appropriate peer groups, and reliably track progress over time. 

The R&D for what became Better BuyingTM officially started back in the summer of 2015 at the University of Delaware, with funding from C&A Foundation (now Laudes Foundation). The grant was to determine whether it would be feasible to gather data from suppliers about their specific customers’ purchasing practices via an online platform. Experience with a couple of big consulting projects where suppliers had shared important details about challenging practices in face-to-face interviews was encouraging. But a big question remained– could that data collection be replicated in a standardized way without being in a rapport-building face-to-face environment? If that was possible, Better BuyingTM would be able to systematically deliver valuable insights and comparative data about a lot of brands and retailers, not just a few who had the appetite and budget for big consulting contracts.

The research began by organizing all the available studies on purchasing practices and their negative impacts. I’d personally been collecting everything relevant since 2003 when the idea that purchasing practices negatively impacted workers was first raised. Analysis of all that existing work identified the many purchasing practices that were problematic and how investigation of them might be organized across a brand or retailer’s business functions. Studies that proved especially valuable to that desktop research by covering a wide range of topics included those published by Insight Investment and Acona Limited in 2004, Traidcraft Exchange in 2005, Impactt and Traidcraft Exchange in 2008, several reports and a guidance document published by Ethical Trading Initiative between 2004 and 2010, and a 2014 study published by IEH Ethical Trading Initiative Norway

With clarity about the wide range of purchasing practices affecting workers, attention turned to the question of which of those practices were the most impactful, and would merit inclusion in a supplier survey and system to track progress over time. Emphasis was put on creating as few measures as possible, compared to the landscape of emerging initiatives requiring suppliers to input data on hundreds of questions.

The next step was to go out and talk to suppliers about the topic. This field research included interviews and focus groups with suppliers and supplier associations from Hong Kong, mainland China, Taiwan, and Bangladesh, and with other stakeholders in Vietnam and Cambodia. I contacted some of the suppliers that I’d met over the years doing research in global supply chains, while others were reached with the support of supplier associations. 

As the interviews were carried out, there were times when the problems being raised were almost laughable; the practices described were so ridiculous and counterintuitive to good business. But the mood would quickly change with recognition of how those practices were impacting suppliers and workers. 

This qualitative research gave a more nuanced understanding of the issues and ideas for the practices that needed to be improved, and therefore how they might be measured.

Which topics should be measured by a supplier survey and which should not was further considered. The supplier had to be able to directly observe the practice in its dealings with the buyer that would be rated This ruled out measuring things like whether the buyer had implemented internal policies or training addressing purchasing practices. It was important that the measures obtain factual and objective business data across a full range of potentially good and bad purchasing practices, rather than supplier self-selected and subjective points of irritation in the relationship. 

There were other practices that in and of themselves weren’t necessarily damaging; it was how they were being handled that was creating problems. A good example of that was the highly discussed (at the time) changes to designs. Remember when there was discussion about whether a pocket should be moved a half inch after produciton started? The thinking was that there should be no changes after a certain point. But as one supplier explained: “this is the fashion industry, there will be changes.” What mattered, and needed to be measured, was how the buyer handled the change. Did they insist on the product being delivered on time as originally planned, or were adjustments to the shipping schedule allowed if they were needed?

The Index needed to be applicable globally, so the next step, after the potential measures were created, was to test them by surveying a global sample of suppliers. Using  a convenience sample of suppliers already known to Better BuyingTM or recently met, the survey yielded data from 21 countries and determined the extent that each practice impacted the supplier’s business, its ability to provide good working conditions, whether the data to answer the question was readily available inside their companies, and whether the supplier would provide that information about a specific buyer customer if their anonymity was protected. This research confirmed the measures were right and supported the weighting that was applied in the scoring system that was developed next. 

In later face-to-face meetings with suppliers with whom the list of measures was shared, a common response was “Yes these are the ones [the problematic practices]. You nailed it.” 

I confess to being a little overwhelmed by the challenge of combining all this information into one overall Better BuyingTM number that could be compared across buyers. Scoring was needed for each of the seven categories that were developed as well (Planning and Forecasting, Design and Development, Cost and Cost Negotiation, Sourcing and Order Placement, Payment and Terms, Management of the Purchasing Process, and Win-Win Sustainable Partnerships). Peter Burrows of Fair Factories Clearinghouse (now part of Worldly), whose organization was building the platform to be used to collect and process the data, advised me to think about each category having 100 points and distributing those to be added across the measures. This bit of advice was really helpful in creating the proprietary scoring system and ensuring the heaviest weights were on the categories and practices with the biggest impact on suppliers’ businesses and their abilities to provide better working conditions. 

Over the first few ratings cycles in 2017 and 2018, enough tweaks were made to the questions and scoring that scores couldn’t be compared from one cycle to the next. Most likely, changes in scores were due to changes in what was measured and adjustments to the scoring. But by the Fall 2019 ratings cycle, the Better Buying Purchasing Practices IndexTM was consistent enough to the previous ratings cycle that  those comparisons could be made.

Better BuyingTM takes a continuous improvement approach to ensure measures remain relevant and to incorporate new measures as new problematic practices emerge. These minor updates are typically suggested by suppliers. For example, a new measure was added after the onset of Covid to specifically address order cancellations (it was previously embedded as a response option in a measure of forecasting accuracy). Questions have also been added about the existence and length of long-term formal commitments for a certain volume of production, which category of purchasing practices the buyer should prioritize and work on first and, a few years ago, the practices impacting a supplier’s environmental performance and a broader array of sustainability impacts (business, worker, and environment) were included where impacts of certain practices are measured. Open-ended questions at the end of each category gather constructive feedback from suppliers about how the buyer can improve. 

This is a high level summary of that work, but it was approached in a scientific way with well supported rationale for each decision that was made. As a result, the Better Buying Purchasing Practices IndexTM is the most comprehensive and reliable survey for suppliers to share the purchasing practices of their customers, to compare buyer performance,  and to track how those change – hopefully for the better – over time. Better Buying’s data are being used in the corporate headquarters of major brands and retailers, both large and small, publicly owned and privately owned, from a range of geographic areas. 

The knowledge and insights Better BuyingTM provides buyers enables them to get on with actioning the changes they need to make to improve their financial, social, and environmental sustainability outcomes, rather than getting caught up in drawn out deliberations about how to measure whether purchasing practices are improving. Deliberations that delay necessary action. Their improvements support the concept  “that what gets measured gets managed”, even though the surrounding economic environment can derail improvements now and then.

The tools are there for buyers to learn about which of their purchasing practices are problematic, how their performance compares with other buyers, and to track whether the changes they make are yielding the desired results. 

The best thing that can be done now is for more buyers to use those tools, and  to lessen the negative impacts of the practices that matter most to suppliers in their support of shared goals for resilient supply chains, better wages and conditions for workers, and net positive environmental results. 

Let’s get on with it!