Assessing supply chain risks and building strong relationships is key to supporting suppliers throughout the Covid-19 pandemic.
Research, conducted by Sedex, found almost nine-in-10 (88%) suppliers reported customers were being supportive of their needs.
Sedex analysed data from 1,000 suppliers on the impacts of Covid-19 on business operations.
The most common actions taken by customers that had a positive impact on suppliers included continuing regular communication of forecasts and plans (63%), maintaining regular orders (39%), and extending production or delivery dates (31%).
However according to Sedex, this support “may not be sufficient to meet suppliers’ needs or be reflective of good purchasing practices generally”.
Suppliers linked with non-essential sectors, such as garment manufacturing and some agriculture firms, have experienced negative impacts as a result of customer actions.
Almost a quarter of garment manufacturing firms said customers had adjusted payment terms to be more in the customers’ favour. One-fifth said contracts had been terminated, and 17% experienced customers asking for discounted prices.
“Both sectors typically have a high proportion of low paid and temporary workers, who are likely to be impacted by the knock-on effects of poor purchasing practices and are more vulnerable to falling into poverty during this crisis,” the research said.
Buyer actions have an impact on suppliers’ abilities to provide work, decent working conditions, and wages to workers.
“Therefore, companies must consider how their actions affect suppliers’ abilities to pay their workforce and should work in partnership with suppliers to mitigate negative impacts on workers,” it continued.
Sedex's five ways to support suppliers through the pandemic and beyond:
1. Firms should conduct risk assessments to understand the highest human rights risks in their supply chains, including assessing the risk to more vulnerable workers. Where workers are already vulnerable to exploitation, they are likely to be more vulnerable to the impacts of Covid-19.
2. Maintain existing responsible sourcing programmes to assess and improve working conditions where safe and possible, with flexibility to account for new issues impacting suppliers and workers. Firms should take a “root-cause approach” to address issues when they are found.
3. Building and maintaining strong supplier relationships is key. Work in partnership to establish supplier needs and how to best support supplier businesses and workers.
4. Firms should honour order contracts and ensure the price of products is sufficient for suppliers to pay living wages to workers, while building in flexibility on timelines.
5. Collaborate with peers where possible so that interventions to support suppliers and workers are aligned and, where needed, addressed at a national and sectoral level.
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