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Lower order prices, urge buyers to suppliers


As per a Workers Rights Consortium (WRC) and the Center for Global Workers’ Rights (CGWR) survey, buyers are urging suppliers to lower their prices for the same product by 12 per cent compared to previous year. Almost 75 factories in 15 countries, 65 per cent of suppliers reported that buyers have demanded price cuts on new orders that are bigger than the year-over-year reductions they usually ask for. As a result, 56 per cent suppliers have been forced to accept some orders below cost, with the majority anticipating they’ll have to do so in the long term.

The survey states, suppliers now have to wait an average of 77 days after they ship new orders to receive their payments. The average waiting period was 43 days, and only 34 percent of buyers took longer than 60 days.

At the same time, most suppliers now handle less than half the order volume relative to the same period last year. If evaporated volumes, discounts and drawn-out payment terms continue, 57 per cent said it is extremely or somewhat likely they will have to shut down business. Already, 75 per cent factories said they have had to reduce workers’ hours because of current buyer purchasing practices, with roughly a quarter of suppliers cutting working time by more than 25 per cent.

On average, suppliers have dismissed 10 per cent of their workers, and they anticipate letting go another 35 percent if nothing changes.