Ensuring Responsible Business Conduct
Principle 1:
Integration and Reporting
In order to implement changes to purchasing practices, the company has top leadership buy-in and commitment; has a thorough understanding of existing suppliers and purchasing systems and (possible) negative impact on human rights; and uses this to decide on priorities that feed into an agreed improvement plan.
Responsible purchasing practices are integrated into the commercial and other relevant departments of a business.
This includes integrating purchasing practices into strategy and decision-making processes; and establishing external reporting, internal KPIs/accountability and training.
Principle 2:
Equal Partnership
The purchasing company and their suppliers respect each other as equal business partners; engage in respectful sourcing dialogue; and pursue win-win situations, with a shared responsibility to improve working conditions.
This includes building long-term, secure sourcing relationships; reducing the churn of suppliers; formulating agreements on mutual responsibilities for responsible purchasing; only using force majeure clauses responsibly; improving communication; achieving partnership in problem solving and employing responsible exit strategies.
Principle 3:
Collaborative Production Planning
Critical path and production planning is done collaboratively between the purchasing company and suppliers. Any changes are mutually agreed and cannot be detrimental to the supplier.
This includes reducing samples; providing accurate tech packs; increasing forecasting accuracy; balancing orders; tracking reasons for delay in the critical path; and the purchaser taking responsibility for delays caused by missed deadlines on their part.
Principle 4:
Fair Payment Terms
The purchasing company and suppliers agree on fair and transparent payment terms that include all relevant information regarding the payment procedure and do not place a disproportionate burden on one party. Contractual obligations are honoured at all times. Payments are made in full & on time.
This includes ensuring payments are made on time; aiming to improve the timeline of payment; and mutually agreeing reasonable penalties, taking into account the cause of any delay in delivery.
Principle 5:
Sustainable Costing
The costing procedures and levels of the purchasing company reflect and support wage increases and sustainable production. Prices cover all costs of production in line with responsible business conduct and allow for a reasonable and maintained supplier profit margin.
This includes developing mechanisms to ensure costing allows for all labour costs and increases when labour costs increase (through national minimum wages and/or collective bargaining); and implementing a costing strategy that supports increased wages to reach a living wage.