Jeff Banks, the celebrity designer and co-founder of Incorporatewear, has hit out at a rising tide of bidding wars in the corporate clothing industry. He described e-procurement as unsustainable for both customers and suppliers, and says it threatens the future of the industry, puts the supply chain at risk and compromises quality.
The ‘reverse-eBay’ style auctions, in which companies bid against each other to set the lowest price for a contract, are becoming more common as buyers focus on cost cutting. Mr Banks, the former presenter of The Clothes Show and the creative force behind Coleshill-based Incorporatewear, decided to speak out after a growing number of e procurement approaches to the company from potential customers.
“E-procurement is driving prices down to an unsustainable level,” he said. “When suppliers decide they must win a contract at all costs and begin to bid for work at a loss, that is a step towards business failure for them and loss of supply for their customers. I understand the need for buyers to cut costs but there are better ways to do that by working with suppliers rather than pitching them against each other in a fight to the death that no-one can win.”
He said e procurement was fundamentally flawed because it relied on a fixed contract specification. “By specifying the product in detail at the beginning of the process, buyers are losing the chance to benefit from the design knowledge and expertise that suppliers have, and to develop a specification that provides better value.”
Mr Banks said e procurement raised issues around customer relations, product quality, service levels, responsiveness, lead times, flexibility and ethical procurement.
On customer relations: “The bidding process compromises the relationship between purchaser and supplier. By choosing to take this impersonal, lowest-price-takes-all approach, organisations are doing nothing to generate goodwill with suppliers, and that could be something they regret if there are challenges down the line.”
On product quality: “The fixed specification and the drive to the lowest possible price are a signal that quality in corporate clothing isn’t a priority, but quality in work wear does matter. It reflects on the brand image of the company, and it influences the performance and morale of the people who wear the clothes, the buyer’s workforce.” On service levels and responsiveness: “If suppliers pare down their operations to the bones to try to make money from undervalued contracts, service levels and response times will inevitably be reduced.”
On lead times and flexibility: “Suppliers will be forced to source clothing from the cheapest factories, which are often the farthest away and least flexible, so eventually all corporate clothing will take months to be delivered and will only be available in large shipment sizes.”
On ethical procurement: “Ultimately, if price is the god, where is the room for suppliers to look after their customer’s greater interests when sourcing clothing? Responsible buyers are concerned with price as one part of a mix that includes a real commitment to ethical sourcing and increasingly minimising their carbon footprint. There isn’t room for anything much more than lip service to corporate social responsibility in e procurement.”
Mr Banks concluded, “By making the process all about money and turning corporate clothing into a commodity, purchasers are risking serious problems down the line, including compromising their brand image and their reputation.”