Supply chain disruption has been the biggest challenge faced by businesses across the globe
Bangladeshi export oriented apparel and footwear manufacturers have seen a 77% decline in revenues due to the Covid-19 pandemic impact.
Supply chain disruption has been the biggest challenge faced by businesses across the globe amid the coronavirus crisis, according to a survey titled “Sedex Insights Report: Covid-19 Impacts on Businesses.”
The survey was conducted on 3,300 buyers and suppliers across 118 countries which showed that the garment and footwear along with the construction have been worst affected sectors.
Sedex, a London based leading ethical trade service provider, is working to improve working conditions in the global supply chain scenario.
Of the total surveyed suppliers, 469 suppliers from garment and footwear industries are from China, India, Bangladesh, and Turkey.
According to the survey findings, 68% member countries reported that their revenue had decreased significantly or critically, while only 38% to 55% on average reported that its customers are being supportive during the pandemic.
“The garment and footwear sectors are hardest hit, according to our respondents, where Bangladesh has seen a 77% fall in revenue followed by 88% in India, 83% in Turkey and 56% in China,” the survey report said.
Only 10% of respondents have seen an increase in or steady revenue, it added.
As per the survey findings, disruption to supply chains and inability to get input of raw materials was the most commonly reported challenge, felt by 43% respondents.
Reasons for this included delay in raw material delivery, suppliers stopping production, and higher prices of raw materials or transport.
On the other hand, 20% respondents have had orders cancelled by customers and 4% experienced delayed payment terms, it showed.
The combination of squeezed production times and poor purchasing practices puts significant additional pressure on suppliers and workers, increasing the likelihood of poor working conditions, it added.
Recommendation for garment and footwear exporters
Businesses must improve their purchasing practices and support suppliers in their supply chains to remain viable where possible and pay workers sufficient income to manage the impacts of this crisis, Sedex recommended.
For the garment and footwear sector, it suggested buyers consider some action including agree lead times to allow for slower or disrupted production resulting from physical distancing and other Covid-19 measures and impact.
On top of that, it also suggested maintaining regular orders, ensuring the price of goods covered and additional transport costs, removing penalties for shipment delays, and ensuring clear forecasting so that suppliers can plan their workforce to ensure that working hours meet income needs but are not excessive.
However, alongside the recommendations in the Sedex guidance there are three major changes required to help suppliers and their workers.
Sectors must work together to tackle the impacts on workers as a result of the crisis. This may be around responsible recruitment in agriculture or ensuring sufficient income for the survival of garment workers – what is clear is that these are sectoral challenges and must be tackled as such, Sedex said.
Governments must do more to support worker safety measures for those at work and economic safety measures for those who are unemployed, it added.