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Bestseller said it will reduce the number of suppliers that deliver to the company |
Danish fashion retailer Bestseller has said it will release payments on all current orders to suppliers and implement early payments until October, but due to Covid-19 is accelerating the planned consolidation of its supply chain.
In a statement at the weekend, the company said its decision on payments has been made to ensure suppliers’ cash flows, with a focus on “bringing our partners through the crisis”.
“Over the past four months, we have all faced significant challenges and disruptions due to the global Covid-19 pandemic, and we have all had to make difficult decisions in order to protect our colleagues, our partners, and indeed our supply chain,” Bestseller said.
Due to global lockdowns, the company said it has had to adjust its business and inflow of goods, and that its order intake and revenues have been “hit hard, at times being close to zero”, but has tried to minimise the impact across its supply chain.
“Our closeness to our supply chain partners is something that we have always been proud of and, as a company, we see this as a critical part of our foundation and an enabler for future development. We meet our suppliers in all production countries face-to-face multiple times per year, and we take pride in visiting production sites, to follow up on actual progress and developments, and to address issues when needed. We have global teams working with labour rights, environmental improvements, chemical management and more. We work in close collaboration with our suppliers and all regional stakeholders – and have done so throughout Bestseller’s history,” it added.
The company said it will immediately pay all current invoices early – regardless of the date of invoice, in order to strengthen its suppliers’ cash flow.
And with Cargo Closing (CC) dates in July, August and September, Bestseller is implementing payment terms of TT10 days, with immediate effect, applying to all orders living up to agreed CC dates.
“We trust that providing this immediate cashflow will – in the best possible way – enable our partners to do even better business with us, while helping all our suppliers meet their commitments”, the company said. As of 1 October, it will revert to standard payment terms TT90 days.
The company noted it has continued to pay all its suppliers, and has, despite lockdowns, tried to support the entire supply chain, continuing to submit orders to safeguard jobs.
However, it added: “We have maintained a close dialogue with all our suppliers to understand their situation, and to find the best way forward for our mutual business. There will always be room for improvement. We continue to be motivated to improve our supplier collaboration and to strengthen our supply chain. This also means that we must accelerate the planned consolidation of our supply chain and unfortunately, that will mean reducing the number of suppliers that deliver to us.
“Our industry does operate in less developed regions where regional structures on labour law implementation are less developed. We work with a global supply chain team of 40 colleagues, who work closely with our suppliers to secure working conditions and to work on continuous improvements.”
The company said it expects the disruption caused by the pandemic to continue, noting “it is therefore imperative that we as a brand and as a partner to suppliers in developing countries, continue to work on improving supply chain working conditions – and setting a long-term focus on improving with our strategic supplier partners”.
It added: “We will continue to reach out to all regional stakeholders, NGOs, labour unions, governments and employer associations, to support the development of stronger systems in all regions where we operate.”
A spokesperson for Bestseller did not quantify how many suppliers would be cut but told just-style: “Bestseller has a continuous focus on improving our supply chain. In our Fashion FWD strategy we have set the goal that by 2025, 75% of all products will be consolidated in suppliers that are highly rated in our sustainability evaluation. This requires a firm focus on supplier development and as a natural effect of this also a focus on an ongoing supplier consolidation. Our supply base is not constant but is constantly evolving to meet trend and requirements. However, the majority of our orders are with a smaller group of long term suppliers.”
