How many slaves are in your supply chain?
I asked that question almost three years ago following the collapse of a garment factory in Bangladesh that killed more than 1,100 workers and injured thousands of others. Based on recent reports, it appears that, three years later, the answer to that question remains the same: We don’t know.
Last week, the Chartered Institute of Procurement & Supply (CIPS), a leading international body representing purchasing and supply management professionals, issued a press release highlighting findings from a survey it conducted showing that relatively few companies are ready to comply with the UK’s Modern Slavery Act, which was passed in March 2015 with enforcement set to begin on April 1, 2016.
As reported in the press release, “the Modern Slavery Act aims to prevent the use of forced labour in the UK economy by encouraging businesses to take a greater interest in the practices of their suppliers at home and abroad,” but one in five UK supply chain managers are unaware of the new rules. In addition…
- 27% do not fully understand what their business is required to do
- One in four cannot name a single step they have taken to comply with the law
- More than half say they lack the skills to deal with modern slavery in their supply chains
- Just a third of supply chain managers claim to have mapped their suppliers to understand the potential risks and exposure to modern slavery
- Only 41% have ensured all workers in the UK in their supply chain receive the minimum wage and apply robust immigration checks
- Less than 28% of businesses in this group claim to have provided training to employees and local suppliers on modern slavery
- 68% of supply chain managers call for legal and financial penalties for non-compliance
David Noble, Group CEO of CIPS, summed it up this way: “Our findings suggest that good intent is not yet translating into action. With little motivation and no sanctions to speak of, this requirement rests on goodwill and general awareness. Consumers, communities and businesses deserve better.”
Compliance with a similar law passed in California back in 2010 is equally poor. According to a recent report by the non-profit group Development International, only 14% of Californian companies fully comply with the California Transparency in Supply Chains Act of 2010 (TISCA). As reported in The Guardian last week:
Identifying poor labor practices and stopping them can be a time consuming and costly task for companies. Because of the complexity of supply chains, [Patricia Jurewicz, founder and director of the Responsible Sourcing Network, a human rights advocacy group] said it’s often almost impossible for manufacturers, retailers and consumers to uncover the human rights abuses that lie within their products.
“[TISCA] has good intentions, but without enforcement, I don’t know how effective it actually is,” Jurewicz said.
The lesson is clear: laws passed with good intentions but with no enforcement or consequences will barely move the needle on achieving their desired outcomes.
How many slaves are in your supply chain? Not knowing the answer is a symptom of poor supply chain visibility.
As I wrote in Can You Have Supply Chain Visibility Without Responsibility?, you can’t aspire to have end-to-end supply chain visibility, which is what every manufacturer and retailer wants in order to become more agile and responsive, without also accepting end-to-end responsibility. The scope of end-to-end supply chain visibility must go beyond the status of orders, shipments, and inventory — it must also include having timely, accurate, and complete visibility to labor, safety, environmental, and legal practices across the entire supply chain.
This is by no means an easy task, especially for companies with complex, global supply chains. Just look at all the time, money, and resources companies like Intel are investing to discover, report, and eliminate the use of conflict minerals in their supply chains. Intel’s efforts and success to date are highlighted in a recent Huffington Post article by Alexander C. Kaufman, How Intel Eliminated War From Its Supply Chain:
Less than two years after Intel became aware of its role in the Congolese conflict, the company devised a plan. Intel established a consortium of independent, third-party nonprofits that work with the local government to audit mines. Once a mine earns a positive rating, its ore is placed in labeled bags that can be tracked to smelters. Intel also donated $250,000 to a fund to help smelters who want to meet the tech giant’s ethical guidelines but cannot afford to retrace their supply chains.
The system isn’t perfect. There’s room for error — a wayward local official here, a mislabeled bag of ore there. But in 2016, two years after Intel eliminated conflict minerals from all its microprocessors, every Intel products uses minerals from audited mines only.
Achieving full end-to-end supply chain visibility is not an easy task, but a necessary one.
I’ll repeat what I said back in 2013: If you want to create socially responsible supply chains, you have to develop a more granular and detailed understanding of your supply chains. You have to improve the way you communicate and collaborate with your suppliers, especially lower-tiered ones. And most importantly, you can’t outsource the responsibility; the buck ultimately stops with you, the brand owner. You have to see and walk your supply chain, from start to finish, with your own eyes and feet.
For related commentary, see “Why Supply Chain Mapping Matters,” “There’s No Silver Bullet for Supply Chain Visibility,” and “Why Supply Chain Visibility Remains an Elusive Goal.”
