Modern Slavery – do you really know what is happening in your supply chain?

Worldwide an estimated 24.9 million people are subject to Modern Slavery through forced labour. These numbers are shocking, and victims are not only located in the developing world. According to the Global Slavery Index, there are an estimated 136,000 victims of Modern Slavery in the UK and an additional 403,000 in the US.

A key issue is that businesses can be inadvertently promoting and sanctioning these crimes through the procurement of goods and services that have been tainted in their supply chains.

The starting point is that procurement professionals must educate themselves on Modern Slavery to reduce the risk of supporting supply chains that fuel forced labour and trafficking.

Source: Global Slavery Index 2018

Modern Slavery is all around us, but often just out of sight

Modern slavery is the severe exploitation of other people for personal or commercial gain. Modern slavery is all around us, but often just out of sight. People can become entrapped making our clothes, serving our food, picking our crops, working in factories, or working in houses as cooks, cleaners, or nannies. Modern Slavery can be found in both local supply chains in the “developed” world and further reaching global supply chains to less economically developed countries.

The International Labour Organisation identifies the construction, agriculture, and manufacturing industries to be at the highest risk.

Globalisation driven by the West’s demand for cheaper goods sourced in the developing world has created complex global supply chains. This is making it increasingly challenging for companies to track and monitor transparency throughout their supply chains and implement Sustainable Procurement practices.

A news article recently raised concerns that the gloves provided to frontline UK healthcare staff in the NHS, were made by Malaysian manufacturers with a history of exploiting its workers (The Independent, 2021). The irony that this equipment being produced was to help protect human lives, whilst at the same time, was depriving many others of their basic human rights.

But how was such a big issue missed in a government supply chain? Sometimes, all it takes is excess demand and limited supply- and the COVID 19 pandemic is a strong example of this. Quick decisions to source supply have resulted in the NHS missing out on crucial steps in their supply chain risk assessment – which has led to potentially putting many lives at risk.

Transparency in the Supply Chain

It is vital now for companies to embrace traceability and transparency in their Supply Chain. A recent study by Label Insight interviewed more than 2000 consumers, about the impact transparency has on their trust and loyalty to brands in the food industry.

73% of consumers said they would be willing to pay more for an item if it showed full transparency, and 39% of people said they would move to another consumer if it showed full transparency of the product (inc.com)

With more and more companies now becoming more traceable and transparent, the competition in every industry is becoming more intense. By implementing Sustainable Procurement practices to avoid Modern Slavery, not only will you mitigate your supply chain risk, but it can also lead to a more competitive edge against those companies who are not willing to invest in these strategies.

8 practical steps to address the issue

Understanding your supply chain is crucial to protecting your employees and your organisation. The transparency model below from Harvard Business Review tracks 2 factors – Supply chain scope and Transparency Milestones, which can be used as a roadmap for reducing Modern Slavery risk.

(Source: hbr.org)

 

We have highlighted below a list of factors a procurement professional should look to implement and maintain within their Supply Chain and procurement practices:

1. Identify and highlight Supply Chain Risk

Conduct a robust audit and risk assessment at each supplier. Partners or Directors should be involved throughout, to ensure the appropriate level is involved in case an escalation is needed. Apple purchase components from suppliers in 43 countries, across 6 continents, therefore supplier audits are of paramount importance. To conduct effectively, Apple pay close attention to those suppliers of geographical risk, previous audit performance and manufacturing process risks. Directing your attention to those ‘high risk’ areas allow you to identify any patterns where Modern Slavery could become present.

Apple audit leaders also create an effective risk analysis, by discussing with key stakeholders and speaking directly with the employees through interview or anonymous surveys. It is vital that you can understand the working environment in which the employees are working in and address any potential risk which may arise from these results.

2. Create a supplier Code of Conduct

Create and implement a strong Code of Conduct for all suppliers, including a high standard for labour, human rights, environmental and ethical conduct. The Code of Conduct should look to reference and work with the UN Guiding Principles for Business and Human Rights (UNGP’s). H&M and Nike are just 2 examples of global brands which work to implement UNGP’s into their business, and strongly focus developing these as best practices for understanding and managing human rights risks and impacts.

Continue to update the Code of Conduct on an annual basis, based on due diligence in the supply chain, emerging rules and regulations, and human rights frameworks- which was recommended by the UK Government.

3. Performance Based Metrics

Assessing the level of KPI target’s your company has set, is an effective way to notice any risk of Modern Slavery. Unrealistic KPI’s can lead to an environment of pressure, where Modern Slavery may become a way to deal with short time pressures and large order volumes. Ensure the KPI targets are realistic, based on a supplier’s resources.

Secondly, introduce any KPI’s which can help mitigate risk that was identified in the risk assessment. The NHS Shared Business Services have recently introduced KPI’s in 2021- which focus heavily on ensuring 100% of employees are trained in Anti- Modern Slavery, and that the Procurement teams continuedly receive feedback from their suppliers regarding Business and Human Rights.

Introducing KPI’s which ensure every employee are trained and understand the risks associated with Modern Slavery, can dramatically reduce the risk of it occurring.

4. Traceability

Traceability can be difficult if the Supply Chain is globalized, with limited visibility to your suppliers’ processes. Nestle has recently announced full Supply Chain disclosure, listing 95% of their suppliers, to enhance their Responsible Sourcing Program. Nestle have invested heavily on IT technologies such as blockchain, which have helped increase traceability in their sourcing and reduced risks across their supply chain.

Invest in IT technology such as Blockchain to achieve traceability.  This will allow your company to identify your products Supply Chain from Raw material through to POS.  Having this visibility will enable you to monitor suppliers, highlight risks, and minimise Modern Slavery risks due to full oversight.

5. Maintaining Awareness

Following the working practices of industry leaders in Supply Chain transparency such as Nestle, Apple and Nike will help enforce the competitive edge of your business.

Senior leadership is crucial to maintaining awareness and embedding this into company culture. Ensure company leaders invest and implement annual Employee Modern Slavery Training as part of the supplier KPI’s, and continually update the Code of Conduct based on new rules and regulations.

Encourage open discussions with your employees. Invest in an ‘anonymous’ forum in which employees are able highlight areas of concerns in the workplace. This has been a successful key driver in mitigating Apple’s Modern Slavery risk.

A strong employee culture who can identify risks of Modern Slavery and avoid procurement practices which would enhance these risks, is of upmost importance to a successful and Sustainable supply chain.

In Summary

  • Modern Slavery is a large issue in many supply chains due to a lack of transparency.
  • Investing in a Sustainable Procurement Strategy and IT technologies can help lead to mitigate Modern Slavery sand supply chain risks.
  • Implementing transparency and traceability can help drive consumer engagement and company profits

If you want to know where to start in implementing Sustainable Procurement, Procura can provide a clear strategic plan and outline your supply chain risks and help mitigate them through Sustainable strategies.

 

Key References:

Global Slavery Index 2018 – https://www.globalslaveryindex.org/

https://www.globalslaveryindex.org/2018/data/maps/#prevalence

Ilo.org. 2017. Global Estimates of Modern Slavery. [online]

https://www.antislavery.org/

Acknowledging and reporting on modern slavery

https://www.independent.co.uk/news/uk/home-news/covid-ppe-modern-slavery-gloves-uk-b1825502.html

https://www.inc.com/kenny-kline/new-study-reveals-just-how-important-brand-transparency-really-is.html

https://hbr.org/visual-library/2019/08/how-transparent-is-your-supply-chain

https://www.anthesisgroup.com/wp-content/uploads/2020/08/Modern-slavery-update-2-page-guide.pdf

https://www.forbes.com/sites/darrynpollock/2020/04/15/nestl-expands-use-of-ibm-food-trust-blockchain-to-its-zogas-coffee-brand/?sh=53b83c711684

https://www.nestle.com/csv/raw-materials/supply-chain-disclosure

https://www.ethicaltrade.org/sites/default/files/shared_resources/corporate_leadership_on_modern_slavery_full_report_2016.pdf

 

To discuss how Procura could help your organisation – please get in touch:

Email us: info@procuraconsulting.com

Call us: +44 (0)203 693 7275

OR subscribe to receive regular insights from the procurement experts at Procura:

Subscribe below for regular Insights

* indicates required

Please select all the ways you would like to hear from Procura Consulting:

You can unsubscribe at any time by clicking the link in the footer of our emails. For information about our privacy practices, please visit our website.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.