Modern Day Slavery haunts Supply Chain

Human rights first reported that forced labor generates annual profits of US $150billion. The report also indicates that 24.9 million people are in forced labor, where 16milion people are exploited in global supply chains for the private economy, especially in manufacturing and retail industries. Thus, labor rights strike at the heart of global supply chains.

Asian manufacturing hubs have witnessed a significant increase in modern slavery over the last four years, and the risk is set to intensify further as the economic fallout from COVID-19 takes full hold. Modern Slavery Index reveals that Bangladesh (18th highest risk globally), China (20th), Myanmar (23rd), India (25th), Cambodia (32nd), Vietnam (35th), and Indonesia (44th) all are at risk.  The index measures the risk to the business of the possible association with slavery, trafficking in persons, and forced labor in supply chains, operations, and service providers. In addition, they have significant deterioration in enforcement capabilities post-covid-19. However, these countries produce a majority of the retail goods and a swathe of raw materials, which is critical to our economy and global businesses.

Enterprises must invest in a “Network of Networks” meaning extending their supply chain with their suppliers’ ecosystem and suppliers’ supplier ecosystems.  Bringing ultra-visibility into third-party ecosystems minimizes the modern-day slavery risks and aids companies to gear up human rights due diligence as part of their supply chain operations.

Enterprises establish supplier evaluation processes, appraisal processes, and policies to govern environment sustainability and fair labor standards. However, capturing ESG (Environment, Social, and Governance) is still an afterthought and often functions as a silo process.  Therefore, incorporating policies and procedures within the environment and integrating with your supply chain planning and execution systems are imperative. Without a doubt, establishing the guidelines is the first step in Modern Day Slavery, but operationalizing that is huge.    

Today’s solutions treat those policies and procedures as standalone processes during the supplier assessment step or supplier onboarding or trade compliance side. That data has been jailed in siloed in supplier performance journals or global trade management systems and never put to use or analyzed for ESG analysis. Believe it or not, we are struggling to match the authoritative identifiers of the companies.   

Instead, we need to design our supply chain solutions to adapt to the manufacturer or retail business process, integrate supplier ESG policies within the day-to-day operation, and flag inconsistencies for routine audits, immediate escalations. We must unlock hidden information by mapping disjointed supplier data against operational data by leveraging analytics and semantics.

The same underlying information must be used for governance to track risks, disclosure, and performance to project risk management policies with suppliers and supplier ESG compliance assessments.  Last but not least, analyzing supplier ESG data and execution data through machine learning tools reveals patterns for fraud, improvement areas, and new opportunities. The random audit can be enforced on suppliers based on ML tools’ findings and recommendations. Above all, giving a chance for smart technologies can aid enterprises to trace the origin of the raw material and enforce fair labor policies within their suppliers.  All it needs is a strategic, thoughtful team to take up this priority. Believe it or not, customers care about this issue.

Conclusion: Supply Chain Leaders have the opportunities and technologies to act on modern-day slavery as part of their supply chain initiatives.