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In Chains in Supply Chain

In Chain.jpg

The US Democratic Party presidential candidate Hilary Clinton is strongly advocating against modern slavery in her current election campaign. In the UK, the new Prime Minister Theresa May is setting up a government task force to 'get a real grip' of this problem.


Early this year, three global IT manufacturing organisations in the forefront of innovative consumer electronics were accused for not inspecting their supply chain for child labour. These companies have been using Cobalt (a mineral used in lithium-ion batteries) mined by children as young as seven in the Democratic Republic of the Congo. The recent estimates show the number of victims of Modern Slavery are in the range of 45 million globally.

If there was any similar incident twenty years ago, reputational damage would have been the only aspect to worry about. Still, after some time consumers and media would have forgotten the scandal leaving the original issue unresolved. In the wake of such exposures, organisations also actively went after fairtrade certifications which were primarily focusing on food & textile manufacturing. Again, over a period of time, these initiatives were reduced to mere marketing tools and used only to 'tick the CSR box'.

As practitioners, are we also to be blamed for taking this global issue lightly? We often ask various questions in our RFx documents on related subjects. 'Do you have a corporate social responsibility (CSR) Policy? What CSR targets do you have? The vendors also respond reasonably well and often attach their policies as evidence. However, do we really read them and ask questions? Do we consciously use the information provided in the evaluation process? Do we verify the responses with an independent party? One may argue this is not our job and the responsibility lies with the vendor if there were any wrongdoings discovered later contrary to what they promised on paper. However, this is not the case. There is too much at risk. The buyers are also responsible for what the vendors in their supply chain are up to. In the incident mentioned at the beginning, who would have thought a raw material used in a small component of the end product would have caused so much mayhem!


Matters are also getting tougher on the legal front. Last year the 'Modern Slavery Act' was introduced in the UK. This legislation empowers courts to use seized assets to compensate victims and issue orders barring offenders working in certain segments, such as with children.  The Act also introduced the 'Transparency in Supply Chains Clause', which now requires any supplier over £36 million in sales carrying out business in the UK to publish an annual slavery and human trafficking statement. There is significant focus on this problem in the political landscape as well. The US Democratic Party presidential candidate Hilary Clinton is strongly advocating against modern slavery in her current election campaign. In the UK, the new Prime Minister Theresa May is setting up a government task force to 'get a real grip' of this problem.

How can we help the buyer organisations to mitigate this risk? What are the tell-tale signs of these inhumane acts in supplier organisations? Can we partner with independent organisations specialising in Ethical Trade Audits? I am interested in knowing how much awareness on this topic is there in the Sourcing & Procurement fraternity. Also, what measures have you seen in organisations trying to combat this issue?


Please share your thoughts and comments.


Comments

Tiran this is a very interesting, highly relevant and timely post. There are various ways to conduct ethical trade audits and buyers themselves can get certified to do them or take help of their procurement partners to bring in capabilities. Here, audit with procurement practitioner experiences are must have for auditors. Keep writing.

Thanks CK.Really good tips on trade audits.

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