Combat inequality and get a bonus hit on climate change
Dr Joy Murray, Senior Research Fellow, Integrated Sustainability Analysis at the University of Sydney; Dr Arunima Malik, Lecturer in Sustainability, ISA, School of Physics and the Sydney Business School; and Dr Darian McBain Global Director of Corporate Affairs and Sustainability at world-leading seafood producer Thai Union Group, look at the need for modern slavery to be properly defined on a global level and how effective initiatives to combat it can also have an effect on climate change.
There are two overarching threats to humanity right now. The first is climate change, with its headline indicator, GHG emissions. The second is inequality for which modern slavery, as extreme inequality, is the headline indicator. While societies around the world may struggle to engage their governments in making climate change a priority through measures like energy infrastructure and carbon trading, combatting modern slavery relies less on governments for initiating and underpinning action. Modern slavery can be challenged by all of us with the help of NGOs that expose and monitor modern slavery in supply chains.
Of course, a Modern Slavery Act can provide focus and stimulate action amongst the business community, although many companies are already taking action. Reputation is valuable, easily lost and can take a long time to rebuild. We can probably all recall a scandal involving child labour or deadly working conditions, with subsequent media outcry and businesses compelled to take responsibility and supervise changes in their supply chains. Thus, right now it may be easier for citizens to combat modern slavery than to make meaningful inroads into directly influencing action on climate change. The good news is that there’s a good chance we would be indirectly tackling climate change at the same time.
Inequality and environmental degradation cannot be separated. With a global system that allows 26 people to own the same wealth as 3.8bn, governments have fostered fertile ground for the rich to exploit the poor and the planet. The rich donating to climate denier organisations influence governments to support their interests against the interests of the rest. Over-consumption by high-income countries hiding their increasing GHG emissions by outsourcing production to low-income countries, is driving massive change to our climate. An example of this production outsourcing can be seen in work done by the University of Sydney’s Integrated Sustainability Analysis group (ISA) and the Stockholm Environment Institute invited by the UK Government to analyse progress towards meeting its Kyoto commitment.
University of Sydney Australia, University of Groningen and University of Leiden Netherlands, Purdue University USA, OECD Paris and NTNU Norway are key groups in this kind of analysis, which is known as ‘footprinting’. Footprinting accounts for the full impacts of a country’s consumption. Using high-performance computing power this research analyses billions of global supply chains. Using this method, called global multi-regional input-output analysis (GMRIO), these groups from around the world have calculated not only environmental effects of trade but also social effects such as inequality, child labour, and working conditions. Work has now begun on the painstaking task of adding modern slavery to this suite.
On 1 July 2019, the Australian Modern Slavery Act will begin its first reporting period. Modern slavery is the extreme manifestation of inequality. If we can convince businesses and organisations like universities to take this reporting seriously, to investigate supply chains diligently and take steps to combat the problem, we will reduce some of the most damaging inequality on the planet. Simultaneously, we will take out of the system money that is fuelling the fossil fuel industry and undermining government efforts to combat climate change.
Where are the gaps?
First, there is no Paris Agreement on modern slavery. Modern slavery lacks powerful metrics like carbon footprinting used to define and track emissions, making it hard to assign targets and document progress towards eliminating slavery.
Secondly, there is no common language, knowledge and understanding around modern slavery like that which keeps emissions in the news. Whereas today we can all speak the language of climate change there is little agreement even on the definition of ‘Modern Slavery’. An internationally agreed definition is important to enforcing legislation. Without it we will struggle to maintain a shared focus on the issue and the actions to address it.
And thirdly, unlike emissions, where in December 2018 the Alliance of CEO Climate Leaders signed a letter to world leaders telling them to be ambitious in addressing climate change, corporate leadership on modern slavery, while some visibility has followed legislation, lacks the impetus to drive global change. In Australia, with the exception of Andrew Forrest who founded the Walk Free Foundation in 2010, there is little visible leadership from business and industry. On the contrary, business leaders have been known to deliberately not look for slavery in case they find it.
What to do?
First metrics: As outlined above, since 2003 groups around the world have been providing climate change associated metrics to local and global businesses, all levels of government and bodies like the World Bank and the UN. Just as we produce carbon footprints we can produce modern slavery footprints. But it takes time.
Secondly, a common language for understanding modern slavery: throughout 2018 organisations in Australia, like the Property Council and Human Rights Leadership Group for Business, conducted briefings to alert businesses to the coming Act. In 2019, the Australian government provided support for industry engagement on obligations under the Act. Forums assembled speakers from government, business and NGOs. Speakers at these events know how to address the knowledge gap. They are already helping producers, consumers and in some cases students to understand and address modern slavery.
With the help of virtual reality (VR), their messages can reach a wider audience. In Australia we have award winning VR companies and researchers. VR has been identified as capable of providing a solution for addressing Sustainable Development Goal 4 (Quality Education). Harnessing the power of VR, we can provide an immersive experience for combatting modern slavery. With VR visualisations of the footprint metrics, we can show how supply chains snake around the world, illustrating the importance of looking beyond tier two suppliers. We can make product traceability a reality.
Thirdly, leadership: We have highly respected corporate, civil society and academic leaders who can show the way by taking seriously their responses to the Modern Slavery Act. Buy-in from the top and a collaborative culture will support organisations in seeking advice on how to find and address modern slavery so that, instead of not looking in case they discover something, they can be proud of what they are doing to solve the problem.
There exists the knowledge and experience to produce a modern slavery footprint – a common metric that can provide the scientific rigour to support a benchmark and targets towards a world without slavery. We have in Australia the creativity, know-how and enthusiasm to produce VR visualisations of complex supply chains driven by supply chain data and on-the-ground good news stories. And there are academic, business and civil society leaders in Australia who understand what modern slavery means to people’s lives and are committed to change.
With these three interwoven strategies to combat modern slavery, Australia will be combatting one of the most extreme forms of inequality and simultaneously taking a step on the way to reducing a major driver of climate change.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”