Comment: Communication and collaboration key to tackling supply chain slavery
The practice of slavery is, in theory, confined to the history books. Yet it still exists in the modern world, in a more clandestine form, throughout the supply chains of many businesses whose products we buy and use every day. The most recent Zara incident where alleged unpaid workers in Turkey were stitching pleas for help into clothes further ignites the need for more effective mechanisms to address labour conditions and regulate the landscape. The good news is that earlier this month, the International Development Secretary announced that the UK government will spend £40 million on tackling modern slavery in supply chains, with retail giants like Ikea, Tesco, John Lewis and Marks & Spencer taking part in the research.
Despite this, studies still reveal that the world is failing to meet the UN’s Sustainable Development Goals, furthering the ongoing concern of how ethical our supply chains truly are. The research, conducted by International Labour Organisation and the Walk Free Foundation, found that over 40 million people worldwide are victims of modern day slavery, and that 152 million children, between 5 and 17 years old, are in child labour.
Often a company’s boardroom and the factory handling its production are continents away from each other. The physical distance between them is widened by a distance that comes as a result of limited communication and a lack of awareness of how certain practices are handled locally. Practices like falsified factory audits and outsourced production contribute to modern slavery across companies’ supply chains. The lack of training and education across all levels can further harm a business’ ethical initiatives.
Despite the seemingly growing number of companies introducing their own fair-trading schemes and standards for ethical sourcing, it’s clear that the vast majority are still failing to do their bit.
With increased access to information and shared content online, conscious and socially aware consumers are demanding greater transparency from brands and their supply chains. Apps like Not My Style and Project Just, along with social enterprises like Fashion Revolution, are putting increasing pressure on the fashion industry’s supply chain ethics. Not My Style lets users browse through and rate brands based on how much information they have disclosed about the factory workers and labour conditions in their supply chains. Consequently, ASOS’ entire supply base has been revealed through this rating app, as opposed to FCUK’s, who refused to share any data. Project Just works in a similar way, rating brands on how they report human rights and environmental issues, and supplying browsers with a guide to which ethical brands they can shop from. The snowballing consumer activism is putting pressure on retailers to first question their own supply chain ethics, and then consider what they could do to address any existing issues.
We need to talk
In today’s connected age of tech and social media, it seems we’ve forgotten how to truly communicate. The sheer act of talking and facilitating these discussions could be the key to eradicating slavery in the modern world.
Factory workers often hold back from voicing their grievances, fearing that their statements might be met by unjust retribution. It is in the hands of factories to enable trustworthy and effective methods for sharing concerns and complaints. Product design and procurement specialist, Matrix, worked with high street retailers and NGOs to launch MatrixChat; a new worker welfare service, via the Chinese messenger app WeChat. MatrixChat is set to change the consumer goods industries for the better, as it allows factory staff to log quality of work-life statistics so that factory managers, intermediaries and buyers can focus on improving the working lives of their employees.
Another way to facilitate the honest sharing of grievances is to supply workers with a mobile hotline and online surveys, which can additionally provide a direct route for worker voice all the way from the factory floor to the brand’s headquarters. Of course, the mechanics of these processes would also need to be considered. Matrix, for example, helped to install a wireless internet connection in its core factories’ communal areas, so that people could access the MatrixChat service without incurring costs from their mobile providers.
These examples illustrate necessary, cheap and simple steps toward bridging the gap between brands and the people making their goods, and will help to combat the problem of often falsified factory audits. What could also have a significant impact on eliminating unfair working conditions is if businesses committed to going the extra mile and to making irregular visits to their suppliers, in order to check working conditions throughout the year and not just around factory audits. These are small but effective steps in opening up the channels of trustworthy communication in the supply chain.
When the tools to talk are there, how can businesses truly embed ethical initiatives in their corporate cultures and therefore prolong their lifespan?
Educating and training everyone, from retail buyers to factory managers and workers, in CSR is essential. Online platforms can supply access to information about core processes, such as regulation changes and the lifecycles of the products that workers have helped create. Partnering with local institutions and NGOs in supporting migrant workers to settle in, introducing programmes for working parents, as well as providing training on quality management and leadership are additional steps that companies should take in order to inspire culture and boost the productivity of a happy and stable workforce. All stakeholders need to have a clear overarching vision and understanding of the importance of such initiatives and their possible effect.
Theoretically, all businesses should exercise due diligence in their supply chains, but when that has been foregone, raising awareness of an issue and its importance must be a starting point. Collaboration and communication, intertwined with innovation and technology, could be key to adopting responsible business practices and processes. The outcome of these would positively impact a business’ supply chain, eliminating the risk of modern slavery incidences. Maybe someday modern slavery could be just a page in a history textbook.
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.”