Dun & Bradstreet: stopping slavery in the supply chain
With the International Labour Organisation (ILO) estimating 25mn people worldwide are trapped in forced labour, modern slavery is a very real issue for businesses across many different industries.
Recent figures released by the National Crime Agency showed a 10-fold increase in the number of suspected modern slavery cases in 2018 across UK local authorities. Last month, a group of retailers hosted a Modern Slavery Forum at the House of Lords to look at ways to tackle this critical supply chain issue and seek commitments from leading high street brands.
The European Union (EU) is actively pursuing policies to ensure better procurement decisions are made by businesses and the European Parliament (EP) is looking at EU-level rules on how public procurement can contribute to better functioning purchasing practices.
This raises interesting considerations about the ethical responsibilities of procurement professionals across Europe. In particular, the EP points out that “socially responsible public procurement must take into account supply chains and the risks associated with modern-day slavery, social dumping [a practice of using low-wage labour or moving production to a low-wage country] and human rights violations.” This effort makes sure that goods and services acquired via public procurement align with the European human rights protections, with new guidelines expected this year.
Australia has also recently introduced a modern slavery bill which not only requires large companies to publish annual statements on measures taken to address modern slavery, but is also trying to ensure modern slavery risks are identified and addressed in government procurement. Key elements would also apply to Australian companies and foreign entities carrying out business in Australia. The governments of Australia, Canada, New Zealand and US launched a call to action to end forced labour, modern slavery and human trafficking during the 72nd Meeting of the UN General Assembly in 2017, and 80 countries have now endorsed it.
The Commonwealth Secretariat, a voluntary association of 53 independent and equal sovereign states, has also prioritised eradicating forced labour and modern-day slavery. Baroness Patricia Scotland, Secretary General of the Commonwealth, stated that the aim is “to build on outcomes of other international meetings, including the [UN] Call of Action to end forced labour, modern slavery and human trafficking launched on the side-lines of the 72nd Meeting of the UN General Assembly.”
The UK is currently seeing the first convictions from the 2015 Modern Slavery Act, and the establishment of the office of the Independent Anti-Slavery Commissioner has been a key lead in the UK effort to tackle modern slavery and human trafficking. But what role will the United Kingdom take on socially-responsible procurement and how can businesses join in the mission to prevent modern day slavery in global supply chains?
Global Supply chain transparency can identify riskier suppliers but policies can also help to increase diversity and small business engagement with government procurement.
The crimes of modern slavery and human trafficking have often been hidden behind a veil of secrecy, making them difficult to detect in supply chains. Supply chain transparency can help to identify potential illegal activity so that companies can develop mitigation plans to address these risks.
Mitigation plans cannot be a one-size-fits-all; they must be nimble enough to cover all industries and all regions of the globe. Technology can be used to help make supply chains transparent and identify low, medium and high risks. Mitigation plans can be established to review those medium and high-risk suppliers on a timeline that makes the most sense for each company’s unique supply chain.
The issue of supply chain transparency to identify and address risks must be a global initiative which has NGOs, governments and businesses working together. Through dynamic partnerships, we can tackle the growing global problem of preventing modern day slavery. We commend the important global policy work, but governments can’t go it alone.
Policy work to foster ethical public procurement and strengthen public-private partnership should be top on the agenda for 2019. Regardless of size and industry, businesses should come together, utilising data and analytics, to provide the needed transparency into global supply chains which will help companies and governments make more ethical procurement decisions.
NGOs and governments can help provide more granular details to ensure identification of the bad actors and make sure risk assessments can be built on the best and most up-to-date data, and businesses can take these risk assessments and build in policies and mitigation plans to ensure they’re doing business with the most ethical and trustworthy companies. Together we can tackle this global crisis.
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.”