5 Tips Every
Business Leader
Needs To Know

About Slavery in Supply Chains
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Most people at your company probably didn't wake up this morning thinking ‘I should check if our company’s supply chain is using forced labor somewhere’. While slavery in supply chains has been around since the beginning of supply chains, its not been top of mind concern until recently.
Companies of every sector and size are now required by regulators, investors, consumers, charity watchdogs, and the media to look at their supply chains in a completely new way. For the first time ever companies need to know the ethical footprint of their goods and services.

Over 40 million people live under modern day slavery today...

...and 1 in 10 children globally are child laborers. This is not ‘after school job’ kind of child labor, but work that the International Labour Organization deems hazardous and exploitative. The pandemic has pushed 1.6 Billion children out of school, with many unlikely to return. This increases the amount of availble child labor, which in turn creates significant risk for companies.
Slavery in supply chains has been detected in everything from toothpaste, electronics,
machinery, fish, solar panels, tomato paste, hair extensions, apparel, to thousands of other products.
The United States and Canada now ban importation of goods made with slavery, regardless of where it occurs in the supply chain and have begun to seize shipments causing significant costs and reputational damage.
In just the last few years we have seen Modern Slavery Acts passed, shipments of goods seized, large fines paid, and negative media levied against companies neglecting responsibility for their supply chains.
Our company, FRDM (pronounced freedom),
helps companies, governments, and universities trace and monitor their supply chains for forced labor all the way to end tier suppliers.
Supply chain transparency is no longer
a ‘nice to have’ but a ‘better get quick’.

Our team are experts in procurement, technology, and human rights,
and we’ve learned a few tips along the way we’d like to share:

1

Develop Modern Slavery Policies
That Don’t Sound Like Your Legal Team Wrote It

Does it always feel like somebody’s watching you? They might be.

The new modern slavery laws require companies report on  their effectiveness in monitoring and mitigating risk each year. In other words, you need a framework focused on making progress every year. Companies who treat these laws as just a box checking exercise could find themselves out of compliance and called out in the media.Remember, bad guys don’t care about good policies unless there is real action behind it. Most exploitation happens beyond first tier suppliers, where your company’s policies have little jurisdiction.

Hiring consultants to tighten up your policies and procedures is great for the first year of reporting, but you will need to communicate a clear demonstrative plan for continued improvement year over year. Charity watchdog organizations are publicly ranking the effectiveness of corporate efforts, if any, with media and investors paying close attention.

Don’t just check a box. Make a plan.
(also, we love legal teams)

2

Don’t Let Perfect
Be The Enemy Of Progress

There is no such thing as a slavery free supply chain. There, we said it.

We meet companies all the time who get stuck in a paralysis of analysis who believe slavery in supply chains is something they can address once, and never worry about again.

Think of supply chain transparency the same way you think about cyber security. No reasonable company would set up a data security system once, and never improve it. That would be insane, and very dangerous to the business. Instead, data security teams are constantly updating their protocols and learning new ways to protect the business. That is how you need to think about protecting your company’s values in your supply chain.

Don’t plan for perfect. Plan for progress.

3

You Can’t Fix
What You Can’t Measure

One of the great management axioms attributed to management guru Peter Drucker is ‘you can’t manage what you can’t measure’. Your marketing team wouldn’t launch a $10M marketing campaign without first measuring the market and identifying where your paid advertising would get the greatest ROI.

The same is true with cleaning up risk in your supply chain. We’ve watched companies randomly audit a mere fraction of their suppliers with ridiculously long (and somewhat abusive) questionnaires. This is a mistake. We live in the era of big data and deep insights, so why not leverage it? Your company is probably swimming in data that is just waiting to be analyzed. One of your first investments should be gaining risk  insights from your spend data.

Measure your supply chain before you expend effort trying to fix the problem. Start with organizing your spend data into a risk ranking framework. One of the benefits of measuring risk first is that it sets you up for constant monitoring of risk, which is increasingly becoming a requirement by regulators.

Always measure before you fix.

4

This Is A Function
Of Procurement

FRDM intentionally built a procurement tool to help our customers buy better. If you want to manage risk in supply chains, who better than the team in charge of buying for your company.

Would you ask your sales team to do your accounting?  Would you ask finance to do your marketing? Your ability to comply with regulations and generate real impact will depend on your ability to bring your suppliers along on the journey, some of whom may already be further along than your company.Don’t let your legal teams lead this process because they typically like to mitigate risk down to zero, which is literally impossible here.

Don’t let your sustainability team lead this process because they are used to working with data that’s much easier to track like carbon emissions. Slavery does’t leave a footprint or and emission to measure. Slavery is a behavior, as in the literal commodification of a human being. In order to find human rights risk, you need to understand the contextual data like your supplier's industry, trading partners, or the raw materials they use in their products. FRDM built a predictive Bills Of Materials technology (we call them product genomes because it makes us sound smarter) for just about any product you can buy in order to give our customer's a fuller view of risk.

Let your procurement team lead. Let them become the informed buyers in your company who can leverage your buying power for good - protecting your company and everyone in your supply chain.

5

Micro Actions Equals
Macro Impact Over Time

Challenges like modern slavery can summon a desire to do something BIG. Try to let go of this idea. This process is going to take time. You need to pace yourself by creating small wins along the way.

These small wins may feel insignificant in relation to the severity of the issue, and you may even receive cynical responses from within and without the organization for appearing ineffective. Companies who over-engineer strategies either seldom achieve their goals or create goals so insignificant that they put their organization in reputation danger.

Avoid the mirage of working groups and endless stakeholder meetings as signs of progress. It's easy to think appearing to be busy is accomplishing something. It's not. Planning is not doing. Doing is Doing. Building a plan isn’t the same as implementing it.

So, build a plan with small wins like:
Step 1. Draft vendor agreements to align with United Nations Guiding Principles.
Step 2. Celebrate vendor agreement re-draft
Step 3. Enhance suppliers’ files with industry codes
Step 4. Celebrate supplier data enhancement

By creating small meaningful wins, you begin to demonstrate velocity, which is really what regulators, trade enforcement agencies, media, and investors want to see. Never underestimate the power of small sequential wins. Yeah!

Hopefully these 5 Tips will help you settle your nerves and strengthen your resolve to get started.

We’re happy to walk you through FRDM’s software
and how it can help your business comply with all regulatory requirements for continued success.

Ready to
Buy Better?

Start building a healthy supply chain now.