Successful supplier management occurs when both sides work together for mutual benefit. As the best performing procurement functions know, it is not about something that’s done to suppliers, but...
With the introduction of the Modern Slavery Act 2015 in the UK and the Modern Slavery Act 2018 in Australia, companies who have turnover over a certain threshold - £35mil and $100mil AUD respectively – are now required to produce an annual statement on how they identify and mitigate modern slavery risk in their global supply chains.
Much abuse that occurs in relation to workers happens in global supply chains, upstream in the chain where labour intensive and low value activities occur. Therefore, large companies located at the end of that global chain have a responsibility to work with their suppliers and suppliers’ suppliers to ensure that working conditions through the entire chain are ethical and legal.
In order to do this, efforts of global companies has largely been concerned with development of policies and tools related to supplier codes of conduct and auditing according to those codes. (Christ). Though a good place to start, the fact that labour abuses in supply chains continue to be uncovered is evidence that such an approach has so far been unsuccessful.
2020 Global SRM report: Supplier Management at Speed
Currently progress in addressing modern slavery is still limited by what private companies are willing to do in order to address labour abuse in their supply chains. In order to make actual progress, corporations need to cease viewing labour as a cost or merely as an input factor for production and make it a truly integral part of their supply chains.
Traditionally procurement organisations have focussed on their direct suppliers in terms of managing risk, continuity of supply and quality, however the modern slavery legislation requires organisations to think in terms of their entire supply chain, not just their key tier one suppliers. This is a shift in thinking that contemporary procurement practices and systems are not geared for. As such, procurement, compliance and sustainability teams are all grappling with the issue of how to gain visibility of their supply chain beyond their direct suppliers and how to ensure sustainable practices further down the chain and the COVID-19 crisis are not making things easier.
Just this week at the Global SAP Ariba conference in Barcelona, Amal Clooney called on corporations to put respect for human rights at the core of their business, highlighting the trend of ‘doing good’ as a way to bolster profits.