Considering how important it is to know suppliers, especially in highly regulated industries, some recent research on food manufacturers surprised me. Almost one in five (19 percent) of the respondents from large food manufacturers taking part in a survey admitted they don’t have a way of finding out even the name and address of suppliers in their supply chain.
The survey of 42 large food manufacturers across the UK, U.S., Spain, Brazil, Asia, Australia, South Africa and the Middle East was carried out by independent research agency IFF and commissioned by global supplier risk management company Achilles. More than half of the survey respondents from large firms (53 percent) admitted they don’t have a plan in place to find out in the future who is in their supply chain. Furthermore, 12 percent of the respondents also admitted their company doesn’t put in place corporate standards that suppliers must follow concerning issues such as ethics, and health and safety.
Thousands of UK and international businesses whose global revenues total more than 36 million pounds are now considering how they address modern slavery, as they approach the first deadline for making “slavery and human trafficking” statements under the UK’s Modern Slavery Act 2015. The Act is concerned with toughening the criminal law on trafficking and keeping people in slave-like conditions, and requires companies “to give an annual disclosure detailing efforts to root out slavery and human trafficking in their global supply chains.” Businesses found to be using unethical labor in supply chains face hefty fines under the Modern Slavery Act.
What’s interesting is that knowing the name and address of suppliers in the supply chain is a basic first step for identifying and ending abuses, so an inability to do so puts these food companies at risk. Indeed, 40 percent of the survey respondents said they believe it is “likely or very likely” they will be exposed to mounting legislation. Almost a third (29 percent) of the respondents also said they believe it is “likely or very likely” their company will be exposed to reputational damage.
“Without knowing who is in the supply chain, or having basic information about how contractors do business, food manufacturers put themselves at risk of using ‘hidden’ slave labor, child labor or unethical working practices,” says Luis Olivie, Global Business Development Director for Achilles. “To prevent a ticking time bomb of risk, we recommend large businesses map their supply chains through all tiers to identify and tackle potential risks. With a clear picture of who is in the supply chain, businesses can implement clear standards on ethics, which suppliers must adhere to before they are even considered to provide goods and services.”
I suppose the survey results of large food manufacturers shouldn’t be startling. After all, despite all the talk of increased supply-chain risk, nearly one in 10 organizations don’t even know who their key suppliers are, according to the Supply Chain Resilience Report, published last year by Business Continuity Institute and supported by Zurich Insurance Group.
As for slavery in the supply chain, the International Labor Organization explains that forced labor takes different forms, including debt bondage, trafficking and other forms of modern slavery. The organization further notes that almost 21 million people are victims of forced labor, mostly in the domestic work, agriculture, construction, manufacturing and entertainment industries. Finally, this labor in the private economy generates $150 billion U.S. in illegal profits per year.
Let’s hope that as more legislature forces companies to identify suppliers and add more transparency to their supply chains, it in turn helps to begin to put an end to slavery and human trafficking. However, one must also ask if such efforts go far enough?