This month is National Slavery and Human Trafficking Prevention Month. The President’s Interagency Task Force to Monitor and Combat Trafficking (PITF) is a cabinet-level entity created by the Trafficking Victims Protection Act of 2000, its mission is to coordinate the the efforts to combat human trafficking. In the PITF Fact Sheet released earlier this month, Procurement and Supply Chain is named as one of the 4 priorities. The PITF meets annually and is proposing some new measures sure to put pressure on organizations like the fishing industry and retailers who unknowingly purchased product where trafficking was involved.
I mention this in my blog because I have long held the belief that it is impossible to responsibly source internationally from one’s desk in the US. Unfortunately, that’s the practice that a large number of companies engage in. They locate sources of supplies through trading companies, brokers or stumble across them on the internet. In many cases employers enjoy the cost benefits from global sourcing, but fail to see the value in the required due diligence of investigating the entire supply chain and creating relationships with suppliers. They are concerned about the budget and expense of travel and fail to see the damage that the company can be exposed to if the product has a reputation risk or bribery issue.
It may seem like a prudent move, but it can land a company in a PR, regulatory and customer nightmare. My experiences with international sourcing are that I have found that the trading companies and brokers are often not concerned with product consistency, CSR, dedicated manufacturing sites and sanitation. The customer orders are coming in and the customer is content to stay in the US and fork out money, so, why worry about anything but price and delivery.
Some things I’ve seen are food companies processing materials in rusty metal cans, unsanitary plants, machinery incapable of holding tolerances, safety violations capable of great harm, death and life-long disabilities and the list goes on. I have also seen the most modern robotics and invested capital to assure consistent, safe and least-cost manufacturing in many foreign companies. The trick is to survey and understand the supply chain, visit the supplier and make sure your company is not exposed to reputation damage from the global supply chain. Understanding the culture and building strong relationships with foreign entities is even more important when sourcing globally.
Here are 5 key tips that I recommend:
- Never source from your desk; visit the supplier
- Include the cost of visiting suppliers in your cost reduction analysis
- Always visit the suppliers and consider contracting resources in the region to be your eyes and ears
- Look for all health and safety issues, create extensive interviews with principals
- Develop strong CSR and Sustainability policies that the suppliers must sign and agree to
The PITF is creating resources to help, including the release of the online Responsible Sourcing Tool this month. Use these resources and read up on USAID’s new Supply Unchained initiative. Look into the tools offered by ISM like the Supplier Risk Tool and CIPS’ Sustainability Index. And most importantly,
Get up from your desk and visit suppliers.