Slavery in your Supply Chain-Do you know?

Last week I read a very interesting article in the New York Times that detailed how an investigation by the Associated Press prompted the emergency rescue of over 300 Slaves. The astonishing thing is that the article reported the “men from Burma were among hundreds of migrant workers who have been lured or tricked into leaving their countries and forced into catching fish for consumers around the world including the United States.” Much of the fish caught by the enslaved men was tracked by satellite and traced to some of America’s largest supermarkets and retailers.

Forced labor and slavery is big business. Of the 35 million people estimated by the Global Slavery Index to be enslaved worldwide, the majority are victims of exploitation in private sector activities, such as manufacturing, construction and agriculture. The illicit profit estimated by the International Labor Organization is $150 billion per year.

Many companies are adopting risk strategies, but I don’t believe that companies go far enough. When I speak to groups of supply chain professionals about risk management, I always ask how many of the audience members have a risk management strategy. It’s not surprising that all hands raise to affirm they have a risk strategy. The second question I ask is how many people manage the supply chain beyond the tier one or primary suppliers. Most of the hands go down because companies rarely manage the entire supply chain. From my experience working with hundreds of companies around the world, rarely can you find a map of the supply chain end-to-end.

News headlines are further evidence that companies need a strong handle on the supply chain. When toy companies have been accused of buying from suppliers that lack ethics and abuse employees, and garment retailers have suppliers whose factories collapsed killing hundreds of workers, the brand names who sell these products scramble to issue statements that they were unaware of the problems and promise to tighten their policies. Have they been successful? How do they know?

My advice is that every supply chain should be mapped and the complete supply chain should be audited. This is the advice I gave in 1998 in the book “Transform your Supply Chain; Releasing value in Business” and the advice remains sound in 2015. An excellent tool for audit is the Supplier Risk Index (SRI), an online resource developed by Ethisphere and the Institute for Supply Management® (ISM) for organizations to survey the practices among their suppliers and their supplier’s suppliers.

Of course, Supplier Visits are essential wherever your supplier is located. Learning to ask the right questions, meeting with the right people and being observant to identify their suppliers can help put the supply chain puzzle together.

Do you really know if slavery is part of your supply chain?

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Managing supply chain sustainability at Target

On the heels of Mary Barra’s appointment as CEO of General Motors, we can’t resist sharing this GreenBiz.com interview with another female executive in the supply management world. Kate Heiny leads the enterprise-wide sustainability strategy for Target, a Fortune 50 company and one of the most important retailers in the US with the more than 1,700 stores in 49 states.

Early in her career Heiny recognized that industries would need radical transformation in order to be successful in the future, and she views sustainability as the business strategy critical to the long-term viability of Target.

She and her Sustainability Team are responsible for helping Target’s guests and team members live more sustainable lives and minimize Target’s impact on the environment.

For example, Target is a founding member of the Sustainable Apparel Coalition, a trade organization of brands, retailers, manufacturers, government and non-governmental organizations and academic experts who are working to reduce the environmental and social impacts of apparel and footwear products around the world. Target uses the Coalition’s Higg Index to gauge its environmental sustainability performance and make changes for improvement.

With its grocery items, Target is making long-term commitments to offer food that will be GMO-free by year-end 2014, increase its organic food offerings by 2017 and replace farmed salmon with wild salmon.

Collaboration, creativity and sharing are three words Heiny uses frequently to describe how her team is working to imbed sustainability into their team members’ day-to-day work at Target. “Sustainability needs to be a holistic way of working and operating, not just one initiative or team,” Heiny said.

Walmart, A Leader in Offshoring, Now Champions Re-Shoring

Walmart may be a giant corporation, but give it credit for being nimble enough to respond to a changing world around it. It wasn’t all that long ago that Walmart was leading the way offshore, with the leverage of its huge purchasing power and aggressive purchasing strategies that drove suppliers to manufacture in low cost countries.But times change, so Walmart is now committing to a $50 billion increase in purchases of U.S.-made products, and it recently attracted nearly 1,500 high level executives and government leaders to its U.S. Manufacturing Summit. GE Chairman and CEO Jeffrey Immelt used the occasion to announce that GE will begin manufacturing high efficiency light bulbs for Walmart in a U.S. facility, bringing back 150 jobs from overseas.
When you consider that the jobs coming home are counted in the hundreds, while the U.S. manufacturing jobs that went offshore over the last few decades number in the hundreds of thousands, these actions could be written off as more about PR than substance.
On the other hand, when Walmart decided to “go green” and promote compact florescent bulbs in its stores, it signaled that energy consciousness had gone mainstream. It may be the same for re-shoring. Walmart has likely looked at its supply chain and decided that in a total cost analysis, the gap between sourcing locally and sourcing offshore has narrowed for some products it sells. I’d guess that Walmart calculated the marketing value of re-shoring offsets that gap for about $50 billion of the items it sells. And that’s how it came up with a $50 billion commitment.
So I would not discount Walmart’s actions as simply marketing stunts, nor applaud them as truly patriotic gestures. There may be elements of both of those, but there’s also likely some very businesslike sourcing calculations.

Wal-Mart’s Speedier Pay

Looking at this news from Wal-Mart — using a very smart strategy to reduce its supply risk by speeding up payments to its clothing vendors:

Wal-Mart Offers Way to Faster Payments to Vendors

There’s a lesson here for companies that have been stretching payment terms to 90 or 120 days….