For many businesses, supply chain transparency is a challenge. Whereas the business itself may be diligently pursuing ethical policies and shoring up its brand values, it is impossible to know everything about the suppliers that it relies upon. What are the vital things a business must focus on?
“You might have a main supplier whose values closely align with your own,” observes Jonny Michael of JMCL Consulting, “but how can you control what suppliers further down the chain are doing? What about your supplier’s supply chain?”
How Much Does It Matter?
Slavery and human trafficking are on the rise in the UK. Figures from the government’s safeguarding framework, the National Referral Mechanism, show that there’s been a steady rise in slavery victims over the past five years. Between 2014 and 2015 there was the largest annual increase so far, of close to 1,000 additional reported cases.
“These are just the cases the police know about,” states Jonny. “If trafficking and slavery are thriving, what is being done about it?”
The Modern Slavery Act 2015 has made it a legal requirement that any business should be able to state the steps it has taken to ensure slavery and human trafficking are absent from its supply chain.
However, this is far from straightforward.
In April 2017, Fashion Revolution released its Fashion Transparency Index and reported that supply chains of apparel organisations were still not transparent enough. The not-for-profit organisation published this on the four-year anniversary of the Rana Plaza factory collapse, when 1,000 factory workers died.
Here, many of the western retailers who the factory ultimately supplied said they were unaware that their chosen suppliers had sub-contracted the work to Bangladesh.
“Checking your immediate supplier’s credentials is not enough because how can you control who supplies them?”
What Are the Risks to You?
From a legal viewpoint, the further down the line any slavery or trafficking is involved, the more shielded you might be from immediate repercussions, but this is not guaranteed.
“The big question, if your supplier’s supply chain is compromised, is reputational,” suggests Jonny.
“Modern media spreads stories like wildfire through digital channels, and if someone makes the connection between what your supplier’s supplier has been doing and your brand, it is going to be picked up and shared”
“This is about more than compliance,” explains Jonny, “because compliance will not necessarily protect your reputation and how people view your brand.”
What Must You Do?
“As an absolute minimum, be clear in your written terms and conditions what information you must have from your supplier about their own operations.” Jonny advises
“Establish as much transparency as you can. You can do this through questionnaires, audits, site visits, or even using specialist advisors”
Jonny also points out that businesses must be completely watertight in their own areas of compliance, including:
- cyber essentials
- information security
- labour standards
- modern slavery
“Ensure you’ve fulfilled all your obligations,” Jonny concludes, “but be very clear with your suppliers, in writing, what standards you expect of them.”