Supply Chain News: Gartner Says Procurement Leaders are Slow to Address Supplier Slavery Risk

Poses Major Challenge, As Gartner Finds Just Half of Companies Even Trying to Address the Issue are Making Progress

Modern day slavery in the supply chain remains a major risk for companies and procurement execs.

So says new research on the topic from Gartner and analyst Laura Rainier in a press announcement this week.

Supply Chain Digest Says... Traditional supplier assessments often miss risks associated with forced labor. Mechanisms must be put in place to verify that local site auditors speak the language of workers and additional, non-traditional assessments should be contemplated with high-risk markets or commodities. What do you say? Click here to send us your comments Click here to see reader feedback

The research was based in part on a global survey from Gartner completed in May of 104 procurement leaders that had recently participated in a sustainability initiative on their organizations’ progress in addressing modern slavery risk.

The survey was supported by additional conversations with Gartner clients that the research firm says have indicated that procurement leaders often struggle after investing in supplier visibility and related technology initiatives, “constrained from making further progress on the issue due a lack of resources, strategy or capability.”

The survey found that 71% of sustainable procurement leaders consider addressing modern slavery risk a key priority, but just half report making effective progress on the issue.

“Modern slavery is a risk to almost all supply chains,” said Rainier, senior director analyst in Gartner’s supply chain practice. “It’s also one of the most challenging risks CPOs have to address; rooting out the practice requires visibility into multiple tiers of suppliers and a willingness to address issues in areas of the supply chain that traditional due diligence processes often fail to reach.”

Gartner recommends that CPOs start in addressing modern slavery risk with a focus on building greater visibility into their supply chains, including prioritizing the Tier-2 and Tier-3 supplier relationships most at risk via geography or commodity source.

Rainier notes that achieving data visibility among these suppliers requires a mix of incentives and contractual obligations, and that technology will play a critical role in enabling the ability to map supply chain visibility.

To avoid stalling progress on addressing modern slavery risk, Rainier says CPOs need to take a series of actions beyond improving supplier visibility to mitigate and remediate the risk on an ongoing basis.

CPOs should:

Set and cascade policies: Ensure expectations around forced labor and modern slavery are clearly outlined in the supplier code of conduct. Suppliers must understand the nature and importance of the risk and how to comply. Suppliers must also cascade the supplier code of conduct and related policies around modern slavery to their suppliers.

Conduct supplier trainings: Ensure that suppliers are aware of policies, especially when they go beyond the legal requirements. Support suppliers to identify risk factors. Train them to conduct due diligence on their recruitment agencies and upstream suppliers.

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Assess suppliers: Traditional supplier assessments often miss risks associated with forced labor. Mechanisms must be put in place to verify that local site auditors speak the language of workers and additional, non-traditional assessments should be contemplated with high-risk markets or commodities.

Remedy issues: When issues are uncovered in audits it is critical for organizations to be ready to respond. Forging partnerships ahead of time, including with specific membership organizations focused on modern slavery, can help in ensuring best practices are followed in providing remedy or mitigating risk factors. Remedies should address the root cause of the issue and consider whether earlier steps in the plan, such as ensuring policies set for suppliers, are being adhered to.

Embed risk mitigation throughout the supplier lifecycle: Starting with supplier selection and onboarding, embed modern slavery risk mitigation into the supplier life cycle starting with the RFP process, through supplier onboarding, contracts, scorecards and remediation policies.

“Procurement leaders who have made progress on multitier supplier visibility should feel encouraged as accomplishing this step alone can be an overwhelming task,” said Rainier, adding that “Once a baseline of visibility is achieved, however, procurement leaders need to embrace the ongoing work that is required to accurately monitor and mitigate the risks associated with the use of forced labor in global supply chains.”

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