The traditional belief is that the further away a business is physically and logistically from its supply chain, the harder it is to know what is happening within it. This is why, people argue, abuses of labour happen.
A few examples, have however proven that it doesn’t matter whether a supplier is 10 or a 1000 miles away, abuses do happen and unless procurement has the right systems and policies in place, abuses will continue to occur.
Back in 2010 factories in the city of Leicester that were manufacturing clothes for high street retailers including New Look, C&A and BHS were found to be paying workers below minimum wage and they were also forced to work in cramped and dangerous conditions.
This isn’t the only example though.
An investigation by the US Labor Department in November 2016 found that workers at 77 garment companies were subject to sweatshop-like working conditions. Workers were also found to be working over 55 hours a week on just $4.50 an hour, far below the minimum wage of $7.25 an hour.
Clearly a supply chain doesn’t have to stretch across the globe to be at risk of such abuses hitting it and it is procurement’s job to ensure that no matter where suppliers are, that they are adhering to the correct standards.
Fail to do that and it is not only workers that will suffer, a company’s reputation will also take a hit.
Many procurement functions thought reshoring production and boosting local sourcing efforts would take this risk away in terms of global sourcing, but it is obvious that it continues to need attention.
The solution lies in a number of areas.
Technology can help define where a supply chains stretches to, who is in it and a history of problems. The other is a strong auditing process as well as clear policies for suppliers to follow. Outside of that it is about having tough punishments for those who do not adhere to standards.
Even with these in place it is hard to imagine a world where abuses do not happen. It is key that it is a risk that isn’t ignored. Ignore it and the problems will be multiplied.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.