Digital Procurement Networks Aid Legislative Efforts To Root Out Slavery In Supply Chain


Author: Henrik Smedberg

When the parliament of New South Wales passed the Modern Slavery Act on June 21, Australia’s most populous state became one of the world’s most visible beacons of progress against a scourge affecting millions of people in developing countries: the persistence of forced labour in the manufacture of many of the everyday products that line store shelves. The legislation requires businesses exceeding $50 million in annual revenues to slave-proof their supply chains, ensuring not only the absence of forced labour but also any involvement in cybersex trafficking, the livestreaming of the abuse of children, and other human rights violations.

New South Wales, while incredibly forward-thinking in crafting and passing its new legislation, is not the first jurisdiction to do so. In 2016, the United Kingdom enacted its own Modern Slavery Act, mandating that businesses exceeding £36 million in annual revenues produce an annual slavery and human trafficking statement. The U.K. and New South Wales are part of a growing trend toward acknowledging the crisis of modern slavery — and taking concrete actions to combat it. And this push toward transparency is a welcome step forward.

Yet according to the International Labour Foundation, there are an estimated 30 million forced labourers in the world today – from conflict minerals in the Congo to fishing in Thailand to migrant workers in the United States and North America. So much work remains to be done.

There are plenty of recent examples of outsourcing in the supply chain where the use of child and/or forced labour has been found, resulting in reputational damage for organisations who were not aware of the activity. Years ago, organisational leaders might have asked, “How can I possibly know if there is child labour or human trafficking anywhere in my supply chain?” And it was a fair question, because governments and businesses alike were ill-equipped to monitor the ethical practices of their suppliers. For most organisations, keeping track of their first line supplier was difficult enough. Tracking the full supply chain of their suppliers and their suppliers’ suppliers was almost impossible. But technology has changed all this.

Thanks to the rise of digital procurement networks, organisations can gain newfound visibility into their supply chains and quickly and easily evaluate trading partners across hundreds of criteria to determine their exposure to risk and mitigate it before it creates any negative impact. For example, does a supplier have the governance structures in place to root out involuntary servitude? To document responsible environmental stewardship? To certify the provenance of natural resources? To solicit contracts from women-and minority-owned businesses? To avoid the use of upstream labour from regions associated with inhumane working conditions?

Using business networks, organisations can quickly and easily access this data and make it actionable. SAP Ariba is a great example of this. The Ariba® Network connects more than 3.3 million organisations who drive over $1.7 trillion in commerce on an annual basis. These organisations have the buying power to ensure suppliers provide transparency and fair labour practices across their sub-tier supply chains. Leveraging historical and real-time purchasing data and supplier intelligence in conjunction with cloud-based risk management applications delivered on the network, they can unleash this power and help bring freedom to humans who are being exploited around the world. They can, for instance shine a light on the materials, regions, and suppliers that are most likely to have forced labour. They can map the bill of materials of products and services they make and buy right down to their raw materials and cross-reference this information with hotspots where there is a high propensity for the use of forced and child labour which companies can use to determine their risk.

Slavery is a network. And it will take a network to break it. Using digital networks, public and private sector entities can gain a full and transparent view into their supply base, pinpoint problem areas, and act to rectify them by moving purchases to suppliers who adhere to their standards and comply with all applicable rules and regulations.

Forced labour is an equal opportunity offender. And thanks to proactive governments like New South Wales, it can no longer be ignored. Using digital networks, organisations can make more informed decisions about their supply chain and uphold the new law. But more important, they can execute procurement with purpose and make the world a better place.

  • Henrik Smedberg is Regional Vice President of SAP Ariba Australia and New Zealand.  

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