The biggest problem facing supply chains today is also the oldest: forced labor, child labor, human trafficking—slavery by any other name.
A lot of attention has been paid to forced labor camps in China’s Xinjiang Uighur Autonomous Region since the United States banned all imports of cotton and tomatoes from the region in January. But forced labor is also endemic in India, where children routinely mine mica, the mineral that gives eye shadow and car paint their sparkle; in the Democratic Republic of Congo, where indentured laborers toil to mine cobalt for electric car batteries; and in Japan, where prison laborers assemble video game consoles. Worldwide more than 25 million people are enslaved; 155 products from 77 countries are included in the latest edition of the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor.
There is hope on the horizon: In 2016, the U.S. began enforcing a provision of the Tariff Act of 1930 that prohibits the import of any product made with forced labor (before 2016 a loophole allowed such goods to be imported if they were not available domestically). Today, the United States has the strongest legislation against slavery in supply chains in the world, and Customs and Border Protection (CPB) routinely seizes shipments it suspects of being made with forced labor. What makes this law so powerful is that a shipment can be seized if there is forced labor at any stage of the supply chain, from the farms and mines where the raw materials are extracted to the factories where the finished goods are manufactured.
The forced labor ban leverages the formidable buying power of the United States to fight the issue across the globe. Ongoing U.S. policy efforts, meanwhile, enjoy bipartisan support, including the Uyghur Forced Labor Prevention Act, which passed in the House in a 403–3 vote last September, and the Department of Labor’s Supply Chain Tracing and Engagement Methodologies (STREAMS) initiative to combat child and forced labor in supply chains. In March, I testified before a Senate finance committee hearing on forced labor enforcement during which lawmakers on both sides expressed the need to root out the issue. Forced labor is not only morally abhorrent, it undercuts U.S. businesses’ abilities to compete: Goods produced by workers who are imprisoned, trafficked, underage, overworked, or underpaid are impossibly cheap.
So what’s preventing businesses from eradicating forced labor from their supply chains once and for all? For one thing, modern supply chains are huge. A U.S. brand might have tens of thousands of suppliers once you count their direct suppliers, their suppliers’ suppliers, their suppliers’ suppliers’ suppliers, and so on . . . And supply chains are fast changing. In industries like fashion, where demand is constantly shifting, the entire supplier base might turn over every year. Left unmonitored, these vast and fluid networks of trade are ripe for fraud, waste, and abuse, including the widespread use of forced labor.
Fortunately, new technology for supply chain transparency makes it possible to monitor global supply chains at the scale and the speed needed to eliminate products of forced labor. Companies need to adopt these solutions, but the government also needs to establish clear standards for the data companies that must collect on their suppliers. Last but not least, consumers have to pressure their favorite brands for more supply chain transparency.
Products of forced labor should not be able to find a market. Here’s what needs to happen:
The role of business
Companies need to map their supply chains and ensure that every supplier and sub-supplier is complying with U.S. regulations. But it can be hard to know where to start, how to engage with suppliers, and what data to collect or how to verify it. Companies with a few suppliers might be able map their supply chains through phone calls and emails. Mid-sized companies might opt for an approach that leverages consultants and lawyers. But for multinational corporations, supply chains should be fully mapped and digitized.
First developed at MIT more than a decade ago, supply chain mapping software can offer companies an accurate global view of their supply chain, down to every factory, mine, and farm. These solutions leverage the computational power of social networking to connect all of the suppliers in a company’s supply chain. A brand invites its suppliers to a cloud-based network. Those suppliers then invite their suppliers, who invite their suppliers, until every company in the supply chain is registered.
In industries like apparel, coffee, and cocoa, supply chain mapping is already commonplace. Other industries are held back by concerns about their suppliers’ willingness to be transparent and the resources needed to make sense of results. At Sourcemap, the company I founded out of the MIT research, we have helped some of the largest companies map the most challenging supply chains in the world. The first thing companies notice is how responsive suppliers are: More than 95% of tier-1 (direct suppliers) and 70% of tier-2 (indirect suppliers) respond to requests for transparency without being asked twice. (The remainder eventually responds.) That’s because supply chain transparency is a small price to pay for access to the U.S. market. The next thing they notice is how much more visibility they can gain. For every one supplier invited, between two and ten new suppliers join the network. That means a medium-sized company with only 100 direct suppliers will end up learning that it does business with as many as 1,000 companies worldwide.
Of course, the information collected from suppliers can’t be taken at face value. There are too many reasons for suppliers to misrepresent themselves, especially when it comes to forced labor. A number of promising techniques are being piloted to root out misinformation, including the use of blockchain to design tamper-proof transaction ledgers and sophisticated ways to test the DNA and microbiome of finished goods to determine where they actually originated. At Sourcemap, we use AI to spot red flags in supplier data that could indicate fraud, waste, or abuse in the supply chain. In the case of forced labor, this means looking for suppliers that sell more than they have the capacity to produce—increasing the likelihood that the added volume comes from an unknown supplier—or looking for patterns of staffing, for example around holidays, that indicate workers are not free to travel.
A national standard for supply chain transparency
When a shipment is seized by the U.S. Customs and Border Protection, the importer has to demonstrate that it performed enough due diligence to determine that the goods were not produced with forced labor. However, there is no clear standard today for what kind of data is sufficient to make this case, leaving companies scrambling for data to make their case before the shipment loses value. (Imagine filing your taxes only after an audit, and without a 1040.)
The U.S. government needs to set a clear evidentiary standard for what constitutes a forced labor-free supply chain, something that would amount to a clean bill of health for every container arriving in the U.S. At a minimum, every company should be required to map its supply chain down to the raw materials, and to collect enough information to spot red flags. Setting a standard will create a level playing field for U.S. companies and make CBP enforcement far simpler.
Voting with wallets
Consumers also play a role: When choosing between brands, find out what you can about their supply chains and support companies that practice transparency. Even before the forced labor ban, sustainable brands started offering supply chain transparency, allowing them access to the market for responsibly made products. There’s no better incentive for companies to start mapping their supply chains than the relationship they can build with a new generation of conscious consumers.
The U.S. is not alone in its efforts to root out forced labor: On June 11, Germany passed a law that holds companies accountable for forced labor in their supply chains. France, the U.K., Australia, and New Zealand have similar laws on the books. With tougher laws and new technology to map and monitor global supply chains, we can finally see a path to eradicating slavery worldwide. It’s time we finish the job.
Dr. Leonardo Bonanni is the founder and CEO of Sourcemap, the first technology company dedicated to supply chain transparency.