Pacific Rim Report: High-tech must address slavery in their supply chains

News emanating from the U.S. West Coast indicates that among many of the critical risks logistics managers must confront these days is that of forced labor.

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News emanating from the U.S. West Coast indicates that among many of the critical risks logistics managers must confront these days is that of forced labor. A recent report issued by KnowTheChain, a supply chain consultancy based in San Francisco, focuses chiefly on leading Silicon Valley multinationals that often extoll their progressive “human rights” policies.

According to its “2018 Information and Communications Technology (ICT) Benchmarks Report,” the technology sector is guilty of widespread abuse. This is the second ICT benchmark report that the consultancy has produced that ranks the top 40 global ICT companies—with a combined market capitalization of $4.7 trillion—on how they address forced labor in their supply chains.

Kilian Moote, project director of KnowTheChain, observes in the report that while 35 out of 40 companies have published a commitment to address forced labor in their supply chains, there’s often “a disconnect” between those policies and actual implementation. In a recent interview, he outlined several other surprising discoveries.

According to Moote, Intel scored highest in the 2018 benchmark, overtaking both Apple and HP since 2016. Another insight the team unveiled is that although larger companies tend to be among the top scorers, Amazon did not perform well. “We were surprised by this finding,” says Moote.

"This is particularly true in the areas that have the most impact on workers’ lives—worker voice and recruitment—which remain among the lowest scoring themes for all companies.” This comes at a time when all Pacific Rim eyes are set on what the Seattle-based e-commerce giant will think of next.

Amazon’s manufacturing purchasing agreements require its suppliers to comply with supply chain standards, which, among other things, include laws regarding slavery and human trafficking. In a statement submitted pursuant to the California Supply Chain Transparency Act (2010), Amazon notes that employees are subject to internal accountability standards, which include disciplinary measures up to and including termination, “for failing to follow Amazon requirements regarding its audits.”

Amazon did not respond to our queries about the research, but we hope to learn something at the “USC Marshall 6th Annual Global Supply Chain Excellence Summit” this month. That’s when Joshua Dolan, one of leaders of the company’s global supply chain and logistics division, gives the keynote address at what has become a premier Pacific Rim event.

Meanwhile, the USC summit’s founding director, Nick Vyas, recently told Logistics Management that he agrees with the premise of the study. “We have long been aware that child labor, unfair labor practices and other forms of labor abuse remain major concerns for supply chain managers,” he says. “It’s an ongoing issue that must still be addressed.”

While the majority of companies have taken steps to improve human rights compared to 2016, the sector overall needs to take stronger actions to protect vulnerable workers, observes KnowTheChain in its report. The firm “urges companies to engage with workers, give them access to effective grievance mechanisms, and tackle the exploitation of migrant workers by implementing ethical recruitment practices and repaying workers for recruitment fees they may have paid.”

The average benchmark score was 32 out of 100 possible points, with Intel scoring highest (75/100) and Largan Precision scoring lowest (0/100). As might be expected, the top tier scoring companies
have strong practices in place regarding their firsttier suppliers.

According to the report, those efforts are not being matched by several global “super suppliers,” however. Indeed, a half dozen such companies were among those who supply the largest ICT companies in the benchmark: (Amphenol, Keyence, Microchip Technology, Corning, Broadcom, and BOE).

“This is the first time we’ve been able to measure companies’ progress against where they were two years ago,” concludes Moote. “And while we were encouraged that forced labor is finally receiving the attention it merits, there’s still much work to be done to protect those who remain most exposed to exploitation.”

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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