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In Chains: How to Approach Human Trafficking in your Supply Chain

Posted by Amy Clark | June 19, 2015


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Are You Linked to Forced Labor?

It’s a problem the Atlantic suggested is “too massive to solve”, and its survivors provide nightmarish evidence of the dark side of global commerce. Human trafficking – the recruitment of workers by means of force or deception – is rife in essentially every supply chain, which means that most products with global supply chains have, at some point, been touched by someone forced into labor.Although many companies are attempting to eliminate forced labor in their supply chains, recent studies show that human trafficking is still prevalent. Most forced labor occurs in in Tier-2 and Tier-3 suppliers, often out of reach of the company itself. The process of identifying and penalizing human traffickers in a supply chain is exhaustive and at this point a comprehensive solution seems nearly impossible. However, with careful planning, technology, and commitment to transparency, we can successfully do away with forced labor in our supply chains and strengthen the global standard for labor rights to pave the way for fair labor in developing countries.

According to a recent study by NGO Verité, forced labor in the private economy generates $150 billion per year in illegal profits – that money comes from indebted workers, who often must pay for their own employment, as well as suppliers, who pay labor organizations to obtain workers for them. In Malaysia, for example, one in three workers are victims of such forced labor. Most commonly, forced laborers are migrant workers seeking a way out of their home countries, who find themselves trapped with inescapable debts that force them to stay captive. Often, these workers are subjected to terrible living conditions and malnourishment, with no compensation. Many OEM’s use labor organizations to source laborers because it is cheaper and more efficient; however, by doing so they run the risk of employing forced laborers in the process. It’s easy for these suppliers to turn a blind eye to any illegal activity, so information about employment doesn’t always make it to the top of the supply chain. Take the Atlantic’s recent article on human trafficking in Patagonia’s supply chain: the outdoor clothing supplier is one of the leaders in supply chain transparency, yet even they cannot help but encounter forced labor in higher tiers of suppliers. However, it’s not all hopeless. Suppliers often allow forced labor in order to cut costs. If larger companies agree to share the cost with their suppliers, then they may find themselves more successful in avoiding forced labor. That transparency could be passed onto consumers, who are increasingly intent on avoiding human rights violations in their purchases.

In the United States, the conscious use of forced labor is explicitly banned. Companies of a certain size must “implement comprehensive compliance plans [against human trafficking] appropriate to the size and complexity” of the contract. If companies are found to knowingly employ forced laborers, they face severe penalties including civil and criminal sanctions. California has its own Transparency in Supply Chains Act, which requires that “retail sellers and manufacturers doing business in the state… disclose their efforts to eradicate slavery and human trafficking from their direct Supply Chains”. As consumers, too, become more and more cognisant of the supply chain of their purchases, companies must take important steps to stay informed so that they can in turn inform their customers.

The Business of Ethics

There are several relatively easy steps companies can take to avoid human trafficking. The U.S. State Department’s 2014 “Trafficking in Persons” report included a tiered ranking of Asian countries based on how they complied with international forced labor standards. Malaysia, North Korea, Papua New Guinea, and Thailand were among the worst countries for human trafficking violations, with Nepal, Indonesia and Iran mentioned as frequent violators as well. Several multinational corporations like Samsung, Sony, Advanced Micro Devices, Intel, and Bosch have operations in Malaysia, and it is often up to the corporations to locate and eradicate labor rights violations where governments do not act. Avoiding countries that make no attempt to meet international standards is a good place to start. In addition, according to the Wall Street Journal, seeking help from third party organizations to conduct audits, or even making unannounced inspections of the suppliers’ plants, are all successful ways to avoid human trafficking in the supply chain.

Another route to transparency lies in technology. Because supply chains of most large companies are expansive, it becomes almost impossible to keep track of suppliers using traditional methods. Understanding where every one of your products goes before it ends up in a customer’s hands sounds daunting, but it doesn’t have to be. Several firms are leveraging such technology to explore their supply chains in depth, as we found at May’s North American Gartner Supply Chain Executive Conference. It’s a long path to the eradication of human trafficking, but there are concrete steps to take now. As manufacturers, we can decide just how long the path will be.



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