A new analytics solution aims to solve a major supply chain problem that most companies don't know -- or wouldn't even think -- that they have: suppliers using slavery.
The Foxconn fiasco of 2012 affecting major tech brands like Apple, Samsung, and Nokia was hardly a one-time blip on the corporate-responsibility radar. Apple's forced labor woes have continued with a recent exposť about the working conditions of iPhone assemblers at Pegatron, another of Apple's contractors in China. Meanwhile, revelations broke last month that a Tesla Motors (NASDAQ: TSLA) auto plant allegedly engaged in exploitative and abusive labor practices.
Estimates from the International Labour Organization and other organizations indicate that there are presently more than 21 million victims -- men, women, and children -- of outright slavery and similarly exploitative labor practices worldwide. Dun & Bradstreet reports in an infographic that the forced labor practices of modern slavery generate approximately $150 billion in illicit profits.
On April 13, Dun & Bradstreet unveiled its Human Trafficking Risk Index, or "HTR" for short. Helping to clarify corporate "family trees" and linkages between entities and vendors throughout the procurement process, the HTR combines data from the US State Department, the International Labor Affairs Bureau, and Dun & Bradstreet's own proprietary data from 250 million global business records to pick out evidence of forced labor at specific locations along the supply chain and assign risk factors thereto on a seven-point scale. As a result, the HTR can inform companies' global supply-chain decisions so that they can demonstrate corporate responsibility and avoid those manufacturers, contractors, or other vendors who may be using forced labor.
"[T]o test the index we looked at a major consumer products company. We looked at the entire company as a whole, and the total risk index was 1.5. But when we blew out the whole family and looked at each site individually where the company manufactured its products, four of their locations scored much higher on the index," , said Moreen Romans, Senior Director of Global Risk at Dun & Bradstreet, in a D&B report. "This company has actually had issues with unknowingly using forced labor in their supply chain, and what the index showed was that the areas where that occurred were among these four high-scoring sites on the index. Now that we have the index, companies can see these hot spots and proactive about investigating them -- rather than reactive after they find out there's a problem."
Indeed, companies may unknowingly be using forced labor in their procurement of commodities because a view into the full chain of vendors and suppliers has traditionally been difficult to attain. Now, in addition to helping companies to actively ensure ethical supply chains (and, for that matter, avoiding PR fiascos), Dun & Bradstreet's HTR data can also help companies in their compliance efforts where they face mandatory auditing in nations like the US and UK -- which have regulations imposing fines and even import/export limitations on companies who fail these audits.
For Dun & Bradstreet, HTR represents just the beginning. The company reports that its "Responsible Business Analytics" area is still emerging -- and that the HTR is but the first to market within that suite of product solutions. So far, HTR is demonstrating signs of success.
"We have already identified 17,000 just among the companies on our database alone," said Romans. "There's a lot more, but that's just our first pass at it. And that's not even looking at the smaller companies that don't think they have to worry about it."