Forced labor, child labor, overtime, sexual harrassment and so many other human right abuses are identified every day across global and complex supply chain activities procuring large companies the material they need to produce and make margins with products and services across the world. After decades of efforts shaping more responsible supply chain activities, we’re at a turnpoint. Digital transformations can really provide disruptive answers to address and mitigate human right abuses at a very different scale and impact.
The 4 Hotspots Making Supply Chains Ineffective Managing Working Conditions Properly
Supply chain programs of large companies clearly are in a challenging position. In context of profound digital transformations of client interactions, shaping more automated procurement practices, it is first and foremost fair to say that Chief Procurement Officers (CPO) are in a tough position:
- Procurement processes are often caught in the middle of complex processes linking client interactions with procurement activities. CPO have often limited amount of freedom to adapt despite complexity under management
- Categories and commodities under management are very diverse, offering business profiles as well as environmental and social risk profiles which can be very different. Buying Energy & Water, or IT & Telecoms, or Logistics & Freight products and services is just very different
From a working condition perspective, no matter the categories or commodities at stake, the following areas are generally insufficiently managed, which is overall driving insufficient risk mitigation ensuring that procurement activities are properly managing working condition risks across their supply chains.
- Risk assessment. Companies dedicate resources to social auditing in their supply chains, to identify and remedy instances of working conditions not meeting standards. This is a good start, but remains generally limited to remediation decisions. Buyers need information about working conditions that is more accurate, more granular, and more scaled than that which social audits generally provide. Availability of up to date information is ideally needed need before or during a procurement decision
- Transparency. Entities within a supply chain frequently do not know each other’s identities beyond immediate relationships. A smallholder farmer is unlikely to know what happens to her shea butter harvest after it leaves her farm or cooperative
- Grievance Mechanism. Workers across supply chains may not fully know their rights and what might be considered to be a working condition instance which does not comply with standards and commitments made by employer or buyer. They generally don’t know how to report and flag concerns feeling safe and secured to share sensitive information
- Training and transfer of competencies. Workers may operate with practices increasing safety risks, or execute work with insufficient productivity explaining some overtime or wage concerns (e.g.: piece workers). Access to technical training is very often needed and missing to improve practices and working conditions
None of these issues and hotspots are new to anyone working on responsible supply chain programs. Digital transformations and emerging technologies offer a promising opportunity to change impact of programs and investments made on working conditions and mitigation of human right abuses.
The Contextual Elements Making Digital Technologies Promising
Let’s be clear: technology cost money. Adoption can be difficult. Poor data can make deployment of technology really useless. Fragmentation of supply chains across geographies, and diversity of stakeholders, can make deployment across pertinent ecosystems of contributors very challenging. Basically, technologies are not the solution to every problem.
That said, there are reasons to explore massively technologies. There are reasons to be optimistic in the way technologies can genuinely improve working conditions across supply chains.
- Access to smartphone and broadband coverage getting mainstream. A GSMA survey, The Mobile Economy: Sub-Saharan Africa 2018, depicted a steady growth of access to Internet services using mobile phones. 44% of people in Africa had a smartphone in 2017. 52% will use a smartphone in 2025. An estimate of 66% of people in the world are already using a smartphone today. By 2030 we can clearly anticipate a net growth and massive adoption of smartphones across the world, and especially among some of the poorest and less educated workers, despite serious challenges mostly related to capacity to afford such equipments
- Access to technologies is overall attractive. For many agricultural and blue collar activities, technology is attractive. There is often a gap between young workers (e.g.: workers below 40 approximately), and older workers. Tedious activities are becoming more attractive with technologies. Here again, looking at the big picture and the trajectory by 2030, most workers will get used to technologies and will find it more attractive to be retained in agricultural and blue collar activities if technologies are part of the day to day job.
- Access to technologies can improve life of users. Workers don’t like technologies because it is merely fancy. Workers enjoy using technologies because it can make their work easier. For example, on several agricultural activities, data and drones can optimize monitoring and day to day maintenance of crops, saving hours walking across large plantations. Technology can also help to make more money. Farmers have been using mobile phones for years to monitor daily prices and accelerate payment activities. Technologies can also help to learn and access more responsibilities making more money. There are numerous initiatives using applications to learn, get guidance and basically perform better in the job
Surveillance, privacy, additional cost to buy equipments and energy for people making low income… there are of course multiple negative aspects to bear in mind. Technologies are benefiting overall from a conducive envuironment ensuring their broad adoptions by workers and farmers. Technologies are therefore a good vehicle to improve working conditions on the ground.
Examples To Scale Up Impact of Responsible Supply Chain Programs on Working Conditions Using Emerging Technologies
Here is a series of interesting examples and initiatives.
1. Risk Assessment Using Big Data and Artificial Intelligence
First, large companies and buyers need to focus on sensitive categories where solutions in place have never proven to be satisfactory.
- For instance, in the food industry, the question of sanitary protection and traceability has huge business implications. Chains are complex in volume as well as number of transactions. Cost effective solutions to date focus mostly on sampling approaches which do not provide the level of confidence needed to seriously address the business risks at stake. In this example, artificial intelligence is an attractive technology with potential to provide a disruptive solution managing trusted traceability of large scale volumes of sensitive goods using machine learning capacities to focus sampling using predictable analytics
- On another example, social audit data collected for more than a decade is very promising using artificial intelligence. Programs underway are exploring ways to combine social audit past data together with contextual data to focus audits to come in the future based on predictable issues likely to be found. This is really a game changer to mobilize resources differently
2. Transparency Using Blockchains
Second, companies select and explore very specific chains to test innovative solutions. Procurement would focus on an illustrative category of intermediate complexity to better understand how to deploy technologies and further understand pros, cons, implications and benefits
- For example, the food industry has been testing blockchain solutions exploring illustrative products (eggs, poultry, beef, cheese…). Complexity of these chains is intermediate, but offers an interesting playground to understand how blockchain based transactions are impacting relationships, costs and order processes between clients and suppliers. They also offer an interesting test to explore collaboration across departments within companies (e.g.: procurement, billing and production units)
- In the fragrance and ingredient business, some initiatives are exploring ways to connect smallholder farmers and buyers more directly using blockchain. A way to strengthen traceability as well as explore solutions to reduce intermediaries and increase revenues provided to smallholder farmers. Questions of adoption and scalability remains to be solved though
3. Grievance Mechanisms Using Smartphones
Third, companies are exploring ways to expand learning across additional chains or categories. They are facing the following challenges:
- Cost effective deployment of resources. Chains are fragmented and complex. They can quickly involve millions of stakeholders. Luckily, most if not all of these people across smallholder farms, plantations, factories and logistical hubs are using mobile phones, and penetration of smart phones and broadband coverage is deploying very fast across the whole globe as well as many fairly remote rural areas. Mobile phones are no doubt a great and powerful vehicle to use to connect chains, disseminate content, impact practices
- Using smartphones to respond to short individual questionnaires is effective to collect scalable sources of data and build environmental and social risk profile. Workers or farmers can also use similar technology to report on specific issue they may face and often related to human right abuses (e.g.: labor conditions, child labor, harassment…). Granting smartphone access for grievance purpose is also effective to encourage adoption of innovative technologies like Blockchain: users know they can test the system having access to a grievance mechanism should they encounter any issue (e.g. fraud, missing payment)
4. Vocational Training Using Augmented Reality
- Another example comes with vocational training. Across virtually every agricultural commodity supply chain, smallholder farmers always complain to lack access to vocational training, impacting directly their safety, productivity as well as level of income. Multiple stakeholders have been working on numerous training programs, but find it overall difficult to provide cost effective solutions addressing millions of people across fragmented chains. In this example, using smart phones to provide access to training material, including AR and VR technologies can have huge impact on the day to day practices on the field.
- Facing large scale training of workers or farmers, AR can offer powerful solutions to show do’s and dont’s and transfer competencies in very concrete terms. This can be well combined with more traditional learning vehicles such as: videos, pictures and slides.
Conclusion: Technologies Can Offer Effective Scalable Solutions to Improve Working Conditions Across Supply Chains
In response, focusing on sensitive and strategic categories, taking the time to learn pros, cons, implications and challenges deploying solutions through illustrative products, and making the most of digital solutions and innovative finance are increasingly explored and no doubt the way forward to improve practices on the ground. Big changes are underway and will doubtless shape very different practices across many agricultural commodity supply chains in the years to come.
Author of several books and resources on business, sustainability and responsibility. Working with top decision makers pursuing transformational changes for their organizations, leaders and industries. Working with executives improving resilience and competitiveness of their company and products given their climate and human right business agendas. Connect with Farid Baddache on Twitter at @Fbaddache.