For many years retailers and brand owners have been aware of the brand protection risk of poor labour and ethical compliance standards within their supply chains. None more so than the food industry. Yet after many years of investment and focus we still get caught out. And as recent instances of slave labour in the UK we cannot point the finger and say that this is a Chinese or Indian problem.
The introduction of the Modern Slavery Act 2015 raises the bar for all commercial organisations over a certain size. They are now required to produce a ‘slavery and human trafficking statement’ every financial year. It is estimated the act will apply to 12,000 UK active companies in the services and goods sector.
The statement must set out the steps the business has taken to ensure slavery and human trafficking are not taking place in any of its supply chains or in any part of its own business. Businesses will be required to publish it on their websites.
Most food retailers and manufacturers should be able to comply with this requirement by extracting data from their existing supply chain risk management processes.
For those that are not prepared we would recommend the following steps.
Create a code of practice for all your suppliers
This code of practice needs to explain what you require of your suppliers to deliver your compliance with the Modern Slavery Act 2015.
Identify all of your direct suppliers.
This is not as straightforward as you think, but a good place to start is in accounts and get a listing of all suppliers paid for a recent period, for example the last 12 months. The act requires you to report on your supply chain so it will be important to understand the nature of each supplier that you are sourcing from as these will vary widely from direct suppliers, through brokers and agents, distributors and a mixture of these.
Create a supplier self assessment questionnaire
The supplier self assessment questionnaire needs to get detailed information about the supplier, the goods and services that they supply to you and a detailed picture of the supply chain used to deliver the goods and services to you.
The self assessment questionnaire can then gather information about the labour and ethical practices in the supply chain and what your suppliers are doing to ensure that your supply chain is free of slavery.
Send this questionnaire out to the suppliers and get them completed in full for each supply chain that the supplier uses to supply to you.
Review the responses and complete a supplier risk assessment
You need to review and score the responses and complete a supplier risk assessment for each supplier. Where suppliers are deemed low risk this process could be deemed sufficient, where suppliers are deemed high risk we would recommend that you either complete a supplier audit or get the supplier and their supply chain registered on SEDEX and subjected to an ethical trade initiative (ETI) audit.
Update terms of supply to include all of the above
Talk to your procurement and legal colleagues to get the above requirements incorporated into your terms of supply so that all suppliers know that compliance is a condition of doing business with your business.
There will be no financial or criminal penalties for failing to comply. However, the government will have the ability to bring proceedings in the High Court for an injunction requiring an organisation to comply.
The most likely implications for businesses that do not comply is the brand protection risk from negative publicity.
QADEX can help
With over 7 years experience providing supply chain risk management solutions for food manufacturers and retailers QADEX can provide a range of solutions including software, supplier liaison and data capture to completing risk assessments and handling the compliance process for you.
Contact us to find out more.