Supply Chain Engagement
Table of Contents
Traceability System Element: Identifying and Engaging with Supply Chain Partners
Supply Chain Engagement: The Basics
Before a downstream company can meaningfully trace the movement of goods through a supply chain, they need visibility into the actors – like producers/producer organizations, processors, suppliers, transporters, aggregators, traders – that play a role in their supply chains. While upstream supply chain actors like mid-tier suppliers usually regularly collect this information in a one-up, one-down model (meaning they know who they buy different batches of product from and who they sell batches of material to) this information is often opaque for downstream end buyers. This opacity for end buyers is worth addressing for several reasons related to labor and human rights. If downstream companies lack knowledge and understanding of upstream suppliers and supply chain actors, especially beyond the first tier, they are limited in their ability to engage with and build relationships with those upstream actors. This also means they will not be able to undertake other due diligence efforts like risk assessment, monitoring, and remediation in worksites that are opaque to downstream companies.
Identifying the actors in a given supply chain is a critical first step in combating forced labor and child labor for a simple reason: workers work at physical worksites. To understand the risks that workers are facing, and ultimately to integrate workers’ own voices into due diligence efforts, companies need information about the footprint of their upstream supply chains. Downstream companies need to know WHERE work is taking place in a supply chain down to the raw materials and the identity of suppliers.
Supply chain mapping collects information on the identities and locations of each of these actors and, in some cases, information on the basic business relationships between them. In some cases, these efforts integrate preliminary assessment measures, such as requesting that suppliers self-report basic information about their labor policies and practices. Self-reported information should only ever be a starting point for understanding labor conditions at a worksite, but it can be helpful for informing and prioritizing areas for further engagement, including efforts to hear and act on workers’ voices. Over time, self-reported information can also support a more granular understanding of business relationships between actors in a supply chain, such as volume capacity, ability to meet quality requirements, and capacity to meet due diligence and ethical standards.
The process of downstream companies learning about upstream actors in the supply chain should not be limited to passively collecting information. In robust systems, this process can incorporate efforts to actively engage a company’s supply chain like communicating expectations and codes of conduct, providing training on how to meet expectations, and rolling out on-boarding to participate in other traceability and human rights efforts. Downstream companies should also work to provide any capacity support their upstream suppliers need to participate in all labor rights due diligence efforts.
In some cases, supply chain mapping activities may be enhanced to collect transaction data for specific shipments of goods, providing further visibility into raw materials, transit routes, and additional actors along the supply chain. This can also provide a means to collect, document, analyze, and validate the Chain of Custody of shipments of goods as they move along the supply chain. Downstream companies may consider using a product tracking method alongside supply chain mapping to gain visibility into information on exchanges of payments and goods along the supply chain.
Identifying and Engaging with Supply Chain Partners & the Intersection with Labor Due Diligence
How can identifying and engaging with supply chain partners help combat forced labor and child labor in supply chains?
Supplier due diligence starts with discovering and beginning to engage with the actors in a supply chain. Learning basic information about supply chain actors is most directly relevant and required for conducting risk and impact assessments. To understand the risks that workers are facing, and ultimately to be able to integrate workers’ own voices into due diligence efforts, companies need information about the footprint of their upstream supply chains. Once a downstream company has insight into the range of countries from which their suppliers source goods and materials, they can assess relative risk of labor rights abuses by considering legal/policy, political, and socio-economic risk factors in the countries of production of raw materials and processing/manufacturing.
Companies can also conduct risk assessments to prioritize amongst different types of goods based on characteristics of the supply chain or type of production in different geographic regions in their supply chains. Examples of these risk factors include:
- Long, complex, and/or nontransparent supply chains, including the use of illegal or unauthorized subcontracting
- Seasonal surges in labor demand
- Short production cycles
- Undesirable and hazardous work
- Highly labor-intensive production
- Quota, piece-rate or other pay structures that incentivize use of vulnerable labor including unpaid family labor (including child labor)
- Some forms of share-cropping or other arrangements if the terms are exploitative
- Overall presence of vulnerable workforce including children/youth, migrant labor, casual labor, outsourced labor
- Gendered dynamics of work such as women taking on unpaid or underpaid roles, women lacking access to resources needed for production, women experiencing additional layers of abuse, harassment and discrimination
- Restricted freedom of association rights for workers
- Vulnerability of local indigenous populations
- Presence of hereditary/traditional slavery in a supply chain
Based on the learnings from these higher level geographic and sector-based risk screening, companies can prioritize specific supply chains or regions for more in-depth assessments and due diligence efforts, always prioritizing due diligence efforts that access and reflect the voices, experiences, and needs of workers in prevention and remediation programming.
In addition to providing a base for risk and impact assessments, gaining visibility into the identities and practices of supply chain actors – and making efforts to engage them – is an important preparatory step for efforts to track movement of goods through the supply chain. Engaging partners by communicating expectations and codes of conduct, providing training on how to meet expectations, or rolling out on-boarding to participate in due diligence has the added benefit of enabling downstream companies to make investments in their upstream suppliers, building supplier capacity to participate in ongoing due diligence efforts.
Supply Chain Engagement Method: Supply Chain Mapping Data Analysis & Visualization
Supply Chain Mapping Data Analysis & Visualization: The Basics
The process of identifying supply chain actors can generate a lot of information. This information can be stored and accessed in a number of ways, from simple spreadsheets to more complex digital dashboards. Platforms that provide visualizations of supply chain mapping information in accessible ways allow companies to use this information to inform due diligence strategies, including ongoing procurement and sourcing decisions. If companies collect supplier profile information and any risk information – collected via preliminary risk screens, supplier engagement such as Self Assessment Questionnaires (SAQs) or on-the-ground assessments – they can overlay that data with internal data such as procurement volume, spend value, and other strategic information to understand their overall risk profile. Data visualization can be leveraged for communicating supply chain information to internal stakeholders in a company, such as executives, board members, and shareholders. Similarly, this information can enable external visualization for the public, including consumers, advocacy organizations, and unions.
Enhanced data analysis can incorporate the use of algorithms designed to integrate multiple data sets and automatically flag potential supply chain risks and/or disruptions. These platforms are most useful when downstream companies are actively accessing the voices, experiences, and needs of workers and ensuring that workers’ concerns and priorities are integrated into due diligence actions. Companies can also incorporate learnings from workers and their advocates into data visualization platforms so business decisions can be more easily informed by workers’ priorities and concerns.
Supply chain mapping and risk screens based on geography can also be used to support efforts to map and understand labor supply chains – that is, the network of brokers, agents and firms that recruit, hire, and sometimes manage outsourced workers at worksites. Undertaking labor supply mapping is critical at worksites in higher-risk areas where the use of third-party labor recruiters is common. However, labor supply mapping and analysis is impossible until downstream companies know the identities and locations of their upstream suppliers. Based on the footprint of suppliers, companies can prioritize individual facilities for labor supply mapping by assessing the prevalence of vulnerable migrant workers in the area, reliance on third party labor recruiters in the area, as well as common recruitment corridors.
Potential Benefits of Using Supply Chain Mapping Data Analysis & Visualization for Downstream Users
| Benefits | Applicable? |
|---|---|
| Provides information on origin of good or material in actual physical good; Provides information on geographic locations of transit points of actual good along supply chain; Provides information on transactions between entities along supply chain tied to specific good/batch of goods (Chain of Custody) | No. Basic supply chain mapping provides information on the identities of supply chain entities, but does not provide chain of custody information about the movement of any physical product. In some cases, supply chain mapping efforts can integrate transaction data which may allow downstream users to have visibility into chain of custody information and/or information on the geographic origin. |
| Provides information on location and identities of entities along supply chain; Provides information on sourcing relationships between entities along supply chain such as indirect suppliers and facilities management groups | Yes. Collecting information on the location and identities of entities along a supply chain is the primary function of supply chain mapping. The specificity of information collected will vary. There is not typically a built-in means of verifying information provided voluntarily by a supplier/other supply chain entity. It is also possible that there may be gaps in information reported and collected, leading to supply chain entities that may be hidden from downstream actors, either intentionally or unintentionally. For example, supply chain mapping alone – without further engagement – is not likely to surface all sub-contracted facilities or other indirect suppliers contributing to a supply chain. Similarly, details and nature of businesses relationships -for example whether relationships are long term or one-off transactions - will not necessarily be surfaced by supply chain mapping efforts, but these dynamics are important. |
| Provides information on volume of certified or assessed product supported by purchase | No. |
| Supports collection of information about labor conditions, or access to / reflection of the voices, experiences, and needs of workers in the supply chain | Sometimes. In some cases, efforts to map a supply chain and identify suppliers can be enhanced by engaging actors and requesting voluntary information on practices, including recruitment, hiring, and employment practices. (For guidance on collecting this information, with a focus on policies and practices relevant to forced labor, see the Sample Supplier Self-Assessment Tool from responsiblesourcingtool.org.) However, it is important to note that this type of information is voluntarily provided by the supply chain entity and typically lacks independent verification. Workers own voices are the most credible source for information about labor and human rights conditions at worksites. Most voluntary information on systems and practices that can be collected via mapping, discovery, and initial engagement practices -- including whether or not suppliers hold certificates – does not provide insight into actual conditions for workers. Instead, this information can be considered a helpful preparatory step, providing clues for the general level of risk at a worksite, which can be used to prioritize future on-the-ground assessments, other efforts to promote and respond to worker concerns and priorities, interventions, and ongoing monitoring. For example, a company might choose to prioritize further engagement and risk assessment efforts with suppliers that:
Collecting credible information from vulnerable workers in a way that does not pose further harm to workers is challenging. See here for good practices. Further, simply collecting information from workers still requires companies to act on that information by integrating it in to all due diligence efforts to address risks and harms identified. |
| Decreases market for unethical goods and increases market for goods produced with less FL/CL risk; Provides structure to drive increased value to producers and suppliers with demonstrated commitment to labor and human rights due diligence | Sometimes. Mapping does not automatically decrease the market for unethical goods. However, by leveraging supply chain mapping and engagement efforts, combined with credible risk information, companies can prioritize building longer term partnerships and support capacity building with supply chain partners committed to participating in and improving labor and human rights due diligence and better outcomes for workers and communities. Conversely, companies can shift away from procurement with partners and regions where due diligence is not feasible. As consumer pressure on companies grows, company use of supply chain mapping and supplier engagement to support due diligence can deliver value back to companies choosing to prioritize and invest in ethical supply chain partners. |
| Facilitates increased engagement with supply chain actors | Sometimes. Companies should actively engage supply chain partners during the identification and mapping process. Once initial information is received, they should work to maintain lines of communication and engagement including training, capacity building, and onboarding to any traceability and due diligence systems. |
Supply Chain Mapping Data Analysis & Visualization & Labor Due Diligence
How can Supply Chain Mapping Data Analysis & Visualization help combat forced labor and child labor in supply chains?
Examples of Supply Chain Mapping Data Analysis & Visualization
What are some examples of Supply Chain Mapping Data Analysis & Visualization that could be used to combat forced labor and child labor in action?
- Child Labor in Cotton Supply Chains: Action-Based Collaborative Project to Address Human Rights Issues in Turkey
- The GoodWeave Label
- Leather & Cotton traceability using supply chain mapping
Operationalizing Supply Chain Mapping Data Analysis & Visualization
What supply chain characteristics would support the use of Supply Chain Mapping Data Analysis & Visualization and Other Methods of Identifying and Engaging with Suppliers?
- Every company should conduct supply chain mapping because understanding the actors and geographic footprint of a supply chain is necessary for all other due diligence actions. As companies improve and further their due diligence systems, they may seek more granular information about direct suppliers, and the multiple tiers of indirect suppliers (suppliers of the company’s direct suppliers and other actors).
- Identifying and collecting specific information on participating suppliers/producers is a necessary step towards conducting more targeted on-the-ground assessments, such as conducting assessments of the practices of suppliers or third-party labor recruiters providing labor to suppliers.
- The use of visual maps and other analysis features for supply chain mapping is beneficial when companies want to integrate traceability and human rights data into procurement and other decision making. They are also helpful when companies are implementing multiple supply chain mapping or data gathering efforts, but data streams remain siloed and difficult to analyze or act on.
- The company is willing to implement targeted spot checking to validate voluntary information provided by participating suppliers.
- The company is committed to developing longer-term strategic sourcing practices from producers and suppliers to incentivize timely and transparent reporting from supplier entities.
Supply Chain Mapping Data Analysis & Visualization Supporting Technologies
| Functionality Needed | Potential Facilitating Technology Types |
|---|---|
| Identifying supply chain partners' locations and identities and mapping linkages between them | |
| Analyzing mapped data for potential risks, “red flags,” gaps or other anomalies | Artificial Intelligence (AI) & Machine Learning |
Supply Chain Engagement Method: Mid-Tier Gatekeeping Due-Diligence Initiatives
Mid-Tier Gatekeeping Due Diligence Initiatives: The Basics
Key mid-tier suppliers, especially at points of aggregation and/or transformation in complex supply chains, can conduct their own due diligence and supply chain mapping, allowing them to act as gatekeepers. They may also be referred to as choke points or control points. These mid-tier suppliers engage and identify their own upstream suppliers and put due diligence control systems in place to reduce procurement of materials from higher-risk geographies or suppliers. Suppliers participating in a mid-tier gatekeeping due diligence initiative are typically audited or otherwise assessed to determine the strength of their procurement and due diligence approaches and activities. For downstream suppliers, discovering and engaging with their upstream suppliers allows them to identify potential key gatekeepers or control points.1Elevate Limited, an LQRA Company. Context Analysis Report: Global Supply Chains, Labor Rights, and Traceability. 2022. www.elevatelimited.com/wp-content/uploads/2022/07/ELEVATE-GTP-Context-Analysis-Report-May-2022.pdf
Suppliers participating in gatekeeping initiatives will typically have their own complex procurement systems that are adaptive to the realities of the supply chains they operate in and will have their own visibility into their supply chain at a one-up, one-down level. To leverage this technical knowledge and help them meet requirements of their downstream customers, they can typically benefit from robust capacity building on the due-diligence steps and management system steps needed to participate in gatekeeper initiatives: upstream supply chain mapping, information collection, risk identification, risk assessment, transaction documentation, and risk management. Suppliers that have participated in training and can demonstrate they meet standards for due diligence in their own procurement practices can become a trustworthy partner to address risks in their supply chain.
Potential Benefits of Using Mid-Tier Gatekeeping Due Diligence Initiatives for Downstream Users
| Benefits | Applicable? |
|---|---|
| Provides information on origin of good or material in actual physical good; Provides information on geographic locations of transit points of actual good along supply chain; Provides information on transactions between entities along supply chain tied to specific good/batch of goods (Chain of Custody) | No. Mid-tier gatekeeping approaches typically do not make origin information for a specific physical good visible for downstream companies. However, mid-tier suppliers typically already maintain their own “one-up, one-down” transaction documentation and participating suppliers typically have the capacity to procure inputs from lower-risk origins. While mid-tier gatekeeping due-diligence approaches do make comprehensive chain of custody information available to downstream companies and brands, participating suppliers are able to also share credible information on their sourcing practices and due diligence systems. They are typically able to provide transaction information about specific orders upon request. This method offers a check that participating suppliers have the correct management systems in place to be able to provide accurate sourcing information, as well as a check on whether they have the right policies and procedures in place to identify, assess, prevent, mitigate, and remediate risks and harm in their own upstream supply chains. |
| Provides information on location and identities of entities along supply chain; Provides information on sourcing relationships between entities along supply chain such as indirect suppliers and facilities management groups | Yes. Participating suppliers are active participants in identifying and engaging their own upstream suppliers. |
| Provides information on volume of certified or assessed product supported by purchase | No. |
| Supports collection of information about labor conditions, or access to / reflection of the voices, experiences, and needs of workers in the supply chain | Sometimes. Mid-tier gatekeeping systems do not automatically collect information about working conditions for workers. However, participating suppliers may choose to prioritize sourcing from certified suppliers or other lower-risk suppliers (with risk assessed via the participating supplier’s due diligence efforts). In these cases, the certification can offer some assurances that certain labor standards – or systems for upholding labor standards – are met. Mid-tier gatekeeping approaches also do not necessarily provide insight into working conditions at the Mid-tier supplier itself. |
| Decreases market for unethical goods and increases market for goods produced with less FL/CL risk; Provides structure to drive increased value to producers and suppliers with demonstrated commitment to labor and human rights due diligence | Yes. When Mid-tier suppliers are successfully able to reduce procurement of goods from higher risk suppliers or to increase procurement from lower risk suppliers, they can contribute to creating a market for lower-risk producers. Lower-risk goods from participating suppliers can then be utilized in conjunction with controlled blending or other mixed approaches for product tracking. |
| Facilitates increased engagement with supply chain actors | Yes. Building the capacity of suppliers to take on responsible procurement due diligence systems requires investment in ongoing training and capacity building as well as mitigation and remediation. Downstream customers need to invest in capacity building of mid-tier suppliers to facilitate the implementation of these programs. |
Mid-Tier Gatekeeping Due Diligence Initiatives & Labor Due Diligence
How can Mid-Tier Gatekeeping Due Diligence Initiatives help combat forced labor and child labor in supply chains?
Mid-tier gatekeeping approaches utilize control points (sometimes known as “choke points”) in supply chains – these control points are key points of transformation or aggregation of material. If suppliers at these control points can successfully demonstrate their systems for minimizing procurement of materials and inputs from higher risk supply chains upstream, they can offer some confidence and assurance for their own downstream customers that their outputs are produced with lower-risk materials.
Examples of Mid-Tier Gatekeeping Due Diligence Initiatives
What are some examples of Mid-Tier Gatekeeping Due Diligence Initiatives that could be used to combat forced labor and child labor in action?
- Responsible Sourcing Network’s Yarn Ethically and Sustainably Sourced (YESS) Initiative
- Responsible Minerals Assurance Process (RMAP)
Operationalizing Mid-Tier Gatekeeping Due Diligence Initiatives
What supply chain characteristics would support the use of Mid-Tier Gatekeeping Due Diligence Initiatives?
- A large number of dispersed small producers or other worksites, particularly in upstream tiers of the supply chain, can amplify the impact of mid-tier gatekeepers, who often represent points of co-mingling and transformation of goods from a large and changing number of producers.
- In supply chains where procurement relationships tend to be highly flexible and frequently shift, supply chain mapping enhanced with a gatekeeper due diligence strategy can also work to ensure that even as procurement relationships between upstream producers and suppliers shift, higher risk materials are kept out of downstream production.
- Feasibility of implementation relies on some stability in downstream sourcing relationships so that downstream customers can engage and incentivize mid-tier suppliers to participate in due diligence programs. It is even more powerful when downstream customers take collective action in a multi-brand effort across an industry.
- A mid-tier gatekeeper strategy can be helpful when risk in a particular tier tends to be concentrated in a particular geography (or geographies) or on types of farms so that mid-tier suppliers can utilize systems to reliably categorize the risk level of sources. It can also be especially helpful when there is a lot of complexity to the supply chains and blending of inputs from multiple geographies.
- Implementing due diligence sourcing systems requires capacity building for the implementing supplier as well as time and resources to maintain their responsible sourcing systems. Because mid-tier suppliers already track their procurement and sales – typically in a one-up/one-down system – capacity building should leverage the systems they already have. Further, because the additional transparency is needed to generate value and meet the requirements of downstream companies, those downstream companies should work to ensure that they are providing financial support for suppliers implementing due diligence systems.
- See here for more information on how mid-tier gatekeeping approaches (also referred to as choke points or control points) can integrate with broader traceability systems.
Mid-Tier Gatekeeping Due Diligence Initiatives & Supporting Technologies
| Functionality Needed | Potential Facilitating Technology Types |
|---|---|
| Spot check product input to confirm the geography of raw materials production is aligned with due diligence-based sourcing practices | Forensic Tracing. Depending on the exact technology used, isotopic testing typically enables an understanding of the origin of the raw material, but not necessarily the chain of custody – or the places a good traveled – after it was initially grown/harvested. Microbiome analysis has some promise and applicability for understanding where a good or batch of goods traveled after initial production but this has not been as widely applied in the traceability field. |
| Enabling Mid-Tier actors to identify and assess their suppliers | Supply Chain Transparency & Management Platforms |
- 1Elevate Limited, an LQRA Company. Context Analysis Report: Global Supply Chains, Labor Rights, and Traceability. 2022. www.elevatelimited.com/wp-content/uploads/2022/07/ELEVATE-GTP-Context-Analysis-Report-May-2022.pdf
