Tips for Complying with the New Law Prohibiting Forced Labor

Robert Brice
Wed, May 4, 2016
Happy workers create a positive environment that promote productivity.
Happy workers create a positive environment that promote productivity.

Companies can't allow distance to lead to disconnects. As more businesses expand into a global supply chain - making use of foreign manufacturing and selling to new audiences - they must ensure operations in other countries match their local brand standards.

While companies can operate in other countries to take advantage of local resources, they must take care not to exploit populations in desperate need of employment. Recently, President Barack Obama signed the Trade Facilitation and Trade Enforcement Act into law. The new legislation prevents U.S. businesses from importing goods created by forced labor. Before the creation of these rules, many American organizations took advantage of legal loopholes to contribute to the $51 billion in profits generated by forced labor in international trade.

If a business operates using unfair labor conditions or by subjecting workers to dangerous situations, their infrastructure could be destroyed by changing regulations, poor public relations or on-site accidents. On the other hand, investing in employees can yield more benefits than supply chain logistics management professionals may expect.

ALSO READ: Talent acquisition in the supply chain »

Preventing Forced Labor

Businesses that profit from forced labor don't always know they're contributing to unethical practices. Supply Chain Brain said it's not uncommon for companies to lose track of their foreign partners and sell products without understanding the processes that went into manufacturing and distribution. The best to way to ensure every step in a supply chain is above board is to make ethics a priority and invest appropriately.

Ethical operation means choosing the right foreign partners. If a distribution channel or third-party facility offers prices that seem to be too good to be fair, they probably are. While companies often rely on local expertise from foreign partners to help with tax compliance and community best practices, business leaders must find some way to insert themselves into distant operations.

Many companies use technology to bridge the gaps created by geographic and cultural divides. An RFgen customer case study examined how Provimi, a feed manufacturer, integrated barcode software and other ERP solutions to maintain visibility of its 80 factories operating in 30 countries. The automated data collection system created through a partnership with RFgen provided each location with standardized information processes that accounted for 80 percent of daily activities. The solutions were flexible enough that each location could perform the additional 20 percent in a manner befitting the unique demands of its territory and report them to central overseers.

When employees use automated data collection solutions like barcode scanners, physical actions become information visible in a central system. Overseers can recognize if workers are safe, productive and fairly compensated.

The Advantages of Treating Employees Fairly

Companies operating in foreign territories should reevaluate distant facility procedures before changing regulations close down parts of their supply chain or consumer investigations create negative public opinions. By prioritizing the well-being of employees, businesses in most industries can take advantage of the current marketplace where informed consumers favor socially conscious brands.

Fast Company said many companies turn workforce salary raises into huge press events. Economic inequality is a major hot button issue. Marketing that shares data on how a company treats workers fairly - especially financially - demonstrates a business is on the side of the general public.

There is also the good jobs strategy to consider. A few years back, a researcher from MIT's Sloan School of Management found supply chains that accounted for every possible risk and resource would still fail to meet expectations when employees weren't fairly compensated. When businesses invested in their workers, however, they created a virtuous cycle of support and positivity that led to higher customer satisfaction, workforce retention and increased profits. Happy workers who feel appreciated often associate brand success with their own, while exploited workers look for opportunities to slack off or increase their compensation at the company's expense.

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