by Thor Olavsrud

How predictive analytics can help end slave labor

Jun 17, 2015
Analytics Markets Predictive Analytics

Slavery may be illegal around the world, but the practice is alive and well. Whether you know it or not, it probably supports your modern lifestyle. Supply chain analytics can help companies discover forced labor and child labor in their sub-tier supply chains.

How many slaves work for you? If you own electronics, jewelry or sporting goods; drink coffee or tea; eat food or wear clothes, it’s more than you think. It’s probably a lot. If you dig deep enough into the supply chain of many of the products we use and consume every day, you’ll find forced labor and child labor.

Predictive analytics can help you root modern slavery out of your supply chain.

An estimated 21 million to 36 million people are enslaved today according to NGO Free the Slaves. About 78 percent of those people are victims of labor slavery. Whether you know it or not, they work for you: mining conflict minerals in the Congo to make electronics, fishing in Malaysia, as migrant labor in the U.S. It’s children in India mining the mica that puts the glitter in cosmetics.

In 2011, Justin Dillon, founder and CEO of nonprofit organization Made in a Free World decided to help people put the problem of modern slavery in perspective by founding the website Slavery Footprint in partnership with the U.S. Department of State. Slavery Footprint consists of a short survey that consumers can take to answer the question, “How many slaves work for you?”

(For the record, my relatively modest lifestyle in New York City is supported by 30 slaves, according to Slavery Footprint.)

How predictive analytics can stop slave labor

But while Slavery Footprint was a success — it’s reached 23 million consumers worldwide and was acknowledged by U.S. President Barack Obama in his speech on slavery last year to the Clinton Global Initiative — ending slavery requires more than raising consumer awareness, says Tim Minahan, senior vice president and chief marketing officer, SAP Cloud and Line of Business.

“The real way to solve this problem is to go where the money is,” Minahan says. “The largest Global 2000 enterprises that spend over $12 trillion on goods and services every year have incredible power to make sure that suppliers do the right thing.”

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Last week, at the Ariba LIVE event in Munich, SAP company Ariba announced plans to combine the power of its business commerce network with Made in a Free World’s comprehensive forced labor database to use predictive analytics to help organizations root forced labor out of their supply chains.

“Slave and child labor is rampant in supply chains around the world. But it doesn’t have to be,” Dillon says. “We live in a digitally connected and data-driven economy. And we have the tools and information needed to uncover and end it.”

While some organizations do knowingly benefit from sweatshop labor and poor working conditions among their suppliers, Dillon notes that many companies simply don’t have a good view of what’s happening in their sub-tier supply chains.

“There really aren’t very good optics into sub-tier supply chains,” he says. “It’s very difficult to see beyond tier one.”

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For example, the metal tantalum, extracted from an ore called coltan, is essential to production of capacitors and high-power transistors found in most of the world’s electronics, from mobile phones and PCs to automotive electronics. Much of the world’s coltan comes from places like China, Malaysia, the Democratic Republic of Congo and Rwanda. And a lot of coltan mining is done with slave labor.

How Steve Jobs took action

“Seven years ago, our team wrote to Steve Jobs about tantalum,” Dillon says. “We didn’t really expect to hear anything back. But four hours later we got an email from him saying, ‘I had no idea. I’ll look into it.’ They did look into it and they did do something about it.”

“A lot of it is indeed not knowing, and more importantly not knowing where to start,” Minahan adds. “What we feel we can do is deliver a model that provides the tools and high levels of transparency that helps you know where to start.”

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The Ariba Network consists of more than 1.8 million companies in 190 countries. It is the largest, most global business-to-business trading platform on the planet, Minahan says, with more than 76 percent of the Global 2000 using it to connect their global supply chains. Through the network, Ariba also has 16 years of transactional, relationship and community-generated data.

How analytics help

Made in a Free World’s Forced Labor Risk Determination & Mitigation (FRDM) database maps the bill of materials of a vast number of products and services, broken down to their raw materials and labor inputs. By combining these data sources, companies will be able to use analytics to accomplish the following:

  • Evaluate their spending and supply chain against the FRDM database and get a view into areas where forced labor might exist.
  • Be alerted to potential future risks by triangulating a myriad of inputs — like supplier performance ratings, payment history and more.
  • Identify alternative sources of supply with supply chain transparency and fair labor practices to help mitigate risks.
  • Access category-specific playbooks that provide a framework for detecting forced labor and outline actions to remediate it.

“In harnessing the connectivity and intelligence of networks like Ariba and Made in a Free World, companies can make more informed decisions about their supply chains that not only help their business, but make the world a better place,” says Chris Haydon, senior vice president of Product Management at Ariba. “This isn’t just a huge opportunity, it’s a responsibility. Because at the end of the day, you can outsource processes and manufacturing, but you can’t outsource accountability.”

Part of the trick, Dillon says, is to remediate your supply chain rather than simply cut off a supplier when problems are discovered.

“We need to create a replacement economy,” he says. “You can influence your supply chain in a way that creates a replacement economy.”

“We don’t want people to cut and run,” he adds. “Cutting and running when there are problems creates more problems. That’s why we’ve chosen to approach this through a business tool and not a smear campaign.”

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