Supply Chain’s indirect impact: Is your business addressing the elephant in the room?

Globally functioning Supply Chains have some of the greatest impacts on society at large, out of all disciplines within business operations.

Big companies, medium companies, and even your local mom and pop shop’s utilize the supply chain of the world to produce, transport, and distribute products to the far reaching corners of the Earth. As stated in The Supply Chain Pessimist just a few weeks ago; “[Supply Chains] are complex networks, reliant on multiple moving parties, ridden with risk, predisposed to complications and are seldom run with absolute harmony.”

Source: Kodiak Rating

Within this complex web of function and dysfunction, there is a lot of production that ensues. Sourcing of materials, building of factories in rural regions, travel, machinery use, product inspection, strategy implementation, hiring of staff, firing of staff, digitalization, shipping of products, contracting, business collaboration, inventory management, sales, and customer success. These activities are just a snapshot of the turning cogs that make up a fully functioning supply chain. Each activity is reliant on a previous activity, and that activity drives the success of the next activity after that. The cycle is codependent and cyclical.

With each supply chain activity, there is a certain level of production value, whether it is human work, the use of heavy machinery, or the contracting of a 3PL provider.

As Issac Newton once said, “For every action, there is an opposite and equal reaction.” Of course, Newton was speaking of physics when he claimed this famous claim, but the physics of supply chain production doesn’t drop too far from the apple tree.

Every action of global supply chains has a reaction. Some are positive and some are negative. Many of the negative impacts of supply chain activities have been recognized by enterprises globally, and the reaction has been unanimous; ergo the influx of organizations working to create supply chain sustainability initiatives. A unity behind sustainability and corporate social responsibility is a positive movement to be seeing, but as large corporations hug one tree, they continue to cut down three more.

Global supply chains are aware of their impact on society at large, and are working to neutralize their direct impacts from supply chain activities. But then, there’s the grey area no one likes to speak about: the runoff.

Let me explain.

When you spill a glass of milk on hardwood floors there’s an instant reaction to the spill. You run and grab a towel, wipe up the milk, spray the area with cleaning spray, find another rag, and wipe up the cleaning solution to dry off the area. The floor is clean there, but not really. The milk seeped into the cracks, areas that your rag couldn’t clean up. But there’s no chance you can get that minuscule amount of milk out of the cracks. In fact, you might not even think about it, or care that it’s there. But it is there, living in between the surface areas that can be seen and helped. This, is the runoff. A forgotten about indirect impact of a larger, happening that has received aid.

Addressing the elephant in your business.

A topic much discussed is eliminating and/or neutralizing the presence of child labor in supply chains globally. Child labor combines for a staggering amount of tiny workers, digging the minerals used to produce your computer or dying the shirt that’s on your back.

Source: ILO; Unicef; World Bank Group
“168 million children worldwide, between ages 5–17, are subjected to, forced, and/or exploited for their labor according to the statistics of (ILO) International Labour Organization. 168 million… That’s more than half the population of the United States.”

This issue has been brought to the spotlight, becoming one of business’ biggest concerns in regards to corporate social responsibility. This is great and the topic should certainly be addressed.

But then, there’s the runoff. The shadow that exists around the edges of the spotlight.

There is millions of children affected by the activities of global supply chains, and I’m not talking about those exposed to child labor. I’m talking about the indirectly impacted children, the children that live in the same dimension as milk in your floorboards; the children in the grey area.

Millions of families globally are systematically predisposed to becoming members of this undesirable club.

Many corporations speak of reducing waste, neutralizing GHG emissions, bettering product transparency and improving worker/human rights in their sustainability strategies. I implore you to find a sustainability plan, responsible sourcing strategy or supplier development plan that goes one step beyond human rights, and speaks of children rights in specifics.

It might take a while…

Due to business’ globalization and the search for cheap labor, families are relocated and split up every day. Leaving children away from their primary caretakers, forcing them to care for themselves, and sometimes for younger siblings. Many organizations lack ‘family-friendly’ policies that stress the importance of worker right’s in regards to the life of workers outside of the workplace. NGO’s such as Save the Children Sweden and Unicef have teamed up to vocalize these indirect impacts of global supply chains.

The two organizations have collaborated to create 10 principles for bettering the lives of children globally. This includes reducing child labour, but in addition, “ensuring that products are safe for children to use, employing marketing techniques that respect children, and considering children’s rights in relation to the local environment” (sida.se 2014).

Source: Unicef
“It is easy to get caught up in a traditional view of children’s rights in regard to companies: harmful child labour in developing countries. Of course that is an important part but you have to remember that only one of the ten principles has to do with child labour”, said Mattias Forsberg from Save the Children Sweden.

Addressing the impacts of supply chain activities shouldn’t be limited to the issues that exist on the surface. Indirect impacts of supply chain operations have less awareness, but that doesn’t make them less important. This is a topic Kodiak Community plans on returning to later in the year.

But in the meantime…

Challenge the commonality of your business’ strategy/operation, ask questions and dig deeper. Let’s create the future of tomorrow, not just accept it.

Until next week.


This publication is brought to you by author Sam Jenks, but also on part by Kodiak Rating — A Supplier Relationship Management SaaS functioning out of Stockholm, Sweden. Kodiak Community intends to challenge traditional business practices with innovative thinking and creation.