Responsible Supply Chain Tools: Understanding The Market .
Responsible Supply Chain Tools:Understanding the Market OpportunityApril 2019
Responsible Supply Chain Tools: Understanding the Market Opportunity2
Responsible Supply Chain Tools: Understanding the Market OpportunityThis report outlines the current market for responsible supply chain tools and services and calculates its potential market size through interviews with stakeholders from across fourindustries and labor-focused consultancies, analysis of secondary research, and discussions with subject matter experts at Humanity United and Working Capital.Working Capital, founded by Humanity United, commissioned the report with funds from UK aid from the UK government; however the views expressed do not necessarily reflect theUK government’s official policies. A team from Monitor Institute by Deloitte, part of Deloitte LLP, conducted research and synthesis for the report. The Monitor Institute team includedLisa Newman-Wise, Caitlin Ryan, and Tony Siesfeld.03
Responsible Supply Chain Tools: Understanding the Market OpportunityContentsExecutive ogy11Overall Findings13Current State of the Market13Growing the Future Market19Industry-Specific Findings25Apparel and Footwear25Food and Beverage26Hospitality27Information and Communications Technology27Implementation ResourcesLandscape of Tools & Services2929Market Size Estimates: Assumptions and Calculations33Conclusion35Glossary3604
Responsible Supply Chain Tools: Understanding the Market OpportunityExecutive SummaryGlobalization presents businesses with immense opportunityto produce affordable goods and services at scale, but comeswith growing demand—from governments, shareholders,investors, employees, and consumers—to protect the safetyand dignity of workers. Labor exploitation poses a complex,dynamic, global socioeconomic risk that spans industries butpromising new solutions are emerging to reduce it.Workers at the bottom of global supplychains face poverty, displacement, jobscarcity and wage disparity.1 The world’s450 million waged agricultural workerssuffer from high incidences of poverty andhunger.2 Globally, up to 150 million workershave crossed national borders in searchof work and a better life.3 As migrants,workers become especially vulnerable tounethical recruitment practices and otherforms of labor exploitation.4 According tothe International Labour Organization, anestimated 24.9 million men, women, andchildren are victims of forced labor aroundthe world.5 Companies can impact the livesof many exploited individuals and helpprotect others from harmful practices bycarefully addressing both severe labor rightsabuses and subtler systemic labor issues intheir supply chains.As public awareness of labor risks in supplychains increases due to new regulations,investigative journalism, and pressure fromnon-governmental organizations, manybusinesses have turned their attentionto labor rights. A growing set of tools hasemerged to assist companies by providingbetter visibility and transparency to assessrisk, diagnose problems, act on issues,and monitor labor practices and workingconditions in their supply chains. Thesetools, which are primarily built around a05digital technology, supplement and can beutilized both by companies themselves aswell as within the context of professionalservices like consultations and certifications.They will be referred to throughout thisreport as socially responsible supply chaintools or simply “tools.”Some socially responsible supply chaintools were originally developed to addressenvironmental risks. As corporateenvironmental sustainability approachesmature, companies have expanded theirfocus to include social and governancefactors. We believe the future of laborrights innovation and practices will followthe strong adoption and growth of thesustainability industry. Companies seek tounderstand how tools and technology cansupport socially responsible supply chainpractices in addition to environmentalsustainability, and some have alreadyimplemented third-party solutions orbuilt their own. However, there remainsa significant opportunity for many morecompanies to explore, implement, andscale a range of tools to improve sociallyresponsible supply chain practices.This study explores the current state andfuture horizon for socially responsiblesupply chain tools.
Responsible Supply Chain Tools: Understanding the Market OpportunityThe market for sociallyresponsible supply chaintools could reach 2.7 billionover the next five years.A Market Poised to GrowThe market for socially responsible supplychain tools is well positioned for growthover the next five years. The market fornew tools is somewhat nascent, especiallywhen compared to social compliance audits,which have been in place for decades. Yetthere is a growing market need for toolsthat go beyond audits, including tools thatoffer real-time transparency into practicesof actors in the supply chain, programsthat digitally facilitate sourcing from ethicalsuppliers, and grievance mechanisms thatassist employers or buyers in interveningwhen workers identify issues. Interviewsand research reflected the following themeswhich are helping accelerate the market: Audits are insufficient and ineffectivebut still dominate practice. Currently,there is a relatively large market forservices that assess social and laborpractices (e.g., social compliance audits).Audits are well-understood and acceptedas the foundation of socially responsiblesupply chain management, yet widelyconsidered ineffective Mounting pressure and growingbusiness risk. Increasingly, stakeholderssuch as policy leaders (via regulations),NGO and media investigators, industryassociations, investors, consumers,and even employees and leaders withincorporations have pushed for greatertransparency and accountability withinglobal corporate supply chains Global supply chains are complex andopaque. In a study conducted by TheEconomist Intelligence Unit Limited in2017, 49 percent of executives cited supplychain complexity as the greatest hurdleto responsibility.6 Fortunately, technologysolutions and tools designed to providebusiness leaders with intelligible data andoptions to make sense of this complexityhave emergedOur analysis indicates that over the next fiveyears, the market for socially responsiblesupply chain tools could reach between 889 million and 2.7 billion (excludingsocial compliance audits). Among the fivemajor categories of socially responsiblesupply chain tools—risk assessment,Figure 1: Estimated market for responsible supply chain tools (excluding audit), 2018 and 2023 807M- 2.1B2018 Market 889M- 2.7B2023 Market06
Responsible Supply Chain Tools: Understanding the Market Opportunityproduct traceability, ethical sourcing, ethicalrecruitment, and worker engagement—riskassessment and product traceability toolsare expected to see the highest growth. Bycontrast, the market for social complianceaudits is expected to remain flat over thenext five years with the low end of the marketspend at 361 million and the high end of themarket spend at 671 million in 2018.Additional details about market estimationcalculations can be found in the Market SizeEstimates section.Behaviors Influencing DemandBuyer and supplier companies alike areactively seeking tools that allow greatervisibility and accountability into anorganization’s supply chain operations.As the future vision of an increasinglysocially responsible supply chain takeshold, innovation can play a disruptiveand important role in how companiesapproach effective oversight, visibility, andmanagement of their operations. Studyparticipants thought the demand for toolswill increase as companies continue to takethe following approaches. Working with fewer, better suppliers.Companies noted that, increasingly,suppliers own the responsibility for laborand human rights practices. Working witha smaller number of credible supplierswith proactive management practicesis one way to increase confidence in theintegrity of supply chains, and tools canhelp identify and monitor leading suppliercompanies. Additionally, leading suppliershave begun to use new tools themselves07 Channeling resources from audits to amore impactful approach. Participantsexpressed a desire to streamline facilityaudits and repurpose resources fromaudits to other socially responsible supplychain tools Increasing interconnectivity of toolsto improve transparency throughoutsupply chains. Many study participantsshare a vision for data sharing acrossindustries, platforms, and levels of supplychains to enable greater end-to-endvisibility of supply chain operations. Newtools can help unlock this advanced datasharing environment Embracing opportunities to collaborate.Companies realize that an industry-widecommitment to upholding human rightsand labor standards across value chainscan accelerate the adoption of better toolsand practicesFactors Influencing Supply of ToolsTool developers should consider how theirdesign and distribution may encourage orhinder uptake. The impact of tools is not widelyunderstood yet. Innovations need toovercome their “unknown and unproven”reputation to achieve uptake at scale.Some interviewees expressed skepticismthat third party tools are scalable acrossthe breadth of diversity and complexityin their multinational supply chains.Developers of new tools should considerindustry parameters, characteristics of thetarget company’s supply chain operation,and the company’s posture toward humanrights and labor when designing tools
Responsible Supply Chain Tools: Understanding the Market Opportunity Tools are more effective alongsidechange management. Interviewees whoare implementing tools noted that thetools are helpful but not a total solutionor silver bullet solution: fixing laborrelated problems requires understandingroot causes and undertaking changemanagement processes to gain buy-in andinfluence attitudes and behaviors, both atleadership levels and on the ground. Thismeans that tools should be supported byadditional change management solutionsto facilitate effective implementationEffectively addressing labor risks in supplychains will require both bold action fromindividual companies and collective actionacross companies, suppliers, policymakers,and providers of new tools and solutions.Individually, leading companies can continueinvesting in innovative solutions and tools toclose the gap between stated commitmentsand practices on the ground and help maketools more financially accessible to a broaderrange of companies. Together, companiescan strengthen industry-wide strategies,develop data sharing agreements, and shareknowledge and resources with industrypartners. Finally, tool providers can continueto engage the various purchasers withincompanies (e.g., procurement/responsiblesourcing, corporate social responsibility,and legal/compliance teams) by introducingtools that reduce the barriers to adoptingsocially responsible supply chain practicesand integrating them with other responsibleprocurement concerns. Complicationsrelated to scaling—tailoring tools to meetcompany circumstances and building buyin through change management—can beaddressed to foster greater demand forthese new tools.The anticipated growth of the market forsocially responsible supply chain tools pointsto enhanced opportunities to expunge laborexploitation from global supply chains.Effectively addressing labor risks in supplychains will require both bold action fromindividual companies and collective actionacross companies, suppliers, policymakers,and providers of new tools and solutions.08
Responsible Supply Chain Tools: Understanding the Market OpportunityIntroduction“We will not enjoy security withoutdevelopment, we will not enjoydevelopment without security, and wewill not enjoy either without respect forhuman rights.”United Nations Secretary-General Kofi Annan (Prague, November 2005)7Companies can protect or violate thehuman rights of workers and communitiesthroughout their operations. Resultingeffects may be positive, such as increasingeconomic opportunities or expanding publicservices, or negative, such as creating unsafeworking conditions, underpaying workers,or misusing natural resources. For decades,local communities, national governments,and international institutions have debatedthe responsibility of companies in managingthese adverse impacts and the role ofbusiness in preventing them.8Realizing this potential for impact, in 2011the United Nations Human Rights Councilendorsed the United Nations GuidingPrinciples on Business and Human Rights(UNGPs). The UNGPs apply to all countriesand to all business enterprises, bothtransnational and others, regardless oftheir size, sector, location, ownershipand structure.9The UNGPs encompass three pillarsoutlining how states and businesses shouldoperate: The state duty to protect human rights The corporate responsibility to respecthuman rights Access to remedy for victims of businessrelated abuses09Guiding Principle 13 outlines: Theresponsibility to respect human rights requiresthat business enterprises: (a) Avoid causing orcontributing to adverse human rights impactsthrough their own activities, and address suchimpacts when they occur; (b) Seek to prevent ormitigate adverse human rights impacts that aredirectly linked to their operations, products orservices by their business relationships, even ifthey have not contributed to those impacts.10As such, the UNGP asserts that companieshave a responsibility to protect humanrights along all phases of their value chain,inclusive of manufacturing and outsourcedsupply chains. Responsibility for supplychain operations proves particularlychallenging, since today’s global corporatesupply chains include expansive anddiffuse networks of both formal andinformal relationships between buyercompanies, factories, and workers whereworking conditions may vary greatly.11 Butincreasingly—due in part to regulationsas well as pressure from investors and/or shareholders, consumers, employees,the media, and civil society groups—manycorporations have embraced responsibilityfor the safety, health, and wellbeing ofindividuals along all phases of operations,including deep into their supply chains.This concept of “responsible supplychains” integrates environmental, social(including human and labor rights), and
Responsible Supply Chain Tools: Understanding the Market Opportunity“There’s a limit to what wecan do if governmentsdo not have the rightlabor laws and do nothave trained inspectorswho have the capacityand authority to conductinvestigations.“- Intervieweegood governance factors into the lifecyclesof goods and services. Supply chainresponsibility aims to create, protect, andgrow long-term environmental, social, andeconomic value for stakeholders along acompany’s value chain. By implementingsocially responsible supply chain practices,companies are able to protect the long-termviability of their business and secure a sociallicense to operate.12Interest in sustainably-managed businesseshas grown rapidly. From the investorperspective, in early 2016, environmental,social, and governance (ESG) principlesaccounted for 22.89 trillion, or 26 percent,of professionally managed assets in Asia,Australia, New Zealand, Canada, Europe,and the U.S – a 4.5 percent increase since2012.13 On the regulatory front, severalrecent measures require reporting relatedto ESG topics, including the 2010 CaliforniaTransparency in Supply Chains Act, the2015 United Kingdom Modern Slavery Act,the 2014 EU Directive on disclosure ofnon-financial and diversity information, andmostly recently the 2018 Australia ModernSlavery Act. Legislation also has beenproposed in Hong Kong, the Netherlandsand Switzerland.14ObjectivesWe offer this report to increase awarenessand stimulate a discussion about the currentresources available to companies that seekto manage responsible supply chains andidentify strategies that might be used tostrengthen the market for useful tools tohelp accelerate better practices acrosssupply chains.Specifically, the report aims to define andquantify the market opportunity for sociallyresponsible supply chain tools and services by:01. Understanding the current landscape oftools and services being used to managesocially responsible supply chains;02. Understanding the profiles of corporateactors whose operations impactvulnerable workers that may benefitfrom these tools and identify: priorities,needs, challenges, demand drivers,current approaches to building andmaintaining socially responsible supplychains, willingness to pay, and budgetsfor these tools and services; and03. Estimating the value of the commercialmarket for tools and servicesdesigned to create accountability andtransparency in corporate supply chains,by prioritizing four industry verticals—apparel and footwear, food andbeverage, hospitality, and informationand communications technology(including electronics)—industriesknown to be of high risk for forced laboror labor abuse.10
Responsible Supply Chain Tools: Understanding the Market OpportunityAuthorsA team from Monitor Institute by Deloitteconducted research and synthesis forthe report. Working Capital, founded byHumanity United, commissioned the reportwith funds from the United Kingdom’sDepartment for International Development.MethodologyThe data collection process involvedsecondary research and interviews withrepresentatives from companies (buyersand suppliers) as well as consultanciesand vendors of responsible supply chainsand tools.About Monitor Institute by DeloitteMonitor Institute by Deloitte is a consultingteam within Deloitte LLP that workswith social impact-focused nonprofits,philanthropies, and businesses. The teamhelps leaders make the hard choices andtake the required actions to advanceprogress on pressing societal challenges,crafting impact strategies and field-leadingthought leadership.Secondary ResearchThe team conducted secondary researchto inform analysis and estimate the valueof the current and future commercialmarket for responsible supply chain tools.As background, we reviewed more than 50documents from sources including academia,scholarly reports, government policy memos(e.g., U.S. Department of State Trafficking inPersons Report 2018), news outlets (e.g., TheAtlantic Whose Job Is It to Prevent Worker AbuseAbroad?; The Economist No More Excuses– Responsible supply chains in a globalizedworld; and Huffington Post The Myth of theEthical Shopper), consultancies (e.g., BSR Stateof Sustainable Business and KPMG Surveyof Corporate Responsibility Reporting 2017);think tanks, international governmentalorganizations (e.g., United Nations GlobalCompact Supply Chain Sustainability: APractical Guide for Continuous Improvement)and non-governmental organizations. Inpreparation for interviews, we reviewedpublicly available information related toeach company’s responsible supply chainoperations. To estimate market size, wedrew from industry briefs, investor reports,and market research reports (e.g., Gartner,Standard & Poor’s Capital IQ), informationshared by interviewees, and pricinginformation publicly available from vendors.Further, Deloitte Consulting is committed toand understands the fight against humantrafficking. Since 2011, Deloitte Consultinghas worked with the U.S. Government toexpand its capability in preventing humantrafficking, protecting survivors, prosecutingtraffickers, and collaborating across industry,civil society, and governments in the fightagainst modern slavery.About Working Capital and HumanityUnitedWorking Capital is an early stage venturefund that invests in scalable innovationsto meet the growing corporate demandfor more transparent and ethical supplychains—addressing the urgent need toprotect vulnerable workers and sourceresponsibly. It was created by HumanityUnited, a foundation that is part of TheOmidyar Group. Working Capital activelyexplores an
supply chain tools could reach between 889 million and 2.7 billion (excluding social compliance audits). Among the five major categories of socially responsible supply chain tools—risk assessment, The market for socially responsible supply chain tools could reach 2.7 billion over the next five years.
Supply chain management 1.1.2.1. Supply chain processes: the integrated supply chain point of view To describe supply chains from a process point of view, we refer to the supply chain operations reference (SCOR) model. SCOR is a cross-industry standard for supply chain management and has been developed and endorsed by the supply-chain council .
companies. In this case, supply chain management mainly focuses on cooperation between the supply chain actors. 1.1.2. Supply chain management 1.1.2.1. Supply chain processes: the integrated supply chain point of view To describe supply chains from a process point of view, we refer to the supply chain operations reference (SCOR) model.
Accenture reports how a microchip company created a more resilient and sustainable supply chain to respond in almost real-time to disruptions. Read more. Keywords: sustainable supply chain, supply chain resilience, advanced supply chain, maturity assessment, proactive risk management, supply chain digital twin, supply chain stress test Created Date
Qlik for supply chain: forecasting and planning 6 Qlik for supply chain: sourcing and supplier performance 8 Qlik for supply chain: production insights 10 Qlik for supply chain: warehousing and distribution 12 Qlik for supply chain: transportation, storage and logistics 14 Qlik for supply chain: fleet management 16
The Define Supply Chain Planning Configuration task list is part of the Supply Chain Planning offering. If you have navigated to the Setup: Supply Chain Planning page from the Supply Chain Planning offering in the Setup and Maintenance work area, the Supply Chain Planning Configuration function
rounding supply chain vs. supply chain competition, the Integrated Supply Chain Management (ISCM) Program at the Massachusetts Institute of Technology (MIT) conducted a Delphi study with more than 30 supply chain experts from industry, academia, and consulting. The study found that the gr
green supply chain management. Supply Chain in the Environmental Life Cycle Raw Material Extraction Transport ManufactureTransport Retail/ Consumer Use Transport Disposal Concept Design Typical Supply Chain Scope Designing the supply chain concurrently with the product is a supply chain management best practice.
graduation, positioning them for college and careers. The grade level ELA standards begin in the Prekindergarten and Elementary ELA Standards section. Please see the introduction for more about how the anchor standards and grade level standards connect. New York State Education Department ENGLISH LANGUAGE ARTS LEARNING STANDARDS (2017) 4 NEW YORK STATE EDUCATION DEPARTMENT Reading Anchor .
