Seeing the Human Face in Supply Chain Data
Is there any topic in business less human-sounding than "big data?" Just about the only person who comes to mind when you hear the phrase is that cheesy, central-casting business guy in the stock photo touching the invisible screen with numbers flying off it.
Yet Moreen Romans has made a career out of seeing real human faces in data and analytics. For more than a decade, Romans has been a leader in developing data-inspired supply chain solutions for Dun & Bradstreet. Yes, those solutions help manufacturers with the mechanics of their job: finding and selecting suppliers with track records of reliability and avoiding costly supply chain disruptions. But Romans and her team have also focused their work on the personal aspects of supply chains - how smart supply management can create better circumstances for individuals involved. How companies can do well by doing good.
Romans has led efforts that let minority and woman-owned suppliers more easily be discovered by Dun & Bradstreet customers. They've developed solutions to identify suppliers most committed to environmental stewardship.
And now, they've turned to helping companies eliminate human trafficking and forced labor from their supply chains. It's estimated that 21 million people are in modern slavery today - making it a scourge of "epidemic" proportions, to use Romans' word. That's why Romans and team launched Dun & Bradstreet's new Human Trafficking Risk Index in April.
We sat down with her recently to talk about this latest endeavor - one galvanized by a visit to the White House and one that has her particularly excited about the human aspects of her work.
"How often in a job, particularly in data, do people wonder what kind of impact you can have," Romans says. "Well, here's the impact, and it's a wonderful impact."
Here are edited excerpts of the conversation.
To get a sense of the problem of human trafficking, how many companies have you identified with potential exposure to human trafficking? Even just looking at the regulatory piece of it - laws in the U.S. and U.K. in particular. How many companies are affected by those laws?
We have already identified 17,000 just among the companies on our database alone. There's a lot more, but that's just our first pass at it. And that's not even looking at the smaller companies that don't think they have to worry about it. But with the recent amendment of the Fair Trade Regulations of 1930, there's the restriction that no products now can come into the U.S. if they've been sourced with forced labor. If you have anything at all even in your little mom-and-pop store, you'd better make sure you know where you're getting that from. If you're importing parts or supplies from another country, if you're doing business in the UK, you have to be on top of this. It affects just about everybody.
How many of those companies realize this is a potential problem for them and are looking to solve it?
They're aware of it now, because with these new regulations they have to start reporting on it this year. I compare it to where supplier diversity was in 1998. Regulations passed and companies had to start paying attention to it, and each year since they've had to step up their game. The requirements evolve and expand. I expect this is going to be similar. This is just going to be the first pass. Everybody is going to have to report, try to find their way to the information they need to be able to report, and it will only get more restrictive from here.
Who at a company is most responsible for this? Who "owns" it?
It varies depending on the and maturity of the organization. I was talking to one of our customers the other day, and he handles the reporting to the government for their diversity requirement. I asked him, "What are you doing with the human trafficking reporting?" He goes, "What do you mean?" He said he owned reporting for diversity and conflict minerals, so I said, "Well, a little heads-up, you're about to get this one too." But the responsibility could be under a CSR (corporate social responsibility) program. It could be under a compliance program. Many companies haven't even decided yet. You mention it to them, and they're like, "Oh, yeah. I've got to start thinking about that."
But you've been thinking about it for quite a while?
We started to hear a lot about human trafficking a few years ago. Since then, we've been talking to other companies and NGOs to try to figure out the right way to address it. Then in January of 2015, we were invited to the White House for a forum on how corporations could be proactive in identifying forced labor. President Obama has said it's a legacy issue for him, and we were there with big companies from industries like retail and technology, some key NGOs, and Secretary of State Kerry.
What was that discussion like?
Nobody there was going to say, "This isn't a problem." The problem we talked about is that companies are reactive about it. When they find it, they take steps to fix it. They make the big public statement saying they don't support it. But what if we could be proactive about in identifying the potential for it and then putting a process in place to prevent it? That's where you're going to start eradicating forced labor - when you don't allow it to happen. That's what really came out of it. Just after that meeting, the U.S. government released the FAR regulation [Federal Acquisition Regulation, effective May 2015, which introduced more strict standards and mandated new reporting for U.S. companies]. That was really a catalyst for us to figure out the right solution using our data.
But even so, don't many people think it's still an issue isolated to only certain areas?
Yes, but it's a global epidemic. There are certain parts of the world and certain industries that have more potential exposure to it, but if anyone thinks that we in the U.S. don't have our own issues with it, they're mistaken, because we do.
It's actually happening in countries like the U.S. - not just developing regions like southeast Asia?
It's happened in this country. A lot of it is in fishing and agriculture industries. We need to focus on the fact that it is truly global. That's been one of the main motivators of the new index.
With the index, how have you been able to accomplish that global view?
It's a combination of two data sources. We look at data from the U.S. Department of State that creates a tiered analysis of risky geographic regions. They assign watch points based on where there's evidence of forced labor. Then we also have data from the International Labor Affairs Bureau that categorizes product and commodity types for likelihood to be produced by forced labor. This is the same information used by the International Labour Organization.
We create the index by marrying them to the Dun & Bradstreet database, where we have firmagraphics on more than 250 million companies around the world. By looking at the State Department data, the International Labor Affairs Bureau and the location and very granular industry code information we collect in our database, we can assign a risk rating of between 1 and 7 to a specific location where a company is sourcing a product, where 1 is lowest risk and 7 is highest.
So for example, to test the index we looked at a major consumer products company. We looked at the entire company as a whole, and the total risk index was 1.5. But when we blew out the whole family and looked at each site individually where the company manufactured its products, four of their locations scored much higher on the index. This company has actually had issues with unknowingly using forced labor in their supply chain, and what the index showed was that the areas where that occurred were among these four high-scoring sites on the index.
Now that we have the index, companies can see these hot spots and proactive about investigating them - rather than reactive after they find out there's a problem.
And when there is a problem, consumers find out about it and react to it. In the information age that we're in, when someone says, "We didn't know," consumers don't believe them, and they go on social media saying so.
Exactly. So companies are trying to identify it. But when they're looking at thousands of companies in their supply chains - their Tier 1 suppliers and the suppliers of those suppliers - how can they really manage that? They can't go in manually and look at all of those. They need a starting point. They need help knowing who to key in on and then proactively monitor and manage with a process that might include boots on the ground. That's what this does.
Then as we do this, companies start working more closely with those potentially high-risk suppliers. Those suppliers have someone watching them more closely, so they can't even try to use forced labor. And maybe we just stopped a little bit of human trafficking. And how good is that?