Supply Chain Intelligence: The "Last Mile"
By Kimberly Allen, Ph.D., TFI Environment Consultant
Aug 05, 2012
Electronics industry supply-chain executives are well aware of the challenges with supply-chain management. Fortunately, advances in communications technology combined with the techniques of social enterprise are enabling executives to access deeper and more accurate information about suppliers' operations. The secret? Workers on the factory floor.
The challenges are clear. Companies that experience supply-chain disruptions show a 40% decline in shareholder value compared to their non-disrupted competitors. And regulations are getting more stringent: California now has a law requiring companies to report on their Tier 1 and 2 suppliers regarding slavery and human trafficking. The Dodd-Frank Act requires assurance that conflict minerals have not been used. The current system relies on self-reporting or various types of inspections, neither of which is satisfactorily reliable or accurate.
LaborVoices offers a new type of supply-chain intelligence. Rather than relying on experts such as factory managers or 3rd-party inspectors, it utilizes the crowd-sourced intelligence of many factory workers. Laborers can submit direct, real-time information about the working conditions and practices over their cell phone, supplying the critical "last mile" of data that has so far gone untapped.
Although LaborVoices' reports can serve as social and environmental tools, they offer far more because they can also address real operational issues. For example, suppose it is revealed that workers are not being paid on time at a certain factory. This could indicate a cash flow issue that supply chain executives would want to know about. It is even possible that the factory manager was not aware of the payment delays and is hence alerted to some internal problems.
Here's how it works: A company (such as an electronics or apparel vendor) presents LaborVoices (LV) with its thorniest issue, such as a particular factory or region that is of concern. Within about a month, LV ramps up its technology and creates a social infrastructure of partners in the region (NGOs, trade unions, etc.). Then LV starts collecting data from workers and, with the customer, co-creating a useful intelligence flow in the form of a dashboard. Data arrives in real time, is analyzed by LV, and presented to the customer in a report.
This creates benefits for all parties:
- Supply-chain executives get high-quality intelligence on existing supply chains.
- Suppliers (local employers) get unprecedented visibility into their own operations and human resources, gaining an edge over competitors who are cutting corners.
- Workers gain a channel to raise concerns in a safe, anonymous way.
Pilot operations have been set up in South India, proving the effectiveness of the technology. LV is in discussions with potential customers in the electronics, apparel, and toy industries. It has also spoken with the EICC (Electronics Industry Citizenship Coalition) about possible coordination of data standards.
According to Dr. Kohl Gill, founder and CEO of LaborVoices, "We want to set ourselves up as the gold standard in intelligence. We are primarily concerned with supplying accurate and useful data about what is actually happening in factories."
It is clear that this detailed level of data-gathering offers something radically new for the electronics supply chain. One can't help but wonder whether it might have averted some difficult and tragic supply chain disruptions, such as those emerging from problems at Foxconn.
As you consider your own supply chain, how might this kind of "last mile" information be helpful to you? How would you engage a product like what LaborVoices offers, and what would you like to see it do? Post a comment and share your thoughts.
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