Supply Chain
SAP Ariba Takes Aim at Forced Labor with Supplier Risk Management Tool

Despite the attention the issue has received in the past decade, child labor and modern slavery are still prevalent across the world and in many corporate supply chains. The figures are stark – the United Nations estimates that 168 million children are victims of child labor across the world, while the Global Slavery Index estimates that 45.8 million people are enslaved.

Eliminating child labor and modern slavery will require dedicated action from the entire business world. SAP Ariba is well positioned to lead on this. Its products already connect over two million buyers and sellers around the world, with over $1 trillion in transactions.

“That’s more than 2.3 times the transactions of eBay and Amazon put together ... that is leverage we could bring to really [enable] ethical sourcing,” Padmini Ranganathan, SAP Ariba’s VP of Products and Innovation, told Sustainable Brands in a recent interview.

Knowing the potential for impact, and the growing desire for better tools to allow supply chain managers to understand supplier risk, led SAP Ariba to release its Supplier Risk Management tool at the end of 2016. The goal: to bring in many diverse sources of data that can be utilized by companies when they are making supply chain decisions or developing strategies to minimize the risk of labor violations in their supply chain.

“What we’re doing is aggregating across these aggregators,” Ranganathan said. “One of the primary pain points that we heard from companies was about inconsistent and fragmented information. There is a lot of data coming from NGOs, media; a lot of time it happens after the fact, and it’s not delivered at the point where they are making that sourcing decision.”

SAP Ariba’s Supplier Risk Management tool aims to provide actionable information to companies where it can have the greatest impact. To do this, they are bringing in diverse sources of data and partners, such as Made in a Free World, a San Francisco-based company that has created an innovative supply chain risk mapping and transparency tool.

One of the early users of SAP Ariba’s Supplier Risk tools is Nielsen Media Research, a company known mostly for its analysis of television ratings and audience measurement – not exactly the first company you would think has supply chain issues. But Nielsen does manufacture some products, such as tv-top boxes, that require them to work with diverse, and potentially risky, suppliers.

“Nielsen is probably not an extremely high-risk company,” said James Edward Johnson, Director of Supply Chain and Risk Management at Nielsen. “We don’t have a direct supply chain that relies on agriculture or mining. We do, however, have a certain amount of equipment manufacturing that we do. We don’t want to be facilitating bad behavior that we know happens in the electronics manufacturing industry.”

For Nielsen, the real benefit of SAP Ariba is taking supplier risk management from a topic discussed within one team to one that can become a daily concern for those working across the company and, importantly, those directly involved in procurement.

“SAP Ariba allows us to start thinking differently about information,” Johnson said. “Now, we can have our sourcing managers see their suppliers risk live. They can see the data that we’re generating on a large number of measures instantaneously.”

SAP Ariba is not a solution on its own – it’s a tool, like any other. It can’t replace real action, but it can help companies identify where to act. And Ranganathan hopes that as SAP Ariba grows its supplier risk tool’s functionality and bring in more data sources, more companies will be empowered to take action.

“For every company that wants to do this, I hear another that is afraid of finding what is in their supply chain,” Ranganathan said. “I hope we will have less and less companies afraid of doing things, and taking responsibility.”

For Johnson, consumer demand for transparency and ethical products is something he only sees continuing, pointing to a need for more companies to begin taking supply chain management seriously now.

“Flying under the radar is becoming less and less possible,” Johnson said. “It’s obvious that there is a large and growing number of consumers who care about what is in the products they buy. Consumers increasingly read labels and they’re doing it a lot more with everything they buy.”