Do you know the origins of your supply chain? Increasing visibility into supply chain practices takes work but has the potential to boost business value and lead to new market opportunities.
Until recently, ‘modern slavery’ was not a concept that many would associate with the Australian workplace. However, since the provisions of the Modern Slavery Act 2018 (cth) came into effect on 1 January 2019 – which outlined new modern slavery reporting requirements for Australian entities with an annual revenue greater than $100 million – businesses have been under scrutiny to boost their supply chain transparency and develop collaborative responses to eradicate modern slavery.
Despite government organisations being an exempt entity, Townsville City Council is now addressing this issue through their tender and prequalification processes, recently making it a mandatory stage 1 criteria for their suppliers to comply with the practical, risk-based reporting framework outlined in the Modern Slavery Act 2018.
Chief Executive Officer of Townsville City Council, Dr Prins Ralston, affirms this landmark initiative is a significant step to fixing supply chain issues that have resulted from the rapid globalisation of manufacturing over the last two decades and seen many businesses unwittingly support modern slavery through lack of supply chain awareness.
“Townsville City Council requires its suppliers with an annual revenue greater than $100 million to develop an annual modern slavery statement. This statement requires suppliers to understand in detail their supply chain and commit to either improving working conditions or transitioning components of its supply chain that do not present risk of modern slavery,” explains Dr Ralston.
“Businesses that do not reach this income threshold are required to sign a modern slavery declaration, which enables organisations to understand their supply chain and commit to transitioning components that are at risk of modern slavery.”
Beyond these regulatory requirements, Dr Ralston says investment into supply chain tracking can lead to new market opportunities and boost business value, often revealing new ways to operate more sustainably and cost-effectively. This is critical in the wake of COVID-19, which has highlighted Australia’s reliance on overseas suppliers, with long lead times and significant price increases now commonplace.
“Over the past 20 years, increased globalisation of the manufacturing sector has enabled businesses to utilise supply chains with a significant presence in developing countries where the cost of developing their goods and products is significantly lower,” continues Dr Ralston.
“While this has contributed to the enhanced financial sustainability of many commercial organisations, this has led to the enablement of modern slavery like, for example, using child labour, significantly underpaying workers and unsafe working conditions.”
It’s no secret that COVID-19 has caused viral disruption to supply chains globally and exacerbated the vulnerability of those trapped in modern slavery. However, it hasn’t all been negative, with much of the focus now shifting to ways North Queensland can boost local manufacturing for critical industries to decrease import risk. This has further been compounded by investment into major projects such as the Lansdown Eco-Industrial Precinct to ensure there is the required infrastructure and viable manufacturing facilities available in the region.
“Australian businesses understand the need to increase the capacity of the local manufacturing sector to enhance supply chain reliability and support stable pricing. This transition has seen Australian businesses adapt to provide goods that have traditionally been sourced overseas, however, significant growth is still required in this sector,” continues Dr Ralston.
“This transition, along with further advancements in technology, presents enormous opportunities for Townsville and North Queensland through the growth of an advanced manufacturing sector and the economic stimulus this would provide through stable and secure jobs.”
With the industry looking at opportunities to help grow the sector, Chamber of Commerce CEO, Ross McLennan, says it’s time to get back to connecting with customers; and wherever possible, supporting local supply chains to stimulate the economy.
“Approximately every $1 spent locally generates about $1.46 in the local economy so when it comes to larger contracts and procurement, the multiplier effect not only works when money is circulating in the local economy, but it builds critical capacity,” says Ross.
“Now is the best time to refresh our business networks. As supply chains start to change in line with reduced capacity of import, it has provided an opportunity to look for new, local suppliers to support your business and support them in return.”
As businesses face rising expectations to embed responsible business practices into their supply chain operations, the focus on modern slavery compliance risk for Australian entities is only predicated to become more mainstream over the next decade.
Whilst this isn’t a process that will happen overnight, Dr Ralston reminds us that it all comes back to education; he encourages businesses to start small and ask key questions about the origins of goods and services to ensure they are growing an economically sustainable business that is not reliant on slave labour.
“Review the modern slavery statements of your suppliers and wholesalers. These will detail the strategies organisations have in place to decrease the risk of modern slavery,” he says.
“Where suppliers do not have a modern slavery statement in place, the organisation’s website should be reviewed, and suppliers questioned on how well they understand their supply chain.
“Businesses can identify opportunities to transition all or some of the components of their supply chain to markets that do not present risk of modern slavery.”