Impact of COVID-19 on the Supply Chain

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COVID-19 has had a profound impact on business operations across global supply chains, especially the working conditions that people operate within. In extreme cases, the turbulence has exacerbated the risk of forced labour and other forms of exploitation that many face during their day-to-day working hours.

Now is a critical time for businesses to build even greater visibility of their supply chains, understanding the technology available and then using the rich data produced, to better understand working conditions and identify risks to workers – which can translate into risks to business.

 

The power of technology

The pandemic has disrupted business due diligence processes, which often rely on in-person audits and site visits to assess working conditions. Technology becomes a critical enabler here, as digital tools support companies to assess workplaces in their supply chains even with safety restrictions and lockdowns in place.

For example, virtual assessments – based on a virtual “walk-through” of a site to look at working conditions – can bridge a gap where on-site audits cannot take place. Mobile technology is also an important feature of many worker engagement tools, used to gather feedback from workers remotely and, crucially, anonymously, enabling businesses to hear workers’ concerns.

These tools help businesses to continue identifying and managing human rights risks in their supply chains. They remain invaluable this year as COVID-19 restrictions and related disruptions remain present – and beyond this current disruption, will complement other activities such as on-site audits and self-reported information from suppliers to build a multi-faceted picture of workers’ experiences.

Protecting vulnerable workers​ from human rights risks

After a disruptive 2020 and 2021, companies are increasingly recognising the importance of sourcing responsibly and operating ethically to protect business operations and workers. Technology and data play increasingly crucial roles in supporting these goals, enabling companies to build visibility of their whole supply chain and the environmental and human rights risks within it.

For example, research on labour rights has found that the COVID-19 pandemic has increased workers’ vulnerability to forced labour in numerous countries and industries, including the global garment and personal protective equipment (PPE) supply chains.

A tool that looks at the indicators of forced labour found at suppliers’ worksites helps companies to identify practices commonly associated with this human rights violation – such as retention of workers’ identity documents, excessive overtime, deception, and restriction of movements. Businesses can then prioritise where the risks of forced labour are highest, and therefore where to take action.

This year, the European Union (EU) looks to introduce new legislation requiring companies to conduct human rights and environmental due diligence – which may include companies based outside of the EU that want to operate or sell within it. This legislation will bring increasing demands for businesses to show how they assess and address human rights risks, such as modern slavery, and protect people working in their supply chains.

 

Regular risk assessment​ is critical

Organisations should continue to develop their understanding of their supply chains as we move beyond the pandemic. In today’s fast-paced world, things can move and change quickly, so regular risk assessments are always key. ​

Risk assessment is not an end in itself, but part of a process to understand potential adverse impacts in supply chains, so that companies can take action to limit and address these impacts. It is these actions that can have the most beneficial effects for workers, communities and the environment, rather than just the process of risk assessment.​ Organisations can use a risk assessment tool to help them prioritise these actions, including remediation for workers, where they are needed most.

 

Preparing for the future​

While the worst of the pandemic is hopefully behind us, there are ongoing repercussions for workers across supply chains globally, and new challenges will continue to emerge. Businesses must continue to build visibility across their supply chains, assess supplier sites regularly (including the people, activities and working conditions at different sites), and act on this information accordingly.

Adapting to changing conditions is the new normal. We expect that companies will continue needing to negotiate workforce shortages or surpluses, fluctuating order patterns and disrupted supporting services like logistics. They must also play their part in protecting workers’ health and limiting the spread of the virus, while COVID-19 remains a priority concern.

Beyond COVID-19 and the need to ensure functional supply chains during times of disruption, stakeholders are demanding ever greater transparency from companies on how they address human rights and environmental risks. Businesses are now expected to know where their products or services are produced, by whom, and under what conditions, and to make at least some of this information publicly available to back up ethical commitments. This is only possible if a business has a thorough understanding of their supply chain.