APICS CEO Abe Eshkenazi, CSCP, CPA, CAE -
January 13, 2012
On January 1, 2012, the California Transparency in Supply Chains Act went into effect. Its goal is to ensure that large retailers and manufacturers__defined as companies who do business in the state and whose annual worldwide gross receipts exceed $100,000,000__provide information about their efforts to eradicate slavery and human trafficking from their supply chains.
Which means ... what, exactly? As the San Francisco Chronicle reports, even though the bill was enacted in 2010, "many California companies either don't know about it or are scratching their heads over how to deal with it." It appears that, currently, all it takes to be compliant is to disclose a certain amount of information in a clear manner on a corporate website. This required information includes whether the company is looking into the existence of slavery and human trafficking in its supply chain, whether it verifies that its suppliers conform to the same code of conduct on labor practices, whether it provides training for managers on this sort of risk mitigation, and more. "In other words," as the Chronicle's Andrew Ross writes, "you're not actually obliged to do anything, but don't promise what you can't deliver."
It will be interesting to see how companies react to this piece of legislation. Already, compliant web pages are appearing on many corporate websites. I took special note of Hewlett-Packard's page on the Transparency in Supply Chains Act, which can be found here. There, HP discusses its measures such as risk-based supplier assessments, supplier agreements, and professional training that demonstrate its observance of the law's requirements.
But this page is just a fraction of HP's section on supply chain sustainability. HP goes in-depth, disclosing the names of its suppliers, the results of its supplier audits, and its goals for the future. According to HP, it has been making these efforts since 2000, when it began its supply chain social and environment responsibility program. The company is a member of the Electronic Industry Citizenship Coalition, a group for responsible supply chain corporations, and subscribes to its code of conduct. What's striking is that HP has undergone these measures without any legislation demanding them.
Navigating a sea of regulations
Regulations regarding hazardous substances in a supply chain have long been common concerns for operations and supply chain management professionals, but only recently have laws regarding sustainability practices become more common. Of course, the first step for anyone in the industry is to learn all the laws and regulations for your supply chain__which might be a daunting task in itself, considering the global reach of today's supply chains.
The next step is to evaluate how to make supply chain decisions while considering those standards. Doing this, according to the APICS Certified Supply Chain Professional (CSCP) Learning System, requires you to "think like a supply chain manager. Think of the overall functions that are included in the entire supply chain and look for causes and effects." This includes elements such as environmentally designed facilities, the safety of employees, the use of toxic materials, and the choice of carrier.
Supply chains, and the laws and regulations that govern them, are becoming increasingly complex and demanding. We created the APICS Asia Supply Chain & Operations 2012
conferences with the goal of addressing this complexity on a global scale. The learning tracks cover subjects such as critical sourcing decisions, infrastructure risk, and supply chain strategy, and the speakers will represent a range of expertise from North America and Asia. We are excited to have the opportunity to present these conferences on April 2-3 in Seoul, South Korea, and April 5-6 in Shanghai, China. I hope that you will join us.
In other news
How APICS Operations Management Now relates to you
Operations management is everywhere. Today, operations management professionals have unprecedented impacts on the global economy. Consider these questions and how today's edition of APICS Operations Management Now relates to you and your career.
- What are some laws or regulations that affect your organization’s supply chain? What actions does your company take to comply with them?
- Will the California law have any impact on your company? If so, what steps will your company’s leaders take?
- How do local laws and regulations affect business strategy?