Slavery in Supply Chains: A Clarion Call to Procurement

By Ronald Hedley

In 1833, a sixteen-year-old slave from Maryland was sent to work for a poor farmer and self-proclaimed slave-breaker named Edward Covey. True to his reputation, Covey beat the boy regularly. The sixteen-year-old slave was nearly broken.

But on one memorable occasion, as Covey began to beat him, the young slave fought back. The struggle lasted more than two hours until Covey, bloodied and humiliated, gave up the fight. Covey never tried to beat the young slave again.

In his autobiography Narrative of the Life of Frederick Douglass, author, orator, statesman and abolitionist Frederick Douglass shared the significance of standing up to his cruel overseer:

“This battle with Mr. Covey was the turning point in my career as a slave. It rekindled the few expiring embers of freedom, and revived within me a sense of my own manhood. It recalled the departed self-confidence, and inspired me again with a determination to be free. The gratification afforded by the triumph was a full compensation for whatever else might follow, even death itself.”

Are we helpless? Can anything be done to reduce slavery in factories, fishing boats, and sweatshops? Can we stop the exploitation of children? Dillon is certainly trying.

– Hedley

Justin Dillon is an entrepreneur, musician, director, producer, and like Douglass, Dillon is an author, orator, and (modern-day) abolitionist. His book, A Selfish Plan to Change the World, is a must read for all procurement professionals. In Selfish Plan, Dillon writes about how he learned of twenty-first century slavery (forced labor, human trafficking, the abuses of child labor) and what he has done about it since. He writes about how his lifelong mission, his “soul dream,” was realized, and he writes about how you, dear reader, can also change the world.

Prior to the Civil War, in Douglass’ era, there were 3,953,762 slaves in the United States. Those numbers are small compared to the number of slaves that are in the world today. Dillon writes, “Twenty-first century slavery affects more than forty-million men, women, and children who are forced to work without pay, and endure unspeakable violence. This illicit trade and exploitation of humanity is the fastest-growing crime on the planet” (2017 p. 28).

What is twenty-first century slavery? Perhaps President Obama said it best: “When a man, desperate for work, finds himself in a factory or on a fishing boat or in a field, working, toiling for little or no pay, and beaten if he tries to escape - that is slavery. When a woman is locked in a sweatshop, or trapped in a home as a domestic servant, alone and abused and incapable of leaving – that’s slavery.” (September 24, 2012, Sheraton Ballroom, New York)

Are we helpless? Can anything be done to reduce slavery in factories, fishing boats, and sweatshops? Can we stop the exploitation of children? Dillon is certainly trying. In 2018, he founded FRDM a software as a service platform. Dillon shared his reasoning for creating the start-up. He wrote, “We believed we could reduce slavery globally by influencing something that happens every nanosecond of every day. Consumers, business, governments and organizations are purchasing goods and services constantly without knowing whether or not that purchase was produced by slavery. We determined that if we can influence those purchases with intelligence about the likelihood of slavery, we could eventually impact tens of millions of lives” (2017 p. 67).

We built an algorithm that can determine the risk of slavery in almost any product, down to raw materials, such as cotton and petroleum.

– Hedley

Changing the World

To that end, FRDM was developed to help procurement professionals make informed decisions about choosing suppliers. Dillon writes, “Slavery and child labor are buried deep in supply chains, but previously no one had a way to look for it. So, we built a software business intelligence tool called FRDM that companies can use to identify risky purchases” (2017 p. 67).

He continued, “We researched all the goods, services, and commodities a business might purchase, from steel to lightbulbs, apricot jam to industrial refrigerators, and palm oil to Wi-Fi routers. We built an algorithm that can determine the risk of slavery in almost any product, down to raw materials, such as cotton and petroleum” (2017 p. 209).

In his book, Dillon waxed specific, “When FRDM analyzes a generic kitchen blender, it doesn’t just look at the factory where it was assembled. It looks for the risk of slavery where the metal for the blade is made, in the copper wiring on the inside, and in the rubber components. We designed the tool to help businesses see what they might be missing. This kind of data empowers companies to be the heroes by working with their suppliers to protect the freedom of their workers” (2017 p. 209).

Dillon continued, “When a company identifies a risk (through FRDM), they can then interrogate certain suppliers that might be benefiting from slave labor. This long-form, upriver approach is designed to make it hard for bad guys hidden deep in supply chains to profit from slavery” (2017 p. 67).

Dillon knows you have to hit ‘em (exploiters) where it hurts: in the pocketbook. He wrote, “When I decided I wanted to make a scalable impact on slavery, I knew it had to be done in the marketplace. We estimate that the annual global profits reaped by slaveholders exceeds $150 billion. We knew we had to leverage a much larger amount of money to fight slavery, and those kinds of numbers only exist in the marketplace. On average, global commerce from consumers to business and business to business (B2B) is more than $80 trillion a year. So, we focused our efforts on leveraging that number to end slavery” (2017 p. 128).

What is the impact of FRDM? Dillon explained, “On pure numbers, our platform is influencing over 24 billion in B2B spend. What that means is that we’re helping [businesses] understand the risk of forced child labor inherent in those purchases and services. We’re monitoring a tremendous amount of spend.”

FRDM provides procurement professionals with the tool they need to know every aspect of their supply chain. Dillon believes it is procurement’s responsibility to know which of their products exploit slaves. He explained, “[Procurement is] the one place where companies can really affect change. Marketing, finance, sales and operations can’t affect change [like] procurement can because a dollar over a barrel is the best motivator of behavior. Companies can express their values through procurement, and that’s hugely valuable.”

Dillon believes it is procurement’s responsibility to know which of their products exploit slaves.

– Hedley

The Power of “Buycotting”

Dillon connects with business, education, entertainment and government leaders worldwide to promote his cause. He wrote about one such connection and subsequent positive result. “I met with Kelly Miller at his company’s headquarters in Cupertino, CA. His company, SAP Ariba, is a procurement software company. Together, we decided on a plan. We would find a way to integrate our FRDM tool into their platform, empowering millions of companies to protect freedom in their supply chains” (2017 p. 210-212).

Dillon and Miller once again knew to hit ‘em where it hurts. Dillon wrote, “Our mission was clear. If we can wield the power of the global marketplace, we can change the world at scale. We knew we had to build a new way for humans to be humans. Instead of boycotting companies for what they aren’t doing, we decided to build a network of ‘buycotters’ who buy better. We committed to applauding efforts that led to transparency, rather than requiring impossible perfection” (2017 p. 210-11).

New Anti-Slavery Laws

FRDM is influencing governments and helping to implement laws that are affecting change worldwide. Dillon wrote, “[In 2012,] the Obama administration issued Executive Order 13627 requiring companies that do business with the United States to increase their efforts to remove slavery from their supply chains. The White House highlighted Made in the Free World, the non-profit organization Dillon founded, as the organization that can assist business in this process. The United States is the largest purchaser in the world, which means that this executive order has the power to protect millions of people” (2017 p. 212).

The proverbial dominoes began to fall. Dillon wrote, “Soon after, the UK passed the Modern Slavery Act, requiring businesses to produce proof that they were looking for slavery in their supply chains. Other laws were being passed as well, and companies were beginning to be prosecuted in court for slavery in their supply chains, some cases reaching as high as the Supreme Court” (2017 p. 212). Laws were passed in Australia as well, requiring companies to know where slavery is in their supply chains.

In 2016, President Obama signed the Trade Facilitation and Enforcement Act of 2015. In Section 910 of the Act, a loophole in the Tariff Act of 1930 was closed. The Tariff Act of 1930 (also known as the Smoot-Hawley Act) permitted the use of “forced labor” in products entering the U.S. if the product was not produced in the U.S., and if Americans needed the product.

The new law, the Trade Facilitation Enforcement Act of 2105, which was signed by the President, prohibited the use of forced labor in all products, needed or not, that were imported into the U.S. The Act also mandated that U.S. Customs and Border report to Congress every September how many goods and what kinds of goods have been denied entry due to the Act.

Dillon said, “What’s been interesting in the journey is seeing how governments come on board. The U.S. Customs and Border Patrol recently (Oct. 8) stopped shipments of baby pajamas coming from China because they knew it was [the merchandise] made by Muslim minorities in slave labor camps in China.”

The media has entered the picture too. They have begun to report on slavery. Dillon stated, “Journalists were uncovering slavery in seafood, even discovering a remote island in Indonesia where slaves were being kept in cages. The world was quickly changing its view on slavery supply chains, moving it from a remote problem to a high priority in business.”

What is the long-range effect? Dillon said, “What the laws have done is made it something that [companies] have to pay attention to. How much is up to [them]. My job is to help companies create more value for themselves, which means I’m either helping increase their value on who they are as a company, or I’m reducing costs. If I’m doing those two things, then I’m providing value for companies.”

A Challenge to Procurement Professionals

Dillon shared another important aspect of his work, stating, “My job is to not only create value for companies, but also to create value for the people who work in those companies: the value of being able to go to your job and contribute to something bigger than yourself. It is an opportunity that doesn’t come along too often in a career.”

Justin Dillon and Frederick Douglass are kindred spirits. Both abolitionists stood up to the machinations of slavery and have made a difference. Let’s revisit Douglass’ thoughts following his fight with his oppressor. He added this to his words shared at the beginning of the article:

“He only can understand the deep satisfaction which I experienced, who has himself repelled by force the bloody arm of slavery. I felt as I never felt before. It was a glorious resurrection, from the tomb of slavery, to the heaven of freedom. My long-crushed spirit rose, cowardice departed, bold defiance took its place; and I now resolved that, however long I might remain a slave in form, the day had passed forever when I could be a slave in fact.”

Dillon challenges every procurement professional to “repel the bloody arm of slavery.” He stated, “Procurement is being given an opportunity to do something they have never been able to do before, which is to change the world.”

Dillon added, “Addressing slavery in supply chains also addresses something we all struggle with, the question about why we are here, [aka] the poverty of meaning in our lives.”

Dillon then framed his words to represent the thoughts of the quintessential procurement person. “I (the procurement professional) can actually influence the way the world works in my own way from where I sit at my desk. I know that by using FRDM, I am able to help illuminate where my spend is going, and [I can] direct that toward the suppliers.”

One can’t help but feel Douglass’ spirit resonating in his words.