The High Cost of Low Costs (Women Pursuing Careers in Supply Chain) by Kelly Barner

I have recently become aware of a growing interest in women pursuing careers in supply chain. There are new recognitions for women in leadership roles, and groups being started to discuss the unique issues faced by women in supply chain. Other groups are founded to support the interest of employers to find qualified females to fill their open supply chain positions. All things considered, this is a great time to be a female supply chain professional.

As the scope of responsibility expands for all professionals in supply chain, both male and female, there is an increased focus on managing risk. Sustainability initiatives are being looked at as one of many approaches to reduce risk, protect quality, and improve stakeholder/consumer relations. In many cases, risk lurks several tiers deep in the supply base – with either second (our suppliers’ suppliers) or third (our suppliers’ suppliers’ suppliers) tier companies. We lose significant visibility with each step we take away from the top tier.

This loss of visibility is particularly concerning when we cross borders and continents. As with most sourcing projects, there are products as well as services at stake in sustainability initiatives. Workers in low-cost countries may be legitimately less expensive per hour because the cost of living is lower or because of exchange rates, but they may also be subject to poor conditions and poverty-level existence. Of particular concern are the women and children working for little or no compensation in companies and/or countries that do not prioritize their well-being.

Some industries are at higher risk than others for exploitation of women (and often children) as a labor force. Cocoa production and textiles/clothing manufacturing rely heavily on female laborers while targeting a predominantly female consumer base. As individual consumers, we are bombarded by companies that want us to know about their ‘fair trade’ practices because it is good for business. Some of the largest companies have also made this part of their B2B marketing platform, revealing information about their supply base and welcoming audits by third parties.

Unfortunately, we often hear about these sustainability initiatives only when there has been a failure. The reputational risk for companies is huge, and even when the violation takes place at a second or third tier supplier, the financial repercussions may be significant and swift. Once the details become available, the issue almost always boils down to costs. Suppliers apply pressure to the workers at the bottom of the chain because of the pricing pressures they feel from above.

According to the International Labor Rights Forum (ILRF), “While increased access to employment has provided new economic and social opportunities for poor women, the jobs they occupy remain unregulated and unstable. Women workers are systematically denied their rights to regular pay and regular working hours; equal pay for equal work; permanent contracts; safe and non-hazardous work environments; and freedom of association.”

Understanding where our suppliers source their materials is a first step. It allows us to research the regulations in those countries and industries, and then ask the appropriate questions about international standards and audits. At the very least, those suppliers should be well-informed about their own first tier suppliers, giving us a clearer view of our second tier in high risk areas.

Digging into the supply chain is no easy task, and it can’t be done everywhere in the supply base. Do you need to investigate all of the tiers of your office supplier’s supply chain? Probably not. But if you purchase textiles or food products from low-cost countries, most likely on the direct spend side of the business, you need to be fully informed about your suppliers’ pricing and how they manage their costs. In the long run, it may be more cost effective to pay a few percent more for products that are ethically produced and sourced.

As female supply chain professionals expand capabilities and influence, we should use the platform to elevate the other women in the supply chain – ALL of the women: colleagues and suppliers alike.

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