A recent change in California law now requires all businesses trading within the state with revenues in excess of $100 million to make their supply chain transparent, for easier verification that they are also complying with anti-human trafficking legislation. Businesses with lower turnovers are also required to make information about their staffing compliance to their customers who do breach the $100 million mark.
Known as the Transparency in Supply Chains Act, this new law is designed to reduce the use of illegal immigrants and slave labour within California and to help businesses identify points in their own supply chains where there may be an issue. As a result, companies are considering how to capture and store this information effectively.
To stay compliant, many companies have begun recording vendor reputation, employee hours and human-resources records in the supply chain management systems, and then making the information available to their supply chain partners. By sharing the information sensitively, businesses up and down the supply chain can see that their partners are not only compliant, but can prove it to the relevant authorities when necessary.
As Boeing found with their supplier portal, sharing information with suppliers and customers within the supply chain, significant efficiencies could be created beyond simply proving legislative compliance. The Transparency in Supply Chains Act has only been in force since January 1st and supporting systems and business processes are still maturing but eventually Californian companies will begin to recognise other benefits available through a more collaborative supply chain.
Information and resource sharing often helps to create a more efficient supply chain, but the politics and costs involved lead many such projects to fail before they even start. By forcing this change on companies, California’s new law will kick-start the collaborative process, which may well lead to further cooperation between affected companies, changing their future prospects.