U.S. supply chain leaders often underestimate the risk of labor-related issues, both domestically and with foreign suppliers, according to Kevin Kolben, a supply chain labor expert and professor of business law at Newark, N.J.-based Rutgers Business School.
In a Feb. 28 op-ed for Bloomberg Law, Mr. Kolben said U.S. companies are accustomed to managing supply chain risks and disruptions, such as pandemics, supplier bankruptcies, logistics issues and political instability.
"Labor is one supply chain risk, however, that's been underestimated," he wrote. "While global economic integration has created incentives and opportunities to outsource and offshore production and services, it has also posed reputational and now increased legal risk for firms that are highly dependent on global procurement and supply chains."
Emerging legal risks include the increasing use of labor chapters in U.S. trade agreements and heightened enforcement of goods made with forced labor, according to Mr. Kolben.
He emphasized the need for companies to assess their vulnerability to these threats, designate responsible individuals or teams to oversee supply chain risk management, and collaborate with other firms to share information and resources.
"Labor rights abuses in the supply chain are increasingly not just a reputational threat, but present legal and business risk as well," he concluded. "These developments require proactive measures to guard against unanticipated supply chain disruptions and liabilities."
Read the full article here.