Category Archives: In The Press

H&M Struggle with Strong US Dollar

Fashion retailer H&M’s profits miss forecasts thanks to might of US dollar.

H&M hit by strong US dollar

The world’s second largest fashion retailer, H&M, is facing a significant reduction in its profit outlook. The bleak outlook is due largely to changing currency valuations and their impact on the firm’s supply chain.

Despite rapidly increasing sales figures, the firm has warned of a “very negative” impact to its bottom line based on the growing strength of the US dollar.

H&M has suggested that the strengthening US dollar will cause second quarter profit figures to take a significant hit. It’s also likely that these troubles will continue into the second half of the year as analysts suggest the value of the US dollar will continue to improve against most other currencies.

The currency exposure the firm is facing is due to the structure of its supply contracts. H&M sources the majority of its products from Asian markets. The contracts for these garments are agreed and signed in US dollars. However most of the retailer’s sales take place in the European market and are conducted in either Euros or Pounds.

It therefore follows that as the value of the US dollar increases against the Euro and the Pound, the cost of H&M’s garments and raw materials experience a relative increase. This means that unless the firm elects to increase in-store pricing, the margin it makes from selling each garment reduces. Clearly, this has a detrimental impact on the firm’s profitability.

One would imagine that the procurement and supply chain departments at H&M identified this currency exposure some time ago and have established a form of currency hedging as means to minimise its impact. But, it should certainly prompt questions in the minds of procurement and supply chain managers with cross currency operations to take a closer look at their currency exposure.

New Runway Offers Freight Potential, While US Investigates ‘Collusion’

The airline industry is a popular news topic, appearing on two fronts this past week. The decision on a new runway for London got people talking about airfreight, while in the US, an investigation was announced by the Department of Justice into alleged collusion.

All eyes on Heathrow expansion plans

New Runway Plans

Last week, a UK Government commission selected Heathrow as the preferred location for a new runway to be built in London. Following the publishing of the report, UK Prime Minister, David Cameron, confirmed that a final decision would be made by the end of the year.

The plans for Heathrow, already the busiest passenger airport in Europe and third busiest in the world, appear to have beaten competition from London Gatwick and a proposal for a brand new airport in the Thames estuary.

While it appears that the debate will rage on until the final decision is made at the end of the year, business leaders and UK organisations have welcomed the decision. With Heathrow currently operating at 98 per cent capacity, many think that this is directly impacting business and freight.

‘Importance of air freight’

The freight industry believes that additional runway capacity at Heathrow is required in order to service new markets in Asia, South America and the Indian sub-continent.

The Chief Executive of the UK’s Freight Transport Association (FTA), David Wells, stated that, “80% of freight is carried in the holds of scheduled passenger aircraft using Heathrow Airport.”

“Whereas passengers could be persuaded to use a different airport, the diminution of Heathrow as an international air cargo hub favours neither the country nor the economy,” Wells concluded.

Future Exports

The commission report highlighted future exports for the UK as a reason for their decision. The report stated, “By 2030 advanced manufacturing industries such as pharmaceuticals or chemicals, whose components and products are predominately moved by air, are expected to be among the top five UK export markets by their share of value.”

Sir Howard Davies, Chairman of the Airports Commission, who compiled the report, went on to say that the Heathrow option provided the “greatest benefits for business passengers, freight operators and the wider economy”.

While it remains to be seen if the UK Government will go along with the Commission recommendation, it does appear that business might benefit from a new runway at Heathrow.

Collusion Investigation

Over in US, the industry is in the news for less positive reasons, with the Department of Justice (DoJ) announcing a new investigation into alleged collusion between some of America’s biggest airlines.

United Airlines, Delta Air Lines, American Airlines and Southwest Airlines have all confirmed that they are part of the investigation, which will focus on whether the airlines have been coordinating to keep tickets available at a steady number, artificially increasing demand and driving up prices.

The four airlines account for 85 per cent of the domestic routes across America, partly due to two high-profile mergers in the past year. The investigation also comes at a time when airlines are posting huge profits due to the falling oil prices.

Questionable Outcomes

However, many commentators believe that the investigation will not produce outcomes that will be of benefit to consumers. For one, it is hard to prove that airlines are actually colluding to keep availability low, as with better technology, information on both capacity and pricing can be found easily and immediately.

There is also an argument to say that it would be just as effective to let markets sort out collusive behaviour on their own. There are other ways to ‘collude’ beyond pricing, but ultimately, if inefficiencies appear in the market, new competitors will emerge or consumers will look elsewhere to satisfy their needs.

Whatever the final outcome of the investigation, it looks as though there will be greater scrutiny on the airlines in the coming months. While it may not lower prices in time for the busy summer holiday period, there is a chance it may push the airlines to be more transparent and act in a favourable way for consumers.

Do you live near Heathrow or commute through there regularly? What do you make of the decision for a third runway? Do you think the DoJ investigation will make any impact? Let Procurious know what you think.

While you think about that summer sunshine, have a read through the headlines from the procurement and supply chain world this week.

BP agrees to $18.7 Billion payout for deadly 2010 oil spill

  • BP agreed on Thursday to pay $18.7 billion for damages caused by its oil rig explosion in the Gulf of Mexico in 2010, an accident that resulted in the deaths of 11 people and the largest marine oil spill in history.
  • The settlement covers lawsuits filed by parties including the U.S. government, five U.S. states that were affected by the spill, and several hundred local government organisations. It also includes a civil penalty of $5.5 billion under the U.S. Clean Water Act.
  • The settlement, which comes in addition to the hefty sums that BP has already had to pay in legal and clean-up fees over the last few years, will be paid over 18 years and is expected to end the majority of BP’s litigation wars over the accident, though the company still faces shareholder lawsuits and some outstanding costs from a 2012 class action settlement.
  • With this new settlement, BP’s total bill for the spill climbs to $53.8 billion—a number that exceeds the company’s profits in the last three years.
  • Carl-Henric Svanberg, BP’s chairman, said in a statement that the agreement offers “a path to closure” for BP and the Gulf. “Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise,” he said.

Read more on Slate.com

Fast fashion retail market trends and opportunities 2015-2019 shared in new research report

  • The report titled “Fast Fashion Retail Market: Trends and Opportunities (2015-2019)” analyzes the potential opportunities, challenges, demand drivers and significant trends representing fast fashion industry in the world.
  • The report gives valuable insight into various types of brands of fast fashion such as ZARA, H&M, Uniqlo and GAP.  It profiles and analyzes the leading five companies operating in this industry with an overview of their business and finance structure along with a brief discussion of their future business strategies.
  • The report also studies the growth pattern in the fast fashion retail market and the latest trends concerning fast fashion. Further, the report analyzes the current market size and project future market size of the overall fast fashion retail business for the years to come.

The complete report is available to download here

From trash to treasure: Adidas designs shoes made of ocean garbage

  • German sportswear brand Adidas has joined forces with Parley for the Oceans, an organisation formed in 2013 dedicated to undertaking projects to protect and conserve the Earth’s oceans.
  • To raise awareness about ocean pollution, Adidas has designed a prototype pair of sneakers with an upper made entirely from recycled ocean waste and illegal deep-sea gillnets.
  • These gillnets were retrieved by Parley for the Oceans partner Sea Shepherd, which spent 110 days tracking an illegal poaching vessel, finally catching it off the coast of West Africa.
  • “We are incredibly excited to join Parley for the Oceans as they bring the cause of the oceans to the attention of the United Nations,” said Adidas’ Eric Liedtke. “Adidas has long been a leader in sustainability, but this partnership allows us to tap into new areas and create innovative materials and products for our athletes. We invite everyone to join us on this journey to clean up the oceans.”

Read more at CNET

Supply chain workers urge Walmart to act on supplier standards

  • Walmart must do more to improve supply chain transparency and hold its suppliers accountable, according to a study from the Food Chain Workers Alliance. The report includes research on 11 different food-related industries in the retail giant’s supply chain, as well as on the corporation’s impact on local farmers.
  • The alliance said the retailer should do more to hold suppliers accountable to labour and environmental standards. The report, Walmart at the Crossroads: the Environmental and Labor Impact of Its Food Supply Chain, calls on the company to enforce its existing labour and environmental standards and fulfil its goals for local food purchases.
  • The report also contains a raft of recommendations for the supply chain. It said Walmart should improve its supply chain transparency by requiring suppliers to identify the names and addresses of all factories, farms, fishing vessels, or other entities that contribute to the product being purchased before a supplier contract is awarded. This information should be made public, the organisation which represents workers in the food supply chain said.
  • The study also called for an independent, third party body to monitor and verify supplier compliance with Walmart’s labour and environmental standards. Suppliers should have long-term contracts and be paid fairly, and should pay workers fairly.

Read more at Supply Management

Three-quarters of business leaders think Greece will leave Euro within the year

In the heat of the Greek banking crisis, an overwhelming majority predict Greece will leave the Euro behind.

Will Greece leave the Euro behind?

in a survey conducted by the Institute of Directors (IoD), business leaders were quizzed on Greece’s monetary troubles. Three in four IoD members think it’s likely Greece will be forced to leave the European single currency within the next twelve months, against only 2 per cent who think it is very unlikely.

Procurious asks: What impact will a “Grexit” have on the UK economy?

The most probable outcome of “Grexit”, IoD members say, is a messy default which negatively affects financial markets and creates pressure on other Euro members. This outcome was considered likely by nearly two-thirds of the business leaders surveyed, while 45 per cent also think there was a risk of widespread bank runs in other southern European countries. Longer-term, 45 per cent of members say there is a good chance “Grexit” will be followed by other countries leaving the Euro. 

three-quarters of business leaders think Greece will leave Euro within the year

While the direct exposure of IoD members to Greece is limited, with 77 per cent having no business interests in the country, nearly half think that a Greek exit from the Eurozone would have a negative impact on the UK.

Commenting on the results, Simon Walker, Director General of the Institute of Directors, told Procurious:

“British businesses are nervous about the potential knock-on effects of “Grexit” on the UK economy. They have reduced their direct exposure to Greece in recent years, but are worried that a messy divorce from the single currency would shake markets across the continent and destabilise the already fragile economies of other southern European countries. IoD members do not expect the chaotic situation in Greece they see on the evening news to end anytime soon. 

“There is a heated debate going on about whether it would be better for the Greek people if they left the Euro, but it’s clear that their decision at the referendum on Sunday has significant implications for the whole of Europe.”

three-quarters of business leaders think Greece will leave Euro within the year

Procurious asks: What impact will a “Grexit” have on the UK economy?

El Niño is coming: How it will impact your organisation

The Australian Bureau of Meteorology has called it; we’re set for an El Niño year.

El Nino could wreak havoc

When I was younger I used to love the words El Niño. Although I knew nothing about this weather event, what I did know was that when we had El Niño conditions, we had great waves to surf.

Living in Australia, as time passed, I began to see El Niño through a different lens. The weather pattern tended to be reported in the news for causing droughts and bush fires, particularly on the country’s east coast.

I never understood El Niño; I didn’t even know what the name meant. It seemed to be used as a scapegoat in Australia for when things went wrong. “Geez, it’s hot today”… “Yeah its that El Niño mate” people would joke.

The fact of the matter is that El Niño has a distinct impact on global climatic conditions and these, in turn, have an impact on our ability to produce certain raw materials. Below I have tried to explain some of these impacts*.

So what exactly is El Niño?

Let’s start with the name. Peruvian fisherman named the weather pattern that we now know as El Niño. These fishermen noticed that in certain years, normally when water temperatures were higher, the anchovies they fished for were far less prevalent.

The fish shortage was normally noticed around Christmas time, hence the name El Niño (which directly translates from Spanish to ‘the boy’ but colloquially refers to Jesus Christ and explains the Christmas link).

Incidentally, the anchovies the fishermen were seeking weren’t in fact gone, they’d merely moved into deeper, colder, more nutrient rich water.

How does it form?

While definitive proof is yet to be established, an El Niño cycle is thought to begin in the tropical waters of the Pacific Ocean. Cyclical weather changes cause prevailing westerly trade winds to dwindle and this allows warm water to amass around the equator.

This warm water then begins to move eastward towards the Americas, and in its wake, leaves a trail of climatic changes that ripple out around the globe. Broadly speaking, El Niño climate cycles tend to result in drier, hotter conditions across the Asia Pacific region and cooler, wetter and stormier conditions in the Americas.

What’s all this got to do with the price of a coffee?

Changing weather conditions are, generally speaking, not a good thing for primary producers. As I mentioned earlier, the name El Niño comes from South American fishermen who saw their yields drop as a result of the changing water temperatures.

Pastoralists too, whether in Australia or the Americas, suffer from El Niño conditions, but for different reasons. While Aussie farmers may suffer through a drought, their counterparts in Brazil and Argentina will likely face issues due to too much rainfall, which can destroy grazing lands and reduce productivity.

Weather susceptible crops like coffee and cocoa also feel the effect of El Niño conditions. Similar to pastoralists, coffee growers in Colombia (where rainfall will increase) are likely to face different issues to those in Vietnam (where rainfall is expected to decrease). The similarity these producers share is that neither face ideal growing conditions for coffee production and harvests will decrease. With lower harvests comes higher prices and this means your morning cup of Jo may get a little more expensive should the predicted El Niño pattern eventuate.

It’s not all bad

It’s easy to get gloomy about these predictions, but it’s important to remember that El Niño conditions are not always bad for farmers. California’s drought and water restrictions have been well documented over recent years; I’m sure there are Californian farmers who would be more than keen to see a year of above average rainfall. Past El Niño years have proven fruitful for dairy and wine producers in the US, as well as wheat farmers in Australia. Whilst some will lose out, others will likely gain.

It’s not only food that’s impacted

Mines too are impacted by adverse weather. Increases in rainfall brought on from past El Niño cycles have wreaked havoc with mining operations in Southern America, causing landslides and halting work. Similarly, parts of Asia that rely on hydroelectric power will likely take a hit as rainfall levels decrease across the region.

What are your thoughts on El Niño? Will it impact your organisation’s operations?

* It must be noted that this description is a broad simplification of an incredibly complex meteorologic occurrence.

Why Cyber Security Needs To Be On Your Board’s Agenda

The Confederation of British Industry has offered-up some tips to help keep your company safe.

Cyber security tips to keep your business safe

Like any other large-scale threat to a company, cyber security must be dealt with at board level, the CBI said at its inaugural Cyber Security Conference in London.

Cyber security is nothing new, but (as Procurious was told at a recent CIPS workshop) it’s a risk that’s risen to the top of many a government’s agenda.

Matthew Fell, CBI Competitive Markets Director, offers the following says this of the threat:

“Getting cyber security right is critical for modern businesses, whatever their sector or size… With our IP, finances and our customer relationships all inextricably linked to technology, we must take steps to protect our online assets.

“Awareness of this critical business risk has risen in recent years, especially as the number of prominent cyber hacks hitting the headlines has sharply increased. Unfortunately, even as awareness in the business community has increased, with a small uptick in action, there is still a disconnect between awareness and action – especially for our high growth small and medium sized businesses, who are at just as much at risk as global brands.”

There’s no silver bullet

Matthew echoes the words of other experts in his field and reasserts the importance of businesses needing to act now in order to mitigate the scale of the impact.

“Nearly all businesses suffer cyber-attacks – 81 per cent of large businesses suffered a security breach last year alone, with the figure for small businesses at 60 per cent.

“Whilst the number of these attacks is going down, as hackers have become more sophisticated and targeted, the cost of these attacks almost doubled last year. That puts the average cost for large businesses between £600,000 and 1.15mn and for small businesses between £65,000 and 115,000.

“Like any other large scale threat to your company, the issue of effective cyber security should be firmly on the agenda of the board.

“Yet only about half of large businesses and a third of small businesses have adequate insurance cover for their online assets in the event of a breach. As the nature of liability changes in the digital age, businesses will need to rethink the assurances they have in place to mitigate financial loss.”

What you can do now

The UK government has issued ‘Cyber Essentials’ – an industry supported scheme to help organisations to protect themselves against common cyber security threats and identify risks.

The full scheme is open to UK organisations and allows them to gain 1 of 2 new ‘Cyber Essentials’ badges to show they are taking steps to protect themselves. If you’re not in the UK that’s OK, as the guidance and recommendations laid out in the ‘Cyber Essentials’ pack will help you on the right path.

What do we mean by risks?

Simply put, a risk is determined as anything that will have an impact on something we value. Don’t overly confuse yourself with lingo, instead take cyber security at face value and ask what losses would be acceptable to you?

In our case, at Procurious we want to ensure that your data is safe (membership details consisting of email addresses, password etc.), all of our content (videos, articles), social networking and online accounts, and making sure that our domain remains online. As an online business network these are all core elements to what we’re trying to achieve. We’d recommend you assess your own security needs, and in doing so tailor your approach to identify where you really need the protection.

For more information on the sources cited in this article please visit:
CBI
Cyber Essentials 

What Really Happened At The Tesco Shareholders Meeting

‘The Rolls Royce of grocery retail has become Ryanair… The difference is people still want to fly with Ryanair.’

What happened at the Tesco Shareholder meeting

As I reported here last week, UK supermarket chain Tesco, held its first shareholder meeting since the supplier rebate accounting scandal and subsequent profit drop, last Friday. Despite reporting better than expected share values, the mood in the room was certainly not a jovial one.

Shareholder concerns focused primarily on executive pay. Of particular interest were the huge sums made out to former bosses that many hold responsible for both the financial and moral demise of the firm.

Rewarding Failure

It was pointed out that Philip Clarke, the Supermarket’s former CEO, was given a £1.2 million early termination fee and will access a pension of nearly £14 million (or £658,000 a year), from a firm that is clearly in worse shape than it was when he joined it.

Clarke was at the helm during a meteoric fall from grace that culminated in Tesco reporting a £6.4B loss in April of this year. As well as plummeting profits, the firm became embroiled in a fraudulent accounting scandal around the way the firm booked £263m in supplier rebates on Clarke’s watch. The latter has resulted in an investigation by the Serious Fraud Office.

Criticism was not reserved for former executives

The firm’s new boss, Dave Lewis, also came under fire as 18 per cent of shareholders failed to back a remuneration report that showed Lewis had received £4.13M for his first six months in the new role.

While both men are contractually entitled to funds they have (and will continue to receive), the sentiment of the crowd certainly echoed a discomfort with the corporate greed that is attached to executive level salaries.

Shareholders directly juxtaposed these executive salaries to those earned by in-store staff members, which have been described as being below the ‘living wage’. One particularly stinging shareholder comment summed up this sentiment:

“We do not pay the living wage but we do make our executives millionaires for failure.”

Other shareholder quotes made on the day included:

“When we bought Tesco shares it was the Rolls-Royce of grocery retail but last year it became the Ryanair of grocery retail. The difference is that people want to fly with Ryanair.” 

“Our country can no longer accept the greed of executives.”

The challenge ahead for Lewis and his leadership seems a daunting one. The eyes of his shareholders, and indeed the media, will be fixed on the firm’s performance in the coming months. The leadership team must not only turn around poor profit figures, but also navigate a sea of litigation that will be attached to the firms handling of the supplier rebate scandal.

At the shareholders meeting, Lewis stipulated that “We are managing the business in the right way and, at a fundamental level, the business is stepping in the right direction.” The recent share price improvements and company performances appear to be positive, but there is a long road ahead for the new boss.

The cost of maintaining a supply of ethically sourced coffee

Starbucks contributes $30M to supplier development fund

Starbucks contributes $30M to supplier development fund

Global coffee chain Starbucks has announced it will contribute a further $30M USD to its Global Farmers Fund, more than doubling the company’s investment in this initiative. The fund, established back in 2008, is designed to provide support for farmers in the company’s supply chain.

In the announcement Starbucks claimed that its investment aligned directly with the firm’s global sourcing strategy. Starbucks purchases coffee from more than 30 countries across the globe. Many of these suppliers are located in the developing world and do not have access to the infrastructure and financial support to secure the longevity of their operations.

“By providing access to capital, farmers have the ability to make strategic investments in their infrastructure, offering the stability they need to manage ongoing complexities so that there is a future for them and the industry.” Said Craig Russell, executive vice president of global coffee for Starbucks.

Recent years have seen the coffee industry undergo a series of supply shocks due in large to adverse weather conditions. This year’s prediction of an el Niño weather pattern could potentially impact the output of coffee producers. Starbucks investment should better prepare farmers for these sorts of events.

It is thought that by investing its supply base, Starbucks will not only improve its security of supply, but also the quality of its product, its environmental impact and ultimately its profitability.

Richard Rhinehart, Executive Director SCAA Specialty Coffee Association of America made this statement following Starbucks announcement; “Traditionally smallholder coffee farmers depend on a single payment at the end of the harvest season to cover their expenses for an entire year. They are most often viewed as too high risk or lack access to any conventional loan facilities, and are captive to a cycle of sustained poverty. In order to break this cycle, these producers need to be able to make investments in their farms, households and communities that will deliver long-term benefits. Such investments require credit, and buyers who are willing to extend credit and share risk with farmers are not only stabilizing their own supply chains but contributing to the resiliency of coffee production globally.

2014 Best Year for Supply Chain and Logistics since Great Recession

The revelation comes from the Council of Supply Chain Management Professionals (CSCMP) 26th Annual “State of Logistics Report.

This year's State of Logistics Report

This year’s State of Logistics Report revealed that the supply chain industry experienced its best year since the Great Recession. The report examined the economic vitality and associated challenges facing each segment of the logistics industry. It also tracked and measured all costs associated with moving freight through the U.S. supply chain since 1988.

According to the research the transportation sector grew by 3.6 per cent in 2014 due to stronger shipment volumes rather than higher rates. The U.S. economy was on solid ground. New job creation was consistent, real net income and household net worth inched up, inflation was low-to-moderate and gas prices tumbled, providing consumers with additional buying power.

The report revealed total U.S. business logistics costs rose to $1.45 trillion in 2014, a 3.1 per cent increase from the previous year. However, the growth rate for logistics costs was lower than the U.S. gross domestic product (GDP), resulting in a slight decline in logistics as a percent of GDP from 8.4 per cent to 8.3 per cent.

Costs for the water sector rose 8.9 per cent, the second highest growth sector in 2014. Inland waterway traffic rebounded due to successful agricultural harvests, higher demand for coal and an expansion of petroleum transportation by barge. Shipments through the nation’s ports increased, with East Coast ports seeing the largest percentage of gains due to congestion and delays at West Coast ports caused by protracted labour issues.

And in 2014 air cargo sector costs declined 1.2 per cent as competition from other modes kept rates down; however, in 2014, a record $968 billion of high value merchandise was moved by air—$443.8 billion in exports and $543.3 in imports.

“Today’s market-leading companies use their supply chains to drive innovation and competitive advantage,” stated Marc Althen, president of Penske Logistics. “This in-turn drives demand for logistics providers. While demand for logistics is increasing, the industry faces a talent shortage and needs more logistics engineers, technology professionals, warehouse workers, and truck drivers to meet the needs of current and evolving freight fulfillment models businesses and consumers rely on for their goods and services.”

Intrigue, money laundering and arrests at the Alhambra

World’s collide as procurement fraud comes to my hometown of Granada.

Alhambra_-_Patio_de_los_Leones_in_the_morning_sun_-_July_2011

This morning, the Director of the Alhambra, an ancient Moorish palace that is now Spain’s most visited tourist attraction, along with some senior staff members were arrested and accused of money laundering.

The allegations centre on the dubious circumstances surrounding the award of a contract to service the Palace’s audio guides.

In 2007 the Alhambra held a tender for the provision of audio guide services, the contract was awarded and then renewed in 2011. The issues that have arisen are related to discrepancies between the bid that was submitted by the winning supplier Stendal and the actual contract terms.

Stendal’s 2007 bid stipulated that the company would contribute an annual fee of 77,000 Euros as well as 47 per cent of the revenues it raised to the Alhambra for the privilege of supplying the guides.

However, the final contract stipulates that Stendal would only contribute 30,000 Euros a year and 15 per cent of its revenues back to the Alhambra. Clearly the terms used to win the business were not implemented in the contractual agreement and this has raised concerns of bribery and kickbacks with the Spanish authorities.

While the flat fee of either 70,000 or 30,000 Euros does not seem a vast sum of money. When you consider that the Alhambra receives 2.4 million visitors a year and each audio guide rents for 4 Euros, you start to see there is serious money in the revenue sharing side of the agreement.

After facing questioning at Granada’s police headquarters, those arrested were released with charges and will face further hearings in the coming days.

If you can read Spanish or know how to work Google Translate, you can read more here.

We need data to combat slavery in supply chains

Thai fishing scandal

International news agency Reuters has announced that recent investigations into the Thai fishing industry suggest that fish caught by boats utilising slave labour could be finding their way into the global retail supply chain.

It is alleged that operators in the Thai fishing industry (the world’s third largest seafood exporter) are staffing boats with migrant workers under appalling conditions that have been likened to slavery.

There are concerns that due to a lack of transparent supply chain data, global retailers and fish buyers are not able to track if the fish they are buying were caught on these suspect vessels.

Lisa Rende Taylor, director of Project Issara, a program run by Anti-Slavery International highlighted as much when she claimed “One big problem in the Thai fishing industry is the lack of certification of good slavery-free shrimp versus bad-shrimp.”

Speaking at a the Trust Forum Asia conference, Nick Grono, the head of Freedom Fund, said his organisation would spend $5 million dollars on an initiative to increase awareness and transparency across these supply chains.

The issues present in the Thai fishing industry are replicated across a plethora of industries in the developing world. In attempts to access cheaper products and produce, global buying teams are now extensively leveraging the developing world’s low cost base. More often than not, this means creating relationships with third party suppliers.

These relationships are notoriously opaque, meaning that procurement teams often lose sight of what is happening in their supply chain. Only through improving supply chain data and encouraging procurement teams to take direct responsibility for the actions of suppliers (and indeed their supplier’s suppliers) can we hope to put an end to these worrying practices.

More than 3,000 mid-sized Thai vessels will have to stop fishing on July 1 under government measures designed to curb illegal, unreported and unregulated fishing, the Bangkok Post reported.