If your company is importing anything solely or partially created in the Xinjiang Uyghur Autonomous Region (XUAR) of China, it will be in violation of U.S. law effective June 21, 2022. This will be the presumption by U.S. Customs and Border Protection unless it is determined that the imported goods were not produced using forced labor, under the Uyghur Forced Labor Protection Act (UFLPA) that was signed into law by President Biden late last year.

This sets a high compliance standard for companies that source goods made — or contain components made — in this area of the world. The UFLPA is comprehensive in scope and seeks to prevent trading partners — foreign and domestic, first tier and sub-tier — from circumventing the law by working with middlemen, indirectly sourcing goods and products from this region, or simply claiming ignorance of the law. 

There is an immediate need for companies to develop plans to assure and prove compliance with this new law. This is not, however, the only reason to uncover sources, gain transparency into business operations and determine if trading partners are ethical. There are many other environmental, social and governance (ESG) regulations coming into effect around the world.

There are five key steps your team should take as it develops processes and procedures to avoid unwitting involvement in slave labor and other unacceptable practices. 

1. Centralize supplier data. The foundation of successful compliance can only be built with reliable and comprehensive supplier data. Because information originating in the Xinjiang Uyghur Autonomous Region is not always reliable, it is important to develop data from a variety of sources to build a credible assertion that your company’s products are not produced through the use of slave labor. Data sources can include your suppliers, their suppliers, your historical supplier scorecards, media reports, analyses by legitimate forced labor and child labor advocacy organizations, and even your anecdotal in-country experiences.
   
   Once the available sources of data have been identified, it’s time to step back and prioritize data-cleansing activities that will yield the most reliable results. If a company lacks the IT infrastructure to do this, there are effective systems available.
   
   This process will bring clarity to the potentially duplicative or overlapping data that can come from multiple sources. The goal should be to have a unique identifier for each part, product, component or resource that is sourced in the Xinjian region. This might seem laborious, but it is critical to providing data that regulators are more likely to accept. 
   
   
2. Visualize your supply chain. Each company’s supply chain needs to be viewed both holistically and at a granular level, to understand where it is threatened by the use of forced or slave labor. Only an interconnected digital model will provide reliable and up-to-date proof that your company understands what’s happening across its entire supply chain and right down to the specific sites where each individual component is sourced.
   
   Existing manual processes are probably not up to this task. Now is the time to either adopt a fully integrated supply chain management system or assess the capabilities of the existing system. Be sure to incorporate a risk management component, which will minimize the business impact of risk by assessing supplier criticality and detecting vulnerabilities at the category level.
   
   
3. Collaborate with suppliers. Establishing trust across your company’s supplier ecosystem is a challenge, especially in commercial activities that involve the Uyghur region. The fact that forced or slave labor practices are endemic to this area make it necessary to demonstrate that supply sources are beyond question. It’s important to stand firm in this regard, even if it means having to abandon suppliers who are unable or unwilling to collaborate.
   
   Fortunately, that undesirable outcome can usually be avoided in two ways: with an upfront discussion explaining the necessity for full disclosure about sources, and an offer to help facilitate the development of this data so that it doesn’t impose an unacceptable burden on business partners. In the end, if all parties benefit, trust can usually be established.
   
   To some extent, very large organizations can pressure suppliers to cooperate. Collaboration, however, will be much more effective when supported by reasonable and clear expectations that make good business sense. 
   
   
4. Gain sub-tier visibility. The importance of establishing a transparent relationship with suppliers becomes even more apparent when information is needed about their suppliers (your sub-tier suppliers). There is a natural reluctance by suppliers to share their sub-tier sources. Concerns include the exposure of proprietary sources, costs and overall competitive advantages.
   
   No “magic bullets” are available to gain this visibility. Rather, it is necessary to proceed carefully, step by step, to develop a mutual agreement that sharing sources is necessary and that each party’s legitimate proprietary information will be protected and not shared outside the supply network.
   
   The execution of non-disclosure agreements is a basic step that will help. Beyond that, effective technology will be needed because monitoring the complex web of supply sources is simply beyond human capability. A supervised deep learning algorithm, powered by artificial intelligence, accelerates the detection of risk in the massive volume of data generated by your supply chain. Incorporating this level of visibility can provide all trading partners with the information and confidence they need to work as truly engaged partners.
   
   
5. Create proactive mitigation plans. Even after all steps have been taken that are realistically available to avoid risk, there will still be exceptions that cause disruptions. These risks can be reduced, too, if action plans have been developed for significant contingencies that facilitate collaboration across your organization and with your suppliers to proactively manage risk.
   
   Such action plans are crucial so that immediate action can be taken to mitigate a sudden disruption to reduce potential reputational, financial and geopolitical risks.
   
   They also provide your team with confidence at a time when they might otherwise have little option but to hit the “panic button.” By reducing stress at these moments, the development of rational and effective actions can be accomplished. It also prioritizes risks, allowing focus on those that are most important and deferring actions on less important issues.

Take the First Step

It’s time to take the first step to avoid the new import penalties. The riskmethods Risk Radar maps and monitors your supply network to reveal risk in real time. Take immediate action to assure that your goods and commodities sourced in the Xinjiang Uyghur Autonomous Region of China do not include any product of slave labor. The riskmethods Risk Assessment, the professional collaboration tool, performs supplier risk surveys quickly, provides the data in the format you need and enables collaboration that lets you perform supplier risk surveys quickly. 

Adapt a fully integrated supply chain management approach or assess how risks affect your entire category, not just individual suppliers. system. Be sure to incorporate a risk management component, such as the riskmethods Impact Analyzer, to get the big picture.

Invest the time to work with suppliers to explain the necessity for full disclosure about sources and to help facilitate the development of this data to avoid imposing an unacceptable burden on business partners. 

Robust technology will be needed to gain sub-tier visibility. Monitoring the complex web of supply sources is simply beyond human capability. The riskmethods Supply Risk Network system can provide all your trading partners with the information and confidence they need to work as truly collaborative partners.

Even if you’ve taken all the steps that are practically available to avoid risk, there will still be exceptions in the real world that cause disruptions. The riskmethods Action Planner module taps into some 100 indices, providing options to deal with a wide range of situations. It also prioritizes risks, allowing you to focus on those that are most important and to defer actions on less important issues. It provides an action plan before you need one.