Happy Thursday from The Supply Times!

It’s been a couple of weeks since we caught up, and I’ve got a lot of great updates for you! In this issue, I’ll talk about companies getting even more pressure to ethically re-tool their supply chains, as well as an apparent end to the Work From Home era. Also, a little bit on scammers, the magic wisdom of Naval, and some red flags being flown in the financial sector.

Let’s take a look!

Industry Highlights: Supply Chain Ethics

Ethics has always played a role in business, though many would argue it’s too small a part.

That will likely change in the near future, thanks to both social pressure and government legislation that will require companies to really rethink the ways they source their products and materials.

Let’s contextualize the problem first:  A 2018 report from the non-profit Responsible Sourcing Network suggests twice as many people worldwide were in forced labor than the whole of the 300 year American slave trade. 

In the five years since, a recent Financial Times article suggests the problem has gotten worse. The pandemic and other global threats like the Ukraine-Russia conflict has upended supply chains in many ways, which has left millions of workers at risk of forced labor and human rights abuses. A September, 2022 Reuters report found that there were nearly 50 million modern-day slaves working on any given day.

Human rights violations are certainly not a new issue. Engaging with fair suppliers has been on some companies’ agendas since the mid-’90s, but many have not made it a priority. And despite decades of effort and initiatives to end such abuses, progress has been limited.

But now, companies are under more pressure than ever to meet their obligations over responsible sourcing due to continuing scrutiny from consumers, activists, and the media, as well as growing interest from investors.

As younger generations increase their buying power, so will the pressure on companies to be transparent about their sourcing and labor practices. A HubSpot survey found that 45 percent of Gen Zers have boycotted a business, and 36 percent enjoy buying products that display their social and political beliefs. 

Legislators are likewise sitting up and paying attention more, though their motives are arguably less ethical and more tactical. Last year, the Uyghur Forced Labor Prevention Act took effect, which banned the import of all goods and merchandise produced in China’s Xinjiang province. But that’s more about Uncle Sam pulling what levers it can to manage the increasing tension with their trade partners in the Middle Kingdom. As I’ve mentioned in previous newsletters, China’s been jockeying to control a lion’s share of the world’s trade—especially when it comes to tech and the production of microchips.

But beyond creating laws requiring companies to ethically source products, can companies be trusted to do so? I’m not so sure. For proof, see Starbucks CEO Howard Schultz’s comments on plans to make the coffee chain its biggest market by 2025. As this Fast Company article points out, in order to get there, the company will have to do some significant gymnastics with its values.

I’m honestly not sure how companies can both say China is an ethical enemy AND make it their priority to expand there. For many, it’s going to be a fine needle to thread in terms of balancing human rights AND global growth.

The bottom line is that perhaps we’ve sold our souls at the altar of globalism for a long while, and eventually, these chickens are going to come home to roost. Sooner, rather than later, it would seem. China for China sourcing will not be an issue. But China-sourced goods for the rest of the world should brace for some serious upheaval.

The Future of Work: The End of an Era

For millions of American workers, the last three years have been the Wild West.

Pew Research reported in October, 2020 that 71 percent of American workers could accomplish their jobs at home. And though that number dropped slightly over the next few years, many stayed away from the office. Call it what you want—WFH, virtual, remote, hybrid—all involve an environmental shift.

But according to new Labor Department data, remote work is again becoming increasingly rare. Almost three-quarters of businesses said their employees worked remotely rarely or not at all in 2022, which is commensurate with pre-pandemic levels. That’s 21 million more workers who went to the office when compared with last year.

Part of this shift comes from many companies’ emphasis on productivity. Increased inflation and a cooling economy have many executives concerned that at-home work is eating into their bottom line.

Allan Jones, the CEO and founder of HR consulting firm Bambee told The Wall Street Journal he believed the initial success of remote work was a fluke. Of course at-home productivity is up when the world is shut down. But now that it’s more or less back to normal, workers are tempted to sneak in that long lunch or weekday round of golf.

Big players like Meta and Salesforce are taking a similar tack. Meta recently announced it’s pausing new WFH applications, and Salesforce reps said the learning curve for new remote workers is significantly impacting revenue. They’ll be instituting a mandatory four-day in-person workweek in the coming days.

But all is not lost for workers interested in getting their jobs done at their kitchen table. Staffing firm Manpower Group reported around 13 percent of current online job postings are for remote positions. That’s down from 17 percent this time last year, but still way beyond the pre-pandemic level of 4 percent.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About Re: Supply Chain, Work, and Beyond

📕 Read - Why They Do It

I love a good scam story, and this recent Wall Street Journal review of Kelly Richmond Pope’s Fool Me Once: Scams, Stories, and Secrets from the Trillion-Dollar Fraud Industry really caught my eye. While I haven’t yet added Pope’s book to my shelves, it reminded me of an excellent book I read not long ago by Eugene Soltes called Why They Do It: Inside the Mind of the White-Collar Criminal. Soltes is an HBS professor who spent seven years rubbing elbows with the perpetrators of history’s largest white-collar crimes—from Enron to Tyco to Madoff’s Ponzi schemes. I’m interested in reading Pope’s and doing a little compare/contrast.

📺 Watch - Dirty Money

Speaking of scandals, I’m also revisiting an older Netflix series called Dirty Money. It’s a two-season investigative series that explores and exposes the brazen acts of corporate greed and corruption throughout history. An especially good episode is the one about Wells Fargo and the ruthless fraudulent practices that fueled its growth to the top of the banking world. Timely, I think, considering our recent banking woes.

👂 Listen - The Tim Ferriss Show

I’m always impressed with Naval Ravikant. Beyond just the enormous wealth he has amassed. His coolest flex is on Twitter, where he has millions of followers but he follows a total of ZERO people. Naval definitely fashions himself a modern-day sage. He showcased his wisdom on a recent episode of The Tim Ferriss Show, where he was joined by Oxford physics professor David Deutsch. There’s a lot of brainpower in the room during this pod, and their discussion on the fabric of reality and redefining wealth is inspirational and informative.

💡 Think - Financial Meltdown

Since the last issue of The Supply Times came out a few weeks ago, the banking sector has been in a state of flux, to say the least. This rapid financial meltdown, thanks to the SVB collapse, reminds me of my time in corporate America when I witnessed the Great Recession of 2008. Of course, that stemmed from reckless lending and a housing bust. Back then, I was in the second worst industry after the financial one—construction and heavy equipment. 

What transpired earlier this month upended the notion that the regulations and fail-safe plans put in place since 2008 remained strong. Hardly. Silicon Valley Bank was one of three US lenders that collapsed within a week. And more recently, the forced rescue between UBS-Credit Suisse only added fuel to the contagion fears. Banks take note: when interest rates rise at historic levels, loading up on long-terms bonds isn’t recommended. As bond prices plunged, banks were left holding the bag. And in this case, the bag was empty as depositors started to flee. 

Just because our government backstopped these losses doesn’t mean we are out of the woods. Not to mention the hazards that continuous bank bailouts represent to an already stressed economy. If we are not careful, we could be looking at a Japan-like scenario of the ‘90s where capital is bogged down by unproductive legacy assets. No one wants a “lost decade” of economic growth for our country. Well, except for maybe Russia and China.

Charts of the Week

Quote of the Week

Tweets of the Week

Finally...

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you.

If you have suggestions or topics you’re interested in seeing me address, shoot me an email at [email protected]!

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Happy reading this weekend!

-- Naseem