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Wal-Mart: The “Gold Standard” in Immigration Compliance

October 1st, 2008 · by Justin Fogarty · 1 Comment · Services Procurement, best practices, outsourcing, sourcing, supplier management, supply risk

Deloitte’s Ryan Flynn recently previewed the ICE (Immigration & Customs Enforcement) webinar and their Wal-Mart case study. As you likely recall, Wal-Mart received a very public PR black-eye a few years ago when some of their subcontracted cleaning crews turned out to be comprised of undocumented workers. The media hung the company out to dry and the Feds settled with them for a record breaking fine.

Wal-Mart clearly treated the episode as a learning experience and set out to minimize the risk of future ICE infractions, which they felt were a threat to their bottom line and reputation. So they enlisted the help of Deloitte and implemented a comprehensive system to identify the riskiest service vendors on their nationwide payroll - a process that flagged 9,000 vendors or approximately 30% of their supply base as “at risk”.  Once potential problems were ID’ed, the contracting and monitoring process for the vendors greatly minimized their compliance risk, so much so that ICE considers Wal-Mart the “gold standard” for their risk mitigation process.

That’s quite a reversal in 5 years time. In the webinar, Ryan and his colleagues went into great detail about how they accomplished their goals. So, the webinar replay [download the replay here] is well worth your time if ICE compliance is at all an issue for your company.

As for the lessons learned by Deloitte and Wal-Mart in the process…Ryan had these insights to share:

  • You will NEVER eliminate risk. Unfortunately, the best you can hope for is reducing risk to a very small level and showing the authorities and public you are operating in good faith. But in companies large and small, there will always be some risk of a cost-cutting vendor hiring illegal laborers or rogue employee that doesn’t follow procedure.
  • An effective system will put processes, policies, metrics and technology in place. Wal-Mart has 4,000 facilities and around 30k vendors. So, obviously a focus on process, accountability and automation were necessary to roll out a scalable system.
  • The required cross-functional teams are complex and time consuming, yet essential. Input from stakeholders in various departments, roles and locations was critical to forming a workable solution.
  • Set expectations with suppliers and take “good faith” steps to verify employment practices are appropriate. As Ryan said, “Over-communication is a good thing if you want to move through this process in a timely manner” since gaining supplier trust, buy-in and cooperation are absolutely necessary.
  • Be vigilant because contractors may be tempted to stray. As long as there is money to be made by cutting corners and the perceived danger of getting caught is low enough, some unscrupulous vendors will break the rules. So, an ongoing trust but verify strategy will help keep everyone on the up and up.
  • The risk based model and tech driven solution works. Wal-Mart’s solution has helped them get their ICE house in order and earn praise from the government and vendors in the process.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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