It seems like such a small misstep for a supply chain: Sherrin football sent its Auskick balls to Spartan, a supplier in India, which, during peak periods, in turn outsourced stitching to four sub-contractors. In recent years, it amounted to less than five percent of Sherrin’s stitch work, the company claims.

But the 9,000 balls sent to one outsourcer came at a high cost to Sherrin when a newspaper investigation revealed that subcontractor used poor children in India, some as young as seven, to hand-stitch the balls for 12 cents an hour, working the children 10-hour days, seven days a week.

That one subcontracting decision created a major public relations nightmare for Sherrin in Australia, costing the company in recalls and donations, and even put its endorsement as the official football of the Australian Football League at risk.

Sherrin officials stated surprise, and have taken steps to address the problem, including suspending the use of India subcontractors — but not the original India-based supplier — and promising to overhaul its supply chain to ensure child labor isn’t used again.

It’s also withdrawn the footballs it provided to guests at a prestigious, $350-per-person AFL grand final breakfast, replacing the balls with a donation to World Vision, promised to profits from its Grand Final Balls speciality products and from its Auskick balls will be donated to the Manav Sehyog Society, one of the largest charities in the Jalandhar region which focuses on health and education.

But it’s brought back sour memories for Australians, who recall a similar 1996 incident in which Pakistani children between the ages of 5 and 14 spent 11 hour days stitching soccer balls for Nike, Adidas, Reebok and Mizuno.

That prompted attempts to stop the use of child labor in supply chains, but, most of these efforts were voluntary for companies, writes Justine Nolan, deputy director of the Australian Human Rights Centre at the University of NSW, in a Sydney Morning Herald op-ed.

Nolan goes on to suggest that as the problem receded from headlines, so did the effort.

“One should not assume for a moment that supply chain production is easily monitored or human rights violations, such as the use of child labour, easily eliminated,” Nolan writes. “But the solution, posed in 1996 and still relevant, is for companies to assume legal – rather than simply moral – liability for their supply chain.”

In the U.S., the California Transparency in Supply Chains Act is designed to stop human trafficking, child labor and human slavery in the supply chain by requiring auditing and accountability throughout the supply chain. A similar national measure has been introduced in Congress.

Smart companies will act stay ahead of this regulatory trend by taking steps now to add teeth to corporate responsibility programs. Here are our recommendations for steps chief procurement officers can take to ensure your company isn’t “caught holding the ball” on human rights violations:

  1. Map your entire B2B supply chain. and transparency throughout the supply chain, from labor sources and sub-contractors through logistics and transportation. Nestlé did, and to its surprise, uncovered child labor and other forced labor violations.
  2. Work with external bodies, especially external auditor, to improve your supply chain and your corporate responsibility program. Nestlé used the Fair Labor Association, which audited the cocoa B2B supply chain. Ben & Jerry’s Ice Cream, which is reknown for its quality and corporate responsibility, partners with Fairtrade International and FLO-CERT for support in its supply chain, according to Industry Week.
  3. Partner with key suppliers. Ben & Jerry’s builds backward in its supply chain and works with farmers to move them up in the value chain.
  4. Ask yourself these key questions before outsourcing B2B systems and transactions.
  5. Ask suppliers about their own outsourcing practices and include in your contract a way to audit their business partners.