Supply Chains

Miriam Posner’s article on supply chains starts off with a common question. Do exploitative work conditions exist because global corporations care only for profits, while third world countries are both cheap and don’t care about labour conditions? The answer, as you might have guessed, isn’t simple. But the information she finds while exploring that question is very interesting.

 

But first, she points out another aspect of supply chains around us:

“The world is unpredictable—you’ve got earthquakes, labor strikes, mudslides, every conceivable tragedy—and yet as a consumer I can pretty much count on getting what I want whenever I want it. How can it be possible to predict a package’s arrival down to the hour, yet know almost nothing about the conditions of its manufacture?”

The ignorance, she says, isn’t limited to us customers. Even companies themselves don’t know! That may seem outrageous, but it is a feature, not a bug:

“This partial sight, erected on a massive scale, is what makes global capitalism possible.”

What?!

 

For one, even for the simplest products, the chain runs very deep:

“A company may have a handle on the factories that manufacture finished products, but what about their suppliers? What about the suppliers’ suppliers? And what about the raw materials?”

Second, the word “chain” is misleading: it suggests a linear, one-link-connected-to-the-next system. Whereas a more accurate mental picture is like this:

“They really look more like a network of waterways, with thousands of tiny tributaries made up of sub-suppliers trickling into larger rivers of assembly, production, and distribution.”

 

The deeper down you go (or to the smallest of the tributaries), well, they are often tiny entities, working out of garages. Obviously, labour laws and regulations rarely apply in such places. That sounds like a “bug”, how is this a “feature”?

“If a fire or a labor strike disables one node in a supply network, another outfit can just as easily slot in, without the company that commissioned the goods ever becoming aware of it.”

Resilience – that’s the feature. But the cost of that resilience is opacity – the big companies can’t realistically keep track of every tiny link/tributary:

“It’s not like there’s a control tower overseeing supply networks. Instead, each node has to talk only to its neighboring node, passing goods through a system that, considered in its entirety, is staggeringly complex.”

I realized it’s like the Internet – there’s no central authority!

“Supply chains are robust precisely because they’re decentralized and self-healing.”

 

The last point she adds is that a big/complex supply chain is managed/tracked via software (obviously). With links/tributaries this complex, and often adjusting on the fly, it’s simply impossible to key in every element or its details into the database (Who’d provide that info? Could you trust it?). And so the management software focusses on a few things only – the “what”, the “when”, and the price:

“It helps explain, for one thing, why it’s so hard to “see” down the branches of a supply network.”

 

All this then is why almost no big company can truly know all the ugliness in its own supply chain (this is in addition to what they do know and hide). Posner signs off with an uncomfortable point, for us, the customers:

“It could mean assimilating a lot of information that companies have become very good at disavowing—a term that, in its Freudian sense, means refusing to see something that might traumatize us.”

 

This then seems to be the price we are willing to pay (consciously or unconsciously) to get everything we want, as fast as possible, and at the lowest price.