Supply Chain Transparency and Digitally Native Data

The holidays are upon us! From now until the New Year, ’tis the season when consumers far and wide rush to buy gifts for their loved ones. Online retailers and brick-and-mortars alike are boasting all-time low prices for everything from electronics to puffer jackets, while even grocery stores are offering free delivery, encouraging shoppers to enjoy more time at home with the family. The 2019 holiday season is shaping up to be another big year yet again.

But I wonder — where does all this stuff come from after all, and what impact do these products and offers have upon the world as a whole?

Sarah Emerson recently wrote an article on Medium that spells out the complexity of these questions when she tried to track the origin of an AmazonBasics battery that exploded in her kitchen. In short, it was near impossible to find the origin of her cheap batteries and along the way she learned just how difficult it is to get data/information about the products we buy.

As consumers we’re taught to chase a bargain — in fact price was likely the factor that led Sarah to purchase the AmazonBasics batteries in the first place. And there’s no direct fault in this; after all, when confronted with the option to pick between two items that appear similar though priced differently, why wouldn’t we pick the more affordable item? Most people wouldn’t think twice.

The problem here is that not all products are created equal. While we may be enjoying a discount, somewhere something or someone is often paying a price for that luxury good. From low wages to child labor and animal cruelty, buying the cheapest product or most convenient service often has unwanted consequences, and these injustices are all created as a result of variables within the supply chain.

The supply chain includes the resources (raw materials like cobalt or cotton), activities (like milling, smelting, fabrication, processing, or shipping), people (farm and factory workers), and organizations (manufacturers, brand owners, or corporations) that contribute to the transition of a raw material into a finished product for a customer.

Emerson ascribes malicious intentions to Amazon, assuming they are intentionally obscuring supply chain provenance information for their gain. The reality is less nefarious — it’s near impossible for a company to completely control their supply chain, which means it’s near impossible to share upstream product data with downstream consumers. Using multiple suppliers and manufactures is typical business activity in the supply chain. It’s core to the capitalist market and the baseline of how businesses make their products.

A company may do business with a manufacturer who may, unknown to their brand clients, outsource parts of the order to another manufacturer. They might source the material differently from batch to batch (depending on availability and price). This could simply be getting a better price on a certain raw material due to legitimate market fluctuations, or perhaps because it is sourced in a jurisdiction with less rules and regulations. It’s in these multiple suppliers, with the intention to get a better deal that exploitation can occur.

Whenever a company in the chain is trying to maximize profits (or cut costs) there will inevitably be unscrupulous individuals willing to exploit the situation to their benefit — without being forthcoming about the reasons. This is why it’s difficult to get comprehensive data about products being created in the supply chain — it involves many companies, with various levels of ethics. This makes it difficult to have data you can trust.

In our research, one company comes up as a leader in sustainable supply chain — Patagonia. A core part of Patagonia’s mission is to build products without harm and inspire solutions to the environmental crisis.

QR barcodes are just one example of the many tools being explored to improve supply chain transparency and boost consumer trust. Another — the concept of the “Digital Twin” — has also shown great promise.

So what are the benefits to sharing supply chain data to end consumers?

In our research, we came across several projects using new technology to increase the transparency of their supply chains. While these are in their early stages, companies can see real-world applications by industry leading companies.

Companies need to consider their plan for data transparency in their supply chains. While the transition to a transparent supply chain won’t happen overnight, it has already started, using new technology that enables sharing of trusted data. Companies that use these new technologies to share supply chain data (without revealing suppliers and their competitive advantage), will find a long term economic advantage. There are steps every company can take today.

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