Trawling a hotel minibar one night while on a work trip to Amsterdam, I found a piece of chocolate with an unusual name: Tony’s Chocolonely. I giggled at how apt the name was—who eats minibar chocolate unless they are, indeed, a little lonely?—and, on a whim, plugged it into Google.
The results were more sobering than I’d expected. The founder of Chocolonely, Teun (Tony) van de Keuken, founded the company with the goal of making the first (the “lonely only”) chocolate bar produced without labor exploitation. According to the company, this goal actually landed them in legal trouble: Bellissimo, a Swiss chocolatier, sued Chocolonely in 2007, allegedly claiming that “slave-free chocolate is impossible to produce.”
I had heard similar claims about other industries. There was the Fairphone, which aimed at its launch in 2013 to be the first ethically produced smartphone, but admitted that no one could guarantee a supply chain completely free from unfair labor practices. And of course one often hears about exploitative labor practices cropping up in the supply chains of companies like Apple and Samsung: companies that say they make every effort to monitor labor conditions in their factories.
Putting aside my cynicism for the moment, I wondered: What if we take these companies at their word? What if it is truly impossible to get a handle on the entirety of a supply chain?
The thing that still confused me is how reliable supply chains are, or seem to be. 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?
In the past twenty years, popular and academic audiences have taken a growing interest in the physical infrastructure of global supply chains. The journalist Alexis Madrigal’s Containers podcast took on the question of how goods travel so far, so quickly. The writer Rose George traveled the world on a container ship for her book Ninety Percent of Everything. And Marc Levinson’s The Box startled Princeton University Press by becoming a national bestseller. Most recently, Deborah Cowen’s The Deadly Life of Logistics offered a surprisingly engrossing history of that all-important industry.
These books help us visualize the physical infrastructure that makes global capitalism possible. But the data infrastructure has yet to be explored. How does information travel through the supply chain in such a peculiar way, so that I know to wait impatiently at my door at the exact moment my new iPhone will arrive—but no one really seems to know how it has gotten to me?
I set out to find the answer, and what I found surprised me. We consumers are not the only ones afflicted with this selective blindness. The corporations that make use of supply chains experience it too. And this partial sight, erected on a massive scale, is what makes global capitalism possible.
A Network of Waterways
The industry of supply-chain management (or SCM, to its initiates) is both vast and secretive. It’s one of the most rapidly growing corporate fields, and the subject of reams of books, journal articles, and blog posts. You can even get a degree in it.
But most companies are leery about revealing too much about their own logistics operations. It’s not only because they are afraid of exposing what dark secrets might lurk there. It’s also because a reliable, efficient supply chain can give a company an invaluable edge over its competitors.
Take Amazon: it’s not so much a retailer as a supply chain incarnate. Its advantage lies in the high speed and the low price with which it can get a set of bath towels to your door. No wonder the retailer is famously tight-lipped about its supply-chain infrastructure. Few people outside of Amazon know much about the software that Amazon uses to manage its logistics operations.
In the supply-chain universe, there are large, tech-forward companies like Amazon and Apple, which write and maintain their own supply-chain software, and there’s everyone else. And most everyone else uses SAP. SAP—the name stands for Systems, Applications, and Products—is a behemoth, less a single piece of software than a large, interlocking suite of applications, joined together through a shared database. Companies purchase SAP in “modules,” and the supply-chain module interlocks with the rest of the suite. Among people who’ve used SAP, the reaction to hearing its name is often a pronounced sigh—like all large-scale enterprise software, SAP has a reputation for being frustrating.
Nevertheless, SAP is ubiquitous, with modules for finance, procurement, HR, and supply-chain management. “A very high percentage of companies run SAP for things like finance,” says Ethan Jewett, an SAP consultant and software developer who helps companies implement SAP modules. “And so, if you’re running it for one part of your business, you’ll default to running it for another part of your business.”
Leonardo Bonanni is the founder and CEO of a company called Sourcemap, which aims to help companies map their own supply chains. Bonanni suspects that companies’ inability to visualize their own supply chain is partly a function of SAP’s architecture itself. “It’s funny, because the DNA of software really speaks through,” said Bonanni. “If you look at SAP, the database is still actually written in German. The relations in it are all one-link. They never intended for supply chains to involve so many people, and to be interesting to so many parts of the company.”
This software, however imperfect, is crucial because supply chains are phenomenally complex, even for low-tech goods. 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?
“It’s a staggering kind of undertaking,” said Bonnani. “If you’re a small apparel company, then you still might have 50,000 suppliers in your supply chain. You’ll have a personal relationship with about 200 to 500 agents or intermediaries. If you had to be in touch with everybody who made everything, you would either have a very small selection of products you could sell or an incredible margin that would give you the extra staff to do that.”
We call them “supply chains,” but that image is misleading. 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.
Bonanni explained that while workplace abuses get a lot of attention when they take place in the supply chains of large, prestigious companies like Apple and Samsung, working conditions are actually most opaque and labor abuse is most rampant in other industries, like apparel and agriculture. “Apparel, every quarter they have 100 percent turnover in the clothing that they make, so it’s a whole new supply chain every season. And with food, there’s millions of farmers involved. So in these places, where there’s way too many nodes for anyone to see without a computer, and where the chain changes by the time you’ve monitored it—those are the places where we see a lot of problems and instability.”
The picture that many of us have of supply chains involve state-of-the-art factories like those owned by Foxconn. In reality, the nodes of most modern supply chains look much less impressive: small, workshop-like outfits run out of garages and outbuildings. The proliferation and decentralization of these improvisational workshops help explain both why it’s hard for companies to understand their own supply chains, and why the supply chains themselves are so resilient. 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.
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. Supply chains are robust precisely because they’re decentralized and self-healing. In this way, these physical infrastructures distributed all over the world are very much like the invisible network that makes them possible: the internet.
by Miriam Posner, Logic | Read more:
The results were more sobering than I’d expected. The founder of Chocolonely, Teun (Tony) van de Keuken, founded the company with the goal of making the first (the “lonely only”) chocolate bar produced without labor exploitation. According to the company, this goal actually landed them in legal trouble: Bellissimo, a Swiss chocolatier, sued Chocolonely in 2007, allegedly claiming that “slave-free chocolate is impossible to produce.”
I had heard similar claims about other industries. There was the Fairphone, which aimed at its launch in 2013 to be the first ethically produced smartphone, but admitted that no one could guarantee a supply chain completely free from unfair labor practices. And of course one often hears about exploitative labor practices cropping up in the supply chains of companies like Apple and Samsung: companies that say they make every effort to monitor labor conditions in their factories.Putting aside my cynicism for the moment, I wondered: What if we take these companies at their word? What if it is truly impossible to get a handle on the entirety of a supply chain?
The thing that still confused me is how reliable supply chains are, or seem to be. 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?
In the past twenty years, popular and academic audiences have taken a growing interest in the physical infrastructure of global supply chains. The journalist Alexis Madrigal’s Containers podcast took on the question of how goods travel so far, so quickly. The writer Rose George traveled the world on a container ship for her book Ninety Percent of Everything. And Marc Levinson’s The Box startled Princeton University Press by becoming a national bestseller. Most recently, Deborah Cowen’s The Deadly Life of Logistics offered a surprisingly engrossing history of that all-important industry.
These books help us visualize the physical infrastructure that makes global capitalism possible. But the data infrastructure has yet to be explored. How does information travel through the supply chain in such a peculiar way, so that I know to wait impatiently at my door at the exact moment my new iPhone will arrive—but no one really seems to know how it has gotten to me?
I set out to find the answer, and what I found surprised me. We consumers are not the only ones afflicted with this selective blindness. The corporations that make use of supply chains experience it too. And this partial sight, erected on a massive scale, is what makes global capitalism possible.
A Network of Waterways
The industry of supply-chain management (or SCM, to its initiates) is both vast and secretive. It’s one of the most rapidly growing corporate fields, and the subject of reams of books, journal articles, and blog posts. You can even get a degree in it.
But most companies are leery about revealing too much about their own logistics operations. It’s not only because they are afraid of exposing what dark secrets might lurk there. It’s also because a reliable, efficient supply chain can give a company an invaluable edge over its competitors.
Take Amazon: it’s not so much a retailer as a supply chain incarnate. Its advantage lies in the high speed and the low price with which it can get a set of bath towels to your door. No wonder the retailer is famously tight-lipped about its supply-chain infrastructure. Few people outside of Amazon know much about the software that Amazon uses to manage its logistics operations.
In the supply-chain universe, there are large, tech-forward companies like Amazon and Apple, which write and maintain their own supply-chain software, and there’s everyone else. And most everyone else uses SAP. SAP—the name stands for Systems, Applications, and Products—is a behemoth, less a single piece of software than a large, interlocking suite of applications, joined together through a shared database. Companies purchase SAP in “modules,” and the supply-chain module interlocks with the rest of the suite. Among people who’ve used SAP, the reaction to hearing its name is often a pronounced sigh—like all large-scale enterprise software, SAP has a reputation for being frustrating.
Nevertheless, SAP is ubiquitous, with modules for finance, procurement, HR, and supply-chain management. “A very high percentage of companies run SAP for things like finance,” says Ethan Jewett, an SAP consultant and software developer who helps companies implement SAP modules. “And so, if you’re running it for one part of your business, you’ll default to running it for another part of your business.”
Leonardo Bonanni is the founder and CEO of a company called Sourcemap, which aims to help companies map their own supply chains. Bonanni suspects that companies’ inability to visualize their own supply chain is partly a function of SAP’s architecture itself. “It’s funny, because the DNA of software really speaks through,” said Bonanni. “If you look at SAP, the database is still actually written in German. The relations in it are all one-link. They never intended for supply chains to involve so many people, and to be interesting to so many parts of the company.”
This software, however imperfect, is crucial because supply chains are phenomenally complex, even for low-tech goods. 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?
“It’s a staggering kind of undertaking,” said Bonnani. “If you’re a small apparel company, then you still might have 50,000 suppliers in your supply chain. You’ll have a personal relationship with about 200 to 500 agents or intermediaries. If you had to be in touch with everybody who made everything, you would either have a very small selection of products you could sell or an incredible margin that would give you the extra staff to do that.”
We call them “supply chains,” but that image is misleading. 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.
Bonanni explained that while workplace abuses get a lot of attention when they take place in the supply chains of large, prestigious companies like Apple and Samsung, working conditions are actually most opaque and labor abuse is most rampant in other industries, like apparel and agriculture. “Apparel, every quarter they have 100 percent turnover in the clothing that they make, so it’s a whole new supply chain every season. And with food, there’s millions of farmers involved. So in these places, where there’s way too many nodes for anyone to see without a computer, and where the chain changes by the time you’ve monitored it—those are the places where we see a lot of problems and instability.”
The picture that many of us have of supply chains involve state-of-the-art factories like those owned by Foxconn. In reality, the nodes of most modern supply chains look much less impressive: small, workshop-like outfits run out of garages and outbuildings. The proliferation and decentralization of these improvisational workshops help explain both why it’s hard for companies to understand their own supply chains, and why the supply chains themselves are so resilient. 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.
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. Supply chains are robust precisely because they’re decentralized and self-healing. In this way, these physical infrastructures distributed all over the world are very much like the invisible network that makes them possible: the internet.
Image: Media Club
