Realist, not conformist analysis of the latest financial, business and political news

It’s Impossible To Map Or Know A Modern Supply Chain – Impossible

A nice little earner among the likely lads is to attempt to inspect supply chains. To make sure that somewhere down the line there’s no modern slavery, no blood minerals, nor raping Gaia and so on. The reason it’s a cool little earner is because it’s impossible – impossible I tell ya! – to properly map a modern supply chain.

This isn’t anything to do with capitalism, as this misguided waif seems to think, it’s to do with a market economy.

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?

Well, yes, of course it’s impossible to get a handle on an entire supply chain. The reason is given in Leonard Reed’s “I Pencil“:

My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon. Now contemplate all the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding. Think of all the persons and the numberless skills that went into their fabrication: the mining of ore, the making of steel and its refinement into saws, axes, motors; the growing of hemp and bringing it through all the stages to heavy and strong rope; the logging camps with their beds and mess halls, the cookery and the raising of all the foods. Why, untold thousands of persons had a hand in every cup of coffee the loggers drink!

The logs are shipped to a mill in San Leandro, California. Can you imagine the individuals who make flat cars and rails and railroad engines and who construct and install the communication systems incidental thereto? These legions are among my antecedents.

That’s about the making of a pencil but as Reed points out, it’s a good example. Seemingly simple and yet the creation of it depends upon the entirety of the economy. Absolutely everything that is connected to the global economy is part of that global economy. Thus if modern slavery, blood minerals, happen in any one part of that economy then they happen in all parts of it.

Further, analysing that entire global economy is impossible. If it weren’t scientific socialism would be possible and it ain’t.

Just to give on little example. The fools at Global Witness got those conflict mineral provisions included into Dodd Frank. An even greater fool from one of the Green parties wanted to get all European businesses to also so self-examine. Note, all, not just the large ones. One mineral that has to be checked for is wolframite, a source of tungsten. Tungsten is used to harden steel, among other things. Steel is used to make the blades in pencil sharpeners. The demand is actually that someone who imports a dozen or two Chinese pencil sharpeners to sell upon e-Bay needs to be able to track the steel production back to which source of tungsten they used – and to make sure that it’s not from certain mines in DR Congo. This is not a level of knowledge of the economy that anyone at all has. Nor is it a desirable one.

And do note that to truly know that there’re no conflict minerals at all in your supply chain you’ve got to know that the spades used to dig up the potatoes which feed your programmers in Ireland to build your website also didn’t use DR Congo sourced tungsten.

It’s impossible to understand a total supply chain just because that total supply chain is, by definition, the entire global economy.

0 0 votes
Article Rating
Notify of

Newest Most Voted
Inline Feedbacks
View all comments
Arthur the Cat
Arthur the Cat
5 years ago

I notice the original article also trots out those modern snake oils, block chains and machine learning, as possible panaceas, but is at least accurate enough to say they probably wouldn’t help.

5 years ago

Not only are there too many interconnections to database, but the wonderful modularity of the market economy means that if a vendor somewhere down the chain who does not value “slave-free” designation finds he cannot meet his contractual commitment, he may turn to other vendors even though a customer’s customer has already achieved certification. The “conflict minerals” law is one of the very largest millstones Obama placed around Americans’ necks. Trump has taken aim at it and even some Democrats have conceded that, like the former 35% corporate tax rate, it is cumbersome far beyond any benefit. But I don’t… Read more »

5 years ago

Matter of scope and need, the example takes an extreme approach to defining the supply chain.
Having worked in Aerospace and food production it’s possible to know a lot about the supply chain if you need to and the extra cost is part of the risk management.
The real issue is trust as you step along the supply chain, and this is where something like the EU trading block becomes a problem (horse meat scandal etc.) when dealing with food which has a large potential supply chain.

5 years ago
Reply to  BniC

Yes, one can verify that all one’s suppliers meet standards for incoming inspection, and it is part of risk management. One cannot verify “a supply chain completely free from unfair labor practices.” It is a SJW forelock-tugging achieved by claiming to prove a negative.

Would love your thoughts, please comment.x