Broken Cars, McDonald’s, and Boeing: A look into Networked Global Supply Chains
Recently, the drive shaft on my car broke, and I was quoted a repair time of two weeks. These weeks slowly turned into two months as I waited for parts to be allocated and shipped to my mechanic – I was left confused as to why such a seemingly routine fix was taking so long. After doing some digging, I discovered that it was due to immense supply chain inefficiencies. My mechanic was ordering parts from a part reseller on eBay, who was operating out of a massive warehouse, and was sending us inaccurate parts. More broadly, this was a symptom of two macro-scale issues: global supply information asymmetry and inaccurate edges between suppliers and customers.
To frame the first issue, it’s helpful to start by thinking about the challenges associated with global supply information. The most obvious challenge is data availability and access. Supply Chain data is an incredibly important form of IP and large corporations will spend immense amounts of money to develop and protect their supply chain operations. One classic example of this is McDonald’s – the company is known to have one of the most consistent customer experiences due to their efficiency, and will often out-compete local eateries due to their CX (1). The value of their supply chain IP is what allows them to out–compete local establishments, but also retain a loyal customer base.
Fortunately, recent research has shown ways that researchers and governments can aggregate supply chain data without imposing on the IP of large corporations. Specifically, a study published in Science found that using VAT data could provide insight into supply chains. For context, VAT fulfills a similar policy need as sales taxes, except they are burdened by end consumers, not businesses. The study found that analyzing VAT data could uncover “200,000 firms with more than 500,000 linkages” in some cases (2). This is pretty useful, as it can allow researchers to track products through supply chains using non-proprietary payment data. The researchers do acknowledge this data is limited, though. More specifically, VAT data only tells us so much – solving bigger supply chain problems like “the provision of critical goods, monitoring human rights, fighting cross-border tax fraud, and monitoring the carbon footprint of individual products will remain ineffective without … [more] comprehensive, and international [data]” (2). The researchers do acknowledge that securing this type of data, the type which possibly uncovers supply chain IP, will be difficult to convince companies of, and propose centralized secure data collection centers (2). In my opinion, this type of intervention is unlikely to succeed, as companies will strive to protect the IP at the core of their business, even if that comes at the expense of more altruistic goals.
Supply chain networks aren’t hopeless, however. In the past couple of years, there have been efforts to publicize supply chains. One such effort is a platform called ImportYeti. ImportYeti has built a website where consumers can look at the supply chain breakdown for various companies, including which suppliers these companies use, where these suppliers are located, and what recent shipments have contained (3). An interesting example of this is with Boeing – a quick search for Boeing’s supply chain uncovers a fairly complicated network of sea shipments. A brief overview of this network confirms obvious trends – Boeing’s top shipment routes are between major ports in eastern Asia and ports in the Seattle area (3). I’ve included a screenshot of these visualizations below:
When evaluating these two types of data aggregation efforts for global supply chains, it is clear that research-focused and consumer-focused efforts can vary significantly within the same academic subject. Additionally, it’s interesting to uncover efforts which occur at the largest scales possible, and track how those efforts change our everyday lives as consumers of global goods and services.
Sources:
- Naked Economics: Undressing the Dismal Science
- https://www.science.org/doi/10.1126/science.adi7521
- https://www.importyeti.com/company/boeing-commercial-airp