Project Proposal: Supply Chain Accountability - Reducing the harm of the free market from within the free market
Actually written SEPTEMBER 21, 2000 -
Corporate Accountability means Supply Chain Accountability.
The modern goods we enjoy are made by complex levels of manufacturing integration distributed over a chain of several corporations. No single corporation makes the whole thing from start to finish, but instead supplies parts to the next link in the manufacturing chain. This is the supply chain.
Unfortunately, the supply chain currently allows corporate participants to “pass the buck” on accountability to benevolence/malevolence parameters. The sheer complexity of the supply chain (more like a supply network) prohibits the collection and processing of benevolence/malevolence data on each corporate participant. This is what we call “Supply Chain Blindness”, as in, “We are ‘blind’ to the benevolence/malevolence of those who supply the parts from which we make our gadgets.”
For example, consider the good intentions of Ben & Jerry’s ice cream makers. While they claim the ability to evaluate the externals (benevolence/malevolence parameters) associated with the production of their own ice cream, they apologize for their inability to track the externals impact of their packaging vendors. This is a confession of Supply Chain Blindness.
Corporate accountability through the complex supply chain has been impossible in the past, which helps explain why corporations have not achieved it. But things are changing. Supply chain accountability increasingly seems a plausible achievement.
Supply Chain Accountability could extend an existing industrial discipline called Supply Chain Management. Supply Chain Management, as it currently exists, concerns itself with mediating the trading of corporate goods based on strictly non-externals parameters like price, delivery, quality and interchangeability. The medium for Supply Chain Management is an array of specialized database systems made by a plethora of information technology vendors. Client corporations purchase these database systems and fill them with data about their own suppliers’ parts: again – price, delivery, quality and interchangeability. These database systems could be modified to include space and processing procedures for the benevolence/malevolence parameters of suppliers’ parts.
Used widely enough in the trade network, such database systems could then calculate the aggregate benevolence/malevolence rating for entire supply chains. Those manufacturers at the consumer-end of the chain could then market their consumable goods based on these ratings, as Jay Forrest notes:
It would not be surprising if a symbol for sustainably-produced goods becomes a trademark, similar to the one for cotton or wool.
Finally, the end consumer could evaluate supply chain intensive goods (cars, electronics, houses, chemicals, etc...) based on benevolence/malevolence parameters of their manufacture, along with price and quality, to make informed buyer’s choices... hopefully benevolent buyer’s choices.
We hope this would create a flood of consumer willingness to choose benevolence, even at higher price, and corporate willingness to meet this demand. Jay Forrest, in his article “Corporations and Sustainable Development”, predicts this demand:
The faint, but visible, trend of companies selecting their suppliers carefully with respect to corporate policies and philosophy is likely to grow, particularly if the public endorses the concepts of sustainability and sustainable products become fashionable. Just as Herman Miller has committed to buy sustainably grown lumber for their furniture, chains of sustainably-oriented companies are likely to develop.
All well and good. But there’s a few more details.
To make Supply Chain Accountability possible, we suspect the entire discipline of Supply Chain Management will need to become a centralized, trans-corporate endeavor in which all corporations subscribe to one central clearinghouse for all component parameters, whether non-externals or benevolence/malevolence oriented.
We suspect so because the typical supply chain intensive manufacturer can’t implement good Supply Chain Management as it is. The reasons are several and pragmatic (poor internal configuration management, poor links to engineering), but boil down to the fact that most manufacturers can’t afford to research their suppliers adequately. On the other hand, the level of research they do muster is adequate, since all their competitors do no better. The market supports what little gets done. So forgiving is this market that most manufacturers neither know nor care that their supply chain management is weak.
We therefore propose that a much improved Supply Chain Management be achieved economically by coalescing the efforts into a centralized, independent business institution where appropriate. Think of one or more consulting agencies specializing in information about every manufacturer’s component goods, a super-automated database version of the Thomas Register, IC Master, EEM catalog, UL/CSA/VDE indexes and other cross-vendor catalogs for various industries.
Such new consulting agencies would also, we suspect, need to sell computer programs that help client manufacturers customize the centralized data to their own needs. To this end we propose the new endeavor of Automated Component Engineering in the form of modules that plug into each client’s larger database system, which ease the task of defining the specific, acceptable parameters for purchased components.
It is through the birth of such new agencies that we hope to facilitate the economical tracking of not only non-externals parameters, but also benevolence/malevolence parameters for component goods in the supply chain.
This is our chance to get corporate accountability integrated right into the process.
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