By Benjamin Goldstein – Erb Postdoctoral Fellow
Not a month goes by without a media campaign linking the supply chain of a well-known brand with unsavory labor practices or environmental mismanagement. Such exposés can devalue brands and reduce well-meaning corporate sustainability initiatives to hypocrisy. Beyond financial and reputational risks, a corporation that doesn’t know its supply chain can be caught flat-footed when the regions it sources from are rocked by political and environmental upheaval.
Answering the five Ws of their supply chain allows companies to reduce these risks and simultaneously address unsustainable practices related to their business. Every high school student knows the five Ws: who, what, where, when and why. These are the key exploratory questions to ask when tackling any problem. Yet research has shown time and again that corporations often cannot answer the five Ws of their supply chain beyond their immediate suppliers. The rampant outsourcing, supplier fluidity and vast distances that typify modern production make answering the five Ws a formidable task for any corporation. Operating in this information vacuum minimizes corporations’ agency and maximizes risk.
My research with Associate Professor Joshua Newell develops an approach to demystify supply chains and answer the five Ws. We reconstruct supply chains using transaction-level data on imports and exports of individual companies, document analysis and algorithms. This allows us to identify the companies in supply chains, locate their activities with high geographic specificity and associate them with damaging environmental or labor practices. For instance, our work on the international rubber trade implicates the supply chains of U.S. multinationals with Lalan Eco Latex (who), a company linked to land grabs and deforestation (what) in the Weliya Forest of Sri Lanka (where) that occurred in 2014 (when). With this knowledge, we can also start to ask the deeper question of why this happened.
By answering the five Ws, our research provides the facts necessary for corporations to reflect on how they can proactively address the social and environmental risks deep within their supply chains. Will dropping a troublesome supplier be enough, or are wider technological, institutional, behavioral or economic transformations needed to eradicate injurious practices? As long as the five Ws remain unanswered, the steps corporations can take to address risks and advance their sustainability agenda are severely limited.
Our research shows that with a little data–and a lot of grit–it is possible to answer the five Ws of a corporate supply chain. If you answer the five Ws of your supply chain, you can identify hotspots of negative environmental and social impacts and solve problems before they happen.