Understanding global supply chains

Big brand names must be held accountable for how their products are being made

Due to supply chain disruptions during the pandemic, multinational companies around the world are spending immense resources to make their supply lines more resilient. Supply chain flexibility may ensure smoother production in the event of another pandemic, or during other inevitable climate related disruptions, yet the lingering exploitation of workers within the supply chains of most consumer goods is an issue not receiving due attention.

Before thinking about what should be done to make global supply chains more equitable, it is useful to consider how modern supply chains came into being, and how opaque and convoluted they can be, which makes it difficult to contend with the exploitation taking place within them.

Trade is an age-old phenomenon which can be traced back to the advent of human civilization. Barter systems eventually gave way to the creation of currencies, and ever-expanding trade routes. Maritime routes were created between the Arabian Peninsula, Mesopotamia, and the Indus Valley Civilization well before the birth of Christ. Some 2,000 years ago, the historic Silk Route linked much of Eurasia and North Africa.

The process of colonization further enhanced the flow of goods and human labour around the world. Extracted labour and raw material from the global south boosted industrialization in Europe. Then, in early 20^th century, the US and Japan became economic power houses, which also accelerated global trade.

Just before WWI, Henry Ford introduced the idea of an assembly line within American factories in the effort to boost efficiency. This innovation allowed products to be taken to workers rather than the worker moving around to assemble products. This automation increased manufacturing productivity manifold, but such segmentation of the production process into smaller and more mundane tasks made individual workers easily replaceable.

Soon thereafter, other entrepreneurs realized that more money could be made by shifting their production processes overseas, where regulations were laxer, and labour was much cheaper. Offshoring thus came into being, which led manufacturing processes to move away from their home countries. General Electric is one of the pioneers of shifting production to poorer countries where labour costs were much lower, and multitudes of other businesses followed suit.

Outsourcing was the next stage in the evolution of globalized production systems, which enabled supply chains to become even more segmented. It is now common for multinational corporations to source raw materials and produce an array of goods in far-flung countries. In their desperation to attract foreign investment, poorer countries in the global south began outdoing each other by sacrificing worker safety, squeezing worker remunerations and ignoring ecological costs associated with the manufacturing processes.

While global supply chains have become sophisticated, they remain rife with labour violations. There have been repeated exposes of human rights abuses in the value chains of most consumer goods. Often, factories in poorer countries further outsource production to the informal sector where even more blatant forms of labour exploitation, including child labour, remains rife.

Big brand names try to distance themselves whenever labour exploitation and environmental damage associated with their production systems come to the fore, by shifting blame onto their suppliers or by finger-pointing to corruption or the lack of adequate regulation within the global south.

While the governments of poorer countries do need to do more to ensure that local businesses comply with statutory labour and environmental laws, big businesses must also be held accountable for how their products are being manufactured. This accountability cannot only focus on the factories which produce final products for multinational brand names, but it must also percolate down to many interlinked nodes within the supply chain going all the way down to the production of raw materials.

Published in The Express Tribune, November 25^th, 2022.

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