What's in a Supply Chain?

Some people are lucky enough to buy everything they eat, drink, and own from folks in their own community. The rest of us meet our daily needs by participating in complex global supply chains.

At its core, a “supply chain” is simply a pathway (chain) connecting goods (supply) and customers. It’s the way your favorite summer time treat - a juicy, red watermelon – makes it from the farm, into the grocery store, and onto your dinner table. The more complex a good or item, the more complex the associated supply chain.

Since complexity is, well, complicated, supply chains can be confusing with many lacking the transparency for customers to understand just what it takes to deliver their goods. Recent consumer interest in purchasing ethical, sustainable goods has created demand for greater understanding of and transparency within supply chains. Many companies are struggling to meet this demand and so we ask:

What’s in a supply chain?

The answer to this depends largely on the industry as well as a specific item within an industry.

Let's say it's time to buy a new couch and you want to find one that's relatively inexpensive, but also chic, and, if possible, made sustainably and ethically.

Enter Wayfair, your e-commerce destination for all things “home.”

[As I mentioned in a previous post, Wayfair was the subject of a case study I created for a Corporate Sustainability course at Harvard Extension. I’m reliably informed about the basic ins-and-outs of their business and, as a result, am comfortable using them as an example.]

Like many companies in the home furnishings industry, Wayfair has a complex supply chain. Basically, it looks something like this:

Customers interface with the "Wayfair Platform," through the Wayfair website, a visually appealing collection of home merchandise. The merchandise comes from a variety of factories and individuals all over the world. These folks are "sellers." The Wayfair warehouse stores popular items for ease of delivery. Third party carriers deliver Wayfair products to the customers.

Simple, right? Not exactly.

The simplified supply chain diagram above shows 5 customers and 10 "sellers." In reality, Wayfair represents over 11,000 home merchandise suppliers. These 11,000 suppliers offer over 18 million products to Wayfair's 21.1 million active customers. These staggering figures illuminate an important part of why it can be complicated to answer: What's in a supply chain?

It's worth emphasizing here that Wayfair doesn't actually produce any of the merchandise it sells on its website. Wayfair is simply an e-commerce platform which connects customers to home furnishings suppliers.

Why does this matter?

- Because it impacts supply chain visibility.

Let's remember that, at the start of all this, we decided it was time to buy a new couch. Like many other people looking for furniture, we found Wayfair's website and began browsing.

Like most consumers, you're likely focusing on things like: color, size, shape, and price. You're imagining what it will look like in your living room and whether or not your roommate or spouse will be a fan. Before clicking "buy," chances are, you're not thinking about where it comes from or who's selling it to you. But, even if you were, information is limited.

On the Wayfair website, to find where a given product is coming from, you have to scroll down the page until you find the "specifications"drop down menu. Then you have to scroll through a long list of materials and product details until you find the "Country of Origin." In this case, China.

This, by itself, doesn't tell us much. Unfortunately, beyond that, you're out of luck.

My assumption is that Wayfair doesn't provide more detailed information about the products offered on their website because:

1. Customers aren't asking for it and, most importantly,

2. Wayfair has limited information themselves.

If Wayfair made their own home furnishings, it would be relatively easy for them to tell us when and where a particular couch was made as well as whether or not it was made sustainably and ethically. Instead, they work with + 11,000 "sellers" producing over 18 million products, the sheer volume of which is staggering.

Even if Wayfair could reliably collect information on all of those products, it's reasonable to assume that +11,000 suppliers may not necessarily provide all of the information needed to determine whether or not a specific product is "sustainable" or "ethical." [These words are in quotes because there is no globally recognized standard or definition for either of these words. More on this in a later post.]

And, of course, even if all "sellers" provided all the necessary information, if a "seller" is located somewhere like China, it can be hard to verify if the provided information is accurate or current.

Of course, this kind of thing is not unique to Wayfair; it's not even unique to the home furnishings industry. Ever heard of a little company called Amazon? Today's consumer expects a wide selection of everything, offered at low prices, and shipped as close to their front door as humanly possible. To meet these expectations, companies like Wayfair get creative and, in the process, sacrifice supply chain transparency.

In general, supply chains are complex. They tangle around countries, reach across oceans, and connect companies and consumers to the things they rely upon live happy, successful lives. While there are some who believe the answer is to "buy local," its unreasonable to assume that local vendors and their short-and-sweet supply chains will be able to meet the needs of every individual in a given community.

... At least not in the near future...

Growing consumer interest in purchasing ethical and sustainable goods seems to create a middle ground between simplified local and confusing global supply chains. If we must rely on international suppliers, we should know more about who they are as well as how they make and distribute the many "things" that make up our life: our food, our drinks, our clothes, and, yes, even our furniture.

As consumers, we should each make it our mission to answer the question:

"What's in a supply chain?"

And, if they want our business, companies like Wayfair should have a better answer than:

"It's complicated."