Building Better, More Transparent Supply Chains

Because of significant global supply chain delays over the past few years, consumers have a greater awareness of how goods reach them and the impact on the climate. They may understand the interconnectedness of sourcing goods, paying people fairly, and managing waste, but there’s still not much transparency in global supply chains—even internally.

“It’s not only that consumers don’t have visibility, but companies often don’t know where products come from or how things are made,” says Yanchong (Karen) Zheng (George M. Bunker Professor; Associate Professor of Operations Management). “Traditionally, they at best know their first tier of suppliers, and have little knowledge beyond that.”

Her work studies fundamental and emerging operations and supply chain problems, with a particular focus on creating environmental and social responsibility in global supply chains. But, at the core of the work, in the simplest possible terms, “I like to apply math to figure out how we can improve the world,” she explains.

Zheng, working with Retsef Levi (J. Spencer Standish (1945) Professor of Operations Management; Faculty Co-Director, MIT Leaders for Global Operations) and in collaboration with the government of the Indian state of Karnataka, completed an empirical assessment of their new digital market platform designed to unify agricultural trading in the region. The government created the platform as an effort to get wholesale traders to pay smallholder farmers the fair worth of their products, but the assessment showed there wasn’t a uniform price increase for all goods.

To further enhance the benefit of the platform to farmers, the researchers designed a two-stage auction, adding a second round of bidding to those traders who offered the highest amounts in the first round. In a pilot program during spring 2019, average prices increased 4 percent, which positively impacted more than 10,000 farmers. Their continued research utilizes AI to develop tools for farmers, including generating accurate, unbiased information around crop planning, pricing, and market selection.

This is just one of Zheng’s research directions, and a microcosm of her interest in modeling real-world problems to find practical solutions. She became motivated to study labor practices with an eye toward improving practices from both a labor and an environmental perspective, citing the Dhaka garment factory collapse in 2013 and mass suicides at a Chinese Foxconn plant in the 2010s.

Through modeling, on-the-ground studies, behavioral experiments, surveys, and using brands like Patagonia as a positive example, Zheng has been studying the benefits of supply chain visibility. “We find differences, in that companies with better visibility into their supply chains gain more trust from their stakeholders,” she says.

Zheng has a lofty goal: to engage a coordinated response among companies and suppliers to establish end-to-end transparency and more responsible supply chain practices. It can be challenging to motivate organizations to change their internal practices, but a collective effort is the catalyst for long-term change. This system that generates “value for all,” as Zheng puts it, is something she sees as challenging—but ultimately feasible.