Optimizing & Tracing Informal Supply Chains

Over 60% of global employment is informal, meaning that most of today’s economy operates without data digitization or formal contracts. Supply chains in these informal working environments are created and managed through word-of-mouth processes, and lack centralized repositories of information or coordination in transactions.

As a result, they face important challenges with establishing traceability reliably and at scale, data-driven decision-making, implementing incentive schemes, and accessing reliable, consistent information.

Examples of informal supply chains include smallholder supply chains, informal labor supply chains, and nanostore retailing. They support many of the planet's most vulnerable populations, and coexist with some of its most diverse and threatened landscapes.

 

We study the design of technologies and algorithms that address challenges in informal supply chains, by combining methods from large-scale field work, optimization, and action research.

Smallholder supply chains

Our first project started with the smallholder palm oil supply chain in Indonesia. In collaboration with Daemeter, we are working on the market design of a new mobile-based platform that optimizes and digitizes informal transactions for members of the smallholder supply chain.

 

The platform is called PemPem, which stands for Pemasok-Pembeli and means “buyer-supplier” in the Indonesian language. Through this work, we collect real-time data on the supply chain and study the decision-making behavior of its members as a function of market design.

 
Informal labor supply chains

An estimated 40.3 million people are victims of modern slavery today. An estimated 25 million of those are victims of forced labor; the vast majority are low-skilled migrant workers that migrated from a different country or region. Evidence so far indicates that much of the labor exploitation has roots in the informal recruitment process, which operates as an informal supply chain of labor.

In the extreme, informal labor supply chains can lead to debt bondage and human trafficking. In fact, our work shows that market frictions in informal labor markets worsen forced labor and human trafficking.

In collaboration with the Issara Institute, we are working on the market design of technologies that optimize ethical recruitment of low-skilled migrant workers from Myanmar into Thailand (the largest flow of economic migration in South East Asia).