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Tuesday, November 26, 2013

The Power of Sustainable Supply Chains 11-26

The Power of Sustainable Supply Chains

Supply chains can be made stronger and more sustainable if the people working at different stages in them have stable and sufficient earnings. This is the basis for The Body Shop’s “Community Fair Trade”   programme, which ensures 25,000 workers in marginalised communities earn a fair wage. 

The programme directly benefits more than 320,000 people per year supporting the creation of sustainable businesses, education, health and environmental projects. It makes the supply chain more reliable and can reduce volatility in the prices of raw materials as producers and suppliers have a more direct relationship. 

Between 2008 and 2013 the market price volatility for soya oil was over 30%, while for The Body Shop’s “Community Fair Trade” suppliers price volatility was less than 10%.  “Community Fair Trade” is central to the company’s marketing and recruitment, inspiring staff and providing stories that resonate with customers, 70% of whom state that Community Fair Trade is a factor for them visiting The Body Shop. As the proportion of Body Shop products containing or being made by Community Fair Trade suppliers has increased from 60% in 2008 to over 90% in 2012, it has also influenced parent company L’Oreal to convert six of its key raw materials to Community Fair Trade sources.

Supporting smallholder farmers, investing in the value chain, and developing entrepreneurs are the three components of SABMiller’s enterprise development programme  . Smallholder programmes providing financial and technical assistance have created employment and raised income levels among disadvantaged farmers in Africa and Asia. 

Many farmers have been able to move from subsistence agriculture to small-scale agribusiness and have improved the quality of their lives as a result. Working with local suppliers has built their capacity to deliver quality products and enhanced their ability to grow. These actions are also good for SABMiller’s business. Local sourcing of sorghum in Uganda and Zambia for instance qualifies SABMiller for low excise rates. 

This allows SABMiller to sell the product at a third less than lagers using imported barley, generating sales revenue for Eagle Lager of approximately US$43 million a year in Uganda. Smallholder sourcing has also helped build a market share of over 35% in India.

At the other end of SABMiller’s value chain, the company works closely with thousands of micro and small retailers, recognising their significant potential contribution to economic growth and development, particularly in developing and emerging markets. SABMiller is investing US$17m in a programme with the Inter-American Investment Bank, for small retailers, or ‘tenderos’, across Latin America. 

The ‘4e Camino al Progresso’ programme focuses on the development of the capabilities of the tenderos to improve their business, the quality of their and their families’ lives, and to enhance their leadership skills, enabling them to take on responsibilities in their communities.

Tea, coffee, bananas, chocolate bars, sugar, blueberries and wine are some of The Co-operative’s key own-brand Fairtrade products categories and, with the exception of wine, are all 100% Fairtrade. The Co-operative has committed over £2.5 million to projects that build the capacity and resilience of the producers of these products. The “Going Beyond Fairtrade  ” programme involves 18 co-operatives and producer associations in 13 countries, and supports over 250,000 people, including smallholder farmers, workers and their wider communities. It does this through investing in development projects to help improve productivity, diversify products, strengthen democracy and improve community-wide access to basic necessities like clean water and sanitation.

 This has led to increased incomes, improved health, better access to education, and improved representation of women. In 2012 alone, more than 1,500 children benefited from primary school provision; while 50,000 people have benefited from more than 500 improved water points and 1,100 improved latrines in households and schools.

This programme has also bought significant business benefits to The Co-operative. Its Fairtrade sales have increased by £61 million in the last three years from £71 million in 2009 to £132 million in 2012.  By investing in development projects to build the capacity and resilience of key Fairtrade producers, The Co-operative is strengthening supplier relationships, securing future sustainability and developing new products. One example is the Fintea Growers Co-operative Union in Kenya, where the programme has strengthened the livelihoods and trading position of 15,000 farmers, increasing the value of their tea by at least 25% through Fairtrade. By achieving Fairtrade certification, the Fintea farmers are now eligible to supply into The Co-operative’s own-brand tea and they supply at least 10% of the leaves blended into The Co-operative’s iconic ‘99’ Tea. 

The Body Shop, SABMiller and The Co-operative have all developed ways to address global poverty through investing in sustainable supply chains, and at the same time have strengthened their own businesses. Does your business invest in sustainable supply chains and help address global poverty?

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