Supply chains across industries are getting a lot of attention these days between exposés revealing slave labor shrimp from Thailand to disasters like the Rana Plaza collapse killing hundreds of garment workers. These scenarios highlight the complexity and lack of transparency in supply chains, which can have many middlemen involved. The bigger a supply chain is, the more complex it is.
The conventional supply chain is notoriously adversarial and competitive. Suppliers are seen as interchangeable and exploitable. The focus is on short-term economic gain which results in benefits and profits being unevenly and unfairly distributed across the players. However there are some exciting changes brewing in the food and agriculture industry as it moves toward more conscious supply chains. This paradigm shift is known as values based supply chains.
The focus in values based supply chains is on finding strategic partners and building collaboration and trust between all parties. Through transparent communication, interdependence is acknowledged and is seen as an opportunity for mutual support. There is an emphasis on “shared vision, active information sharing and shared decision making.”
An aspect of the shared vision can be seen in the desire to provide superior quality food. Providing superior quality is in many ways tied to the focus of environmental stewardship. The food is produced in a variety of sustainable ways – organic, biodynamic, integrated pest management, pasture raised, grass-fed, etc. There is an understanding of the interconnectedness of the land, air, and water and our treatment of such resources within the values based supply chain.
The shared vision also includes a social responsibility focus as seen in fair trade products (at times this means literally certified as such) and fair labor. Additionally, the various relationships are seen as opportunities to create and support the individuals within the supply chain by ensuring that the economic benefits and profits are spread out to incorporate all parties. It is about creating a community of people who believe in the value of strong, healthy, and resilient food systems that serve the needs of their surrounding region.
Meeting the needs of the surrounding region means that the farmers who operate at less than an industrial scale are maintained, preserved, and enhanced. This in turn means as farmers and other players in the supply chain have more income, there is more discretionary income to spend on local goods and services. Additionally, there is greater fresh food access available to low-income communities, schools, and hospitals.
Values based supply chains are more transparent and build community despite the complexity. Benefits can be seen in cost sharing, greater market access, flexibility, and healthier regional economies. Consumers win as well with visibility into the supply chain and better food. The question that remains is how to translate this paradigm shift in the food and agriculture industry to other industries.
If after reading this article you are interested in having your business become part of the values based supply chain, here are some questions to consider:
- What would be the benefits of doing this for your business and why?
- What does your supply chain look like? Have you mapped it out?
- What values, vision, and goals do you share with your partners?
- What standards and evaluations need to be developed across your supply chain?
- How will you foster interorganizational trust and ensure long lasting relationships?
- What challenges might you encounter along the way and how can you and your strategic partners support one another?