When well-executed, private sustainable sourcing programs can offer substantial value. Some approaches designed by firms can raise concerns about whether they offer much benefit to producers and the environment, or, they are little more than compliance checklists. However, they can also be effective in their design and execution so that they offer substantial value to both the suppliers and the firm. Our long history of successfully designing company programs and strategies has yielded useful lessons of what to do and what NOT to do in these eight key steps to sustainable sourcing.
The first generation of sustainable sourcing programs have been operationalized through partnerships with traders, producer organizations, farmers, certifications, extension programs, research institutions, and international development agencies. These programs operate with different names, such as sustainable/responsible/ethically sourced or direct trade.
With any approaches that are developed privately, there is a concern that they may not offer much benefit to producers. However, when well executed, sustainable sourcing programs can offer substantial value. Better ones tend to align with this general definition:
A known relationship with producers that goes beyond the transactional to include transparent processes that promote best practices in coffee production and processing to safeguard the rights and well-being of producers, workers, the community and the environment.
Traceability and transparency are critical to the credibility of a sustainable sourcing program. Tracing supply chains to identify all intermediaries up to the farm level is a precursor to understanding the risks and opportunities at each tier of the supply chain. A well-documented system to consistently collect and analyze data with a transparent process will inform key performance indicators to provide clarity for supply chain partners.
Good intelligence systems can be transformative. They help to quickly identify best practices; and by benchmarking suppliers and supply chains, intelligence systems can promote accountability for continuous improvement. Technologies now allow for just-in-time reporting and data consolidation that permit course-correction before any risks become problematic or even systemic. Some firms use their data systems to motivate their value chains to demonstrate and quantify results, offering incentives such as preferred supplier status.
Well-managed sustainable sourcing programs build strategic relationships with key suppliers and provide cost-effective channels to attain critical supply chain intelligence for decision makers who can:
- Identify and address the drivers of key social and environmental risks with farmers, traders and processors
- Manage reputational risk by rating suppliers based on transparency, traceability of volumes sourced and key sustainability performance indicators
- Target sustainability investments and track performance of services provided to farmers (e.g. technical assistance, credit, certification, and inputs)
- Transparently share information with key stakeholders through maps and dashboards to leverage and integrate information from secondary data sets (via development initiatives, research, and coffee sector specific platforms)
- Grow sales in new market segments through providing customers more information on the supply chain
Numerous organizations have been working on sustainability projects within the specialty coffee sector with supply chain partners committed to the long-term viability of the farmers and their communities. Encouraging efforts are underway in the specialty coffee trade, and here will I attempt to distill a simple recipe of eight core ingredients that will improve the taste of your coffee through adding the flavors of sustainability:
Step 1: Set Clear Strategic Objectives
Outline the time-bound goals and key processes and resources required to achieve desired outcomes.
- Engage your stakeholders’ participation to create it
- Consider the desired long-term impacts first, then the mid-term outcomes that would lead to those, then the activities and investments that generate desired outcomes
- Establish measurable, time-bound goals that are clearly articulated to supply chain stakeholders
- Highlight key processes and resources to demonstrate how the program will be operationalized and managed
Step 2: Select Key Performance Indicators
You cannot manage what you cannot measure. These simple metrics will clearly measure progress toward objectives. Performance is replacing static scorecards.
- Formulate all Key Performance Indicators (KPIs) with S.M.A.R.T (Specific, Measurable, Actionable, Realistic, Time-bound)
- KPIs should align with international norms to facilitate accountability and benchmarking or comparability across origins and supply chains
- Integrated KPIs into a system that encourage their active use in decision-making (e.g. Dashboards)
- Documented guidance is necessary for applying KPIs to ensure they are consistently interpreted
Step 3: Understand Code of Conduct Guidelines
Pragmatic guidelines are needed so that all supply chain behavior is auditable and measurable.
- Define clearly. Interpretations of ethical business practices vary from place to place. Local regulations are a necessary basis but may be insufficiently aligned with global expectations. State expectations clearly and realistically
- A coherent approach should apply appropriately for different levels: aggregators, processors, producers, and hired labor
- Guidelines for conservation, waste management, land use, human rights and worker rights should be auditable and enforceable
- Quantifiably assess specific risks or sustainability attributes associated with individual suppliers or the entire supply chain.
Step 4: Ensure Traceability Protocols
Identify all the links in your supply chain to reliably pinpoint the product from source to consumption.
- Identify all intermediaries, and ideally the transactions, along the supply chain all the way to the farm level
- Ensure use of a standard format for consistent collection of details about farmers. Consider including: unique identification code, producer name, village, phone, age, gender, volume sourced, avg. yields, GPS, number of trees/area under coffee cultivation and associated varieties
- Ensure annual updates, and ensure there is proper documentation to guide a potential audit of the Traceability Protocol
- Consider mapping farms to understand context of production zones on local ecosystems
Step 5: Sustainable Operating Procedure
Measure farmer practices and determine and provide what services are needed based on local stakeholder input.
- Ensure that delivery of services are prioritized with local stakeholders, and are based in a credible needs assessment methodology
- Establish a clear process for monitoring the performance of farmers, aggregators, and processors
- If specific activities such as training, credit, soil analysis, or inputs are delivered, include a tracking system to monitor delivery and quality of services
Step 6: Verify to Improve the Process
When audits uncover non-compliance, seek to understand the root cause for that non-compliance, and provide a reasonable remediation period to come into compliance.
- Verification is ideally used as a learning process for continuous improvement, not just as an enforcement tool
- Provide a checklist of required information and clarity on how suppliers will be evaluated on key aspects of the sourcing program
- Establish integrated systems for validating data sources to reduce verification costs and target field audits towards specific risks
- Improve accuracy with some electronic or even remote sensing verification, in addition to traditional observational inspections
Step 7: Find your Impacts
What are the unintended and intended, and good and bad, impacts attributable to this sustainability intervention?
- Utlizing targeted impact assessment can identify reasons for an outcome. Knowing how interventions such as training, certification, or credit affect an impact opens up practical solutions and more effective investments or policies
- Science methods have advanced in the last decade to engage a better mix of quantitative and qualitative tools
- Always look beyond single dimensions to include the environmental, social, and economic manifestations of change to usefully illuminate the realistic dynamics or trade-offs of farming and supply chains
Step 8: Visualize and Share Your Information
Simple presentations of results help engaged stakeholders see their progress towards key sustainable sourcing objectives.
- Create access permissions to ensure sharing information is restricted based on the suppliers role in the supply chain
- The platform should provide guidance on tools for data collection, and analysis criteria for rating suppliers’ performance.
- Use online maps and dashboards to monitor a key set of metrics to measure the impact of coffee production, processing and sales on surrounding communities and ecosystems