TURNING THE SHIP: Using Purchasing Power to Create Change
<p>With any product there is an inherent link between quality and price, writes Starbucks' Ben Packard. But by paying a higher price to ensure that products are ecologically sustainble, business leaders can positively affect every aspect of the supply chain -- from farming to processing to exporting.</p>
With any product there is an inherent link between quality and price, writes Starbucks' Ben Packard. But by paying a higher price to ensure that products are ecologically sustainble, business leaders can positively affect every aspect of the supply chain -- from farming to processing to exporting.
Packard, Starbucks' Director of Environmental Affairs, says in Turning the Ship, a five-week online dialogue convened by the Harvard University Graduate School of Design and The Clark Group (and hosted by GreenBiz.com here), that even in the diffuse and unstructured coffee industry, his company has been able to introduce transparent systems that make sure coffee farmers and everyone in the coffee-making process gets paid an equitable rate.
Starbucks achieved this by overcoming three major hurdles:
Currently, the coffee industry does not have a standardized mechanism in place that allows all parties across the coffee supply chain to easily submit evidence of payment in a consistent, uniform manner. We receive different forms of documentation - from a simple receipt for the coffee cherries that the farmer delivered to the mill to full purchase agreements that include more levels along the coffee supply chain. These documents not only differ in quality, they reflect variations in currency, industry standards and laws, units of measure and are prepared in many different languages.
Continued Emphasis on Relationships, Communication and Training
As our demand for coffee grows and our already complex supplier network expands, we understand the importance of staying in touch with and training our suppliers so they understand how to complete the application forms for C.A.F.E. Practices, manage the required verification process, and adapt their practices to improve their scores. We must also seek efficiencies on our end that enable us to respond more quickly to the needs of our suppliers.
Verifiers and Improved Systems Needed
Our plan to buy more sustainable coffee in the future can only be realized if our network of approved suppliers participating in C.A.F.E. Practices grows. The process of approving more suppliers will involve conducting a great number of inspections by third-party verifiers. At the end of fiscal 2006, we had 143 trained and approved verifiers in the field, which was 43 more than the previous year.
Packard's full essay, "Providing Incentives to Coffee Suppliers to Produce High Quality, Sustainable Coffee," is posted on TurningTheShip.com.
The Turning the Ship dialogue has brought together leaders from a variety of fields to explore market and policy barriers that may be inhibiting adoption of environmentally sustainable practices by U.S. businesses. In addition to Packard, other participants in the discussion include Dan Esty, Director of the Yale Center for Environmental Law and Policy; Truman Semans, Director for Markets and Business Strategy, Pew Center on Global Climate Change; Michelle Wyman, executive director of International Council of Local Environmental Initiatives, USA.
