Supply Chain Empowerment Learn how to correctly analyse this topic.

Sarah Simon

14 min Read Time | December 27th 2021

Key takeaways

1

The topic deals with projects and activities that have a proven positive and direct impact on the company’s supply chain and promote the local development of the communities the workers live in.

2

The core focus should be on how activities promote, foster, and develop the communities' living standards, access to resources, inclusion, and well-being.

3

This topic may include philanthropic initiatives or donations as a secondary point.

Executive Summary

This topic addresses how a company empowers people and communities in its own supply chain. Empowerment and securing livelihoods can be addressed mainly through the company's core business activities.

It also includes a company’s ability to ensure diverse suppliers' access to resources and livelihoods, specifically in the context of underserved population groups. It includes, but is not limited to, smallholders and farmers, women, indigenous businesses, local suppliers in the supply chain and emerging markets.

If the impact is significant, the analysis can also discuss empowerment through the company's initiatives, projects, opportunities, etc.

The empowerment of the supply chain includes, but is not limited to:

  • Skills and training  - that helps workers and their communities gain resilience and security
  • Microloans - helps stabilise income flows and savings
  • Local sourcing - aids in poverty reduction and economic growth 
  • Diverse supplier spending - fosters diversity and inclusion of minority groups

This topic is not focused on minorities or gender equality as such; this can be added as a secondary point to the analysis. The focus is on the supply chain as a whole, and how the company's activities, projects, and initiatives empower the members in their supply chain and the communities that they live in.

What is it?

Supply chains are crucial for the global economy and businesses. The supply chain can be defined as a “network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources.”

Empowering members of the Supply Chain promotes and develops strong community relations and compliance with fundamental rights.

Empowerment can be defined in different ways. When talking about underserved populations, lower-income people, rural populations, women and minorities’ empowerment, it means accepting and allowing all people who are on the outside of the decision-making process into it. Empowerment is the process that creates power in individuals over their own lives, society, and their communities. It is all about equipping and allowing people to make life-determining decisions.

The opposite of empowerment is degradation, “the act of lowering something or someone to a less respected state.”

Being firmly interconnected with rights, inclusion and empowerment increases access to food, healthcare, education, land, clean water, and more vital resources for increasing wellbeing.

Being civically and socially responsible can be the driving force for local development (LD). LD is a social science theory based on “the identification and use of the resources and endogenous potentialities of a community, neighborhood, city, municipality or equivalent.” Both economic and non-economic factors can influence LD.

The economic factors might include: purchasing materials and supplies from the local communities, creating job opportunities, fostering local endowments, strengthening local financial assets.

Non-economic factors include: “social, cultural, historical, institutional, and geographical aspects.” In other words, encouraging local development through building strong, empowered, and resilient communities.

Sources

https://www.investopedia.com/terms/s/supplychain.asp
https://www.thebalance.com/what-is-the-supply-chain-3305677
https://www3.weforum.org/docs/WEFUSA_BeyondSupplyChains_Report2015.pdf
https://www.referenceforbusiness.com/small/Bo-Co/Community-Relations.html
https://www.prmrinc.net/blog/how-important-is-community-relations-to-a-company
https://en.wikipedia.org/wiki/...
https://sustainabledevelopment.un.org/content/documents/21453SDG_10_EGM_2019_concept_note_30Jan_consolidated.pdf
E SDG PRINT 16

SDG Choice

SDG 16 is the most common SDG for this topic, but others may apply, such as:

SDG 1

SDG 2

SDG 8

SDG 10

SDG 17

Impact assessment

In your analysis, describe the project/initiative(s): the what, how much, and the who, following the IMP framework.

You must mention the direct and intended impact of the company's actions and measure how significant it is.

Learn more in the article Step 5: Assess scale and value.


Introduction

The introduction should provide background information about the importance of a resilient supply chain and the wider social impact this would have on the communities they are part of.

  • Discuss the vulnerability of supply chain workers that is industry-specific

  • It should consider the relevant geographical areas the impact is in

  • Consider the ways empowerment of such groups boost community well-being

Read more on how to build a strong introduction in this article.

Core Analysis

The body shall explore the direct company’s action/project/program, delineating:

  • The number of suppliers the company has, and if possibly, the number of employees in the supply chain

  • What types of jobs the workers have in the company’s direct supply chain

  • What the geographical reach is

  • How the workers and communities are empowered, through, for example:
    • Microloans

    • Fairtrade and fair purchasing contracts and practices

    • Skills, such as farming, economic training, sustainable and responsible practices, etc.

    • Increased decision making

    • Local sourcing

  • Since when and for how long workers and communities have been positively impacted

  • How many people were actually reached and impacted

  • The tangible outcomes and impact, such as:
    • Reduced poverty rates in one area

    • Increased security and access to resources (financial, food, employment, water, and other resources)

    • Increased ownership, such as land

    • Stable income and increased profits

It would be valuable to know how the company is driving its policies into the supply chain.

Rather than conducting relative impact assessments (representation as a percentage or only compared to the industry), an absolute impact assessment needs to be made. You should report on how the company is empowering or degrading underserved populations in absolute terms, such as systemic changes brought about by the company or in its supply chain.

What the company is doing that is helping or hurting women's standing in society, such as:

  • Whether the supply chain upholds what societal norms and standards accept as 'appropriate' jobs for the underserved population.

  • Are they working in the lowest-paid quartiles?

  • Are the women vulnerable to sexual harassment and violence? Are there security threats when traveling during non-conventional working hours? Are the women's care responsibilities paid for?

  • Do the underserved communities have limited bargaining power? Are they underrepresented in unions?

  • Within the supply chain, is the spend for diverse suppliers significant compared to non-diverse suppliers?

Regarding inclusion, the analysis can discuss one or more ways the company has proactively built a diverse and empowered workforce in the supply chain:

  • Strengthening anti-discriminatory policies

  • Eliminating bias in the evaluation process and promotion opportunities

  • Spending significant amounts to diverse supplier groups

  • Cross-training programs, training, micrloans, fairtrade, local sourcing, etc.

  • Other initiatives such as: fostering diverse thinking and changing language, mentorship programs for diversity growth, training options for diversity training

  • Within the supply chain, is the spend for diverse suppliers significant compared to non-diverse suppliers?


How to measure the impact of Supply Chain Empowerment?

Example 1: Through training and microloans, Nestlé supports the livelihoods +500k farmers in its supply chain

The issue: "Global supply chains employ ~450 million (M) people11. Farmers are part of society's most vulnerable group, often facing food and wage insecurity and making most of the world's poor and undernourished12. Good supply chain practices provide better-earning prospects, & build better communities13;p6."

Program 1: "The company works directly with 550,000 farmers in its "Farmer Connect Program", providing entrepreneurial training to 400,000 each year, which represents 57% of all Nestlé's supply chain farmers3,6;p26

Impact: …attracting young farmers and reducing food insecurity while improving nutrition6;p25-26.”

Program 2: “Village Savings and Loans Association (VSLA) scheme has helped 6,690 women save & manage their own business…

Impact: ...increasing by 5% their land ownership and involving them in decision making8;p14.

Program 3: “Terrafertil, a controlled entity of Nestle since 2018, collaborates with small farmers in Colombia and Ecuador…

Impact: ...offering them training and stable incomes by guaranteeing crop purchases at fixed prices10;p8,9.

Program 4: “Nestlé also set in place a Milk District Model in developing countries, offering free vet services and technical animal husbandry support as well as $25Mn in microfinance loans to more than 296,000 farmers

Impact: ...ultimately alleviating poverty5.


Example 2: Symrise improves livelihoods of Malagasy vanilla farmers, but might be also creating dependence

The issue: "80% of the world's vanilla is grown in Madagascar1, the 9th poorest country3, where 75%2 out of 28,361,8259 live in poverty. In addition, small-scale vanilla farming is threatened by price fluctuation, creating economic instability for the farmers5,6;p4."

Supply Chain Context: Symrise sources vanilla directly from 7,000 Malagasy farmers in 84 villages1. By working directly with them (see report 20208;p123), Symrise provides them with a long-term guaranteed income5. This brings growth, transparency, traceability, and benefits 34,000 people1.

Partnership 1: “Symrise established partnerships to achieve sustainable vanilla sourcing in Madagascar…

Impact: …For example, its partnership with Kellogg provided resilience and crop diversification training to 1,000 Malagasy vanilla farmers3,7.”

Partnership 2: “Since 2016, Symrise also partners with Save the Children…

Impact: …The partnership provided health insurance to 9,000 households and 38,000 community memebers2. In addition, 40,000 people received essential package training to improve health and nutrition, and 2,400 people got access to education services2.”

Certifications: “Symrises uses certifications (Fairtrade, Rainforest Alliance, Organic)6;p20 to ensure fair treatment of farmers6;p4

Impact: …As a result, it was ranked among the top 10 sustainable companies out of 9,6004. The farmers get most benefits by being given rice advances, premiums paid in advance, and crop diversification programs that all benefit the livelihoods of farmers6;p21. Further, these programs prevent early harvesting (which is positive) due to an immediate need for food money6;p21 and ensure quality.”

It is important to remain critical and nuanced. In your analysis, make sure you add value to your readers and go beyond the company’s CSR report by not merely reporting data from the company’s report but going the extra mile of providing additional metrics, studies, and sources to make your analysis robust and the impact value and scale are clear.

“On the other hand, these programs prevent farmers from selling on an open market and render the farmers dependent on the company6;p28.

Make sure to describe the scale of the impact by taking into account:

1/ The breadth of the impact

  • Is the impact local, national, or global?

  • How many people are concerned? Thousands? Hundreds of thousands?

2/ The depth of the impact

  • Is the life of people concerned deeply affected, or does the issue just marginally impact them?

  • Are the changes brought by the issue profoundly changing society or the planet?

3/ The persistence of the impact

  • How long would the impact described last for? Months? Years? Decades?

  • How reversible is the impact described in the impact analysis? Can it be easily stopped/extended?

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Step 5: Assess scale and value

Learn how to assess the analysis you are writing or reading.

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