The label on the sweater says, “Made in Hong Kong” but the yarn is from Korea; it is woven and dyed in Taiwan; then, cut, sewn and assembled in Thailand and the zippers and buttons are from a Japanese factory located near Jilin, China. Then, it is finished packed and inspected in Hong Kong to be sold in a store in Hull. The steps are generic and the locations can vary – especially as a race to the bottom for lowest cost producers generates footloose players with no sense of how this can disrupt communities and even wreck their own corporate long term profitability.
Look at this another way. This is a classic end-to-end supply chain featuring consumers in a listed up-market chain on the High Street at one end of the spectrum and a sewing machine paid for by money borrowed from loan sharks at the other. Transformational logistics seeks to explore the relationships in this story and explore ways in which the value chain can generate inclusive and sustainable growth.
In his latest important contribution to the understanding of the business dynamics of the Majority World, The Inclusive Value Chain in India, Professor Malcolm Harper address the issue in a positive way by showing that the poor can be and are being included, not as an “act of charity” or “corporate social responsibility”, but because their inclusion is profitable for all parties, including the producers themselves.
The aim of the book is to show by example that “modern” integrated value chains need not necessarily exclude the smallest producers. One important contribution is a discussion on the impact of organized retailing on small-scale traders. This is the area that the Kaushlya Foundation (see previous post) has concentrated on with their work on the vegetable supply chain. It features working with farmers to ensure that they have the best quality seeds to grow with and, that their products are marketed well with street vendors. In other words, this works with the informal economy at both ends and seeks to develop a more effective and efficient supply chain that benefits all. Mind you, it does challenge the agents taking their cut for adding very little value apart from connections. And this can be dealt with through mobile technology.
The idea of inclusive and sustainable growth as it applies to supply chains is a fascinating and highly relevant area for research and hands on action. Over the next few weeks, T L will be launching several initiatives to make this happen. For example, why not map supply chains end-to-end and then develop green supply chain initiatives to harness renewable energies and innovative carriage as a major initiative sponsored by Governments as a means to generate greater value to the Development Dollar? Think about it. How much will be spent to erect wind farms and photo voltaic facilities? How much of that budget will be allocated to a sustainability strategy – construction and maintenance skills. And then there is the ethical supply chain audit…